For richer, for poorer


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That sentence doesn't make sense. You can be egalitarian AND believe in equality of opportunity. When I lived in the US, I didn't have the impression that there was more "equality of opportunity" than in N-W Europe (rather the opposite).

plusafdotcom in reply to exscientist

If you choose to use the term "egalitarian," I'd suggest that you clarify whether your focus is on equality of opportunity or equality of results (outcomes), and if you can do that, you need to consider what incentives (or laws) might be or should be established in order to achieve the one or the other, let alone both.

Atlas Shrugged Part 2 arrived in US movie theaters today. One of the key points in the second installment is Directive 10-289, which in the novel was the government's solution to "stability" and "equality."

I'd suggest a close read of that concept in that novel...



plusafdotcom in reply to exscientist

exscientist... way true, little argument on that, except for maybe one item... as most folks never define "fair" when they claim something or someone is being "unfair," the idea of "too much inequality" also begs the question of "how much is too much."

as an "exscientist," you should be well-aware of that kind of non-argument.. :) How could one judge, measure or define "too much inequality"? What kind of experiment could show the degree of "excess inequality" that would diminish opportunity?

.... ex-engineer, ex-marketing person... :)

exscientist in reply to plusafdotcom



Of course, psychoanalysis is bogus.


That is a fair statement. However when in doubt, I have more faith in incentives of individuals over handing it over to someone else in government to equalize. Clearly equality of opportunity will never be fully achieved across a society through generations, so I place more emphasis in provision of a reasonable opportunity with less emphasis on whether it is equal. If the individual is determined enough it won't matter.

On equality of outcome, I see it as perfectly reasonable if one chooses a lot in which they choose to work less hard and play less hard. That's a lifestyle choice and in some instances equates to more happiness due to more time with family and other non-material benefits. Those who put themselves into the so called 1% (personally I hate this classification) from more humble means can make incredible sacrifices in terms of time, relationships, etc. for their passion. Kicking more of it back into the system for the sake of equality of outcome robs a society of this drive. In other words, it takes all types motivated by different incentives, but incentives are the key...rationing of outcomes by those that look out for the masses (politicians) short circuits this gravity. It effectively adds gatekeepers of resources that were not saavy enough and did not work to cultivate them themselves. This lack of discipline not only stifles incentives, but infects a system with moral hazard.


I'm sure whining about income inequality gets a lot of sympathetic audience since only 1% of us can be in the 1%. The remaining 99% read articles like these to make themselves feel better about not being the 1%.

Inequality has existed throughout history. No matter what governments do, there will always be inequality. Is it necessarily bad? Let's consider for a minute where all the wealth goes. Unless the rich are stuffing their billion dollars under their mattresses or burying them under their mansions, which no one does anymore, eventually all their money gets recirculated back into the economy. There are at least 4 ways for them to recirculate this money into the economy:
1) Pay taxes. The government redistributes this wealth to whoever they choose to distribute it to, current and former government employees, the old, the poor, the military, education, foreign aid.
2) Spend it. The wealth is redistributed to the makers of whatever they buy - luxury clothing, high tech toys, jewelry, art, cars, mansions, yacht, parties...
3) Invest it. The companies they invest in get to use this cash infusion to hire more people, expand their businesses.
4) Save it. The banks then recirculate this money into the economy through loans to individuals and businesses.

In each case, the money gets recirculated into the economy. The only difference is in who is doing the recirculation - the government, the rich themselves, the investment banks/hedge funds/private equity, or conventional banks. The middle men in each case may take a cut as compensation, but eventually, the money gets recirculated to the poorer end.

The problem with articles about income inequality is, they often seem to indicate only the first distribution method is acceptable - via paying taxes and letting the government do the redistribution. The reality is, the 2nd, 3rd, 4th methods of distribution are much more efficient, and get the money into the hands of hard working people rather than those who rely on government freebies and corrupt people looking to rip off the old, the poor and clueless/corrupt government officials responsible for the handouts.

Heshler in reply to iThinker

If you read the article, it basically explains that income inequality is bad because the poor cease to afford education and other means of economic mobility, ending up stuck there no matter how hard they work because they don't have adequate skills and brain power. Redistribution through spending, investing, and saving does not help these people unless there is very high demand for unskilled labour, which is ever less the case. Not to mention, government certainly has proven more adept than the free market, (at least in realistic government systems within our reach), in many areas of spending, such as basic science research, defence, and coordination, if not necessarily building, of local infrastructure.

Furthermore, chances are the billionaires are able to game the system, procuring favourable regulations and tax breaks for their business via access to the ears of politicians, while often paying a smaller percentage of their personal income as tax than the poor or lower-middle class, when all taxes are counted (see the 2nd article in the series on the US).

A common idea amongst the American right-wing is that if you work hard you will make it. Indeed,T this is a common idea across most societies actually. The real question is, how hard should you have to work? Should you have to work 15 hours a day 6 days a week for 10 years to make it, just because no one ever educated you properly or the skills wiser people told you to invested in are suddenly out of date? In a rich society like ours where some people simply inherit fortunes, this is inhumane. This is an extreme example to demonstrate why a unnuanced right-wing/libertarian philosophy is problematic. Yes, working harder should get you more. But how much more is not a simple enough question to leave up to the market, particularly one that isn't as free as we like to think.

gjcwharton in reply to iThinker

"No matter what governments do, there will always be inequality" - an unprovable statement and was a forewarning of the specious statements that followed. In response to the 4 methods of recirculation:
1: Correct. The richer pay more too. Good. However there needs to be consideration if the wealthiest pay enough tax on their income in respect to the value they add given that in many situations those with the greatest incomes are rent seekers (see Joe Stiglitz "The Price of Inequality")
2: Did you not read the article? In developing countries the increase in GDP has benefitted the wealthier exponentially more than the poor. The trickle down effect looks great on paper but it has generally been refuted (see Growth, Inequality and Negative Trickle Down, 2010) on the basis that money tends to circulate within the hands of the wealthiest through the exchange of high value assets. Also, it is not absolute wealth that is important for increasing wellbeing (that's what politicians really care about isn't it?) but relative wealth, so no matter how much wealthier the less well off become, if the wealthier are increasing their own wealth faster then the trickle down effect is not efficacious (see Robert Franks work "Evolutionary Economics")
3 & 4 A recent paper from the IMF (Income inequality and current account deficits) has shown that as wealth becomes concentrated it forces the less well off to take out loans to compete with the lifestyles of the better off (despite the fiscal irrationality of this). Indeed, this not only exacerbates income inequality but it there is good evidence to support the theory that this was the cause of the current financial crisis.

2, 3 & 4 would are much better than 1 in terms of redistribution if we were all good, responsible and fair minded. But as Milton Friedman suggested at - that just is not the nature of humanity and governments need to step and decide what is fair. Inequality is necessary for competition and incentives, but too much has a pernicious effect on a society - see Wilkinson & Pickett the Spirit Level.

plusafdotcom in reply to iThinker



Interesting fantasy, but unrelated to reality.





You really should not try to have it both ways.

Calique in reply to iThinker





sonac36 in reply to Heshler





sonac36 in reply to Heshler





insubstainity in reply to iThinker


AAAristarchus in reply to iThinker

You forgot one:
5) They lend the money to you in the form of student loans and mortgages that you have to work for most of you life to pay back - on wages that are actually reducing.
I don't necessarily agree with all the points in this article. I believe that the equality of opportunities motto that we Americans pride ourselves with is the very best way to go, however, we really suck at it.

DerangedCharlatan in reply to iThinker

Your argument is flawed for several reasons:





pocketmaster in reply to iThinker

A very neat theory you have there. The only problem about this theory is the existence of bubbles and inflation. So when the rich so graciously redistribute the wealth as you described it must not necessarily be true that the 99% get richer. The rich person may buy gold and this way hedge against inflation. Sure he paid the money to the 99%, only it is now worth less and he has earned in this transaction, actually reducing the wealth of the other 99%. This is one example of how your theory doesn't hold. Generalizing and saying that leaving the money with the rich will make society richer as a whole is not true and can both be proven wrong by historical evidence and theoretically.


It may be that through the centuries if not through the Millenia, high inequality has been a feature of most large civilizations. The trend towards equality we have experienced with industrialization is a blip resulting from unprecedented prosperity and the supply and demand for people.

One of the differences is that previous elites have used force to collect the economic surplus. The current elite has found it more effective and less messy to use legislation that restricts competition.


chris macrae



Max the Pen in reply to chris macrae

In USA, the cost of higher Education is rocketing, and lower education is lax - another barrier for the poor.

To your point on violence, if you don't give the poor some opportunities and safety nets, they are going to come and take it from you.

Sebastos in reply to chris macrae


Clastics in reply to Sebastos

You talk in a lot of platitudes but do not cite specific behavior and individuals which should be prosecuted (please no ex post facto laws). Ultimately, we as a society were complicit in a boom cycle (housing, financial leverage, etc.) and are recovering from an accompanying bust. Do you really think that these "banksters" preferred to lose substantial sums of money (And their own self worth) due to their involvement in MBS and other securities tied to housing/other markets?

Lao Tzu Bodhi

It seems that the Golden Rule does not work well.
What is the Golden Rule?
The Man with the most gold makes all the rules!


There are two possible ways to reduce the gap between the rich and the poor. On the one hand, take the poor out of poverty by guaranteeing a business or job and good housing on nominal rent. On the other hand, there should be a limit on the number of businesses that an individual may own directly or indirectly. Such a plan is given in an e-book, "The plan for eradication of poverty."

Clastics in reply to MAHameed

I find it interesting that you seem to propose policy consistent with "the war on poverty." Yet, the beginning of the war on poverty seems to be strongly correlated with an increase in the gini coefficient.

I would argue that if you want more of something, you subsidize it.... and, this includes poverty. In the instance of incomes, such distortion reduces the incentive for the poor to work and results in a larger gini. If we were able to capture the effects of income supplementation and other assistance programs. I wouldn't be surprised to see a large part of this trend disappear (in effect, we have transferred part of the income for those less off from employment to government transfer programs).


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