As far as inequality measurements go, consumption > income > wealth
Consumption can better capture deprivation and economic insecurity… income and wealth are just things we have better data accessibility for.
I really don’t think income inequality is inherently much of a problem at all since it’s not clear that its “remedies” actually address the salient issues of social mobility and accessible opportunities. It could *signal* problems but I don’t think it *is* the problem.
Such_Duty_4764 on
Image source: CBO “Trends in the Distribution of Household Income From 1979 to 2020 November 2023”
Inequality is necessary and inevitable in any human society. (source: history)
However, perfect inequality (bezos having all our money) is also ridiculous.
So then, how much is the right amount?
I am afraid that there is a tyrrany of compound interest that people don’t think enough about, if you will allow me to explain:
According to the motley fool (a solid source, i guess?) there are 10k famlies in the USA which have 100M or more in wealth. In passive investments, these 10k families make 5M a year.
How is it that a family is supposed to spend 5M? My presumption is that they can’t. They could try to buy land, but its value would only go up if recent trends continue. You just can’t spend 5M a year on cars, clothes and cocaine, no matter how hard you try.
So for these 10k families, their wealth will only continue to increase exponentially until… until when? Nature abhors vacuums and exponentials.
I don’t know what or how to think about this. Help me understand.
sw337 on
All incomes levels have more after transfers and taxes? So what’s the bad news?
Also provide the numbers please
Bidens_Erect_Tariffs on
I see three lines going up.
Tall-Log-1955 on
Depends on what quintile am I personally in.
AdSoft6392 on
I don’t think there is a ‘right’ amount
I would rather live in a society where the poorest has $1,000 but the richest has $100,000 than one where the poorest has $500 and the richest has $1,000
JeromesNiece on
This graph would look almost exactly like this even if inequality was decreasing consistently throughout this whole period. That is the nature of exponential lines that start off on different orders of magnitude
dubiouscoffee on
Be careful, this sub hates data about inequality!
Having come from rust belt USA and schmoozed with coastal top 0.01%ers, I can assure you that inequality is absurd in this country.
My immediate solution is breaking huge generational wealth transfers with higher estate taxes.
Lower quintiles also need greater access to stock ownership and other assets. And we just need a more cohesive and well-funded safety net overall.
neonliberal on
I do think that inequality is an inherently destabilizing force (and disagree with the people who say it’s not a problem) for a couple of reasons:
-Compared to the wealthy in more equal societies, the wealthy in highly unequal societies are better able to push for and entrench illiberal policies to secure and further increase their wealth. We want people to become wealthy by genuinely creating productive goods and services for society, *not* by rent-seeking.
-People are highly concerned with status, and in particular, their *relative* status compared other people. Social media has dramatically magnified the “keeping up with the Joneses” effect; instead of your neighbors, *the world* is now your “Joneses.” It’s easy for us to say “well I’ll simply tend to my own garden and stop worrying about how others are doing,” but plenty of other people can’t resist that. And they will vote and advocate accordingly. There are a lot of illiberal demagogues who will gladly prey on these disaffected people.
I agree with the assessment that consumption inequality > wealth > income (since consumption is the most visible type and the kind that provokes the most status competition).
I’m not sure what policy prescriptions would work best for dealing with this issue though.
Sh1nyPr4wn on
As long as the absolute poorest have enough to get by (food, water, clothing, housing, education, employment, healthcare, etc) any amount is OK (and as long as the richest got their money legally and relatively ethically)
It’s only a problem when people go without specifically due to inequality
10 Comments
As far as inequality measurements go, consumption > income > wealth
Consumption can better capture deprivation and economic insecurity… income and wealth are just things we have better data accessibility for.
I really don’t think income inequality is inherently much of a problem at all since it’s not clear that its “remedies” actually address the salient issues of social mobility and accessible opportunities. It could *signal* problems but I don’t think it *is* the problem.
Image source: CBO “Trends in the Distribution of Household Income From 1979 to 2020 November 2023”
Inequality is necessary and inevitable in any human society. (source: history)
However, perfect inequality (bezos having all our money) is also ridiculous.
So then, how much is the right amount?
I am afraid that there is a tyrrany of compound interest that people don’t think enough about, if you will allow me to explain:
According to the motley fool (a solid source, i guess?) there are 10k famlies in the USA which have 100M or more in wealth. In passive investments, these 10k families make 5M a year.
How is it that a family is supposed to spend 5M? My presumption is that they can’t. They could try to buy land, but its value would only go up if recent trends continue. You just can’t spend 5M a year on cars, clothes and cocaine, no matter how hard you try.
So for these 10k families, their wealth will only continue to increase exponentially until… until when? Nature abhors vacuums and exponentials.
I don’t know what or how to think about this. Help me understand.
All incomes levels have more after transfers and taxes? So what’s the bad news?
Also provide the numbers please
I see three lines going up.
Depends on what quintile am I personally in.
I don’t think there is a ‘right’ amount
I would rather live in a society where the poorest has $1,000 but the richest has $100,000 than one where the poorest has $500 and the richest has $1,000
This graph would look almost exactly like this even if inequality was decreasing consistently throughout this whole period. That is the nature of exponential lines that start off on different orders of magnitude
Be careful, this sub hates data about inequality!
Having come from rust belt USA and schmoozed with coastal top 0.01%ers, I can assure you that inequality is absurd in this country.
My immediate solution is breaking huge generational wealth transfers with higher estate taxes.
Lower quintiles also need greater access to stock ownership and other assets. And we just need a more cohesive and well-funded safety net overall.
I do think that inequality is an inherently destabilizing force (and disagree with the people who say it’s not a problem) for a couple of reasons:
-Compared to the wealthy in more equal societies, the wealthy in highly unequal societies are better able to push for and entrench illiberal policies to secure and further increase their wealth. We want people to become wealthy by genuinely creating productive goods and services for society, *not* by rent-seeking.
-People are highly concerned with status, and in particular, their *relative* status compared other people. Social media has dramatically magnified the “keeping up with the Joneses” effect; instead of your neighbors, *the world* is now your “Joneses.” It’s easy for us to say “well I’ll simply tend to my own garden and stop worrying about how others are doing,” but plenty of other people can’t resist that. And they will vote and advocate accordingly. There are a lot of illiberal demagogues who will gladly prey on these disaffected people.
I agree with the assessment that consumption inequality > wealth > income (since consumption is the most visible type and the kind that provokes the most status competition).
I’m not sure what policy prescriptions would work best for dealing with this issue though.
As long as the absolute poorest have enough to get by (food, water, clothing, housing, education, employment, healthcare, etc) any amount is OK (and as long as the richest got their money legally and relatively ethically)
It’s only a problem when people go without specifically due to inequality