Varieties of inequality

[I wrote this months ago, was dissatisfied, and decided not to post it.  But now with all the reports about America's poor, poor, pitiful 99%, it'd didn't seem quite as silly.]

I’d like to make some observations about inequality.  First as a person, then as an economist.  These are based on 56 years of observing all kinds of people, in all sorts of different situations.  The various inequalities are not meant to be equally important; indeed I’ve purposely added a few trivial ones for perspective.  But they are all assumed to affect utility (although I don’t know that they all do.)  Then I’ll return to this issue as an economist, and draw some conclusions.

1.  Inequality of disability.  Some people are blind, paralyzed, etc.

2.  Inequality of talent.  Some people are blessed with the ability of a Michael Jordon, or a Brad Pitt.

3.  Inequality if liberty.  I know one Chinese person who used to listen to Russian classical music very quietly, least the neighbors overheard.  It was viewed as counter-revolutionary, and she could have gotten in a lot of trouble.  Least we think America doesn’t have these problems, think of the many 100,000s of people in prison for using drugs.

4.  Inequality of money (i.e. income/wealth/consumption.)

5.  Inequality of personality.  I know one part time instructor who always looks happy.  He always whistles while he walks, and greets people with enthusiasm.  He’s about 85.  And I know lots of grouchy professors making 5 times more money.

6.  Inequality of mental health–actually just a more extreme version of point 5–but a big driver of utility.

7.  Inequality of access to health care.  Often assumed to overlap with money inequality, but the Medicaid program suggests it’s more complex.

8.  Inequality of power.  My Marxist friends would say I have a blind spot for this one.  I think I do.

9.  Inequality of location.  Were you born in sad Moldova, or happy Denmark?

10.  Inequality of luck.  Of course if there’s no free will, then it’s all luck.

11.  Inequality of family situation.  Are you living with an extremely difficult family member (an abusive spouse, an elderly person with Alzheimer’s, or a troubled teen.)  This has a big effect on utility.

12.  Inequality of disease.  Do you have AIDS, or cancer?

13.  Inequality of preferences.  I am cursed with expensive taste.  If I walk into a rug store, my eyes are immediately attracted to the most expensive oriental carpet.  My daughter just bought a teal shag carpet from Target that she likes.  Lucky her.

14.  Inequality of pain.  A hugely underrated factor in utility.  And let’s not forget the poor hypochondriacs.  There is no statement more stupid in the entire English language than “it’s all in your head.”  Everything is all in your head, including pain.  See the studies of phantom limbs.  Pain is pain.

15.  Inequality in social setting.  Do you live in a neighborhood terrorized by crime.  Again, only partially correlated with income.

16.  Racial/ethnic/gender/sexual preference inequality

17. Inequality of nerdiness/awkwardness.  A huge driver of utility for teenagers.  (Would a poor but “cool” and popular teen trade places with a middle class nerdy teen?)

18.  Inequality of job desirability

19. Inequality of appearance (beauty, obesity, etc.)  Michel Houellebecq says this is the greatest source of inequality in rich countries

And I’m sure there are many more that I overlooked.

Now let’s look at the same list as drawn up by economists (including me, with my economist hat on.)

1.  Inequality of money.

2. Inequality of access to health care

You might have noticed that the second list was a bit shorter.  Some non-economists suggest that economists care too much about maximizing utility, and don’t care enough about income inequality.  Of course exactly the opposite is true.  We pay little attention to utility, and focus way too much on income inequality.  BTW, this criticism could also apply to me, as I have done posts discussing ways of reducing consumption inequality.

I probably care less about income inequality than the average progressive.  I think that’s partly because I’ve known lots of lower income people, and I’ve almost never found it to be the case that their income was the central problem in their lives.  (Although it certainly is a problem–which is why I favor some income redistribution.)  On the other hand, the sample I’ve known is very biased, and unrepresentative of all poor people.  I’ve never known a migrant farm worker.  Another reason I put less weight on income inequality is that money has always mattered less to me than to the average person, even when I had very little (age 18-26).  Again, my view is slightly biased, as being poor and young is quite different from being poor and middle-aged.

But I do think I care as much about human suffering as the average progressive.  Almost every day I wonder where the outrage is over 400,000 drug users in jail.  By comparison, over the past 5 years I’ve read dozens of stories about the 400 terror suspects at Guantanamo.  Yes, the issues are different in many respects, but I still see a lack of proportion.  The drug war may be our greatest unnecessary loss of utility, showing up big not just in lost liberty, but also unnecessary pain from diseases, and more crime and violence.

As far as money problems, there is also a huge gap between America and the rest of the world.  I recently heard a progressive criticize Obama.  He started his comments by saying something like “If progressivism stands for anything, it stands for helping the middle class.”  What?!?!  Those sentiments are truly disgusting, repulsive.  The focus should be on hunger in America.  I hate to sound like an aging baby boomer, but at least in the 1960s the middle class was perceived by progressives as the enemy, unwilling to share their money and perks with poor black people.  That’s not entirely accurate either, but at least it’s not morally repulsive.

Here’s a quotation from one of Peter Hessler’s excellent books on China.  He’s conversing with a 33 year old professor in a God-forsaken college in western China during the year 1997:

But even amid these [traumatic modernizing] changes, Teacher Kong is not particularly worried . . . he is calm for the same reason that so many other Chinese are strangely placid in the midst of changes that seem overwhelming to outsider.  Quite simply, he has seen far worse.

“When I was a boy we didn’t have enough to eat,” say Teacher Kong.  “Especially in 1972 and 1973–those were very bad years.  Part of it was that we lived in a remote place where the land wasn’t very good, but also there were some problems associated with the Cultural Revolution–problems with production and agricultural methods.   It was a little better later in the 1970s, but still it wasn’t too good.  We never ate meat; I was always hungry.  Every day we ate rice gruel, and we only had a little bit of that.   Rarely did we have salt.  We ate weeds, wildflowers, pine needles–I’ve eaten all those things.

“My mother died when I was five, after she gave birth to my sister.  Of course, we didn’t have milk or anything like that to help the baby, who died as well.  I don’t remember that.  But at the age of ten my father died, which I do remember.  He got sick suddenly, a very bad cold, and in three days he was dead.

“After that things were even worse.  My grandfather wasn’t strong enough to work, and I was too young to do much, so my uncle had to support all of us.  At that time the Production Team in that village was very bad, and they weren’t of any help.  Later, things improved and they were able to assist us, but for many years it was terrible.”

All of Kong Ming’s early life took place in the mountains outside Fengdu [Sichuan], a town that nowadays has about 30,000 residents.  From his childhood home it took an hour by foot to reach the nearest road, which was three hours by rough bus ride from Fengdu, and as a result Kong Ming never saw the town until he was fourteen years old.

[As an aside, I won't defend the Chinese view of Tibet, which is that they are bringing modernization to a backward people.  But does the previous quotation help you understand why the Han people  might have a slightly different perspective on the relative merits of modernization and traditional culture, as compared to the average American or European?]

Now let’s start down through Dante’s seven circles of Hell:

1.  The US is much richer than Mexico.  So much so that millions of Mexicans will risk the horrors of human trafficking into the US to get crummy jobs picking tomatoes all day in the hot sun.

2.  China in 2011 is still considerably poorer than Mexico.  The Chinese take much greater risks to get here.

3.  China today is so much richer than China in 1997 that it’s like a different planet.  The changes (even in rural areas) are massive.

4.  The China of 1997 seemed like paradise compared to the China of the 1970s.  Throughout Hessler’s book, people keep talking about how horrible things were during that decade and how prosperous they are now (1997 in Sichuan!)

5.  The China of the 1970s was nowhere near as bad as during 1959-61, when 30 million starved to death.

It’s fine to worry about income inequality in the US.  I also worry about this issue.  But it’s important to keep in mind that there is much more to life than income inequality, and much more to the world than the US.  In the grand scheme of things, tinkering with government programs to help the poor, pitiful, beleaguered American middle class isn’t likely to make much difference, at least from a utilitarian perspective.  We need to broaden our outlook.

Unfortunately, Bryan Caplan’s open door policy is politically infeasible, but doing even 1/10th of what he asks for would be a huge boom to human welfare.  Where is the conservative belief in “liberty?”  (Insert Samuel Johnson quotation.)

And let’s not hear any more talk from progressives like Paul Krugman about trade barriers against Chinese workers.

PS.  I just noticed this interesting data on how our poor compare to the world’s poor.

PPS.  Peter Hessler’s MacArthur Award was very well-deserved.


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81 Responses to “Varieties of inequality”

  1. Gravatar of Will Will
    16. October 2011 at 17:28

    Two questions:

    -Just how many Marxist friends do you have? Surely they are not in your department?

    -Do you view Houellebecq as an authority on distribution? If he is correct, does that suggest that disparity in attractiveness is much greater here than in France?

    To speak more to the substance of the post, isn’t it the case that returns on many of the “innate” inequalities you list could be considered as economic rents? I don’t necessarily disagree with the thrust of the argument.

  2. Gravatar of Bob Murphy Bob Murphy
    16. October 2011 at 18:00

    Good post. I note an inequality in your intelligence when you post on monetary policy versus other economic topics. Or perhaps there’s inequality in my biases.

  3. Gravatar of John John
    16. October 2011 at 18:10

    Scott,

    I think it’s a little inconsistent how you said that most people who hold dollars are criminals and that you don’t care about their interests, then bemoan the 400,000 people in jail for drug related offenses. I think that criminals who trade in black market activities such as prostitution, drugs, and gambling are providing a legitimate service like any other business. People could say that they sell things that are bad for you like drugs, but I could argue that McDonald’s sells food that is bad for you. I also believe that drug dealers and pimps have the moral high ground on government. At least drug dealers and pimps don’t use force to make people accept their products.

    Otherwise, great post. Whenever you aren’t talking about monetary economics, I usually agree with you strongly.

  4. Gravatar of brian brian
    16. October 2011 at 18:25

    scott,

    While I agree with your indictment of the drug war, I would also argue that this aspect of overcriminalization has gotten so much attention by libertarians and social justice progressives while other aspects of our criminal code have not. For instance, copyright violation is a federal criminal offense even if the infringement is non-monetary whereas in the past it was a civil matter. So-called hate speech is now been criminalized on many campuses and localities. Speeding traps are used by cities to raise revenue rather than to ensure safe driving.

  5. Gravatar of Morgan Warstler Morgan Warstler
    16. October 2011 at 18:26

    Rawls solved this.

    Disparity means nothing.

    All that matters is if you were going to be the poorest and weakest, in which country would you get the most stuff.

    Since the US wins that race, all things being equal, being in the bottom three deciles here is better in real CONSUMPTION than doing it anywhere else, we win.

    We win = our moral obligation ends.

    We don’t compete against ourselves to determine what we owe the poorest and weakest, we compete against England, France, Sweden, etc.

  6. Gravatar of Morgan Warstler Morgan Warstler
    16. October 2011 at 18:30

    Taken further, since they are all peeling back their safety net, it alleviates our moral issue – we can do less for the poor too.

    In real practical policy terms, as other more comprehensive systems fail, we are receiving god’s (the market) tacit support of our approach.

    I’ve been wanting to explain more on Christianity = capitalism for some time, maybe I’ll get too!

  7. Gravatar of adlai adlai
    16. October 2011 at 18:33

    Hi Scott,

    Great read! Gives some nice perspective. I am troubled, however, by the “pain is pain” point.

    If pain is pain, and if the hypochondriac’s headache is just as real as the pain from a broken leg, then why isn’t the ‘pain’ perceived by the OWS protesters just as legitimate as the pain of starving Africans?

    I would dare to quote Galbraith to you; the “real” poverty of mankind is not the elegant torture of the spirit but rather the unedifying mortification of the flesh. IMO Poverty is not poverty, and pain is not pain, and I feel that this (small) point detracts overall from the perspective the article gives.

  8. Gravatar of Ram Ram
    16. October 2011 at 18:51

    The distribution of purchasing power is important to a utilitarian only to the extent that “goods” (that is, utility-conferring things) may be purchased. As far as I know, if you’re blind, there’s nothing you could buy that would make you less blind. You could buy a seeing-eye dog, or learn braille for a price. Those things certainly confer utility upon a blind person, but they don’t change the fact that they’re blind.

    The inequality between a blind person and a sighted person is not something public policy can fully address, at least not with today’s technology. More generally, inequalities which cannot be fully addressed by giving those on the losing end more money are difficult to address with public policy. If it’s possible for the government to make two people less unequal in some respect, it’s also possible for them to give the loser that money so he is able to do that for himself if he chooses to (forget about market failures for a second).

    The point is, to the extent that the government can do anything to remedy inequalities of any particular kind, it can do so at least as well by transferring wealth from those who won the natural lottery to those who lost it. So, maybe we should focus our attention, inasmuch as we’re designing public policy, on that. What’s true, of course, is that those who won some particular natural lottery are not necessarily wealthy in the sense of purchasing power. So to the extent that we really care about inequality in this more general sense, we shouldn’t just be taxing wealthier people, but also more attractive people, sighted people, healthier people, etc. And transferring not just to the poor, but to ugly people, blind people, sick people, etc. That’s maybe a more effective way of making your point.

  9. Gravatar of Matt Waters Matt Waters
    16. October 2011 at 19:25

    John,

    “I think it’s a little inconsistent how you said that most people who hold dollars are criminals”

    When has he ever said that? As far as I know, he’s always held that people are allowed to do what they want with their money. If the Fed does a bunch of quantitative easing, everyone holding longer-term Treasuries is free not to sell them to the Fed. And those holding excess reserves are free to not spend those reserve. Paying interest on excess reserves is not “criminal.” It’s just stupid.

    Anyway, I’m generally a hardened libertarian as far as inequality and that article on hunger in children still gave me pause. Progressives look at such issues in black-and-white terms though. “Children are starving! We should do something!” But behind the lack of money for food lies a complex web of social and government failures. For the social aspect, the broken homes that creates intergenerational poverty. For the government, the drug war as well as huge failings on the part of public inner-city schools, restrictive employment laws which keep the marginally employable out of a job and, indeed, huge failings of monetary policy.

    BTW, I’m also interested in the “Marxist friends.” I always hoped to know someone in my circle who was an honest-to-goodness Marxist. It’s too bad I’m not in academic circles, which is probably the only place you still find Marxists in America.

  10. Gravatar of anon/portly anon/portly
    16. October 2011 at 20:20

    “It’s too bad I’m not in academic circles, which is probably the only place you still find Marxists in America.”

    But Marxists are so dull – in the academic world overseas, you can still find actual Stalinists! And Scott Sumner’s grouchy American professors, while hugely entertaining in their own right, are no match for grouchy ex-pat professors.

  11. Gravatar of Andy Harless Andy Harless
    16. October 2011 at 20:24

    Dante’s Hell had 9 circles, not 7. (I once memorized the first half of the Inferno, so I can tell you a lot about the first 6 circles.)

    But I agree with the substantive point.

  12. Gravatar of Mercer Mercer
    16. October 2011 at 20:52

    “not hear any more talk from progressives like Paul Krugman about trade barriers against Chinese workers.”

    Why not? How many people in China benefit from subsidizing exports and how many Chinese people are having the living standards reduced? This is the system you think should not be criticized:

    “depends on the transfer of wealth from Chinese households to state-run banks, government-backed corporations and the affluent few who are well enough connected to benefit from the arrangement.”

    http://query.nytimes.com/gst/fullpage.html?res=9C0CEED81739F933A25753C1A9679D8B63&scp=14&sq=china&st=nyt&pagewanted=all

  13. Gravatar of Doc Merlin Doc Merlin
    16. October 2011 at 22:08

    “Almost every day I wonder where the outrage is over 400,000 drug users in jail. By comparison, over the past 5 years I’ve read dozens of stories about the 400 terror suspects at Guantanamo.”

    The terror suspects are a political football. The drug users are a source of rents.

  14. Gravatar of Cassander Cassander
    16. October 2011 at 22:39

    >Ram

    The inequality between a blind person and a sighted person is not something public policy can fully address, at least not with today’s technology.

    We certainly could, we could blind everyone. And lest you accuse me of being extreme, whenever I ask my liberal friends the question “Imagine a hypothetical policy that would reduce the income of the richest 1%, but leave no one else better off, would you be in favor of it?” They almost always say yes. When it comes to income, they really do share the view of the Handicapper General.

    http://en.wikipedia.org/wiki/Harrison_Bergeron

  15. Gravatar of Bee Bee
    17. October 2011 at 03:25

    So, the thesis is- they are poorer than us, so stop telling them to play by the rules

  16. Gravatar of Left Outside Left Outside
    17. October 2011 at 04:45

    Hmm…with respect to income/economic inequality et al. What about revealed preferences and local knowledge, stalwarts of libertarian thought?

    People act like they care a lot about income inequality but not the others.

    People feel like income inequality is still a big problem.

    You can say that people are only pretending to care about income inequality for Hansonesque reasons. You can say that they care about income inequality for reasons information asymmetry, but don’t you think these are the topics where Hayekian ideas of dispersed and tacit knowledge is most important?

    Yes, I agree that it is stupid to focus so heavily on non-third world problems, one you start thinking about them it is hard to think of anything else. But people behave very differently, and there are fairly solid libertarian epistemological reasons to care about income and health care inequality.

    I post recently covering the same ground about a recent post on a similar topic from David Henderson.

  17. Gravatar of q q
    17. October 2011 at 04:54

    1) people see income equality as a proxy for the other items in your list. many (not all) of these issues can be ameliorated with money, or at least there are substitutes that can be bought.

    2) people see one group of people doing well even as they stagnate and they are not, and so they are suspicious. a cursory inspection shows that many of these people (and i’m talking about the financial industry here) are guilty of, at the very least, unfair play. that makes people angry, and justifiably so.

    3) many leftists would target a number of your bullet points as well, and have, but haven’t got traction. for instance beauty. the feminist movement didn’t succeed in changing societal perceptions of beauty, but that wasn’t for want of trying.

  18. Gravatar of Ram Ram
    17. October 2011 at 05:05

    Cassander,

    I don’t favor leveling down, though I’m not your typical egalitarian, so I won’t speak for the broader school of thought. Maybe an intermediate view would be something like Parfit’s prioritarianism, according to which we’re utilitarians, but we put more weight on increasing the utility of those with less of it. Then there’s no leveling down, but the egalitarian impulse is very much there in the formulation.

  19. Gravatar of Scott Sumner Scott Sumner
    17. October 2011 at 05:50

    Will, I teach in a university, so obviously I frequently socialize with people with vaguely Marxist views–especially those in the liberal arts.

    Don’t understand your second point at all.

    Yes, they could be viewed as rents, in some cases.

    Bob, It’s your biases, my monetary posts are far more intelligent.

    John, I was thinking of tax evaders, not drug dealers, when I mentioned criminals. But it’s a fair point you make.

    Brian, I agree on those two points, but would still insist the drug war causes much more harm.

    Rawls is wrong, at I’d rather live somewhere where the poorest had $29,000, and most people had $100,000, then a place where the poorest had $30,000, and most people had $40,000.

    Regarding Christianity, I think of their views (the meek shall inherit the Earth) every time I read your posts on dirty hippies and losers.

    adlai, You said;

    “If pain is pain, and if the hypochondriac’s headache is just as real as the pain from a broken leg, then why isn’t the ‘pain’ perceived by the OWS protesters just as legitimate as the pain of starving Africans?”

    I don’t think they are claiming physical pain, just economic hardship. And I don’t think even they would claim to be as badly off as the poor in Africa. But I would never deny that some people may exaggerate their suffering. My point is that many, many people suffer great pain, even with no symptoms that show up on medical tests. It’s often triggered by things like stress, or it may be genetic.

    Ram, You said;

    “More generally, inequalities which cannot be fully addressed by giving those on the losing end more money are difficult to address with public policy.”

    I agree regarding the blind, and never meant to suggest otherwise. The post wasn’t really aimed at public policy. But I do think there are lots of public policies that can reduce inequality without redistribution. Legalizing drugs and immigration are two obvious examples. Ending occupational licensing laws is another.

    The post had other objectives. One was to put things in proportion. Another was to remind beautiful people that contempt for fat or nerdy people, is actually pretty similar to race, ethnic, and sexual preference prejudice (albeit not identical.)

    BTW, I favor redistribution to the poor, but not to the ugly (on pragmatic grounds.)

    Thanks Andy, I have a bad memory. I think I read a novel called the Seventh Circle once. That probably stuck in my mind.

    Mercer, You said;

    “Why not? How many people in China benefit from subsidizing exports and how many Chinese people are having the living standards reduced? This is the system you think should not be criticized:”

    I often criticize Chinese policy. I said we shouldn’t put on tariffs that would hurt millions of Chinese workers. We subsidize exports too, so that’s not the issue. In any case, the Chinese yuan policy is their concern, it doesn’t hurt the US.

    Doc Merlin, Good point.

    Cassander, Yes, it’s hard not to think of that story when this issue comes up.

    Bee, What rules is China breaking?

    Left Outside; You said;

    “People act like they care a lot about income inequality but not the others.”

    I don’t feel that way at all. When I was young, a teen from a poor family was respected much more than a nerdy teen (at least in my high school.) And as an adult I find other people have much more sympathy for someone with cancer, than someone with a low income like a maid.

    Most people would rather have a low income, than go to jail for selling drugs, or being blind, or mentally ill. So I don’t see your point.

    You said;

    “But people behave very differently, and there are fairly solid libertarian epistemological reasons to care about income and health care inequality.”

    And isn’t that precisely what I said in the post?

    q, The biggest drivers of utility are probably:

    1. personality
    2. Physical and mental health

    Money doesn’t affect 1, and only marginally affects number 2.

    Almost everyone I have ever met seems happy or unhappy mostly based on personality (as best I can tell, admittedly.)

  20. Gravatar of Scott Sumner on inequality | Ducks and Economics Scott Sumner on inequality | Ducks and Economics
    17. October 2011 at 05:58

    [...] of good stuff here: I probably care less about income inequality than the average progressive.  I think that’s [...]

  21. Gravatar of Ken Hirsh Ken Hirsh
    17. October 2011 at 06:13

    Great post. Where did you get the “400,000 drug users in jail” data? If you are suggesting that 400,000 people are in jail solely for using drugs, it’s news to me and I’d like to learn more. I had always assumed that drug-related prosecution was focused on sellers of drugs. (Not that selling should necessarily be illegal either!)

  22. Gravatar of John John
    17. October 2011 at 06:27

    Scott,

    I actually have respect for tax evaders as well. In my opinion, criminals are people who hurt other people. The United States government has now crossed the line where we kill our own citizens without trial, Anwar al-Malaki (I’m not sure if I’m getting his name right). Our government crossed the point of starting aggressive wars and being an overall bully on the world stage over ten years ago. I think there is something very heroic about people who refuse to hand over their money to support such horrible causes. Especially considering the time they have to spend in prison as a result; they have much less chance of getting away with evading taxes than selling drugs.

    Here’s my list of my favorite non-criminal criminals

    1. drug users
    2. tax evaders
    3. bookies
    4. prostitutes
    5. drug dealers
    2.

  23. Gravatar of Morgan Warstler Morgan Warstler
    17. October 2011 at 06:31

    Scott, that doesn’t happen. I’ve always thought that if it did, Rawls wouldn’t have dreamed up his TOJ.

    This was the graph I took away from him:

    http://twitpic.com/18krwv

    The whole point was to forget disparity and focus on growth. The fun observation, was that when you show the poor this graph, they always choose correctly. But the folks int he middle despise the heights of the top.

  24. Gravatar of Scott Sumner Scott Sumner
    17. October 2011 at 07:03

    Ken, Many drug users sell drugs to get money for their habit. In any case, consuming, selling, it’s all part of the same process.

    John, I have some sympathy for the argument, but in the end I think people need to pay their taxes in a democracy.

    I agree that we should legalize those victimless crimes.

    Morgan, Good point, but then why not just advocate utilitarianism–what does Rawls add? Where he deviates from utilitarianism, he’s wrong.

  25. Gravatar of mbk mbk
    17. October 2011 at 07:13

    Scott, I’m completely with you on this one.

    There is one additional tangent which most people overlook – the other name of “inequality” is, of course, “diversity”. Conversely, equality in something means homogeneity in that thing.

    Once past basic survival issues, including jail / liberty, the perceived social problems from “inequality” mainly come from the perception that every parameter you mentioned can be measured and sorted numerically from “best” to “worst”, just as you can do with money. Of course once you start doing this, the world being a diverse place, it now becomes an unequal place, with lots of people being unhappy about their perceived position in the ranking of their own making.

    That being said, I used to have little sympathy for the concept of “relative” poverty. I now have a lot more understanding for the concept. What really matters to people is not money or consumption per se but the social position it expresses. You’re right on “engineering” grounds with your 29,000 / 100,000 vs 30,000 / 40,000. But that’s not what people generally think.

    Besides personality and health, the largest driver of utility / happiness is probably social position. And the perceived ranking in that social position really is what gets people upset. Money is usually a proxy for it but it does not have to be, as one can see in respected an not so well paid jobs. You could do a lot for happiness simply by getting people off the habit of ranking social position by money. The left is the worst offender here since it seems to rank social position and desirability only by money. This is implied by its insistence on monetary equality at the exclusion of almost everything else.

  26. Gravatar of Morgan Warstler Morgan Warstler
    17. October 2011 at 07:33

    1. utilitarians are willing to sacrifice the guys at the bottom.

    2. I don’t like weighing hedons and dolors.

    There is a time scale epistemology problem.

    Say we know between us that in in twenty years, the greatest outcome for the greatest number is radical libertarian policies.

    But between here and there we will have snapshots in time where the greatest good is not yet being achieved.

    You are stymied when we are going through hell.

    Rawls says not worry, we’ll use liberals basic presupposition against them.

    We’ll just keep measuring our bottom dwellers and so as long as they have more than the bottom dwellers everywhere else, we are the most just – so when we’re gong through hell, keep going.

  27. Gravatar of mobile mobile
    17. October 2011 at 07:59

    Great post. Reminds me a lot of one of my favorite Robin Hanson posts.

    I find it striking that these discussions focus almost entirely on the smallest of these seven kinds of inequality:

    Inequality across species

    Inequality across the eras of human history

    Non-financial inequality, such as of popularity, respect, beauty, sex, kids

    Income inequality between the nations of a world

    Income inequality between the families of a nation

    Income inequality between the siblings of a family

    Income inequality between the days of a person’s life

  28. Gravatar of Mike C Mike C
    17. October 2011 at 08:06

    Very important post about a very important topic. There is a great disconnect between the idea of “income”, and the idea of “standard of living”.

    Personally, I could not give a hoot about income inequality. I don’t care if the rich are getting richer, as long as the poor are getting richer too. While in nominal figures the 99% may have stagnated wage wise, I’d like to find anyone who would say “I prefer to live in the 1960s than now”. I’d like to think the poor today live a much “richer” lifestyle than they did 20 years ago.

    This doesn’t mean I don’t want to help the poor and that they are fine. Not the case, but I think the connection must be drawn to standard of living whenever you talk about income inequality.

  29. Gravatar of MikeDC MikeDC
    17. October 2011 at 08:55

    Why do you dismiss inequality of liberty when you put on your economist hat?

    The egregious poverty and deprivations examples you cite don’t ultimately stem from income inequality but from restrictions on liberty (regardless of income level).

    The Chinese were (largely) starving because they were not at liberty to work in productive ways under the communists. Their poverty was a result of depriving them of liberty. Pre-Communist China wasn’t wealthy, of course, but it was generally not subject to mass famine and politically driven genocide.

    Caring about liberty is probably the best way an economist can care about reducing the most egregious poverty (and thus income inequality) we see.

  30. Gravatar of Benjamin Cole Benjamin Cole
    17. October 2011 at 09:19

    Interesting observations.

  31. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2011 at 09:25

    The horrors that were visited on the Chinese post WWII were courtesy of American Progressives; some of them famous Harvard economists (Lauchlin Currie and Harry Dexter White). Had George C. Marshall kept his mouth shut, Mao would have been destroyed by Chiang’s forces in 1946 (see ‘Mao, the Untold Story’) So, there have been real costs to the dream of mitigating inequality that I’m guessing 99% of the Occupy Wall Streeters are completely ignorant of.

    Of course, Senator Joe McCarthy was well aware of what had happened in China, and is today vilified for his prescience. Even here.

    Btw, the movie version of ‘Harrison Bergeron’ is much better than Vonnegut’s short story.

  32. Gravatar of Ritwik Ritwik
    17. October 2011 at 09:54

    Great post. And I couldn’t help noticing that Bob Murphy probably fancies himself as the Rothbard to your Friedman.

  33. Gravatar of Brian K Brian K
    17. October 2011 at 10:18

    Doesn’t the data you link to at the Washington Post suffer from using income instead of consumption? Don’t you think that the bottom 2% of Americans would actually be much higher if they did it on consumption?

  34. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2011 at 11:10

    Paul Krugman , often in error, never in doubt about his own self worth:

    http://www.nytimes.com/2011/10/17/opinion/krugman-wall-street-loses-its-immunity.html?_r=2&ref=todayspaper

    No cliche goes unmined, concluding that we should all cut off our noses to spite our faces.

  35. Gravatar of Becky Hargrove Becky Hargrove
    17. October 2011 at 12:09

    Scott, glad you changed your mind about a ‘silly’ post. I have canceled plenty of ‘silly’ comments but one got away from me on another blog this week, where I waxed on about how money points the way to our dreams and desires even if it doesn’t take us there.

    Maximizing utility instead of income equality: for me this is about getting at core human psychological needs for ownership/possession/economic participation. All these identity triggers in our mind (that absolutely make who we are) take place irrespective of money and there are ways to create environments which reinforce that.

    Stop the Drug War before we lose Mexico, amongst numerous other factors! Who feels safe going there today and indeed this is just the limited middle class response.

    Can you point me to some of the posts about reducing consumption inequality as I was offline for nearly a year. Will close by Yglesias, “What’s needed is to broaden the number of people with access to better lives across multiple dimensions.” When people are finally allowed to validate their skills for and with one another, the universe we all deserve is waiting on the other side.

  36. Gravatar of MikeDC MikeDC
    17. October 2011 at 12:13

    McCarthy isn’t vilified for seeing the horrors of Communism in China, but for seeing everyone who disagreed with him as a communist and acting like, basically, a Communist when it came to politics.

  37. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2011 at 12:25

    Mike, could you provide me with any specific names of people McCarthy unfairly treated?

  38. Gravatar of mtraven mtraven
    17. October 2011 at 12:29

    Interesting article, but I’ll quarrel with your introduction, which appears to imply that because the bottom 99% of present-day Americans are pretty well-off compared to life in communist China, they should shut up.

    Imagine if I broke into your house and made off with all your possessions except a can of bean soup. Then I get my tame apologist to tell you not to complain, because some people in another country and another time don’t even have bean soup. Would you follow their advice?

  39. Gravatar of Me Me
    17. October 2011 at 12:33

    Scott said:

    “Rawls is wrong, at I’d rather live somewhere where the poorest had $29,000, and most people had $100,000, then a place where the poorest had $30,000, and most people had $40,000.”

    Exactly! And for those who claim to prefer the latter, you reveal your preference by remaining in the U.S. For anyone claiming to really prefer the latter, Mexico and most other developing nations are more fitting places in which you can live and fulfill your dream.

  40. Gravatar of Indy Indy
    17. October 2011 at 14:22

    There’s also inequality of envy. I suppose that’s also partially “personality”, but differential levels of enviousness explains more than people like to admit.

  41. Gravatar of MikeDC MikeDC
    17. October 2011 at 14:47

    OK, I apologize for taking this conversation further down the rabbit-hole of the history of McCarthyism, but the most obvious problem with McCarthy is that he tarnished the reputations of, cast suspicion on, and caused harm to lots of specific people without specifically naming them.

    Which is, of course, exactly the point I was getting at when I said his tactics were generally the same as those used by Communists to take power.

  42. Gravatar of Gordon Gordon
    17. October 2011 at 15:38

    Scott, there is evidence from evolutionary biology that people are concerned over relative disparities in social status. To the extent this is true, it makes it difficult for a utilitarian to focus only on absolute differences. You can argue that people *should* not feel badly about merely relative differences, but, if they do, it’s got to go into the utility function.

    Morgan, I don’t understand your comments about Rawls. Rawls means for his Difference Principle to apply within a society, not between societies. Thus, from a global perspective, Rawls, at least the Rawls of TOJ, is concerned only about relative inequality. (Yes, the argument in The Law of Peoples puts some obligations on wealthy societies, but it does not impose an inter-societal DP on them.) You might argue that national borders are morally arbitrary, but that was not Rawls’s own view.

  43. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2011 at 15:57

    ‘…the most obvious problem with McCarthy is that he tarnished the reputations of, cast suspicion on, and caused harm to lots of specific people without specifically naming them.’

    No, no, I want YOU to name them so I can see if you have a clue what you’re saying.

  44. Gravatar of MikeDC MikeDC
    17. October 2011 at 17:55

    “No, no, I want YOU to name them so I can see if you have a clue what you’re saying.”

    The very line of questioning suggests you can’t make that determination.

    But is every employee of the State Department from Feb 1950 on, everyone in the Army Signal Corps from 1953 on, and every employee in the Defense industry from June 1954 specific enough? Unless you think every one of them was both a communist and a traitor? Type I errors are bad.

    Even if you don’t think they’re bad, his handiwork and that of his group of witch hunters led to a number of leading scientific minds fleeing the country. Probably the most unfortunate of these would be Qian Xuesen (since we’re on the subject of China), who after being deprived of his livelihood and held under house arrest for five years, didn’t have much faith left in the American government and went on back to China to father their missile program.

    Can I name myself as an American who’s harmed by the introduction of politicians proffering doctored photos and phony documents in the information age?

    You know who else suffered as a result of McCarthy? Anyone since who’s raised legitimate concerns about subversive and traitorous behavior. Largely because of that buffoon, even serious concerns are now dismissed out of hand, and those who hold them are marginalized. Likewise, do you know who’s helped? Anyone doing something crummy who get’s called on it can now garner at least some support by reflexively appealing to the spectre of McCarthyism.

    All in all, I don’t get the contrarian vibe that folks sometimes get that impels them to defend patently indefensible positions. You’re going to get nowhere but out in left field defending terrible people who terribly overreached and made things worse. And Joe McCarthy almost certainly makes the list of bad people in our history.

  45. Gravatar of ssumner ssumner
    17. October 2011 at 19:07

    mbk, I know all about the social position literature, and agree on one level. But it doesn’t have the policy implications they assume. People greatly prefer the 29,000/100,000 country; look where the immigrants want to go–highly unequal America.

    Morgan, Utilitarianism should take the time element into account.

    Mobile Robin is a much deeper thinker than I am.

    Mike, Good points.

    MikeDC, I didn’t mean to deny the connection, just to indicate that economists tend to overlook liberty, except to the extent it impacts GDP.

    Patrick, Yes, many progressives supported Mao. I’m old enough to remember.

    Yes, I saw that film years ago.

    Brian, Very good point, I forgot about that bias.

    Ritwik, Nice analogy (and overly flattering to me.)

    Patrick, Yes, there are flaws in our financial system, but Krugman doesn’t seem to understand that the root cause of our problems is government-created moral hazard, bailouts, and bad monetary policy.

    Becky, Good comments, I don’t know that I have many posts addressing inequality, but when I do discuss my ideal system I mention things like wage subsidies for low income workers (Morgan’s idea too), school vouchers, HSAs plus universal catastrophic health insurance, progressive payroll taxes, etc.

    The conservative side of me wants to abolish incomes taxes, public schools, health care regulation, minimum wages, etc.

    mtravem I’m not saying the 99% are pretty well off compared to China, I’m saying they are FABULOUSLY RICH.

    more to come. . .

  46. Gravatar of KRG KRG
    17. October 2011 at 19:44

    ““If progressivism stands for anything, it stands for helping the middle class.” What?!?! Those sentiments are truly disgusting, repulsive. ”

    I think you miss here the unstated assumption that the middle class should be the minimum standard; there is no excuse, in our economy, for forcing anyone to live in an impoverished class. Coming out of the depression, we made an active effort to afford unskilled workers a middle class income, and the rest of the economy grew more quickly because most people, top to bottom, had disposable income in invest in consumption or future growth as they saw fit. So Progressivism is, in modern rems about the middle class, because the middle class should be the bottom rung; no one should be on the ground and completely unable to reach the ladder anymore.

    As for wealth disparity, it matters, because wealth translates to economic control when 1% owns a controlling share of available assets, you have a de facto planned economy, because the market now bends to their desires and their profit at the expense of everyone else, unless they actively prevent it from doing so. What’s more, disparity actually limits the amount of wealth available to those at the top in the long term, because impoverished people represent a drag on the economy as a whole as they have to take on debt to meet their survival needs. Pay the people at the bottom enough to give them the security of a middle class economic position and their use of disposable income drives more wealth. The people at the top actually get wealthier, they just have to deal with being less far ahead of everyone else in absolute terms and a slightly smaller relative share due to more being available to go around.

  47. Gravatar of KRG KRG
    17. October 2011 at 19:50

    Also, pointing to differences in standards of living due to technological innovation and efficient production is like telling a slave that he should stop complaining because of how fine his golden chains are and how rich the scraps are that he gets from the master’s table. Yes there are people that have it worse off in every respect elsewhere, but that doesn’t justify keeping people at sub-middle class incomes here, such that they’re chained by debt and insecurity, even if the trappings of that immobilized class are nicer here.

  48. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2011 at 20:13

    As I suspected, Mike, you’re merely blowing smoke. McCarthy (nor any else) never accused all State and Defense Dept employees as traitors. The ones that were investigated by McCarthy were, as far as the records are available, either communists or sympathizers who did tremendous damage to both China and the U.S. Unless you think the Korean and Viet Nam wars were no great inconveniences.

    The one name you could muster, Qian Xuesen, had no connection to McCarthy whatsoever. His problems began BEFORE 1950 with the FBI discovering his name in documents suggesting he was a communist. When he tried to return to Mao’s China he was detained, because he possessed scientific knowledge gained in America that would have been useful to Mao. Not exactly the victim of a witch hunt.

    As Tom Wolfe once pointed out, indignation doesn’t cut it as a substitute for facts.

  49. Gravatar of Morgan Warstler Morgan Warstler
    17. October 2011 at 20:33

    KRG,

    I’ll buy your argument when poor people rise up and stop shopping at Wal-Mat.

    ALL people like cheap stuff. ALL people have a better life today in America than ANY American had 50 years ago. And 95% have better lives than anyone had 25 years ago.

  50. Gravatar of Patrick Patrick
    17. October 2011 at 20:36

    Scott, you might be over thinking this a little … I get something very different from the 99%. Sure, the OWS thing is quite diverse, but mostly I get a that they (we?) are pissed because a very few, very rich bankers/financiers went bankrupts and in many cases probably need to be prosecuted, but instead were handed blank checks, and a get out of jail free cards, while the rest of us suffer from the collateral damage of their actions. In 2008/2009 they said it necessary to save the world … but 3 going on 4 years later the world still ain’t saved. And judging by the events in Europe it looks like it’s going to need a whole lot more saving in the near future.

    Put another way: if you had a business, defrauded people, then went bust, the bailiffs would take your stuff and the Feds would put you in jail. The same rules should apply to everyone, including bankers and financiers.

    Whether many of the 99% realize it or not, it sure sounds to me like people really just want capitalism and the rule of law reinstated. I would think that conservatives would be down with that.

  51. Gravatar of Peter Peter
    17. October 2011 at 23:08

    “If progressivism stands for anything, it stands for helping the middle class.”

    They are obviously stealing the trickle down argument. Give money to the middle class and it will trickle down to the poor.

  52. Gravatar of Becky Hargrove Becky Hargrove
    18. October 2011 at 03:48

    KRG,
    I once had a rich landlady with decadent furniture who nonetheless went to the local county food bank for their cheese, “just because”.

    When the middle class is the new bottom we will also all live in Lake Wobegone where all the schoolkids are “above average”. Plus, the next generation will look around and go, “what are we doing at the bottom?”

    It’s not about rich and poor, but about having the ability to create the environment we desire. Don’t forget the spiritual choice of having few possessions, we just do not have society-wide ways to honor that in the present. We have the capacity to create neighborhoods with tiny little dwellings that are absolutely beautiful and respectful.

    The things people want most as they age are the products of the mind, which have little to do with scarcity or craftsmanship, but a lot to do with resources that exist beyond money.

  53. Gravatar of Some Links Some Links
    18. October 2011 at 04:09

    [...] Speaking of Bryan, I thank him for alerting me to this splendid post by Scott Sumner. [...]

  54. Gravatar of Daniel Earwicker Daniel Earwicker
    18. October 2011 at 04:20

    I think its a conflation too far when you put together “income/wealth/consumption”.

    If I have a billion dollars instead of a thousand dollars, am I really capable of consuming a million times as much value?

    I still only have the one mouth, and 24 hours in the day, etc. Yes, I can *spend* a million times as much, but in return for what?

    Surely inequality of income gives a seriously distorted picture of inequality of consumption. The relationship between money income and value consumption is not remotely linear.

    This is why we should be suspicious of claims that “1% of the population have 99% of the wealth” or whatever the current mangled soundbite is. They may have 99% of the money, but for them to have 99% of the wealth is clearly impossible. When concentrated in large amounts, money units shrink in value.

  55. Gravatar of Scott Sumner Scott Sumner
    18. October 2011 at 04:48

    Me, Yes, and I find that most immigrants prefer to come to the US over Europe as well.

    Indy, Good point.

    Gordon, You said;

    “Scott, there is evidence from evolutionary biology that people are concerned over relative disparities in social status. To the extent this is true, it makes it difficult for a utilitarian to focus only on absolute differences. You can argue that people *should* not feel badly about merely relative differences, but, if they do, it’s got to go into the utility function.”

    I agree, and I hope nothing I wrote was inconsistent with that view. I was merely tryin to put things into prospective. I rarely hear progressives say “we’ve got a big envy problem that we need to address.” I’d also point out that those studies don’t really have much in the way of policy implications, as they don’t suggest that income redistribution reduces envy. Envy may be based on pecking order, which doesn’t generally change with income redistribution. Or it may be local, not national. There are many issues to address before drawing policy conclusions from envy.

    KRG, First of all, it seems like you agree with me–progressives should focus on helping the poor, not the middle class. That was exactly my point. And that’s why I criticized the guy who said they should focus on helping the middle class.

    Second, if you think there was some sort of golden age after WWII, where most unskilled workers were receiving middle class wages, you are mistaken. Unskilled workers had considerably lower living standards than today. Millions in the South lived in what we would now call “shacks” without even indoor plumbing. (Some still do, but far fewer.) Some unskilled workers got middle class wages where they had strong unions, but only a minority of them.

    The wealth inequality data in America is so inaccurate as to be not even worth discussing. I certainly don’t think it leads to a planned economy. To the extent our economy is planned, it is due to things like occupational licensing laws, government-owned schools, FDIC, and over-regulated health care, not wealth concentration.

    I favor wage subsidies for low income workers. But don’t delude yourself, 16 year old kids working low wage jobs at MacDonalds will never receive the sort of middle class income required to raise a family. Not even in a progressive’s utopia. To suggest otherwise is to engage in wishful thinking.

    Also recall that post-1980 America is in many ways more humane to the poor. The most successful poverty program in US history is immigration. We’ve raised millions above poverty by allowing them to enter the US, in far larger numbers than during the so-called golden age of 1945-65, when we had a racist policy toward the poor of other countries. That’s been far more important than the decline in real wages for low skilled workers.

    You said;

    “Also, pointing to differences in standards of living due to technological innovation and efficient production is like telling a slave that he should stop complaining because of how fine his golden chains are and how rich the scraps are that he gets from the master’s table. Yes there are people that have it worse off in every respect elsewhere, but that doesn’t justify keeping people at sub-middle class incomes here, such that they’re chained by debt and insecurity, even if the trappings of that immobilized class are nicer here.”

    Hmmm, I’m not sure how the slaves would like their predicament compared to non-slave middle class Americans of the 21st century. Look, I understand that people get used to whatever living standard they have. If their neighbor has 10% more they’ll always be dissatisfied. Even if they have 6 figure incomes. But it’s still morally grotesque to make the comparison you just made. It’s an insult to all those who actually did suffer through slavery.

    There are debt problems, mostly due to the Fed’s insane idea of running a contractionary monetary policy during a huge debt crisis.

  56. Gravatar of Scott Sumner Scott Sumner
    18. October 2011 at 05:00

    Patrick, A few comments:

    1. I’m also not happy with the bankers, but focus on this less than most people because.

    2. They are only a few dozen of the 3 million in the top 1%.

    3. The bailout money was repaid.

    4. Some big banks didn’t even want the bailout, but were forced to take it by the government.

    5. The auto bailout was far more outrageous

    6. The big banks that behaved poorly mostly lost a ton of money, even after the bailouts.

    7. The poor decisions by the banks is not the cause of the recession, tight money is.

    8. The little banks did much more harm in aggregate.

    9. Believe me, the Justice Department of the Obama Administration would love to put some of these jerks in jail. The problem is that it’s not at all clear that they violated the law. Most of them held toxic MBSs on their own books, and lost a ton of money. That makes it hard to prove intent on those MBSs they sold to others.

    None of that means your wrong, it’s just that I don’t see this public policy failure as reason to overturn my views on capitalism. Indeed it makes me favor capitalism all the more.

    Daniel, I agree, I’ve often argued that it’s consumption inequality that matters.

  57. Gravatar of Worth repeating (from TheMoneyIllusion Blog) « njordat Worth repeating (from TheMoneyIllusion Blog) « njordat
    18. October 2011 at 05:03

    [...] http://www.themoneyillusion.com/?p=10259 [...]

  58. Gravatar of Brian K Brian K
    18. October 2011 at 05:07

    Are there any worthwhile studies out there to support or shoot down KRG’s conjecture about the American economy taking off in the fifties because the average blue collar worker was getting a “middle class” wage? I’ve heard the argument multiple times but have never seen proof either way.

  59. Gravatar of Global inequality and the "99%" « Darin R. McClure – The Good Life In San Clemente Global inequality and the "99%" « Darin R. McClure – The Good Life In San Clemente
    18. October 2011 at 06:15

    [...] Sumner has a superb piece up today, on the different kinds of [...]

  60. Gravatar of Paul Paul
    18. October 2011 at 08:07

    just a great post… that you don’t lose sight of the ‘we are all human’ aspect of utility maximization in your economic analysis is greatly appreciated, i feel bad even commenting on your posts (until a few days later) because the discourse in this section is at such a high level that more popular (no offense) blogs like krugmans can’t see.

    I was wondering if you could do a post sometime with your thoughts on the ‘money in politics’. To me it seems obvious that giving anyone too much control over the ‘rules making’ process will lead to asymmetries and should be shouted down constantly and consistently. However, since progressives (like krugman or stiglitz) never really flush it out formally or wonkishly (and would seem to be missing a great opportunity to try and focus the OWS rage on the issue) I feel that I must be off base.

    anyways, no need to post this as a response, just wanted to thank you for the blog

  61. Gravatar of lxm lxm
    18. October 2011 at 09:40

    1. Economic inequality in America is comparable to or worse now than in the late 1920s.
    2. The fact that poor folks in America are fabulously wealthy compared to poor folks in other corners of the world is irrelevant to the question of inequality in America.
    3. The better questions to ask are: Does inequality lead to worse health outcomes for the less well off? and Does inequality lead to worse economic outcomes for the society as a whole? To put the second question slightly differently: Does a vibrant middle class lead to more innovation and overall wealth than a society dominated by a rich few? Finally have policy decisions led to this unequal outcome? If so, which ones and how should they be changed?

    I don’t know the answers to these questions, but dismissing the question of inequality (Look at how desperate they are everywhere else!) begs the question.

  62. Gravatar of MikeDC MikeDC
    18. October 2011 at 10:19

    As I suspected, Mike, you’re merely blowing smoke. McCarthy (nor any else) never accused all State and Defense Dept employees as traitors. The ones that were investigated by McCarthy were, as far as the records are available, either communists or sympathizers who did tremendous damage to both China and the U.S. Unless you think the Korean and Viet Nam wars were no great inconveniences.

    1. Every single one of them?

    2. The Vietnam War was a result of the actions of those investigated by McCarthy? That is, communists and sympathizers within the US government, after being investigated by McCarthy, led to tremendous damage to the US by leading us to armed conflict against communist governments?

    Yes, that’s what you just said, after wasting time with accusations of people blowing smoke.

    The one name you could muster, Qian Xuesen, had no connection to McCarthy whatsoever. His problems began BEFORE 1950 with the FBI discovering his name in documents suggesting he was a communist.

    It’s the relevant name to muster, not the only possible one. If you don’t see how a problem that appeared and seemed resolved before 1950 suddenly became a problem again the moment after McCarthy started railing about it, then I think you’re very credulous indeed.

    Which, again, is really the whole point regarding McCarthy, as I’ve endeavored to point out and you’ve endeavored to dance around. It’s not that there wasn’t legitimate reason to question or be concerned about Communist spys in the late 1940s and early 1950s. Indeed there was.

    Rather, the problem is McCarthy did a terrible, buffoonish, and indefensible bunch of stuff in pursuit of a legitimate goal. To the extent that he was certainly counterproductive to that goal.

    Much like you in this conversation, I might add.

  63. Gravatar of MikeDC MikeDC
    18. October 2011 at 10:21

    The fact that poor folks in America are fabulously wealthy compared to poor folks in other corners of the world is irrelevant to the question of inequality in America.

    But very relevant to the importance we should place on the question of inequality in America.

  64. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    18. October 2011 at 13:25

    ‘Every single one of them?’

    That gets you back to square one, Mike. I asked you to give me the names of any who were unfairly treated by Joe McCarthy. You haven’t done it yet, after several tries.

    ‘The Vietnam War was a result of the actions of those investigated by McCarthy?’

    Without China falling to the communists there would have been no Korean War, and almost certainly, no necessity for America to send troops to Viet Nam. China wouldn’t have fallen without the assistance of John Stewart Service, Sol Adler, Frank Coe, Harry Dexter White et al. Service (mentioned by name in the 1950 Wheeling speech) was still at State even though he’d been arrested on espionage charges in 1945.

    ‘If you don’t see how a problem that appeared and seemed resolved before 1950 …’

    Forgetting about the Korean War already? It started a few months after McCarthy made his first speech denouncing Dean Acheson and Truman’s foreign policy. You have a peculiar concept of a problem being resolved.

  65. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    18. October 2011 at 14:14

    A little more on Qian Xuesen, Mike’s favorite martyr; it does seem a little suspicious that a man married to a daughter of a military adviser to Chiang Kai-Shek would want to return to China AFTER Mao drove Chiang out to Formosa, doesn’t it. Most Nationalists were very much wanting to go in the opposite direction; as far away from Mao as possible.

    Qian, however was welcomed back as a hero, after he was exchanged for 11 captured American pilots (that pesky Korean War!). He was also named to the Central Committee of the Communist Party of China. Again, rather suggestive of his sympathies. As the Telegraph put it:

    http://www.telegraph.co.uk/news/obituaries/technology-obituaries/6630578/Qian-Xuesen.html

    ‘A dark stain was left on his record during the Great Leap Forward of 1958, when he lent his scientific authority to agricultural theories leading to a famine that killed tens of millions. After calculating the potential of crops to absorb solar energy, Qian wrote in the People’s Daily that wheat yields could rise twentyfold.
    H
    ‘His loyalty to the party left him untouched during the Cultural Revolution, although his satellite programme was downgraded and one of his senior scientists committed suicide after being purged.’

    Maybe McCarthy missed one.

  66. Gravatar of MikeDC MikeDC
    18. October 2011 at 14:35

    I don’t find it odd that someone would change their loyalties after being stripped of their livelihood and imprisoned for several years byyttriumr adoptive country.

    I also don’t find it odd that Mao would overlook a scientific genious’ past political opposition if he appeared indispensable to his national defense.

  67. Gravatar of Sumner on Inequality « Modeled Behavior Sumner on Inequality « Modeled Behavior
    18. October 2011 at 16:02

    [...] Sumner lists some sources of inequality. He says I’d like to make some observations about inequality.  First as a person, then as an [...]

  68. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    18. October 2011 at 18:28

    Qian wasn’t stripped of his livelihood, he was denied a security clearance. He couldn’t work on secret govt. projects but he could stiil work, and Caltech would have kept him on. Nor was his only alternative Communist China, Formosa was another place open to him, obviously.

    Is it really likely that he just rolled the dice with not only his own life but also his wife’s?

    But, of course, McCarthy had nothing to do with it. And since you have again failed to produce an actual victim of McCarthy, I think the debate is over.

  69. Gravatar of Patrick Patrick
    18. October 2011 at 18:36

    Scott, just one point on the money having been repaid:

    How many bankrupted and ruined small business owners or foreclosed homeowners could have saved themselves AND repaid the money had a bailout been extended to them? But of course it wasn’t. And that’s the problem. The rules for the bankers at least just aren’t the same.

  70. Gravatar of A Few Random Morning Links … | The Pretense of Knowledge A Few Random Morning Links … | The Pretense of Knowledge
    19. October 2011 at 00:06

    [...] Varieties of inequality [...]

  71. Gravatar of Laurel L. Russwurm Laurel L. Russwurm
    19. October 2011 at 09:13

    Dear Mr. Sumner:

    Dismissing something bad because there is something worse somewhere else in the world has long been a rationale for doing nothing.

    The chief difference between incarcerated drug users and incarcerated terror suspects is that evidence and actual court proceedings have been afforded the one, while a simple j’accuse is all that is needed for the latter. And no matter how specious the law or the charges, the former were lucky enough to have had their day in court before being convicted, and are then held in relatively humane conditions. The latter aren’t actually convicted of anything, but are suspects being held in the American version of the Chateau D’If, and word is that the conditions and treatment are anything but humane.

    I’m no economist, but using the example of a country where the poorest have $29,000 and the richest have $100,000 as a representation of the American divide is absurd. It doesn’t come close, and I submit there wouldn’t be an “Occupy Wall Street” protest if the actual divide was that reasonable.

    The richest employment earnings range from $144,000,000 to a ranking of a single American earning $10,890 as living in poverty, although realistically we know there are homeless people with much less.
    http://blogs.reuters.com/columns/2011/07/08/ceos-pay-package-hits-brazen-new-high-and-low/

    As the comment from KRG suggests, “…no one should be on the ground and completely unable to reach the ladder anymore” yet government policies have been pushing more and more people into that position.

    Comparing the 60′s and now? The economic divide was not nearly as ridiculous. One parent could support a family, even an unskilled worker, and buy a home. Today, a great many (perhaps even most?) 2 parent families dare not dream of owning a home, while Bank of America bulldozes the homes they foreclosed, but could not sell. Back in the 60′s, there was hope.

    Your post implies meritocracy has something to do with the ever widening economic divide. Most of the 1% are far removed from anything resembling meritocracy. The 1% is simply a new kind of aristocracy exercising its wealth to impose a modern form of feudalism on supposed democratic nations.

  72. Gravatar of anon/portly anon/portly
    19. October 2011 at 10:17

    Here is a link SS might find interesting; a review of a new play about the horror of Chinese sweatshop labor, supposedly based on personal research. “What he saw shocked him to the core….”

    http://www.artsjournal.com/aboutlastnight/2011/10/tt_fascist_thugs_and_useful_id.html

  73. Gravatar of Gart Valenc Gart Valenc
    19. October 2011 at 13:11

    Scott,

    Talking of inequalities, there is a gross inequality in the way Prohibition and the War on Drugs is approached depending on what side of the drugs market fence you happen to be: supply or demand.

    It never ceases to amaze me that some quarters of the anti-prohibitionist movement in drug consuming countries, both in the US and Europe, tend to focus exclusively on the demand/consumption side of the equation with total disregard for the supply side.

    We may think that Prohibition is having seriously detrimental effects on consuming countries (and they are serious, indeed), but they pale into insignificance when compared to the extraordinary price drug producing countries like Mexico, Colombia, and many other countries around the world are paying.

    In my view, what makes legalisation and regulation such critical an issue is the irrationality and devastating effects of Prohibition and the so-called War on Drugs. Therefore, the call for legalisation and regulation should be independent of what type of drugs we deem more or less harmful. I say, let’s legalise and regulate cannabis, by all means, but the same goes for other drugs, both soft and hard. Moreover, let’s legalise and regulate the consumption of all drugs, but the same goes for their production and distribution.

    If we want to fight effectively against Prohibition and the War on Drugs one has to look at the whole picture, and not just at consumption. After all, what good is it to legalise the demand while the supply is left to continue prospering in its murderous business?

  74. Gravatar of The conscience of a neo-liberal: Poverty in China The conscience of a neo-liberal: Poverty in China
    19. October 2011 at 14:21

    [...] Sumner on inequality (significant portion on China is chopped out, read the whole thing): As far as money problems, [...]

  75. Gravatar of James Hanley James Hanley
    19. October 2011 at 17:12

    @Patrick Sullivan,
    China wouldn’t have fallen without the assistance of John Stewart Service, Sol Adler, Frank Coe, Harry Dexter White et al.

    What a load of horseshit! The KMT lost to Mao’s communists because of some American sympathizers in government? That’s a hell of a lot of hubris about American power. The real reason the KMT lost was because they had less support among the populace, as a result of treating people even worse during the civil war than the communists did.

    But I suppose the in-country actions and preferences of the 800 or so million inhabitants pale in comparison to what a handful of foreign bureaucrats did, eh?

  76. Gravatar of Scott Sumner Scott Sumner
    20. October 2011 at 04:55

    Brian, I’m not sure what “took off” in the 1950s, there were three recessions under Eisenhower, and the US was just about the slowest growing economy in the world during the 1950s. Kennedy ran on ‘getting the country moving again.” The 1960s were better.

    Thanks Paul, My short answer on money in politics is follow the Swiss and Swedes, decentralize, decentralize, decentralize.

    Lxm, You said;

    “2. The fact that poor folks in America are fabulously wealthy compared to poor folks in other corners of the world is irrelevant to the question of inequality in America.”

    That’s true. But is is very relevant to the question of poverty in America. In any case, this post wasn’t trying to suggest that America doesn’t have a poverty problem.

    lxm, You said;

    “I don’t know the answers to these questions, but dismissing the question of inequality (Look at how desperate they are everywhere else!) begs the question.”

    Read my post again, I favor income redistribution. You missed the point.

    Laurel, You said;

    “Dismissing something bad because there is something worse somewhere else in the world has long been a rationale for doing nothing.”

    Read my post again, I never dismissed anything. I favor income redistribution. I actually mean what I say, stop trying to read between the lines.

    Sure, in some ways Guantanamo is worse, but there are also lots of ways Obama’s war on drugs is far worse. 1000 times as many people are being ruined. They are Americans not foreigners captured in a war. They haven’t done anything wrong even if convicted. Some of the terrorists really are terrorists. etc etc. Not excusing human rights abuses in the war on terror, but the war on drugs has far worse abuses than Guantanamo.

    I never said those income number represented America, I said America was more unequal than Europe, it was just an example, which you obviously misinterpreted.

    You said;

    “As the comment from KRG suggests, “…no one should be on the ground and completely unable to reach the ladder anymore” yet government policies have been pushing more and more people into that position”

    Yes, And I have used this blog to advocate change those policies, like occupational licensing laws. And tight money.

    People who think the economic divide in the 1960s wasn’t huge forget about the plight of blacks in the rural South. Their living standards have increased a lot since that time. There may have been less inequality (it’s hard to tell because income data is meaningless) but living standards were definitely lower–I recall that era.

    You said;

    “Your post implies meritocracy has something to do with the ever widening economic divide. Most of the 1% are far removed from anything resembling meritocracy. The 1% is simply a new kind of aristocracy exercising its wealth to impose a modern form of feudalism on supposed democratic nations.”

    No it doesn’t imply a meritocracy.

    You’ve probably met at most a few dozen of the 3 million in the top 1%, and in most cases you probably didn’t even know they were in that class. You are in no position to make a generalization about the productivity of lots of businessmen, doctors, etc.

    more to come . . .

  77. Gravatar of Phil O’Dendron Phil O'Dendron
    20. October 2011 at 05:36

    I can say from direct experience that many, if not most, of people incarcerated for drug offenses are criminal types, and would be afoul of the law if drugs did not exist. FWIW

  78. Gravatar of Philo Philo
    21. October 2011 at 10:26

    You failed to mention a biggie: inequality of *species*. Surely none of us members of *homo spapiens* would want to trade places with a chimpanzee or a gorilla, not to mention a dog or a rodent or a reptile or a fish or plant or a bacterium or a virus. Such inequality in the world: it is horrible to contemplate!

  79. Gravatar of Some Links | My Blog Some Links | My Blog
    22. October 2011 at 16:40

    [...] Speaking of Bryan, I thank him for alerting me to this splendid post by Scott Sumner. [...]

  80. Gravatar of ssumner ssumner
    27. October 2011 at 17:52

    anon/portly. Peter Hessler’s books on China are great, one discusses life in the factories.

    Gert, I totally agree.

    Phil, The drug laws are what make them “criminal types. What would drugs cost if they were legal?

    Philo, Or a rock.

  81. Gravatar of Gozo Rabat Gozo Rabat
    8. May 2012 at 06:16

    It must be pointed out that the lists of types of income inequality are irrelevant to the challenges at hand:

    Income inequality is the symptom, not the disease.

    This is why the Occupy Wall Street movement has lacked focus: the cancer-like symptom of economic inequality tells OWS participants that something is terribly wrong, but they are not so doubt-free as to insist they know a solution.
    ____________________

    Much of American poverty used to be a state of mind: when we were starving college students, we knew with certainty that it was a temporary condition. We knew we could fix it, once we were out of school.

    Now, for too many Americans, that temporary condition of poverty (though comparatively generous by world standards) threatens to become permanent, while the number of affected citizens increases.

    It’s the threat of permanence and increase (not the symptomatic inequality) that’s the pragmatic concern. It’s about what the disappearance of a majority, middle-income population means for America’s state of general well-being.

    It would be better to spend time seeking out causes and cures, than to debate whether any or all of the symptoms merit treatment.

    Regards,
    (($; -)}
    Gozo!

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