Inequality

[Borachio]

Deirdre McCloskey seems to maintain that the pursuit of economic equality isn't a valid one, and that what matters more than anything is the elimination of poverty - both a worthwhile and realizable goal.

In place of capitalism, she talks of a system of ‘market-tested innovation and supply:

"You have to ask what the source of the inequality is. If the source is stealing from poor people, I’m against it. But if the source is, you got there first with an innovation that everyone wants to buy, so you get paid some crazy sum, you ought to be paid so much, don’t you think? There is noting to be gained by focusing on inequality."

She asks that compared to all the envy driven policies, what has helped the poor more than increasing the size of pie?

McCloskey argued that:

• Equality is not an ethically sensible purpose.
• Changes in inequality was made an issue by the intellectuals, not by the working class.
• Absolute poverty is what matters and can be solved.
• Inequality is a fool’s errand.
• Who are you going to trust to fix a problem is the key?
• You must look at the actual ability of government to do various things.
  predicting the future of human affairs is a deeply foolish project.

McCloskey’s characteristically extravagant self-description [in contrast to Pickety]:
"a postmodern free-market quantitative rhetorical Episcopalian feminist Aristotelian woman who was once a man. Not 'conservative'! I'm a Christian libertarian."

So, CFC, persuade me that equality is a valid pursuit, or not. I wait with bated breath.

 

[Tahuti]

The source of inequality is state-enforced capitalism (this is really not a contradictio in terminis), fractional reserve banking and gift taxes being the engines of suppressing interest-free loans, forcing the economy to grow, with most of the growth going to the upper 20% incomes.

I really don't mind inequality and eliminating it should not be a pursuit in itself, though it is really hard to imagine that billionaires actually are a millionfold more useful to the economy.

 

[Gori the Grey]

What is the source of the quote, B? I don't find it on the self-definition page.

It must be somebody's summary of her argument. We only have this one quote of hers to go by (out of seven books and 360 articles!). And it sounds informal, like it comes from an interview.

But given what we have to go on, I think I agree that efforts to eliminate poverty stand a better chance of success than efforts to achieve equality.

I actually don't think what are here called the "envy-driven policies" really seek to eliminate inequality altogether. People have just become upset at the scale of inequality.

 

[luiz]

So, CFC, persuade me that equality is a valid pursuit, or not. I wait with bated breath.

I'm not at all convinced that it is. Inequality in itself isn't bad. BUT we should strive for constantly growing living standards for everybody, specially the poor (on relative terms, on absolute terms hopefully there should be no poor), not just the elimination of absolute poverty. And for that goal we need some policies that reduce inequality. That's the price of a stable liberal-democratic regime.

But simply turning inequality into some sort of monster that must be fought is silly. Much of the anti-inequality discourse does seem to be thinly-veiled envy.

 

[Traitorfish]

I'm going to go ahead and say that McCloskey is a hugely unsubtle concern troll.

 

[amadeus]

I really don't mind inequality and eliminating it should not be a pursuit in itself, though it is really hard to imagine that billionaires actually are a millionfold more useful to the economy.

If they aren't, why does anyone pay them? The thing about a great basketball player, singer, businessperson, etc. is that other people get a return on their investment. If they weren't worth the investment, they wouldn't be so richly compensated; but, people like Tom Hanks will draw in crowds because he's a good actor, so he gets paid the big bucks. It doesn't take anything away from anybody for Hanks or anyone to have a billion dollars (and especially not in the case of business magnates whose wealth is tied up in stocks.)

 

[Tahuti]

If they aren't, why does anyone pay them?

I argue that certain government intervention (especially in regulating finance) is involved in creating their elevated position and that it wouldn't exist in completely unregulated free markets.

 

[warpus]

But if the source is, you got there first with an innovation that everyone wants to buy, so you get paid some crazy sum, you ought to be paid so much, don’t you think? There is noting to be gained by focusing on inequality."

The problem is that if this happened to you, you made use of plenty of tax-funded systems to get there. The internet, the roads, tax breaks, and so on.

Society is (in theory) set up so that people can succeed in it. Once you succeed, you can't raise your nose at the rest of society and say: "I got mine, so screw you all". You should be thankful society was set up the way it was, fostering an environment in which you could succeed.

If you succeed, you continue fostering an atmosphere where others can succeed as well. You don't whine about high taxes. You shut the hell up, enjoy your good luck, and pay back to society in the ways required.

 

[Gori the Grey]

The problem is that if this happened to you, you made use of plenty of tax-funded systems to get there. The internet, the roads, tax breaks, and so on.

And especially (and especially in America) the military, maintaining a peaceful and secure environment in which you could devise, build and market your innovation.

Not much innovation going on in war-ravaged lands.

People tend to take the environment in which they innovate as a given. But it's not. It's very expensively maintained.

 

[Borachio]

What is the source of the quote, B? I don't find it on the self-definition page.

It must be somebody's summary of her argument. We only have this one quote of hers to go by (out of seven books and 360 articles!). And it sounds informal, like it comes from an interview.

But given what we have to go on, I think I agree that efforts to eliminate poverty stand a better chance of success than efforts to achieve equality.

I actually don't think what are here called the "envy-driven policies" really seek to eliminate inequality altogether. People have just become upset at the scale of inequality.

Isn't it strange? Now I can't find the original source of the quote. I thought it was from the Guardian, but apparently not. That'll learn me!

Anyway, here's another Spectator article contrasting Deirdre and Thomas.

http://www.spectator.co.uk/features/9211721/unequal-battle/

Economist writer and broadcaster Tim Harford was talking about Picketty on the radio only last night: it seems much of his data is poorly presented and sourced.

Still, I haven't a clue what to think about either of these two.

 

[Tarquelne]

If they weren't worth the investment, they wouldn't be so richly compensated;

With low information inequality you can tell they're worth the investment. With high information inequality they may not be worth the investment but rake in the Big Bucks anyway.

Metrics for actors and basketball players are pretty good. For "businessmen," often not so good.

 

[Tarquelne]

I'm going to go ahead and say that McCloskey is a hugely unsubtle concern troll.

Now now. Some people actually like bread-and-circuses supported authoritarian plutocracies.

 

[downtown]

With low information inequality you can tell they're worth the investment. With high information inequality they may not be worth the investment but rake in the Big Bucks anyway.

Metrics for actors and basketball players are pretty good. For "businessmen," often not so good.

Yup. Heck, metrics for athletes aren't even that great. Every year, lots of athletes are paid millions of dollars that don't even come close to generating a return on that investment. Predicting or valuing performance is *hard*. In the business world, we use all sorts of signaling that may not be actually useful

 

[Gori the Grey]

If we run out of things to say about her economic theories, we could have a crack at that self-description. Don't want to hijack the thread, but there's some interesting things going on in just in how she chooses to identify herself.

Kind of issue that sometimes gets us into trouble, though.

So on second thought, forget I said anything.

 

[Borachio]

Piketty (for those who have not followed the story so far) worries about capital and, in particular, the tendency for those who already have it to get more. ‘Money tends to reproduce itself,’ he says. The story is that for large swaths of history, capital has earned generous returns which allowed those who already have it to reinvest and watch their capital grow faster than the incomes of ordinary mortals. Wealth, by whatever means it is originally created, thus begets more wealth; successful entrepreneurs, through their initial accumulation of capital, go on to ‘become more and more dominant over those who have nothing but their labour’. In Piketty’s excellent phrase, it is through capital that ‘the past devours the future’.

So what happens when the top 1% have 99.9999999% of the wealth?

McCloskey, by contrast, has long argued that economists are far too preoccupied by capital and saving. She doesn’t even like the word capitalism, on the grounds that capital is not what got us where we are today. ‘If Scotland is trying to become Holland, then capital accumulation is how to do it. That will double your income, maybe triple it.’ But for her, that sort of accumulation is a scratch-card-sized prize — and the lottery jackpot beckons. She enthuses about the Great Enrichment of the 19th century. ‘What happened, understand, is not 100 per cent growth, but anywhere from 2,900 per cent growth to 9,900 per cent growth. A factor of either 30 or 100.’

That jump in incomes came about not through thrift, she says, but through a shift to liberal bourgeois values that put an emphasis on the business of innovation. In place of capitalism, she talks of ‘market-tested innovation and supply’ as the active ingredient of our economic system. It is incidentally a system ‘drenched’ in values and ethics overlooked by economists.

Hmm. Don't know what to say about that.

(I'd agree that McCloskey's personal history and self-description isn't probably relevant.)

 

[Traitorfish]

If we run out of things to say about her economic theories, we could have a crack at that self-description. Don't want to hijack the thread, but there's some interesting things going on in just in how she chooses to identify herself.

She describes herself as a "Christian libertarian"; there is little that CFC could add to such damning self-evaluation.

 

[Borachio]

What's going to happen in the near future, though?

Are we going to see a return of prevalent domestic service, for instance?

That's a feature of highly inegalitarian societies, isn't it?

 

[Narz]

Equality will never happen, fairness probably never will either but it's worth striving for. As for eliminating poverty... the problem is, where's the motivation for those in power to do so?

 

[Tahuti]

She describes herself as a "Christian libertarian"; there is little that CFC could add to such damning self-evaluation.

Doesn't the 'feminist woman who was once a man' even it out?

 

[Borachio]

Equality will never happen, fairness probably never will either but it's worth striving for. As for eliminating poverty... the problem is, where's the motivation for those in power to do so?

I think their motivation might come from the fact that, if they don't, the poor are likely, sooner or later, to hang them from the nearest lamp-post. (Though they might do that even if the rich and powerful do help to eliminate poverty.)

And also poor consumers are a poor market for the goods that industrialists like to produce.