Tuesday, 11 February 2014

What's the inequality problem?

Inequality is a big issue these days. Lots of people are struggling to understand what it means, and what that might mean for public policy. The occupy movement, which was itself a response to the GFC, is probably responsible for much of this current wave of awareness.

Media attention is fickle though, and judging by some of the crap that gets coverage this inequality thing could all just be a non-issue media beat-up - amirite?

Yes yes, it could be. But "the media" do get it right sometimes and symptoms should be checked out anyway. The road from issue to policy is long & winding though. 

Problem definition is the first step on that road. It is tempting but foolish to jump to solutions. Following the spirit of Ernest Rutherford, we need to start by thinking hard about the problem. So let's have a go at inequality, specifically income inequality.

Income inequality has increased significantly in the USA (recently) and NZ (ages ago). Redistribution policies via the tax and welfare systems must have softened the blow, but it was still a biggie. That's my assumption. 

So what asks Paul Walker, twice, eager to profess ignorance though he obviously reads widely. Why should we care about inequality?

Poverty is one answer. Unless the whole country grows fast enough, an increase in inequality will push some into poverty. How sure are we that the worst-off citizen has a better deal now than they did before? If you take a Rawlsian view, progress has not happened unless the worst-off are better-off than they previously were.
Ghost of Paul Walker: "Oh, but anyway, that doesn't matter. Because (a) consumption, not income, (b) poverty is relative, (c) social mobility, and (d) let me take another look; I'm sure there's a 'd' down there somewhere."
Get the idea? In the immortal words of the Dude, there are "a lotta ins, a lotta outs, a lotta what-have-yous."

I agree, and they need to be considered, otherwise we'll stuff up the policy response. So let's do that. Paul is quite right to insist on rigorous analytical standards. Policy changes definitely should be properly analysed/justified.

But even while this is (hopefully) going on, let us notice that the multi-dimensional nature of "inequality" presents a huge challenge to analysts, for two reasons
  • it's complicated - causes and effects of inequality are both relevant; and
  • serious analysis might be revolutionary. 
Regarding the latter point managerialism is endemic, and it drives inequality in two ways:
  • by stretching out the top end of the income distribution; and
  • by suppressing bottom-end wages to enhance shareholder returns & justify managerialism.
So here's the deeper issue. Once you start thinking seriously about inequality, you will end up asking some very fundamental questions about how our society is organised and whether that should change. It seems to me that a proper inquiry into inequality would raise revolutionary questions.

So I'm not surprised that Paul doesn't want to talk about it, but I also think this attitude is unbecoming of anyone claiming to practice the virtues of economics. I get that you might just not care, but don't go suggesting that there's no argument when you haven't even thought about it seriously.

Also, kudos to Matt and Bill who both sense there is something interesting in here.

46 comments:

  1. I'd thought that Paul was asking why we would care about inequality per se rather than about poverty. If poverty is why we care about inequality, why shouldn't we just care about poverty? Or, in a world in which you get your preferred policies to deal with poverty, is there any remaining reason to care about income inequality?

    I also wonder why it's *income* inequality that has folks so fired up when there are plenty of plausible other inequalities worth worrying about that aren't sufficiently strongly correlated with income to address them through income measures. For example, ugly people have way worse dating prospects. I remember seeing data from OKCupid that moving from low to high on attractiveness had the same marginal effect on dating as getting something like $150k more in annual salary. Would you rather be a poor musician who dates easily, or a hedge fund manager putting in 16 hour days and utterly unable to date? I'd pick the former, but transfers run from the latter to the former.

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  2. Hi John,

    A couple of references you might find interesting -

    http://wer.worldeconomicsassociation.org/papers/the-evolution-of-economic-inequality-in-the-united-states-1969-2012/

    http://www.eastonbh.ac.nz/2013/12/economic-inequality-in-new-zealand-a-users-guide-summary/

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  3. Hi,

    I suspect Paul is saying "let's not treat some measure as a silver bullet solution to the worlds ills". He is 100% right in this view.

    The key things economists should be doing are articulating trade-offs, and articulating them in a way that captures the essence of what trade-off exists. Doing so on the basis of synthetic aggregates like GDP and income inequality is unbecoming - they are symptoms that bear only a functional relationship to what we do care about, social welfare!

    However, a lot of what we see is people using static measures of statistical dispersion and acting as if this captures the "truth" of fairness. Such an attitude, without careful thought on mechanisms and the translation to social welfare, is likely to lead to bad policy!

    ReplyDelete
  4. I'm hearing fervent agreement that inequality is a multidimensional set of symptoms, and that the underlying problem(s) are still eluding definition.

    Thanks Jeremy for the links & Eric for the example.

    Matt: I think you'd agree that economists can't be of any help at all until there is a clearly defined/articulated problem. Let's ignore the tossers and get started on problem definition.

    ReplyDelete
    Replies
    1. Indeedy - and I suspect that we will run into a "myriad of problems" which we will need to articulate through trade-offs. And I'm good with that - ultimately that is what economists dream of trying to articulate in the first place! Glad to see the amount of movement thinking about these issues is getting on NZ economics blogs.

      I'd just say that I read Paul's post as saying almost exactly the same thing you are - before saying we should "solve" anything lets define what the problem is :)

      Delete
  5. Cheers Matt. I look forward to more discussion on this topic.

    It is interesting how others read Paul's posts. I got the strong impression he was saying "this inequality stuff is all crap and I can't figure out why anyone sensible would waste their time on it".

    If so, that leads to the same place as us (problem definition), but he arrives with very different plans (rock throwing rather than wrestling with the issues).

    I would love to be proved wrong, and will be keeping an eye on Paul's site to see if he does get constructive.

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    Understanding is one way to restore a failing relationship. But as easy as it sounds, it is the hardest task to accomplish,Why is this? let see. In a relationship no one like to be that person that never get heard like he or she does not exist. Men feel like everything said or do by them is right because they are men and they think they need to always be in charge because men are the head and women feel like they need to be respected and there opinion matters alot. If they both can not balance this i do not see any hope for that relationship because after so many fight resulting from misunderstanding they will call it the end.

    Stable Finance

    This is mostly for the men. It is important to have a stable finance because a lot of bad things can happen due to financial trouble. Even if your spouse choose to stay with you through the troubled time you might just see yourself as the fault and before you know little things and talk about money leads to fight and as you know the relationship falls. But stable finance can only restore a failing relationship to an extent before some other factor kicks in.

    Couple Counseling

    This for a very long time has been the the last terminal point of almost all couple before the final fall.Here the relationship are either restored or destroyed.Couple Counseling has recorded a high amount of success over the years but does not ensure that the relationship will stay strong for a very long time.Studies show that most of the relationships saved by counseling experience a positive change for a maximum of 3 to 5 years before failing again and some just do not even experience any change. Some even lead to divorce at the end. I am not saying couple counseling does not work i am just saying, it does not really ensure a long lasting relationship.

    Love Spell

    To me this is the only way that ensures you and that someone you love will always be together just as they promised you. My marriage had its own trouble bigger than counseling, Understanding and all the things a relationship is built upon the only thing that worked for me was the spell Akpe Osilama did for me. It was the only help that i seeked that actually worked for me that is why i am saying it the Ultimate.My friend who advised me to contact a spell caster has stayed married to her husband for 28 year and some months now because of the love spell Akpe Osilama did for her.I cannot talk about mine because its just been four months without trouble again that always seperate us. You want to save your your relationship contact the spell caster with this email chiefpriestakpeosilamaspellcast@yahoo.com

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  30. I feel so blessed again in my marriage after Doctor Oku brought back my husband that separated with me for good 3 mounths. Am Jessica Butler by name from los angeles. Even though i have mouths all over my body, it won't be enough to thank Doctor Oku for his help upon my life. My husband separated with me for the 3 months and have been in pains and agony without him. So, i searched for help everywhere but nothing worked out not until i meant Doctor Oku who i contacted online. I explained my situation to him and he promised that my husband will get back to me within 24 to 48 hours as far that my heart still beats for him. I believed in him and he prepared a spell for me and my husband called me exactly when Doctor Oku said. He pleaded and said he needs me back and now we are living happily again for the past 9 months. Everyone out there reading my article that needs help should contact him... Email: okutemple@gmail.com or whatsApp him +2347053113465

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  31. My names is Cathy i want to testify about the great spell caster called Priest Ade my husband and i have been married for 5 years now we don't have a child and the doctor told us i can't give birth because my womb have been damaged due to wrong drugs prescription this got me so worried and my husband was not happy so he decided to get married to another girl and divorce me i was so sad i told my friend about it she told me about a powerful spell caster she gave me his email address well i never believe in it that much though i just decided to give him a try and he told me it will take 24hrs to get my husband back to me and i will get pregnant i doubted him the 3rd day my husband came back to me and was crying he said he didn't want the divorce anymore 3 weeks after the doctor confirmed that i was pregnant he can also help you Email him at ancientspiritspellcast@yahoo.com or ancientspiritspellcast@gmail.com WhatsApp +2347059715465

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  32. I believe I'm the happiest woman on earth right now, my husband is back with me after he left me to marry another woman February 16th 2017 because she has more money i was so sad because i love him so much and i was so confuse i ran to different friends to help me talk to my husband but it didn't work out the more they talk to him the more he insult them to get out of his face, I don"t really know what to do, I was thinking hard i quit my job because i cried everyday even at work. So one day on Facebook i came across Evelyn talking about Dr. Miracle.. How he help her get her husband back and i saw lovely how Dr.Miracle help her get rid of fibroid. I think deeply how will he help me get my husband back i decided to email him through his contact they provided he responded immediately i feel brave to see his message, i complain to him he requested for my husband picture and i, so i send it immediately and follow his instructions and he cast the spell within 3 days my husband called me and came home with tears that the woman has another man i was so happy with the help of Dr. Miracle.For bring my husband back with me. I promise to tell the world about his powerful spell. "CONTACT Via Email: Miraclespellhome@yahoo.com ,You Can Also Call Him Or Add Him On Whats-app: +2348071398555,,,

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  33. Are you looking for a reliable and a good spell caster to bring back your ex boyfriend a divorce with the help of Dr Sambo Email: divinespellhome@gmail.com



    Dr Sambo thank u for what u did in my life because I had lost hope after trying so many spell casters and no one was able to help me bring back my boyfriend because he had changed a lot, suddenly and he stopped calling me like before and didn't even have any more time to hang out with me and even when I sent him messages he read them but never respond me. I loved my boyfriend too much and didn't want to lose him because we had been together for 5years. As I was about to give up I came across Dr Sambo and saw how he had helped many people successfully with their love life. I got his number +2348145810121 and contacted him. He gave me few days to see the results and he did a love and binding spell for me and to my greatest surprise my boyfriend sent me a message after few days and apologized for the way he had been treating me and neglecting me and promised to love me and never hurt me again. I couldn't believe it, because I had been disappointed by so many spell casters it’s been a month now we are living happily and he just proposed to me. All I can say is Thanks you very much Dr Sambo. Your spells indeed works. You can contact him on his email:divinespellhome@gmail.com

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  34. Its so unfortunate that my husband left me after five years in marriage. thought he finally left the house in the third year of our marriage just because i was unable to conceive. i wonder what happened to Andrea Delacruz my husband that makes him leave the house. he is a God fearing person and very humble. i know that leaving me wasn't ordinary. we dated for seven months and i never notice such character in him before i married him. i cried and wept through my days and night because i really love Andrea Delacruz my husband. in the process of crying and thinking, i recall that his grand mom never support our marriage, she never wanted me to be married to the family. i never give up and i prayed for God to intervene. one a faithful day it was a Thursday morning when my fellow college in my working place noticed my attitude and behavior seems different from the real me and i never wanted to disclosed my Family issues but i shared with her my feeling and what i have been going through. she told me that something similar to these happened to her Elder sister and she told me that everything will be fine. she later invite me to her house to meet her elder sister then i opened up to her and she refers me to a man called Dr. Sambo and i did just as she said. i called Dr. Sambo immediately and he respond to my call in that moment and the first thing he said was 'WOMAN WOMAN' you have to believe and have faith that your problem will be solved. i asked, what should i do? then he said to me in two days time my husband will be back and i asked, Dr. Sambo is this going to be real? the last thing he said was that i will testify of his work. i did just as instructed and i watch for good forty-eight {48} hours. hmm-mm, it was a good night time at 10:05pm within the days that Dr. Sambo told me that my husband Andrea Delacruz will be back, at first i heard the bell rings getting close to my door i heard someone saying HONEY!!!, it sound familiar i opened the door and i saw my husband standing and weeping in front of me. i was not surprised because its all i have been praying for him to come back home. Guess what in six days after i noticed my system and my body temperature is changed and i went to clinic for check up and the doctor told me that there is life in me which means i am pregnant i really wants to use this opportunity to thanks Dr. Sambo so much and my lovely collage who directed me to Dr. Sambo if you have any problem or predicament that is worse or exactly like this you have been into, i plead you to contact Dr. Sambo
    Dr. Sambo E-MAIL: divinespellhome@gmail.com

    Dr. Sambo Whats,App.+2348145810121


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  35. Jones’’

    I’m so happy to share the goodness and wonders Jai Mata Sunlight did for me. My husband started hating me because we have no child after 10yrs of marriage and because of that, he started to flirt with strange women. Every night, with different ways of painful habits he use to hurt me.i give all thanks tp maa sunlight.’’ Because among all those habits, and I hate him most when I see him in the sitting room smoking. And he also don’t listen to me when I am talking to him. But his friends and family. I was now more like a stranger to him I really want to use this opportunity to thank maa sunlight and pls my beloved.. as you read, join me in praise to gives thanks to her. For breaking the misunderstanding that have been destroying my marriage..and for restoring it back with fulness of joy. If you are reading this testimony and you have problems with your marriage/relationship, pls contact Sunlightmata@gmail.com for help. She will help you and give you solutions that will rebuild every destruction in the love of your marriage. And once she has done yours, pls share your testimonies for others to see. Thanks to you mother of all nations

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  36. Hi every one i am Janet Jordan and i am from USA, I had a fight with my husband about three years ago and since then he has refuse to talk to me or even care about our family affair he abandoned us and went after another woman leaving me with three kids two girls and a boy,so last weeks a friend of my introduced me to a spell caster called Dr. Ozil who helped me brought my husband back many think he is a scam but i promise you that he is nothing compare to that not even close so if you have some problems in having or getting your ex back you can contact the great and wonderful spell caster Dr. Ozil in this address and he be willing to help you via: drozilsolutionhome@yahoo.com or drozilsolutionhome@outlook.com Call or WhatsApp: +2348161897826 View his website: http://drozilsolutionhomes.webs.com/

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  37. Hey,I'm so excited my broken Marriage has been restored & my husband is back after he left me and our 2 kids for another woman. After 5 years of marriage, me and my husband has been into one quarrel or the other until he finally left me and kids for another woman. thought they would never see their father again. i tried to be strong just for the kids but i could not control the pains that torments my heart, my heart was filled with sorrows and pains because i was really in love with my husband. Every day and night i think of him and always wish he would come back to me, I was really upset and i needed help, so i searched for help online and I came across a website that suggested that Dr DAN can help get ex back fast. So, I felt I should give him a try. I contacted him and he told me what to do and i did it then he did a (Love spell) for me. 3days later, my husband really called me and told me that he miss me and the kids so much, So Amazing!! So that was how he came back that same day,with lots of love and joy,and he apologized for his mistake,and for the pain he caused me and the kids. Then from that day,our Marriage was now stronger than how it were before,All thanks to Dr DAN. he is so powerful and i decided to share my story on the internet that Dr DAN real and powerful spell caster who i will always pray to live long to help his children in the time of trouble, if you are here and you need your Ex back or your husband moved to another woman, do not cry anymore, contact this powerful spell caster now. Here’s his contact: Email him at: blessedspellhome@gmail.com you can also call him +1(310)-751-7818 fb.me/BLESSEDSPELLHOME

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