I’m sure Tim W eill expain this far better I can, but if this is a secondary impact of the phenomenal growth in wealth that the World has enjoyed since WW2 then so what?

” if this is a secondary impact of the phenomenal growth in wealth that the World has enjoyed since WW2 then so what?”

So Green Eyed Monster basically. A Global market, inevitably, will have a wider spread of wealth than one restricted to a smaller area. It will also make all populations better off on average, (please note the average bit – buggy whip manufacturers are going to lose out here).

What we’ve seen from globalisation has been the lifting out of poverty, (real not relative), at the fastest pace and to a greater extent than any other period in history. On the whole that’s a good thing and a rise in inequality is a damn small price to pay even if you think inequality is bad in itself.

I’m sure Tim W eill expain this far better I can, but if this is a secondary impact of the phenomenal growth in wealth that the World has enjoyed since WW2 then so what?

rubbish. It’s the impact of the system being increasingly biased against the super-rich. The figures show that wealth was rising for everyone almost uniformly up to a certain point, and then starts getting concentrated in only a small minority. Coinciding with a certain liberalisation of financial markets.

So what?

Inequality causes instability. We saw it 80 years ago, we’re seeing it now. It took WWII to really break the cycle last time round…

It depends, as well, if you care about other people, and society, or if you’re unable to empathise with them.

“It’s the impact of the system being increasingly biased against the super-rich.”

I knew it! Sunny’s a Capitalist Running Dog Lacky Thingy!

Including in your Commie rust bucket Russia!!

So your point is?

@6 – Never mind that 99% of the left got over Russia ages ago, while your Right are still mired in the cold war mentality.

Astonishing stuff: the bottom 90% had an 18% real incomes hike over just 17 years!

7 – Funny you say that given Sunny’s latest post on the USSR-loving Morning Star!

[2] “What we’ve seen from globalisation has been the lifting out of poverty, (real not relative), at the fastest pace and to a greater extent than any other period in history. On the whole that’s a good thing…”

Agreed.

“…and a rise in inequality is a damn small price to pay even if you think inequality is bad in itself.”

But why do you think that an increase in global wealth is necessarily associated with an increase in inequality? Why can’t we have one without the other?

This is another reason why the elites are enjoying such riches. Their politician puppets in Washington are giving them a pass.

From Huffington post……”

The federal government is on track to file just 1,365 prosecutions for financial institution fraud in fiscal year 2011, according to a new report from a watchdog group. That would be the lowest number of such prosecutions in at least two decades.

The report, from the Transactional Records Access Clearinghouse at Syracuse University, comes at a time when the protest movement known as Occupy Wall Street has gained nationwide visibility — and no small degree of public support — by criticizing what its members see as a close relationship between big banks and the federal government.

The falling number of fraud prosecutions is striking given what many claim is a strong pattern of financial-sector misconduct in recent years, culminating in a housing crisis characterized by alleged rampant mortgage fraud and improper foreclosure, as well as the weakening of the national and global economy.”

@10 “But why do you think that an increase in global wealth is necessarily associated with an increase in inequality? Why can’t we have one without the other?”

The increase in global wealth is associated with an increase in the size of market and a lowering of costs, (to some extent the removal of trade barriers but shipping costs are perhaps the biggest influence).

The following is a bit long but I hope it helps
_________________________________________________

Imagine you had a market of 10 people, you can sell them item X every day and it’s not worth the trouble for anyone to make X. Your profit on each X is $1 and so you make $10 a day if you manage to sell to everyone in the market.

If the market then increased to 1000 people, you would expect various things to happen. Firstly you’ve got a much bigger potential market and could in theory make $1000 a day, secondly you are likely to have competition and that will drop your premium. Assume that you can vanquish your competitors and you now sell 1000 X per day but only make $0.1 on each X giving a daily profit of £100.

So there are several things here; Firstly everyone has X more cheaply than they used to, secondly you have 10 times as much profit as before, thirdly those others who used to supply X are now doing something else and creating value in a different area.

The big and inevitable rise in inequality bit is that some people will not see vast increases in wealth from increasing the market size and so their incomes will only rise slowly, (they are at least able to reduce their outgoings on X), but a big success has become 10 times bigger. In other words there is a lower bound, (abject poverty), but no upper limit until you run out of people to sell to.

You can do various things about this such as punitively taxing the rich or lining them up against a wall and shooting them. Quite apart from the liberty aspect though the problem is that doing so wont get you cheap X, nor will central planning be able to compensate, (which can’t compare to a billion experiments every day for finding the right way to go about things).

_________________________________________

So that’s why I think you can’t have one without the other. Personally I don’t see that much of a problem with inequality of income except when rent seeking is involved. That one person is richer doesn’t make me poorer unless I’ve had to pony up the money in their wallet in the form of my taxes.

@[10] Many thanks for taking the trouble to respond in detail. However, though I can well see that corporates benefit from globalisation (and you’d have to be a corporate to ramp up production in the way you describe), I still don’t see why this must inevitably result in increasing inequality in individual remuneration.

The owners and senior management of a company with profits increasing in the way you describe could, theoretically, share that wealth on an equal basis with everyone inolved in the undertaking. Now, OK, I’m not so naive as to believe that life’s like that, but I’m still struggling with the idea that inequality of income is a necessary or inevitable consequence of wealth creation.

Churm,

you might be interested in this very good article by Tyler Cowen.

http://www.the-american-interest.com/article-bd.cfm?piece=907

On some levels large disparities in income does matter and it is unhealthy for the economy. Although I would argue that social mobility is more important. Steve Jobs died recently a very rich man. If the U.S. had another 20 Steve Jobs, would they really be worse off because that raised income inequality? J.K. Rowling was the first billionaire author in history. She was not the best author to ever live. Plenty of her peers are probably more talented. Yet, she was lucky to live in a period when she was able to be the first popular author to capture a global audience. Globalised communication networks were as responsible for her making a billion, as much as her talent was responsible. Yet, her making a billion through globalisation raises UK income inequality. Would we be any better off if she had only earned 500 million? Earning only 500 million would make us less unequal, but no better off.

I am doubtful whether any government can do anything about increasing inequality between the very top incomes and everyone else. Global factors beyond their control are plausible explanations. However, they can intervene to redistribute to help to equalise after market outcomes. How much they should just comes down to politics.

So everyone is getting rich, but the super-rich are getting richer faster?

I fail to see why this is a problem. We have a lot more consumers in the market place now. Cliff Richard might have sold an album to one in ten British people in his day, but if Kylie Minogue can sell one to every hundred people in the world, she will be a lot richer.

Globalisation at work I suppose.

In the meantime, if it is envy and hatred that is the problem, I suggest you all stop encouraging envy and hatred.

Who here seriously thinks they were better off in 1974?

@12 – “That one person is richer doesn’t make me poorer”

Except for the minor fact that the rich set up systems to syphon off the money in the system, as we’re seeing today, as wages for the poorer fall as a percentage.

@14 – Counter example to your claim – the Nordic Model.

@16 – “Who here seriously thinks they were better off in 1974?”

I wasn’t alive in 1974. But pick a year I was alive – I was better off then.

“But pick a year I was alive – I was better off then.”

That might explain the bitterness that so clouds your judgement.

17. Leon Wolfson

” Counter example to your claim – the Nordic Model. ”

Leon,

on the contrary, the Nordic Model proves that the only real way to reduce income inequality is through taxes and transfers.

” The important thing to note here is that even in the most socialist of welfare states, market income inequality is very high, nearly as high as it is in the UK or US. The fact that Sweden is one of the least unequal countries on earth has to do almost entirely with taxes and transfers. ”
http://www.peterfrase.com/2011/08/redistribution-under-neoliberalism/comment-page-1/

You said: “I am doubtful whether any government can do anything about increasing inequality”

There clearly is. Not only do the Nordic countries redistribute, social mobility is high*er*.

The system is still rigged by the way the global markets work, of course.

Yes, but I meant pre-market outcomes. The Nordic Model, if there is such a thing impacts equality through after market outcomes. The government can certainly do something positive about social mobility by just having a good education system.

They still have large concentrations of wealth in Scandinavia even though their society has more equal outcomes. For example, the Wallenberg family are responsible for 30%+ of Swedish GDP.
http://en.wikipedia.org/wiki/Wallenberg_family

If we have enjoyed greater wealth since the WWII, isn’t it because more women work today and men and women work longer hours. My grandparents had ten kids, they owned their own house, my grandmother never worked outside the home and my grandfather who was an ordinary worker, never did more than a forty hour week.

A lot of peoples so called wealth today is an illusion. It is based on debt, like morgages, loans and credit cards. How many people are a few paycheques away from disaster? Bearing mind that the average job today only lasts something like eight years.

I don’t envy anyone who is richer than me, but i care when they take money from the poor, the sick and the elderly in the form of austerity cuts and give the wealthy 1% in bank bailouts.

22. Lynne

If we have enjoyed greater wealth since the WWII, isn’t it because more women work today and men and women work longer hours. My grandparents had ten kids, they owned their own house, my grandmother never worked outside the home and my grandfather who was an ordinary worker, never did more than a forty hour week.

I think it is in part because women work actually. But you’re right about the hours. It is trivial to find people in my family who had to work much longer hours and who could not afford to have women stay at home idle. Not just those that worked on farms, but those that worked at sea and on the docks.

A lot of peoples so called wealth today is an illusion. It is based on debt, like morgages, loans and credit cards. How many people are a few paycheques away from disaster? Bearing mind that the average job today only lasts something like eight years.

I know dozens of people who grew up without electricity. With toilets outside. With homes so cold that ice formed on the water jug at night. Without proper clothing. The standard of living I, my siblings, my cousins and all their children and so on enjoy is so vastly beyond the Britain that my grandparents knew you could be talking about another planet. You can’t say this an expect to be taken seriously. You just can’t.

I don’t envy anyone who is richer than me, but i care when they take money from the poor, the sick and the elderly in the form of austerity cuts and give the wealthy 1% in bank bailouts.

A good thing they didn’t. They nationalised those banks thus dispossessing the 1%. They took billions and guaranteed loans to businesses and home owners – and so guaranteed the depositors money. Ordinary people’s money and their pensions. Workers even.

“So everyone is getting rich, but the super-rich are getting richer faster?

I fail to see why this is a problem.”

It is a problem because the rich – individuals and corporations – always try to manipulate or just plain corrupt the political system in their favour. And the more money they have, the worse it is for the rest of us until we reach the current debased state of affairs where banks and other financial institutions are swimming in a sea of money yet they behave as if they have a right to it all.

Too much is never enough, the creed of sociopaths.

What Richard is describing above is the effect of globalisation.

Note that it’s happening everywhere (yes, even in Sweden). A global occurence, well, we’d pretty much expect there to be a global cause really.

Note also that it is very much in that top 0.5 % (the American figures show it even better, in the top 0.1%).

“Cliff Richard might have sold an album to one in ten British people in his day, but if Kylie Minogue can sell one to every hundred people in the world, she will be a lot richer.”

That’s pretty much it. Thre’s a small section of society that are able now, in a way they couldn’t 30, 40 years ago, earn 10 pence off a billion people rather than 10 pence just off however many were in their own native country.

Tiger Woods gets paid for advertising Nike to Taiwanese, not just to Yanks like Arnold Palmer did (OK, any golfer from 50 years ago). Spielberg gets a cut of cinema tickets the world over, not just in the USA (Hollywood’s foreign sales just beat their US ones a year or two back, first time ever). And yes, this does apply to lawyers and stockbrokers in London who now float Kazakh mining companies onto the LSE.

It’s not UK politics, not UK tax policies that did this. It’s just the whole opening up of the world to trade. And that is something driven far more by technology, the container plus digital media, more than anything political.

And as is also pointed out, the flip side of this is that finally, we’re getting somewhere in abolishing absolute poverty. It’s exactly the same process that aloows Woods, Speilberg and the banker to make so much which also allows the Chinee or Hindu peasant to also get three squares a day for the first time ever.

Oh. And one other thing. Yes, it’s true, in country inequality is rising. And global inequality is falling. If you’re actually worried about inequality then perhaps you should be celebrating that second.

23
If you go back far enough everyone had an outside toilet. And of course there have been advances such as central heating that make our lives better. Many elderly people today have to choose between heating or food. 2700 elderly people died last year due to the cold.

The point is that our grandparents had no real debt. My grandfather had a job for life as did my father. Even during the sixties and early seventies you walk out of one job and into another the same day. Many jobs then were well paid manufacturing jobs.

Bank bailouts. Er Sir Fred Goodwin. Who paid for his pension?

24. Limiting Factor

It is a problem because the rich – individuals and corporations – always try to manipulate or just plain corrupt the political system in their favour.

As opposed to the virtuous, noble poor who would never do such a thing?

And the more money they have, the worse it is for the rest of us until we reach the current debased state of affairs where banks and other financial institutions are swimming in a sea of money yet they behave as if they have a right to it all.

Which they do. The solution to the corruption of politics is more democracy. Not less freedom. Not punishing the middle class.

Too much is never enough, the creed of sociopaths.

Meanwhile in the real world, people spouting your politics have filled mass graves with hundreds of millions of corpses and you call the bankers sociopaths?

Lynne

If you go back far enough everyone had an outside toilet. And of course there have been advances such as central heating that make our lives better. Many elderly people today have to choose between heating or food. 2700 elderly people died last year due to the cold.

Not that far back. I know people in their 70s who grew up that way. In fact I know people in their 70s who were raised on subsistence farms with virtually no contact with the cash economy at all. Genuine, African-style poverty. No one in Britain is poor like that any more. Central heating makes our lives better – and it is a sign that we are vastly richer. We have vastly more comfortable and warm lives. I flatly reject the idea that any old people have to choose between heating and food. This is an urban legend that may have been true in the 1930s but has not been true for a long time. The elderly are the wealthiest section of society. I am sure that 2700 people died last year due to the cold, but I doubt that is because their homes were cold. More likely it was because they had to go out in the cold and got wet. In any event 2700 is a tiny number historically speaking. Thus once more proving how wealthy we have become.

The point is that our grandparents had no real debt. My grandfather had a job for life as did my father. Even during the sixties and early seventies you walk out of one job and into another the same day. Many jobs then were well paid manufacturing jobs.

Only because no one in their right mind would have lent to them. They had no debt because they were poor. That is not true of people today. It is true that finding work was much easier but that was because regulations and Unions were much weaker. Manufacturing jobs are worse paid than many service jobs. That is why we send them to China.

Bank bailouts. Er Sir Fred Goodwin. Who paid for his pension?

That would be Sir Fred Goodwin.

27
As it is most likely to be rich individuals and corporations who have the power to corrupt governments, what’s your point in mentioning the poor, you surely can’t believe that anyone from that group has any leverage to influence anything.
@24 has commented about the inequality in society and suggested that certain wealthy individuals behave like sociopaths, so where is your evidence that such views have filled mass graves, or is it a particularlly silly example of hyperbole?

“No-one in their right mind would have lent to them. They had no debt because they were poor”
So now we know, bankers were not sociopaths, they weren’t in their right minds when they lent to the poor.

28. jojo

As it is most likely to be rich individuals and corporations who have the power to corrupt governments, what’s your point in mentioning the poor, you surely can’t believe that anyone from that group has any leverage to influence anything.

There are no grounds for this view at all. As can be seen by the fact that the entire political system exists to shovel money to the poor. Clearly the system has been heavily corrupted by the poor acting in what they think is their own best interests. However that is not really my point. My point is that human beings are inherently and irredeemably corrupt and inclined to their own selfish interest. Rich and poor alike. Thus the best system of government is one that give as few people as little power as possible. Not one that grants flawed human beings the power to dominate the rest of us and so act out whatever nasty little hidden urges they have hidden underneath.

has commented about the inequality in society and suggested that certain wealthy individuals behave like sociopaths, so where is your evidence that such views have filled mass graves, or is it a particularlly silly example of hyperbole?

No. People of her political tendency have murdered millions. This is not even worthy of debate. I suggest she needs some reason why her preaching hatred of the rich won’t end up the same way yet again.

So now we know, bankers were not sociopaths, they weren’t in their right minds when they lent to the poor.

Actually if you read more closely you would have seen that no, they did not lend to the poor. Don’t quote out of context.

I think the grapghs shown are for the UK only. It may be worthwhile mentioning this since it implies it is based on the world data.

SMFS@29
“This is not even worthy of debate” – don’t be daft, it was you who brought the subject up, I suppose what you mean to say is that you have no evidence, that’s because you have just made it up.

Whether you believe that all humans are corrupt and selfish is beside the point, the poor have nothing that would enable them to corrupt governments.

“Don’t quote out of context”, no that just won’t do, you were the one who pointed-out that no-one in their right mind would lend money to the poor circa 60s and 70s. So the logical assumption is that those who did lend to the poor, post 2000, were not in their right mind.