This article provides paragraph after paragraph of supporting data that the richest have gotten richer, but none that I can see supporting its claim that “billions of poorer people across the world have seen their wealth standstill or decline”.
Anyone with some capital could've invested in Netflix, Facebook or Google several years ago and would have achieved a good return on their money.
Even if some sort of global wealth tax would be introduced (that's a big IF) to fix the accumulation of extreme wealth, would people be better off? The amounts collected, spread out over the entire population, would be relatively small. And most of this new wealth is mostly paper wealth -- the headline next year could very well be: "World's richest lost $3tn of their wealth".
How do you decide who gets the work?
So, if there is any indication that wealth has been accumulating faster, it is not on the article. And as such, the article is valueless and a complete loss of time.
http://fortune.com/2014/10/31/inequality-wealth-income-us/
There is an economist called Thomas Piketty who has made his name by studying and measuring inequality over the years. Read his book and you will get a detailed analysis of how inequality has increased in our society.
If me and the rest the million other people in my city have $100,000, some billionaire in a city somewhere else making another 100 million doesn't really have any impact on me directly. Yet it increases this inequality metric and I'm supposed to be outraged.
If the billionaire was using this position to corner the real estate market I'm trying to buy a house in, then I might be upset. But, I could also pool 1,000 of my friends together each with our $100,000 into a corporation and corner a market as well.
So why exactly is inequality relevant? Shouldn't we be focused on just raising where the bottom of the income range is rather than cutting down the tall outliers?
It seems to me like trying to make yourself wiser by killing everyone with more education than yourself.
It's waaaaay harder for you to organize and mobilize your 1000 buddies than it is for 1 billionaire to decide he wants to do something you don't want, such as lobbying politicians to give him a tax break, for example.
If we want to stop regulatory capture, stop that. Don't worry if it's one person or 1000 behind a movement.
According to this article, though, there has been an increase of consumption inequality from 1980 to 2005 in the US according to various papers: https://web.stanford.edu/~pista/JEP.pdf. But the consumption inequality is far less outrageous than income inequality and can be estimated to have been in decline in the world at large through data from the World Bank's DataBank.
See “Measuring inequality: A three-headed hydra”[1] in The Economist and “Economics is all about consumption” by Scott Sumner.[2]
[1]: https://www.economist.com/blogs/freeexchange/2014/07/measuri...
[2]: http://econlog.econlib.org/archives/2014/07/economics_is_al....
But when you say "without visible contributions to society." why should an extremely wealthy person have to contribute to society?
If history says anything, it's that humans only see this when the structure collapse, not when it's still working.
And to be harsh and potentially thought as rude: all you have been saying is a dream, a dream of impractical theorist.
Regardless of how rich I am, I still need to eat and live and put clothes on my back. Are these not contributions?
Or are you suggesting that the wealthiest are parasites simply because they should contribute more to society than someone less financially well off?
Yes, parasite, and what happens to parasites which are too successful?
If my US company shifts labor to India, do we assume it is bad simply because the US doesn't receive those wages to stimulate the US economy? Does this benefit India though?
I think your argument depends on perspective, from US point of view this situation is bad, from India's it isn't bad. From the wealthy person's doing this, it simply benefits him/her.
I don't know how to solve this and completely agree with the argument but it is technically flawed.
No one said that it was, and it isn’t illegal to be a parasite. As to the rest, life is a competition.
Ideally, one should contribute as much as she/he takes. Of course, that's impossible and impractical.
I'd say the higher in the social rank, they ratio of contribution to taking drops exponentially, not linearly.
That's the problem.
You mean the richer people are, the ratio of their contribution to taking grows? That does not seem possible, because that will not make the person rich in the first place.
But the problem is the ratio of their taking far outpace the contribution.
If influence, specifically political influence, and wealth could be perfectly decoupled, no reason. That nexus, however, means an oligarchical class of rich idiots have the capability to project their stupidity onto national policy.
Society as a whole benefits much more when each generation has to earn the bulk of their wealth.
When Elon Musk becomes obscenely wealthy by creating affordable electric cars and space flight, everyone else gets the benefits of affordable electric cars and space flight. Not talking trips to mars, but constellations of satellites offering super cheap worldwide internet.
What the Koch's spent their money on is an entirely different issue.
https://hbr.org/2017/10/why-wages-arent-growing-in-america
https://www.vox.com/policy-and-politics/2017/8/8/16112368/pi...
https://qz.com/851066/almost-all-the-10-million-jobs-created...
(Personally I don't mind a bit of hardship if it helps everyone, but I understand not everyone can be frugal or that some people can be just plain unlucky)
If we attached proportional responsibility to part time work, or just provided benefits out of the public purse instead of labor law, part time work wouldn’t be such an obviously superior choice to employers.
ERADICATE EXTREME POVERTY & HUNGER
Target 1.A:
Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day
The target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline.
More than 1 billion people have been lifted out of extreme poverty since 1990.
In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015.
To be exact, it seems to be saying that the richest 500 are x% richer at the end of the year, not that the 500 richest at the beginning of the year are %x richer at the end of it. These are two different things because they are two different sets of people.
In decades past the richest and the poorest people don't remain in that part of the income distribution very long; this is especially true in the US.
One of the best studies on intergenerational mobility in the US, using all IRS records (not sure how hard they had to work to get those) shows that mobility in the US has been fairly constant for 50+ years.
[1] http://www.equality-of-opportunity.org/assets/documents/mobi...
The sets mostly overlap. The top 10 of the richest people was the same in 2016 and 2017 [1]. These 10 people saw their net worth increase by $107 billion.
[1] https://en.wikipedia.org/wiki/The_World%27s_Billionaires#201...
I would say this is especially not true in the US where social mobility is notoriously bad.
"Several large studies of mobility in developed countries in recent years have found the US among the lowest in mobility." [1]
[1] https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...
Of course, this doesn't mean that everyone is better; there are always winners and some losers, and there are setbacks here and there, but the big picture is one of great progress.
For more, one should read the Human Development Reports:
http://hdr.undp.org/sites/default/files/2016_human_developme...
https://www.hopkinsmedicine.org/healthlibrary/conditions/adu...
But I guess actually looking at the econometric data to compare apples to apples isn't worthwhile because you can stay indoors while your tires are stolen and watch Jessica Jones, so things are better than they used to be, right?
And was really wrong about it.
The middle class in the US had enjoyed the fruits of global inequality resulting from colonialism and WW2 during the second half of the 20th century.
As the gap in skills and education between the average American and the rest of the world have disappeared, the former US middle class will see their income gap with the rest of the world also disappear. A teacher, factory worker or a store clerk in the US isn't 20x more productive than a teacher, factory worker or a store clerk in India or China and there's not reason for that wage gap to exist any more.
The developed countries are still developed and their citizens will fight back.
It's the very first and most important step of progress. If people don't have enough to eat, even their brain won't develop properly. The lower layers of Maslow hierarchy are absolutely essential.
After that, more progress is needed, but having food, essential health and physical security is definitely the fundamental thing for any other types of progress, such as education.
edit: Ability to pay grows with inflation, by definition. Unless you have a particularly unusual type of debt, the principle is constant and the interest is based on the remaining principle and is therefor a pre-inflation value. Wages grow in absolute terms (even though their purchasing power is otherwise constant), so the debt is easier to pay off.
Getting richer has a strong relationship with making others poorer.
This theory is naive, dismissive, and wrong. You have accurately seen some bad examples, and it has led you to incorrectly conclude that the bad examples are the bulk of what is going on.
And just because enrichment, as you call it, can happen other ways than exchange, does not mean it doesn’t happen via exchange too.
So you're saying that it would be better if everyone was poorer individually, as long as they were more equally poor?
Why are you creating this either/or? Are you proposing that if we don't allow people like Gates and the Kochs to hoard billions of dollars that everyone will be poorer individually?
No, it's not at all that simple; there's both disutility associated with inequality and utility associated with absolute material position; how those net out is more complex than either “everyone getting more is better regardless of distribution” or “more equality is better regardless of how much per everyone gets”.
That is, it can be true that I feel rich or poor by comparing myself to others, not based on my absolute wealth. It can also be true that I look at any individual transaction and decide whether to make it or not based on whether it makes me better off in absolute terms.
It's about overall position, but the outcome of every particular exchange is a change to overall position; now, if the asymmetry in exchanges were essentially random, this wouldn't matter, but when you have a system with distinguishable classes, and there is a clear relationship between class role and which side of the asymmetry of exchange you tend to fall on across exchanges—say “capital” having the greater gain and “labor” the lesser—then you can end up with a situation where the pattern of exchange, each seemingly mutually beneficial but asymmetrically so, ends up producing more disutility from increasing inequality on one side than utility from absolute gain.
Voluntary exchange is not capitalism. Voluntary exchange has existed since the dawn of society. Capitalism is a form of production that developed with the industrial revolution. I can't tell if you've fallen for or are employing a sleazy equivocation.
e.g. When an ancient king had land, and let poor people work the land in exchange for a part of their production, what would you call that? Sure sounds like, "the extraction of surplus value via property relations and wage labor" to me.
Same story if the lord has a mill and charges people to use it. Or a bridge and charges people to cross it. Technology was worse, so there weren't as many physical forms of capital, but it definitely existed.
Some people seem to have this need to see capitalism as this invention created by bad people. Because to admit now natural and organic it is would be to admit how much enforcement and violence their ideology really demands in order to obtain the real world.
> e.g. When an ancient king had land, and let poor people work the land in exchange for a part of their production, what would you call that? Sure sounds like, "the extraction of surplus value via property relations and wage labor" to me.
Ok, if you want me to be more precise, private property relations, which are very different from feudal property relations. In fact, since property is a legal construct, this aspect of the development of capitalism could be called an invention, and the idea that capitalist forms of property are particularly ""natural and organic"" compared to other forms is quite suspect-- at least without any argument provided for it. As a foot note, one of the processes that developed private property was Enclosure [0] which was by no means nonviolent.
But I'm not going to try to be as precise and rigorous as a history textbook in Internet comments I compose in between compiles. Feel free to believe that capitalism is natural and organic, or read a history book. Idk.
There is an extent to which it is true (well, the first part, not wage labor!), but it's a different set of property realtions than the ones which are the defining feature of capitalism.
> Same story if the lord has a mill and charges people to use it. Or a bridge and charges people to cross it. Technology was worse, so there weren't as many physical forms of capital, but it definitely existed.
Feudalism is also a system by which value is extracted by property relationships; a different set than capitalism, and (while some quantity of wage labor may exist within feudalism) not one where wage labor plays a central role.
Capitalism replaced the system of property relations underlying feudalism with a different set.
> Some people seem to have this need to see capitalism as this invention created by bad people.
Traditionally, that's not even how the socialist critics that first identified it viewed it; it wasn't “an invention created by bad people”, but the state resulting from a number of related changes to the model of property driven by a combination of opportunity created by physical and other social technologies and self-interested people seeking their own gain. (This isn't inherently bad, the same people saw socialism the same way, though they saw the class driving and benefiting the preservation of capitalism against further change as narrow and inherently narrowing with the continuance of capitalism.)
I'm not really sure, then, what people you are referring to, since neither capitalism's defenders nor it's main critics hold the view you are attacking.
I can tell that you've fallen for Marxist rhetoric.
That the labor theory of value is entirely bunk is trivial to see. If you present to a buyer two indistinguishable instances of the same good but describe how one was meticulously hand-crafted by skilled artisans and the other produced by machines in a factory, in the prospective buyer’s view the former is no more valuable than the latter. Value is imputed by the end consumer who is willing to pay only so much for a pair of shoes, a hat, a computer, a book, an automobile, a house, whatever. Marxists object that this is “commodity-fetishism,” but their many syllables fail to camouflage their deep confusion.
Even employers — rather than exploitative expropriators — are sellers of goods or services but buyers of labor, one of many factors of production. Consumers set prices with their willingness to buy. Producers seek to meet this demand at a profit. (Running a break-even operation is a bad model: at best you end up back where you started and otherwise book red ink.) To take profit, they must produce at a cost below what the consumer will pay, the prevailing price. Raw materials must be bought ahead of time. Employees expect regular paychecks. The employer must risk all of these costs by paying up front for a chance of turning a profit in the end.
Employees likewise are sellers of labor, a role that Marxists fail to recognize or else they’d have to slap expropriator labels all around. Employees shop their skills to find the buyer who values them most highly. When a better offer comes along, we usually congratulate the person for finding a better situation even though it is the same worker now supposedly “extracting” more value. The downside is sellers compete against one another. When the value proposition grows too rich, we buyers start shopping elsewhere. “Cheap labor” is nothing nefarious; everyone is looking for a better deal. Sellers of goods, services, and labor must all continue to improve their offerings.
From top to bottom, this is a network built on voluntary exchange with no extraction or exploitation. The ruthless player is the fickle consumer whose tastes, demands, foibles, and sense of urgently are always changing. There’s also Mother Nature, sometimes gentle and sometimes furious. We live in a world of scarcity with the future uncertain. Where will tomorrow’s dinner come from? How will parents pay for their kids’ college years down the road? How will I pay the light bill next month? Capitalism’s aforementioned complex network of voluntary exchanges — “the market,” for short — is a search process for how best to allocate what we have now in order to obtain what we need and want tomorrow.
> From top to bottom, this is a network built on voluntary exchange with no extraction or exploitation.
I mean, this is just preposterous. Are we going to ignore how capitalism developed with enclosure, forcible transformation of the commons into private property, and colonialism? Do you really want to make the claim that, say the Dutch East India Company's involvement in India was based on voluntary exchange with no extraction or exploitation? Or how about today, when the computers we use to write these messages rely on conflict minerals? Give me a break. Your analysis is ridiculous at face value. My only question is how you could type that out with a straight face.
In the year 1900 Global GDP was 1 Trillion. Today it is 77 Trillion.
https://en.wikipedia.org/wiki/Gross_world_product
In Layman's the Global Pie is growing. The number of people living in extreme poverty has fallen DRASTICALLY over the last 25 years. https://twitter.com/humanprogress/status/913901718823489538
So the people with the smallest piece of the pie are slowly getting a larger piece, but the people who already have the biggest piece of pie are getting even bigger pieces faster. But because the pie is growing, it doesn't mean that their larger piece is making someone else get a smaller piece.
The only people who have a proportionally smaller piece than they used to are in the middle class. Which is what happens when first world work more closely with developing nations. Taking more people out of extreme poverty but putting slight downward pressure on the middle class.
Inflation is a regressive feature of modern currencies. It transfers wealth from lenders to borrowers and away from investors. The degree to which it does so is a function of the amount of wealth one has.
Is it easier or harder to afford basic foodstuffs? Do they eat out (luxury) more or less? If they own a home, is it larger or the same size? Who travels more? Who has better healthcare? Who spends more on entertainment? How much do they spend on the family pet? Who spent more time furthering their education?
All of these are measures of wealth, and the modern "regular" person would be wealthier in every one of these categories. And that's not even factoring in advances in technology that make the quality of life of a person better even if there share of societal wealth goes down.
> Is it easier or harder to afford basic foodstuffs?
Processed foods are far easier to afford, but they are extremely unhealthy. As for other basics, many have gone up over the last 50 years.
> Do they eat out (luxury) more or less?
Women now work. 50 years ago they did not. Less time/people to cook at home. Not like everyone is eating at steakhouses. They just don't have the time so they go to Chipotle or McDonalds or Panera.
> If they own a home, is it larger or the same size?
Most people own legacy homes-they are the same size because they are the same homes. New builds are building bigger houses but what "regular" person builds new homes?
> Who has better healthcare?
This has more to do with advancements in medicine and technology than people becoming richer.
> Who spends more on entertainment? How much do they spend on the family pet? Who spent more time furthering their education?
Furthering education is largely on credit, so this is a bad measure.
> and the modern "regular" person would be wealthier in every one of these categories.
Nope.
It's impossible to separate people becoming richer from advancements in technology. We didn't grow GDP by 77 times, because we work 77 times harder.
Improvements in underlying technology are what help us create more wealth. The problem is that the new wealth being created and benefits of that new technology is being shared so proportionally.
Try to do that today in the same area. The foremen at the same sugar house could never afford a regular residential lot, much less the a house to put on it. It would take them 20+ years to save the money.
When you read stories that Apple (or whoever) has $X billion "in cash" it's not actual cash. They keep some around in money markets and the like for near term expenses, but the majority is in bonds that pay more than inflation. In fact, if Apple were classified as a bond fund they would be the largest in the world:
https://www.bloomberg.com/news/articles/2017-05-04/apple-buy...
This is defined as people living on less than a dollar a day. Yes, it has more than halved in 30 years. Congratulations. I totally see how this progress actually over half a century relates to the world's richest getting an extra trillion in one year. Yep, makes sense to me.
Your tone sounds sarcastic but I don't see the justification for it. The number of people who are actually hungry and malnourished has gone down significantly, and far more people are vaccinated today then 25 years ago, and far more children can go to school and literacy rates are up.
For example, a single farmer today can not only produce many times more crop compared to a farmer 100 years ago, but also safely and efficiently distribute this produce to consumers across the globe. In general, assuming everyone in the economy works equally hard, the total production (i.e., the global net wealth) can increase as long as technology is increasing.
Numerically, yes. Psychologically and socially it's completely different.
As inequality rises, people whose wealth increases more slowly are effectively poorer in relative terms.
% from 1820 - 2015:
https://ourworldindata.org/slides/world-poverty/#/declining-...
Distribution 1988:
https://ourworldindata.org/slides/world-poverty/#/Global-Inc...
Distribution 2011:
https://ourworldindata.org/slides/world-poverty/#/Global-Inc...
The sources below are from a quick Google search. They mostly reference income stagnation and are about the US. But income stagnation leads to wealth stagnation and there are similar trends world wide. Thomas Picketty's Capital in the 21st Century is largely about this issue, as is Robert Reich's documentary Inequality for All. There are those who challenge the conclusions drawn in both, but few seriously contest the data they point to.
[1] http://www.epi.org/publication/charting-wage-stagnation/ [2] https://www.npr.org/sections/money/2014/10/02/349863761/40-y... [3] https://www.economist.com/blogs/freeexchange/2013/09/incomes [4] http://www.nytimes.com/2013/01/13/sunday-review/americas-pro...
In any case, their wealth is increasing at a much higher rate of 23% compared with the world GDP increase of 2.4% and US' GDP increase of 1.5% (https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2...).
They're all one tech bubble bursting from loosing most of their wealth.