I often ask my students to predict the social effects of particular new products or technologies. And a common error is that they expect every new thing to increase inequality. Their argument is that any new thing costs money, which rich people can better afford. So the rich must more gain advantage from each new product. A similar argument is given for a new kind of job – those better suited to that kind of job will do that job, and gain an advantage over people with other jobs, increasing the job induced inequality.
Does not the very division dichotomous division into "haves" & "have nots" beg oversimplification? Have what? (or how much, or how much of what?)
I feel another poorly reasoned plea for endless relativism coming on, here...which I will resist with might & main. Still, the post & the aggregate comments following suggest to me that either/or thinking works really well in hypothesis testing, but perhaps less well when we're talking about how most of us frame the world. Juuussst a thought...
Social inequality and level of technological development are completely unrelated.
Social inequality is about how people interact with each other. Technological development is about what technology is used to make tools and artifacts.
Tools and artifacts can be used to promote social equality or social inequality. Social inequality is what most technological innovation is used for. The first stone weapons were very likely used to enrich the lives of those who could make and use stone tools at the expense of those who could not.
Then, social inequality related to the tools and artifacts one could make and use, as well as the tools and artifacts that one could steal and barter for.
Now social inequality depends mostly on legacy wealth and the social power that legacy wealth buys.
That legacy wealth is being used to foment strife between groups to their detriment and to the advantage of those who control legacy wealth. Keep the poor desperate and they will be compelled to do desperate things. Raise the specter of boogie men under every bush and hoodie, and desperate desperate people will do desperate things.
As we have seen in Florida, those who can purchase guns and are ignorant enough to believe and subscribe to racial bigotry can be frightened enough to use them and kill innocent children.
What is all that technological advancement being used for? It is being used by Fox News to spread disinformation to demonize minorities to stir up xenophobia to get Republicans elected so they can lower taxes on the wealthy and make the poor ever more desperate. The poor do desperate things, so they get locked up which is why the US has the largest prison system in the world and the highest incarceration rate, in the world.
With 5% of world population, the US has 23% of the world's prisoners.
The US is the worlds police state. What could we do if we didn't have to spend ~$50k per prisoner? What could we do if those prisoners and guards were productively employed? What could we do if we built factories and schools instead of prisons?
If innovations always increase inequality, then wouldn't any banning of technology decrease inequality?
Consider the world were product X banned tomorrow. It's different somehow. The day after product X is allowed, effectively reinventing it. The world goes back to the way it is today. Because innovation always increases inequality then the current world has more inequality than the world in which product X was banned.
This seems strange as the banned product could be one that almost only poorer people use (ex. long distance bus travel like Greyhound).
It also implies that the price of technology is inequality, and that tradeoff may be very worthwhile.
Yup, the rich can actually lose money when they lose against a pension fund on the Wall Street casino, when an inheritance gets divided, when they give money to charity, buy 20 Ferraris or when the state redistributes their wealth. Usually (and in the long term) they (as a group) make money faster than they lose it, but that doesn't mean there cannot be periods when they lose more than they gain.
The "official" increase in productivity was 87%. (At least) 100% of wage increases can be attributed to more hours worked so even if 99% of the productivity increase was somehow "miscalculated" the workers still got a bad deal. And not just the Americans: the Chinese workers' wages still rose slower than the salaries of executives (especially when you consider how many hours the Chinese have to work for their wages).
I'm not kidding either: there will be no copper mines left on Earth by the end of this century, to give you an example, meaning copper use would not be able to expand from then on (it would even have to decrease if it's not recycled 100%), that's pretty Malthusian, don't you think? Yet it's what will happen even if we freeze population growth and consumption today.
And I'm saying we are already "Malthusian" because the Earth already cannot sustain the current world population with its current level of consumption and technology. If I have a bunch of kids and because of them I have to spend $2000 a month while I only make $1000 a month and I have $10.000 in savings than my family is in a Malthusian state, even though we won't actually starve for 10 months.
I call a world "Malthusian" when resources limit population growth. Right now the highest population growth is in some of the poorest countries, so I would not characterize the world as Malthusian.
"Looking at table 676, you can see this is not true"
All of the gains from that table are due to more married women joining the workforce and people working more hours in general: . Real median (household) income has grown only 20% while real GDP growth divided by population growth was 68%, causing the top 10% to go from taking 32% of all income to taking 45%, the top 1% from 9% to 20%, and the top 0.1% from 3% to 12%. It's even worse when you read that the top 1% saw their income rise faster than corporate profits (which in turn rose faster than median wage). I have no idea why you are trying to deny the growing income inequality in the United States. Now, I'll throw you a bone though: the actual wealth (consumption of stuff that's not just financial hot air) possessed by the elite may not have grown as fast as their incomes have because part of their money is fake (literally printed at the orders of Wall Street and then invested in a bubble of, say, $2 million Manhattan apartments), but even so, they do have the power to make that money real by buying more stuff workers are also buying, effectively consolidating their wealth in the real world."Is this true? This shows that consumption of upper and lower incomes have been increasing and that what gets consumed isn’t very different. In other words consumption isn’t really diverging."Unfortunately your link doesn't work so I cannot comment on it."Apple hasn’t “escaped” compeitition. They’ve just been innovating faster than their competitors."Apple isn't innovating: they don't develop or deisgn actual components, they just use the same parts everyone else uses, put them in a white box and put an Apple logo on it, then charge more than everyone else because they are a brand."If Apple was charging “way to much”, people wouldn’t buy their products as there are many many cheaper alternatives. That people buy their products means that they are not selling their products for “too much”."So you really are one of those people who believe an Adidas shoe will last longer than a Puma shoe made in the same Chinese factory? People pay more for big brands, even if the quality doesn't warrant it, that's common knowledge. The iPad doesn't even have a USB port (which means a major reduction in value), but Apple disciples don't care about that, to them the status boost of being seen with an iPad is more important."And supplying jobs, therefore wealth, and therefore a better life to poor Chinese people."It is the Chinese government that is forcing an increase in minimum wage greater than annual GDP growth, not Apple, Apple has only gone above minimum wage since reports of workers jumping off the roof starting appearing in global headlines. Also, you can bet the factories will be moved to Birma or Africa in a few years if China keeps raising the minimum wage. Last but not least the salaries of Apple's executives have grown much faster than those of the Chinese workers."Capitalism lets anyone grow richer exponentiially through investment"Right, but exponential growth means you can never catch up to someone who's had a head start."Strong unions are driving force behind out of control government spending and the incredible waste in government."Even if that were true (it's not) you're not possibly suggesting wages would be higher for non-government workers if there were no unions? There's not a single country on Earth where that has been proven."Consumer agencies are less effective than the actual consumers."How many food items have you inspected today? Of course I never said all the consumer agencies had to be government funded, but that slipped past you..."Regulatory bodies are the agencies most responsible for the last two bubbles, meaning they are most responsible for the last two recesssions."You're basically saying: "regulatory bodies, at the insistence of large corporations, eased regulations, allowing large corporations to f*ck up the economy, so naturally it's the regulatory bodies' fault and we need to get rid of them and let large corporations regulate themselves.""And you are apparently unaware the the “energy credits” you described is money. It’s not an abolition of money."No, they're not just money on an "energy standard". Why? Because if I "buy" something with them, the seller doesn't get to pocket my credits. They can also not be given away, stolen, saved or speculated with, and invest of them would always be divided among the population (income inequality based on merit could still exist but it would never grow because of an investment).
Some of these are more ambiguous than suggested. In 1, real wages of the non-rich may be allowed to fall until they can only afford C increasing inequality, in 2, some of the rich may decide C is sufficient quality and divert their spending to other goods producing more equality in these but less in others.
workers have become much more productive, but real income hasn’t gone up for anyone except a tiny elite.
Looking at table 676, you can see this is not true. The distribution of families in the various income brackets, in constant dollars, has shifted showing ever more people getting wealthier, while fewer people constitute the not so wealthier. Fewer people today (as a percentage of the population) make below $15K than in 1980 and most dramatic is the more than doubling of the percentage of households making over $100K, going from 8.6% to 20.1%. Almost 12% of the population can hardly be considered a "tiny elite". Note also, that the percentage of middle incomes have gotten smaller. And since you can also see that the percentage of lower incomes have gotten smaller as well, this means that the middle class is moving into the upper class in income.
So, in essence, more stuff gets produced by workers but the workers don’t have money to buy this stuff themselves, however the demand is still there, meaning the rich are buying a bigger share of all the stuff than they used to.
Is this true? This shows that consumption of upper and lower incomes have been increasing and that what gets consumed isn't very different. In other words consumption isn't really diverging.
On a smaller scale you could think of Apple, a corporation that has used a brand, an image to escape competition
Apple hasn't "escaped" compeitition. They've just been innovating faster than their competitors. Computers and smartphones are incredibly competitive.
and therefore has been able to keep charging way too much even
If Apple was charging "way to much", people wouldn't buy their products as there are many many cheaper alternatives. That people buy their products means that they are not selling their products for "too much".
though their costs have plummeted since they moved their production to China.
And supplying jobs, therefore wealth, and therefore a better life to poor Chinese people. Since Chinese people are far poorer than Americans, this is yet another example that your thesis that the rich are getting richer, while the poor are not, is wrong.
Capitalism lets the rich grow richer exponentially through investment (and speculation)
Capitalism lets anyone grow richer exponentiially through investment (and speculation; something we all are by the way; for example, all those people that were buying houses during the housing bubble were speculating that their houses would be worth more after they bought it; that they were wrong doesn't in any way change the fact that they were speculators).
there are ways to defend against it: strong unions, consumer agencies and regulatory bodies
Strong unions are driving force behind out of control government spending and the incredible waste in government.
Consumer agencies are less effective than the actual consumers.
Regulatory bodies are the agencies most responsible for the last two bubbles, meaning they are most responsible for the last two recesssions.
And you are apparently unaware the the "energy credits" you described is money. It's not an abolition of money.
I suspect this is because most people think of the wealthy as having their wealth in dollars in the bank or in a pile of gold rather in capital assets that can deteriorate or depreciate. If they thought of it as business ownership they could think of all sorts of losses and bankruptcies.
The poverty level in the United States for a single person (no kids) in 2011 was $10,890. The worldwide average income (depending on your source) is ~$7-8k. While many of America's "unwashed masses" may have iPhones, I am quite confident that the common people of China and India (not to mention Africa and the poorer parts of Asia and Latin America) do not.
Does not the very division dichotomous division into "haves" & "have nots" beg oversimplification? Have what? (or how much, or how much of what?)
I feel another poorly reasoned plea for endless relativism coming on, here...which I will resist with might & main. Still, the post & the aggregate comments following suggest to me that either/or thinking works really well in hypothesis testing, but perhaps less well when we're talking about how most of us frame the world. Juuussst a thought...
"the rich have sort received the short end of the stick"
Anytime you find yourself having that thought, please punch yourself as hard as you can right in the nads.
Social inequality and level of technological development are completely unrelated.
Social inequality is about how people interact with each other. Technological development is about what technology is used to make tools and artifacts.
Tools and artifacts can be used to promote social equality or social inequality. Social inequality is what most technological innovation is used for. The first stone weapons were very likely used to enrich the lives of those who could make and use stone tools at the expense of those who could not.
Then, social inequality related to the tools and artifacts one could make and use, as well as the tools and artifacts that one could steal and barter for.
Now social inequality depends mostly on legacy wealth and the social power that legacy wealth buys.
That legacy wealth is being used to foment strife between groups to their detriment and to the advantage of those who control legacy wealth. Keep the poor desperate and they will be compelled to do desperate things. Raise the specter of boogie men under every bush and hoodie, and desperate desperate people will do desperate things.
As we have seen in Florida, those who can purchase guns and are ignorant enough to believe and subscribe to racial bigotry can be frightened enough to use them and kill innocent children.
What is all that technological advancement being used for? It is being used by Fox News to spread disinformation to demonize minorities to stir up xenophobia to get Republicans elected so they can lower taxes on the wealthy and make the poor ever more desperate. The poor do desperate things, so they get locked up which is why the US has the largest prison system in the world and the highest incarceration rate, in the world.
With 5% of world population, the US has 23% of the world's prisoners.
https://en.wikipedia.org/wi...
The US is the worlds police state. What could we do if we didn't have to spend ~$50k per prisoner? What could we do if those prisoners and guards were productively employed? What could we do if we built factories and schools instead of prisons?
If innovations always increase inequality, then wouldn't any banning of technology decrease inequality?
Consider the world were product X banned tomorrow. It's different somehow. The day after product X is allowed, effectively reinventing it. The world goes back to the way it is today. Because innovation always increases inequality then the current world has more inequality than the world in which product X was banned.
This seems strange as the banned product could be one that almost only poorer people use (ex. long distance bus travel like Greyhound).
It also implies that the price of technology is inequality, and that tradeoff may be very worthwhile.
Yup, the rich can actually lose money when they lose against a pension fund on the Wall Street casino, when an inheritance gets divided, when they give money to charity, buy 20 Ferraris or when the state redistributes their wealth. Usually (and in the long term) they (as a group) make money faster than they lose it, but that doesn't mean there cannot be periods when they lose more than they gain.
@Wonks
The "official" increase in productivity was 87%. (At least) 100% of wage increases can be attributed to more hours worked so even if 99% of the productivity increase was somehow "miscalculated" the workers still got a bad deal. And not just the Americans: the Chinese workers' wages still rose slower than the salaries of executives (especially when you consider how many hours the Chinese have to work for their wages).
"there have been eras when inequality has decreased – but how could that happen if each new innovation increases inequality?"
There are factors other than innovation that affect inequality?
I'm not kidding either: there will be no copper mines left on Earth by the end of this century, to give you an example, meaning copper use would not be able to expand from then on (it would even have to decrease if it's not recycled 100%), that's pretty Malthusian, don't you think? Yet it's what will happen even if we freeze population growth and consumption today.
And I'm saying we are already "Malthusian" because the Earth already cannot sustain the current world population with its current level of consumption and technology. If I have a bunch of kids and because of them I have to spend $2000 a month while I only make $1000 a month and I have $10.000 in savings than my family is in a Malthusian state, even though we won't actually starve for 10 months.
I call a world "Malthusian" when resources limit population growth. Right now the highest population growth is in some of the poorest countries, so I would not characterize the world as Malthusian.
Karl Smith on productivity and consumption.
@Ken
"Looking at table 676, you can see this is not true"
All of the gains from that table are due to more married women joining the workforce and people working more hours in general: . Real median (household) income has grown only 20% while real GDP growth divided by population growth was 68%, causing the top 10% to go from taking 32% of all income to taking 45%, the top 1% from 9% to 20%, and the top 0.1% from 3% to 12%. It's even worse when you read that the top 1% saw their income rise faster than corporate profits (which in turn rose faster than median wage). I have no idea why you are trying to deny the growing income inequality in the United States. Now, I'll throw you a bone though: the actual wealth (consumption of stuff that's not just financial hot air) possessed by the elite may not have grown as fast as their incomes have because part of their money is fake (literally printed at the orders of Wall Street and then invested in a bubble of, say, $2 million Manhattan apartments), but even so, they do have the power to make that money real by buying more stuff workers are also buying, effectively consolidating their wealth in the real world."Is this true? This shows that consumption of upper and lower incomes have been increasing and that what gets consumed isn’t very different. In other words consumption isn’t really diverging."Unfortunately your link doesn't work so I cannot comment on it."Apple hasn’t “escaped” compeitition. They’ve just been innovating faster than their competitors."Apple isn't innovating: they don't develop or deisgn actual components, they just use the same parts everyone else uses, put them in a white box and put an Apple logo on it, then charge more than everyone else because they are a brand."If Apple was charging “way to much”, people wouldn’t buy their products as there are many many cheaper alternatives. That people buy their products means that they are not selling their products for “too much”."So you really are one of those people who believe an Adidas shoe will last longer than a Puma shoe made in the same Chinese factory? People pay more for big brands, even if the quality doesn't warrant it, that's common knowledge. The iPad doesn't even have a USB port (which means a major reduction in value), but Apple disciples don't care about that, to them the status boost of being seen with an iPad is more important."And supplying jobs, therefore wealth, and therefore a better life to poor Chinese people."It is the Chinese government that is forcing an increase in minimum wage greater than annual GDP growth, not Apple, Apple has only gone above minimum wage since reports of workers jumping off the roof starting appearing in global headlines. Also, you can bet the factories will be moved to Birma or Africa in a few years if China keeps raising the minimum wage. Last but not least the salaries of Apple's executives have grown much faster than those of the Chinese workers."Capitalism lets anyone grow richer exponentiially through investment"Right, but exponential growth means you can never catch up to someone who's had a head start."Strong unions are driving force behind out of control government spending and the incredible waste in government."Even if that were true (it's not) you're not possibly suggesting wages would be higher for non-government workers if there were no unions? There's not a single country on Earth where that has been proven."Consumer agencies are less effective than the actual consumers."How many food items have you inspected today? Of course I never said all the consumer agencies had to be government funded, but that slipped past you..."Regulatory bodies are the agencies most responsible for the last two bubbles, meaning they are most responsible for the last two recesssions."You're basically saying: "regulatory bodies, at the insistence of large corporations, eased regulations, allowing large corporations to f*ck up the economy, so naturally it's the regulatory bodies' fault and we need to get rid of them and let large corporations regulate themselves.""And you are apparently unaware the the “energy credits” you described is money. It’s not an abolition of money."No, they're not just money on an "energy standard". Why? Because if I "buy" something with them, the seller doesn't get to pocket my credits. They can also not be given away, stolen, saved or speculated with, and invest of them would always be divided among the population (income inequality based on merit could still exist but it would never grow because of an investment).
Some of these are more ambiguous than suggested. In 1, real wages of the non-rich may be allowed to fall until they can only afford C increasing inequality, in 2, some of the rich may decide C is sufficient quality and divert their spending to other goods producing more equality in these but less in others.
workers have become much more productive, but real income hasn’t gone up for anyone except a tiny elite.
Looking at table 676, you can see this is not true. The distribution of families in the various income brackets, in constant dollars, has shifted showing ever more people getting wealthier, while fewer people constitute the not so wealthier. Fewer people today (as a percentage of the population) make below $15K than in 1980 and most dramatic is the more than doubling of the percentage of households making over $100K, going from 8.6% to 20.1%. Almost 12% of the population can hardly be considered a "tiny elite". Note also, that the percentage of middle incomes have gotten smaller. And since you can also see that the percentage of lower incomes have gotten smaller as well, this means that the middle class is moving into the upper class in income.
So, in essence, more stuff gets produced by workers but the workers don’t have money to buy this stuff themselves, however the demand is still there, meaning the rich are buying a bigger share of all the stuff than they used to.
Is this true? This shows that consumption of upper and lower incomes have been increasing and that what gets consumed isn't very different. In other words consumption isn't really diverging.
On a smaller scale you could think of Apple, a corporation that has used a brand, an image to escape competition
Apple hasn't "escaped" compeitition. They've just been innovating faster than their competitors. Computers and smartphones are incredibly competitive.
and therefore has been able to keep charging way too much even
If Apple was charging "way to much", people wouldn't buy their products as there are many many cheaper alternatives. That people buy their products means that they are not selling their products for "too much".
though their costs have plummeted since they moved their production to China.
And supplying jobs, therefore wealth, and therefore a better life to poor Chinese people. Since Chinese people are far poorer than Americans, this is yet another example that your thesis that the rich are getting richer, while the poor are not, is wrong.
Capitalism lets the rich grow richer exponentially through investment (and speculation)
Capitalism lets anyone grow richer exponentiially through investment (and speculation; something we all are by the way; for example, all those people that were buying houses during the housing bubble were speculating that their houses would be worth more after they bought it; that they were wrong doesn't in any way change the fact that they were speculators).
there are ways to defend against it: strong unions, consumer agencies and regulatory bodies
Strong unions are driving force behind out of control government spending and the incredible waste in government.
Consumer agencies are less effective than the actual consumers.
Regulatory bodies are the agencies most responsible for the last two bubbles, meaning they are most responsible for the last two recesssions.
And you are apparently unaware the the "energy credits" you described is money. It's not an abolition of money.
I suspect this is because most people think of the wealthy as having their wealth in dollars in the bank or in a pile of gold rather in capital assets that can deteriorate or depreciate. If they thought of it as business ownership they could think of all sorts of losses and bankruptcies.
The poverty level in the United States for a single person (no kids) in 2011 was $10,890. The worldwide average income (depending on your source) is ~$7-8k. While many of America's "unwashed masses" may have iPhones, I am quite confident that the common people of China and India (not to mention Africa and the poorer parts of Asia and Latin America) do not.