Here’s a pretty easy way to understand inequality

How to explain inequality

From here:

To Mishel and Steinbaum, technology isn’t causing inequality; it’s political factors like the weaknesses of unions, the way minimum wages haven’t kept track with cost of living increases, and a series of tax cuts benefiting both the rich or people making income from investments rather than wages. Examples include lower tax rates for capital income compared to wage income and President Bush’s 2003 dividend tax cut, which exempted corporations from taxes on the money they pay shareholders and increased corporate profits. Those profits, which are passed on to a company’s owners, have risen in direct proportion to decreases in employee compensation; wages now make up a falling share of gross national product as a result.

In reality, inequality is like a snowflake quilt: it’s a bunch of things patched together, but it’s also different for everyone. A family in Memphis may have issues for a wholly different reason than a family in Spokane, and vice versa. (And same in Antwerp vs. Cuzco, for example.) It’s hard to generalize because feelings of inequality — or true bank account notions of inequality — often happen at the familial level, not the “bunch-of-academics-sitting-around-and-talking” level.

(BTW: Had this convo briefly with my wife this morning. What if an university somewhere eventually decided to buy IBM’s Watson and use that for research opportunities and even teaching? What if academics become automated? HA!)

Still, I think the bottom of the pull quote above has a lot of validity. Essentially:

  • We stopped valuing labor (decline of unions?)
  • We started deeply valuing what you own (like process, baby!)
  • Poor/middle-class people tend to work and maybe own a couple of things
  • Rich people tend to own a lot of things
  • If we value what you own, obviously inequality is going to exacerbate

Yes/no? Thoughts?

Ted Bauer


  1. You are so on target. LA TIMES just released figures this weekend that showed the richest 1% in the U.S. own 40% of the wealth in our country . Globally, the top 1% own 47%. of the world’s wealth. The growing disparity is feed by greed, a moneyocracy (versus a democracy), and a sense of despair of making any kind of inroads. And you are right–it is contextual. A living wage in downtown LA is very different from a living wage in Atlanta. It is estimated that an hourly wage would need to be almost $28 per hour for a family of 4 to find a 2-bedroom apartment in Los Angeles.

  2. The cost of things, the value of nothing! I agree that today worth is mainly measured in monetary terms. People tend to join in with that circus as they feel they have no other choice, bucking the trend is perceived as *hippy dippy*. Whilst we stay isolated as either individuals or as a family unit this inequality forces us into staying with that system unless we opt to be in a fringe culture. I agree that unity will make workers more secure in challenging this system. In my view Paul Lafargue got it spot on in his book *The Right to be Lazy*

    • I feel like we got way too into “HOW MUCH you have” in terms of bottom-line, as opposed to like, things you can’t quantify, like love/relationships/friends/purpose/etc. That’s what you want at the end. Isn’t it?

      • Yep. This, all day long. Like my mama always told me: someone will always make more money than you but no one has a higher value than you as a person. I’ve had pretty good success in chasing the dream of connection with #humans vs. #bottom-lines. Will I ever own a boat? Meh, probably not. But that’s what we have friends for. 😉

  3. Capitalism itself isn’t the culprit, but it’s the idea that too many people start businesses only to eventually sell them in as short a time as possible. That’s great for the owners who already had resources to start the businesses and the investors who helped finance them, but it leaves the other people (employees) — who helped make things actually work — out in the cold.

    And so it goes, this constant cycle of building something and selling it out from under the workers. One of the highest accomplishments in business is to sell out…no wonder there’s no loyalty anymore.

  4. The underlying assumption that inequality is bad is wrong on its face. Some things or services are worth more to people than others, and that’s how wealth is generated, by moving resources from lesser to more highly valued ends. That’s true of everything from a manufacturer bidding steel prices up to a worker taking a better paying job. So the issue isn’t inequality, it’s inequality due to certain specific factors. In other words, if someone is richer than you because he worked his ass off, too bad for you. If he’s richer than you because he stole your money, that’s wrong.

    And there’s a lot of theft going on these days, usually the rich and politically connected stealing from the poor, and their main tool is the government. You can go about this in two ways basically, either via direct confiscation or destroying the currency. In the old days kings would mint the money, and upon a reminting they could retain some of the gold for themselves, and then hand it out to friends of the throne, this plus direct taxes kept them in style, and since they ‘owned’ the realm it was in their interest to keep things in marginally good shape. These days we use fiat currency, but the mechanism is essentially the same, money gets basically created out of thin air, not backed by any commodity, nor earned via any honest exchange, and the first people who get it are generally politically connected bankers who then get to use it at its current buying power before it devalues. It’s a nice party if you get an invite, but eventually you have to stop the money pump or you end up like Zimbabwe, and when that happens, either voluntarily or not, you get a recession, and then the outright confiscation begins in the form of ‘bailouts.’ What’s more, instead of king-owners of the realm, we have temporarily elected ‘stewards’ of a sort who have no long term interest in the health of the country, and who are much more easily bought and sold.

    You don’t need higher minimum wages or unions, you need to END the protectionism already afforded to corporations and to the rich and make them compete on an actual free market, as opposed to the heavily managed one we’ve always had. But that’s not likely to happen, they have the money to buy laws, plain and simple. It’s a curious fact that even in countries where the president owns the country for all intents and purposes, he’s almost never the richest guy there. Someone else usually ‘owns’ him, so it’s really not even the government that’s at issue, but the idea among some people that stealing is okay so long as you call it taxation or monetary policy. The rich have always and forever used the government to screw people over. You can try to use their own weapon against them, or you can minimize or eliminate the weapon. Choose your path, but you can’t make this system ‘work’ as many think it ‘should,’ because it’s working just fine once you realize its sole purpose is to rip you off for someone else’s benefit. When viewed in that context, when you realize the government is merely a tool used by connected groups to essentially rob everyone else, everything it does make perfect sense.

  5. I am a free market guy (more of a Libertarian than anything else), however I also believe in a civil society that supports a proper regulatory framework. The problem today is that many institutions and processes that normally would allow a free market to function properly have been co-opted by big interests.

    – Money in politics. I can’t say too much about this but it’s so obviously a non-democratizing feature of our political landscape and it has gotten worse. Super-Pacs. Legions of Lobbyists. Bought elections.

    – Regulations in the wrong places. Glass-Steagall Act should have never been repealed. This was a ridiculous notion. Other places where regulation should have helped include derivatives (this is STILL the case, they never learn). Brooksley Born had this right in the 90’s as the head of a Federal oversight group (Commodity Futures Trading Commission) that insisted on tighter regulation of these economic nightmares. She was forced out over it and in the end she was right…and we got the 2008 meltdown as a result (http://www.pbs.org/wgbh/pages/frontline/warning/view/).

    – Unfair Tax practices. Capital gains should be taxed at the same rate as other income. It simply doesn’t make sense, and it has the material effect of performing and end-around of the progressive tax system.

    – Banks are continually allowed to over-fee customers. When you take these fee structures away in one place they pop up in another. One result is adding a lot of disparity to the “dual-economy” model we have now: One economy for the wealthy and upper middle class, and another for the lower middle class and poor.

    Free markets do work, IMO (some of my heroes are economists). However, we don’t have one and have not for a long time. The govt. and it’s agents/agencies need to recognize that and start undoing all the bad stuff they have done to create this situation in the first place. They also need to stop cross pollinating with the guys who are doing this to the economy. This Venn diagram illustrates this:


    • I agree with your points and I consider myself to be pretty liberal. What I don’t understand is how someone can be libertarian and still believe in free markets. By your own evidence, free markets don’t really exist, even though the concept is nice. Of course it would be great if everyone just did what they’re supposed to and operated on the up-and-up, but people are always going to cheat, deceive, and try to win the zero-sum game…so, why not acknowledge that and throw at least a thimble-full of water on the forest fire that is our corrupt system?

      The government isn’t inherently bad — it’s just run the wrong way by certain people. Some argue that government doesn’t create jobs, but it does exactly that via contracts to third party vendors, the military (and it’s third party vendors), and manipulating fiscal and monetary policies.

      • Because freedom is the one option that hasn’t been actually tried yet. For the last two hundred years in the US alone people have been claiming that the government is ‘supposed’ to work one way and not the other, and that if they could just elect ‘the right people’ it would all sort itself out. We’re always one election and two laws away from perfection. And in a broader sense, that’s been the patter of history for the last several thousand years. All government devolve into a cabal of rich interconnected interests who oppress the poor and often send them off to kill and be killed only to amass more wealth for the already rich. For someone like me, who is more extreme than the original commenter, and who does not differentiate between states and sees the US and other modern states as merely a continuation of the same pattern that has been unfolding for thousands of years, the question is simple: how much more time do you need? We’ve been trying the plan of trying to get the government just right by this means or that for thousands of years, and it has never worked. Not once. All of them have failed, all of them fall due to their own waste and inefficiency or in bloody rebellions. So, would another thousand years do to vet out whether or not the state is a good plan, or could we start discussing alternatives earlier than that?

        I see very, very few circumstances where stealing from someone, kidnapping them and throwing them in a cage, or killing them, are acceptable answers to any conflict. But, those are the tools of the state. They fine, tax, imprison, and murder people who don’t comply. I’ve never seen a moral or ethical justification for why it’s okay to do that under the guise of a government, but it would be criminal if done by the individual. Unless of course it’s understood, a mentioned in my other comment on this post, that the government IS a criminal gang, and the reason the double standard is okay then is because they want to monopolize criminal enterprise. Which I understand from an operational point of view. It just still surprises me that so many people buy into it, totally and without question. Robbery? Nope, it’s ‘taxation,’ and yeah sure you’ll be brutalized or killed if you don’t pay, or forced to flee for the rest of your life, but it’s not robbery. And you OWE it to society because… because you were born on this particular patch of dirt. Which is also why you should go fight and die in a war with those random people from that other patch of dirt so we can make more money… Sorry, for national pride, and because the people on that patch of dirt are EVIL, and we’re good.

        Like I said in the other post, once that double standard is gone the government makes a surprising amount of sense in all its actions, but you also realize there’s no hope of making it ‘work,’ because it’s already working the exact way it’s supposed to.

  6. It’s sad but true. The government is merely the most successful mafia, and that’s it. Think about a standard protection racket. Guy opens a store, some nicely dressed people come by and explain to him he should seriously consider donating some money to the Community Improvement Fund or his windows might get broken. Of course, we all know as does he, that the people who will break his windows work for the same ’employer’ as the people asking for the ‘donation.’ The people who are a ‘threat’ are simply another arm of the organization supposedly ‘protecting’ him, and when out of sight they get together for drinks and laugh at the schmucks who pay.

    So now, say you have some incredibly pro conservative cause group in an area. The Democratic candidate says to his constituents, “You’d better vote for me, send me money, or otherwise support me, otherwise that group of people is going to take away your rights!” And his constituents do just that. But then, stop and think for a moment; what could that group actually do without a corresponding Republican representative? Nothing. Without the force of law they’d have to CONVINCE everyone to let them take something from you. So what the Democrat is really saying is, “You’d better give me money or, when this other guy who I work with, and who gets paid by the same organization as me, tries to change the law to your detriment, I won’t stand in the way, or I’ll sell off your rights on the cheap to him for something else some of my more generous donators want.” So, it’s the EXACT same game the mafia plays, and every player in all political parties plays it. They’re ALL ‘recommending’ you ‘donate’ to the Community Improvement Fund or your windows might get broken.

    Just like the mafia, they have their own very real in-fighting and disagreements, but they definitely all agree you’re the one who pays, and they are the ones who receive, and all the threats they conjure up to scare you into ‘donating’ would be almost entirely toothless threats without them. No one would be breaking your windows. There might be people who don’t like your windows and who want to break them, but then they’d have to explain to everyone else why they had a right to do so, and then convince them that they wouldn’t do it to anyone else, because behaving like an asshole carries a heavy cost in a free society, but the essence of politics is to make behaving like an asshole not only costless, but profitable.

    There is no difference between the government and the mafia. Once you realize that, the source of all the problems of society and the possible solutions start to narrow down pretty quick.

  7. This is an excellent video explaining a lot of the problem, and citing a lot of the same causes I did about money in politics. It’s quite a strong indictment of our whole system…and statistically sound from what I can see.

    • I like the succinct way the video explains the system, but it seems to lump all special interests, unions, trade associations, and billionaires together as if they’re all part of the problem. They’re not all the same. The issue is that the ones that could do the most common good don’t have as much influence as the ones who perpetuate the status quo.

      For example, being a billionaire isn’t inherently bad — it’s what that billionaire does with his or her power and money that counts.

      • The premise of the study was if Congress cares what the public thinks at large. I think they concentrated it well. If you going to get money out of politics, it has to almost all of it. Organizational money. Maybe if all the money that was allowed was from individual contributions, they would listen to public sentiment. Kick out the big PACs and corporations…and the small teachers union, or what have you, still becomes the biggest voice in the room. I agree that not all organizations are equal…but to the politicians, given their record…the only differentiator is how much cash you are willing to but influence with compared to whomever you disagree with. Still corruption in my book.

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