It’s December – and it’s that time of the year when a few things start to happen:
- People start going on holiday, making readership numbers drop off.
- I run out of blog topics because I also want to go on holiday.
- Or when I have a great blog idea, I start wondering whether I should save some of the interesting stuff for, say, February – when people will actually read it.
- So it all starts getting a bit reflective.
- And you see a few more infographics start to spring up (especially when I actually do go on holiday).
But I wanted to get this short post in there before (what feels to be) the last working week of December is out.
I’ve written about inequality (both the wealth and income varietals) a fair amount over the last year and a half. It’s influenced the way I think about inflation and asset classes and investment strategies. And it hasn’t all been consistent either: I’ve been on the side of people that accuse inequality measures of being biased against the rich (and failing to take welfare benefits into account); and I’ve been on the side of those that accuse those same people of being libertarian fools that aren’t quite embracing reality.
Here’s a selection of older blog posts:
- The US Inequality Myth. Sort of.
- The Book That All The Economists Are Reading: Das Kapital in the Twenty First Century
- The War on the 1% #Kristallnacht
- The Hubbub About Global Wealth Inequality
- The US Inequality Culprits: Women, Asia and Insatiability
- Dear Top 1%. It’s Time To Panic.
- South Africa’s Inequality is not racist. Well – not entirely.
A lot of what’s being talked about is based on the idea that inequality is a bad thing. Or that a little bit of inequality is good, but too much of it is very bad indeed. And we’re all destined for under the stairs at Downton Abbey, and the small children are soon to be shipped off to the work houses.
But there is a minority on the edges who argue that wealth inequality is actually not a problem at all.
Their argument seems to fall roughly into three categories:
- “Wealth and income inequality drive innovation and entrepreneurship.”
- “The only real problem is inequality of opportunity – because lack of opportunity reduces social mobility, which reduces the drive for innovation and entrepreneurship.”
- “Sure, we may be less equal. But overall, our lives are better. Is it not better to have a higher quality of life in absolute terms, than a more equal world where everyone is worse off?”
I think the arguments are interesting. And because it’s all thought-experiment territory (after all – how do you really test these things in practice?), it’s entirely possibly that they’re right.
That said, in my mind, I do wonder whether these arguments really reflect the extremes. When you head to the upper end of inequality measures, wealth and income inequality start to correlate with social immobility.
And personally, I think that too much inequality is bad for everyone. Here’s a quote from prospect.org:
“…unequal growth concentrates wealth in the hands of a tiny slice of consumers who can only spend so much money. In turn, the vast majority of earners are left with little extra cash for goods and services. Resulting weak demand undermines growth. Low growth makes everyone poorer than they otherwise might be, including those who own the means of production. Inequality produces other bad economic outcomes, too, such as the underutilization of the nation’s human capital, inadequate public investment in both human and physical capital, and social ills that are costly to address, diverting away resources from investment.”
It’s just a thought.