Extreme Wealth Inequality


#1

There is nothing wrong with wealth inequality. The only problem is with extreme wealth inequality, when it hinders economic growth.

An OECD study found that countries with a narrowing of income inequality had higher percentage growth, than countries with expanding inequality.

So… how do we solve it?

###Do we begin to tax wealth, or are incomes the main problem?


#2

There are a vast array of policies which should be undertaken, but in general I think making the rich poorer is counterproductive - the focus should be on boosting lower incomes.


#3

I’m sorry is this a typo? If it isn’t a typo then the logical (rather than compassionate) reply is don’t bother tackling it because as you just said inequality is good for growth.


#4

It is


#5

Sorry. It is a typo, actually.

Those countries with a narrowing income inequality had faster economic growth.

http://www.oecd.org/newsroom/inequality-hurts-economic-growth.htm

I will update my post now.


#6

My post still stands.


#7

[quote=“lordtutton, post:6, topic:111533”]
My post still stands[/quote]

Despite the link I have provided?


#8

Growing inequality hurts growth, yes.

But wealth inequality is necessary for growth to happen in the first place.

And as a side note, the study doesn’t show why growing inequality hurts growth, so taxing and social spending to reduce inequality could still hurt the economy.


#9

Which is why I said:

:wink:


#10

I know you’re sensible.

My post was a reply to @josho


#11

Taxing wealth excessively probably isn’t going to tackle the root of inequality and poverty, incomes should be the focus of policies attempting to minimize the gap between the wealthy and poor.

Whatever wealth we do tax should be used to improve early education and technology; equip more people with better skills and help build up industries that will better put these skills to use. Although it isn’t the government’s jobs to carve out industries to create jobs for those with jobs that don’t pay well, there could potentially be a large market in technologically advanced industries that have yet to flourish, and could be put to use by those with a superior education.

Also, increasing welfare spending isn’t going to yield massive benefits, at least in the US, more government money has been put into welfare without significant decrease in the number of the impoverished after a certain point.

So overall, I’d say education and efficiency to improve incomes are among the more optimal ways to deal with growing inequality.


#12

R E N T S E E K I N G
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Yes, wealth inequality matters.


#13

FULLY AUTOMATED LUXURY GAY SPACE COMMUNISM DISAGREES


#14

Ok that makes more sense considering what you are arguing. The problem is the link isn’t sound. Firstly oecd is a small sample and secondly how do we know which is the cause? If low grow causes extreme inequality (which based on neoclassical economics it would) then we should target increasing growth not decreasing inequality.

If you want me to assume the causality you state is given, and assume sample size is large enough to be representative then yea a wealth tax is the only solution levied at between 0.1-0.3% of assets per year.

I would want to be far clearer on the facts before I advocated such a tax though


#15

which based on neoclassical economics it would

wat


#16

Nothing in this thread suggested a way to deal with it. Education is a very long term solution. Provides zero short-term stabilisation of wealth inequality. Incomes won’t improve for a 30 year old because more has been invested into education. And the average age is far older than that.


#17

So according to neoclassical models; Solow, Lucas etc in a zero growth world capital accumulates as the return on capital is greater than the return on labour.

This means under conventionally accepted economics in a zero growth world eventually all capital would be held by 1 actor (firm/person)

If you subscribe to this school of thought ( roughly half of economists and all Tories do) inequality is caused by a lack of growth. Not the other way around.


#18

That shows a short sighted view of education. I personally subscribe to a lifelong view of education. Technology constantly changes so why shouldn’t our skills change with It?


#19

Biological constraints, time constraints and most importantly financial constraints. Then there’s also real social perception constraints. Age discrimination might be illegal but no one will hire an entry-level marketing consultant aged 44 who just stopped stacking shelves in Lidl a year ago.

Do you want the government to not only fund full-time education for adults but also give them money for food/rent/etc.?


#20

That’s funny because age related pay exists in law? [quote=“Cameronism, post:19, topic:111533”]
no one will hire an entry-level marketing consultant aged 44 who just stopped stacking shelves in Lidl a year ago
[/quote]

Damn right getting the skills needed will take longer than a year in certain jobs- the one you mentioned probably being one of them.[quote=“Cameronism, post:19, topic:111533”]
Do you want the government to not only fund full-time education for adults but also give them money for food/rent/etc.?
[/quote]

I certainly want the government to pay for the education. You could argue as the individual is structurally unemployed the government is already funding food/rent/etc. Under my proposal you invest in the education which relieves pressure on other parts of welfare which are struggling. The areas of high employment in UK are mostly related to a failing industry. The options are to write those workers off or to teach them a new way of living.