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Topic: Eight theoretical arguments why inequality is bad for the economy

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  1. #1

    Eight theoretical arguments why inequality is bad for the economy

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    interesting link

    http://home.student.uu.se/anbr3915/inequality.htm#today

    Eight theoretical arguments why inequality is bad for the economy

    Greater income equality leads to greater demand, since the poor tend to consume relatively more than the rich
    Cheap labour means that less technological development is needed to replace it
    Inequality leads to a politically tense society (more coups d' etats, strikes, riots, etc.), which attracts less investment
    In an unequal society, less money is spent on education for all - and thus lowering the potential for human capital development
    Likewise, less money is spent on public health, which in turn leaves the population less healthy
    Crime is costly and spurred by inequality. Inequality gives higher incentives for thieves and increases the desire to punish the wealthy.
    Inequality makes the median voter demand higher taxes for redistribution, which may decrease efficiency
    The rich spend more money on lobbying and bribes in order to keep their privileged position in an unequal society

  2. #2

    Re: Eight theoretical arguments why inequality is bad for the economy

    Quote Originally Posted by charles
    interesting link

    http://home.student.uu.se/anbr3915/inequality.htm#today

    Eight theoretical arguments why inequality is bad for the economy

    Greater income equality leads to greater demand, since the poor tend to consume relatively more than the rich
    Cheap labour means that less technological development is needed to replace it
    Inequality leads to a politically tense society (more coups d' etats, strikes, riots, etc.), which attracts less investment
    In an unequal society, less money is spent on education for all - and thus lowering the potential for human capital development
    Likewise, less money is spent on public health, which in turn leaves the population less healthy
    Crime is costly and spurred by inequality. Inequality gives higher incentives for thieves and increases the desire to punish the wealthy.
    Inequality makes the median voter demand higher taxes for redistribution, which may decrease efficiency
    The rich spend more money on lobbying and bribes in order to keep their privileged position in an unequal society

    Let them eat cake.

    -- Marie Antoinette (allegedly)

  3. #3

    Re: Eight theoretical arguments why inequality is bad for the economy

    Many of the points made are self-contradictory and show that the people making the arguments are apparently incapable of discerning the clear implications of their own observations. I think most of this can be summed up here:

    Quote Originally Posted by charles
    Inequality makes the median voter demand higher taxes for redistribution, which may decrease efficiency
    So attempts to enforce economic equality may decrease efficiency? Then why are we arguing in favor of it? Isn’t this self-contradictory? All this implies is that attempts to counteract natural “inequality” are counter productive and therefore warns that in a society with unequal wealth there will be stupid people who want to gouge the productive for their own benefit – but ultimately to everyone’s detriment.

    Most of the flawed logic here is based on the assumption that economic “inequality” means people getting poorer. But the reality is that the increase in “inequality” has been the poor getting richer and the rich getting even richer. So while the proportional difference between the rich and the poor may be increasing, this does not mean the poor are declining, but rather they are improving as well, even if at a slower rate. Thus “inequality” does not necessarily mean more poor.

    But our question should not be "what is economically expedient, nor what makes all economically equal. Our question should be, “what allows man to be free to pursue his own happiness?”

    Quote Originally Posted by charles
    The rich spend more money on lobbying and bribes in order to keep their privileged position in an unequal society
    You mean to keep from having their hard earned property confiscated and stolen by the State.

    Quote Originally Posted by charles
    Greater income equality leads to greater demand, since the poor tend to consume relatively more than the rich
    So the more poor we have, the more demand? And more demand is good? Then let’s make EVERYONE POOR! See where this logic leads?

    Quote Originally Posted by charles
    Cheap labour means that less technological development is needed to replace it
    So in other words, there’s less incentive to innovate and increase efficiency which would have increased net wealth.

    Quote Originally Posted by charles
    Inequality leads to a politically tense society (more coups d' etats, strikes, riots, etc.), which attracts less investment
    Yes, once again thanks to the morons who somehow think they’re entitled to the wealth others have produced.

    Quote Originally Posted by charles
    Crime is costly and spurred by inequality. Inequality gives higher incentives for thieves and increases the desire to punish the wealthy.
    So again, let’s blame crime on the fact that there is something a criminal desires to steal. Even more, to avoid such crime, let’s institutionalize that theft in the State! Or should we just outlaw all wealth so there is nothing to steal in the first place?

    These socialistic arguments are entirely without rational merit.

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