Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. I think we are using inequality as a very bad proxy for poverty but we have much better metrics for that. I suspect people just dislike it for emotional reasons. I want to point out that Sweden has more billionaires per capita than the US. Yet everyone is fine with Sweden.
I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
If everyone's real wealth doubles, that is great, but it is not a stable equilibrium.
If a very small percentage of the people own a large percentage of the wealth, it compounds. They literally cannot spend all of their income on consumption, except maybe by lighting piles of cash on fire, but that is not a route to doubling the real wealth of everyone in society.
That means that asset prices rise, and fewer people can afford property. Jobs concentrate near where rich people live, because they are the ones with disposable income to spend, making this worse. Transfer payments (rent) from ordinary people to the remaining property owners are high. Wages stagnate, because wealthy people spend most of their money on assets, not goods and services. Consumer demand decreases. Capital moves away from producing things that ordinary people need, because they can no longer afford them, and is instead allocated to producing luxury goods. Social mobility is low because low wages and high property prices make it impossible to work your way up.
The cycle is self-reinforcing, not self-correcting. Most of history throughout the world has consisted of a few very wealthy feudal lords and a large population of serfs.
Strengthening the political system might be nice, but post-Citizen's United, that does not seem to be the direction the US is headed, at least, nor is it in the interests of those who benefit most from the current system.
> Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up,
Not in terms of the ratio between you, which is the way we normally talk about wealth inequality : "he has X times more wealth than I do", or "she makes X times more than I do".
Anyway, this is not how wealth inequality has grown at all. It has happened by most people's real income barely rising at all over 40-50 years, while the rich have seen theirs rise by huge factors (hundreds to many thousands in some cases).
If what you care about is standing real wages why talk about inequality? I'm concerned that it just functions better as rage bait and leads to unproductive policies.
1. it is well established that human pyschology makes relative income and wealth much more significant than absolute. And it doesn't matter which quintile you're in for that to be true.
2. real median household income stayed relatively flat between 1970 and 2012. Since then it has risen again in a significant way.
3. despite the gains in real median household income, the rise in the household income (and net worth) of various upper percentiles (20%, 10%, 5%, 1%, 0.1% ... take your pick) has been very, very much larger. consequently, the "double my income, double Musk's income" line is not a description of what has happened.
4. the percentage of GDP that accrues to capital rather than to labor have gone steadily up since 1980.
If that's what "you've seen", then you aren't looking in the right places.
Look at the graphs of real wages vs productivity that start pre-1970. Yes, it's true that real wages have gone up some since that time, but they remain completely divorced from productivity in a way that's totally different from the time before Reagan.
Meanwhile, the income/wealth of the highest earners has gone up astronomically during the same time.
They are staggeringly wealthy because they have redirected the flow of money from us to them. This is a very clearly visible and uncontroversial fact. The controversy is simply over whether it is a good thing.
Wealth inequality matters a lot when rich people can spend unlimited amounts of money buying influence in politics and then use that influence to enact policies that favor the rich over the poor.
Aren't votes supposed to counter this effect? Individuals get the same voting power, so if things are too out of line, it should be easier to vote in folks that prioritize unbiased policies. Of course you could argue that the funds push up candidates for the wealthy for both parties, but independent media is allowing the unfinanced to compete.
Mainstream media companies are owned by very wealthy people, who vote Republican, and put their thumbs on the scales over and over again.
You can see that in a myriad of different ways, but at no time in recent memory has it been more blatant than during the last election cycle, with events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris.
Like, you can agree or disagree with the politics of it, but it should take a monumental amount of motivated reasoning to deny the existence of this bias in our media.
There is bias in all media. I used independent media to mean the plethora of single or small member operations that publish their findings on their own blogs, where they are not beholden to shareholders or investors.
There are also many emerging podcasts which either directly interview candidates or at least discuss the impacts of policy beyond the nonquestions presented by mainstream journalists. For example, how many times have journalists allowed Powell to say that he can't comment on proposed legislation like the BBB? Not once have we seen a follow up asking Powell why he has no comment on the bill considering his job is to offset its effects? His literal job is to comment on policy.
> events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris.
The Washington Post is independent media. It's just dependent on its owner like all media. I have no problem with Bezos' move concerning endorcements; he's maximizing his utility.
> I used independent media to mean the plethora of single or small member operations that publish their findings on their own blogs, where they are not beholden to shareholders or investors.
If you consider WP to be independent, then which news organizations do you consider not independent? Because I think most people define independent as "not owned or controlled by a billionaire".
I used it to mean news not published on behalf of someone else, so I was meaning one to small team operations. WAPO was my non-independent reference, but in the context of it publishing Bezos-directed articles, it is independent of non-Bezos direction.
Sweden has more billionaires per capita, because it’s fairly friendly to businesses and there have been quite a few success stories over the last century.
The US however have more millionaires per capita and SUBSTANTIALLY more people in poverty per capita.
Sweden’s Gini coefficient is 0.276 (2024), the US’ is 0.418 (2023). The US has a lot more income inequality.
It depends on what you're trying to measure. From a purely rational perspective, increasing inequality doesn't matter if everyone's quality of life is improving. But humans are irrational, and happiness is often tied to social status within the hierarchy. Even if you're materially better off you might find yourself lower on the status scale. Status is a zero-sum game. Maybe we shouldn't care about such things but yet most people do.
At billionairre scale money becomes qualitatively different compared to typical household scale. For households money typically goes to consumption (or future consumption via savings) whereas billionairre money goes to affect how productive (and often political) forces get organized.
At consumption money level at least inequality is also inefficient allocation of resources due to the diminishing marginal utility of money.
it matters when "something" become scarce that normal person need to compete with the richests to get, or if one day the richests decided they want something and suddenly those things become scarce. Let's not kid ourselves, majority of politics can be bought by billionaires and when some day fresh waters become scarce or wheat is, it'll be monopolized by the richests. We already get this in some way with housing.
>Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off.
You forgot to mention, also the cost of everything doubles and maybe kicks off some good ole hyperinflation
Wealth inequality means all the investment and excess income goes to the top 0.0001%, rather than the average person. Whereas now this may support he average person's purchase of a home, or retirement, or similar, this now supports the billionaire's purchase of a million homes to rent to the common man, earn a fixed profit, to launch rocket ships with a head, two spheres at the base, and veins, where the billionaire with the biggest, longest, firmest rocketship is the winner! That, instead of people having houses and a retirement.
Lots of leaps of logic here. I'm certainly not fine with Sweden having a higher disparity of wealth but I don't live in Sweden so I can't effect much change there. We're also ignoring how many safety net benefits Sweden provides its population, ostensibly because it reasonably taxes its wealthy. If Swedes are ok with their situation, it's probably because it's being handled adequately.
The issue with disparity is it's a reflection of the unfair conditions of compensation. Elon Musk's employees make him that money, not Elon. He could make all of his employees multi-millionaires overnight by granting more generous stock plans commensurate with the money they've made the company. Reasonable profit sharing plans basically ensure this, but since companies all collude to not grant them, we see them as relatively rare in the working world. The state should be requiring companies to grant profit sharing. Not gonna bike shed it here, but it needs to be done yesterday.
> If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off.
What's this universe that only contains you and Elon? Or do you think that everyone's real wealth has doubled?
> I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
Citizens United has practically dismissed that possibility in the near term.
I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system