Economics Questions

Re: Can we please get this over with? Wealth inequality study

John James — Thu, 22 Dec 2011 10:10:22 GMT

The Truth About Wealth

"The total income of the top 1%—or those earning more than $343,000 in 2009—fell by more than 30% from 2007, according to the most recent Internal Revenue Service data. By contrast, the average income of the bottom 90% fell less than 3% during the same period.

A November Federal Reserve study, meanwhile, found that a third of the people in the top 1% in 2007, as measured by wealth, were no longer in the top 1% in 2009."

(Yahoo Finance)

Re: Can we please get this over with? Wealth inequality study

Wheylous — Sun, 18 Dec 2011 04:22:10 GMT

To play the devil's advocate, interpersonal utility comparisons are impossible. Perhaps the rich had more use from the money than the poor. Who knows?

Re: Can we please get this over with? Wealth inequality study

Fool on the Hill — Sun, 18 Dec 2011 02:31:01 GMT

The current level of inequality (among other things) is a symptom of government intervention. The latter ("legitimized" aggression, theft, special privilege, etc.) is the problem. Eliminate the problem, and its symptoms automatically go away. What else (or more) are you exactly proposing?

I think it's important to talk about the current level of inequality in discussing the problem--it helps to tell us that there is a problem. I'm not sure what you have in mind concerning how to eliminate the problem. After the problem is eliminated, would Bill Gates still have $50 billion? If property is legitimated based upon the past, then nearly all existing property is illegitimate.

Absent government aggression and intervention, theft is already considered illegitimate and unfair by most people. Inequality could result both from (1) theft and (2) voluntary exchanges of property and labor. There are plenty of people who have acquired more property than other people and yet have never stollen anything from anybody. I see no reason to attack inequality, per se.

I think most people (especially rich people) have stolen things by fact of being members of the system. Many companies have benefited from the states enforcement of intellectual property rights. The state provides many companies with stolen tax money in exchange for products that help it steal that money. Many people steal money by owning treasury bonds. Then there's bailouts, subsidies, tariffs, educational grants. And perhaps most important of all, the deprivation of the masses of the means of production, forcing them into wage slavery, rendering all of capital into a grand scheme of theft. So the claim that there are rich people who have never stolen anything is a rather dubious one in my view.

Re: Can we please get this over with? Wealth inequality study

Malachi — Sun, 11 Dec 2011 17:45:30 GMT

How does one measure "inequality"? Things are either equal or they are not.

Re: Can we please get this over with? Wealth inequality study

z1235 — Sun, 11 Dec 2011 17:43:56 GMT

Fool on the Hill:

Well if the actions of government are problematic and contribute to inequality, then the current level of inequality is a problem--regardless of whether inequality in the abstract is a problem.

The current level of inequality (among other things) is a symptom of government intervention. The latter ("legitimized" aggression, theft, special privilege, etc.) is the problem. Eliminate the problem, and its symptoms automatically go away. What else (or more) are you exactly proposing?

Absent government aggression and intervention, theft is already considered illegitimate and unfair by most people. Inequality could result both from (1) theft and (2) voluntary exchanges of property and labor. There are plenty of people who have acquired more property than other people and yet have never stollen anything from anybody. I see no reason to attack inequality, per se.

Re: Can we please get this over with? Wealth inequality study

Fool on the Hill — Sun, 11 Dec 2011 17:06:04 GMT

It has stolen everyone's money. Get in line. Btw, where's the government going to get the money to pay you (and everyone else) back?

Well yeah, we're talking about social inequality here. I'm not suggesting that the government is going to pay everyone back. But it seems to me that if we want to oppose government, we shouldn't be apologists for the inequality it creates.

Um, it's the other way around. Bondholders are the ones lending (giving) money to the government.

They're lending money in order to get money. Imagine a man lends $5000 to a bank robber who uses it to buy a getaway car. In return, the bank robber promises to pay the man $10,000 after he robs the bank. If the bank robber were caught, I don't think many would say that he should pay the man back.

I meant, how could inequality (a non entity) be trampling anybody?

That's the way Wheylous put the issue. I would put it differently. I'd say that inequality is evidence that the government is trampling the poor.

I think he meant that the government contributes towards making the wealth inequality larger. This doesn't mean that all wealth inequality is necessarily created through aggression and government intervention.

Well if the actions of government are problematic and contribute to inequality, then the current level of inequality is a problem--regardless of whether inequality in the abstract is a problem.

Re: Can we please get this over with? Wealth inequality study

tunk — Wed, 07 Dec 2011 23:27:36 GMT

No2statism:
Some Inequality in wealth is due to genetics (but I don't think all of it is). Anyways, I saw what I believed to be a good refutation of an inequality graph by Mother Jones. It pretty much confirmed that equality has a negative correlation with interest rates. What Thomas Sowell has written is also good.

http://www.rightcondition.com/2011/10/wealth-inequality-in-america.html

That is actually a very interesting blog post, because it also shows that the rise of what many people refer to as "consumerism" correlates with the lowering of the federal funds rate. I.e. people are consuming more and living beyond their means only because it has been made easier for them to rack up more debt.

Re: Can we please get this over with? Wealth inequality study

Birthday Pony — Wed, 07 Dec 2011 22:41:33 GMT

Tunk, check my latest post. We're almost saying the same thing.

And I'll get to the integration thing when I have some more time to cite the stuff I have in mind.

Re: Can we please get this over with? Wealth inequality study

tunk — Wed, 07 Dec 2011 22:37:49 GMT

I know I'm replying to a troll (and a very skilled one, at that), but here I go anyway.

Birthday Pony:
graphs are a mode of empiricism

Yeah, they are. But praxeology doesn't necessarily reject empiricism (the notion that knowledge comes only or primarily via sensory experience). It was Rothbard, after all, who considered the action axiom an empirical truth, i.e. a law of reality as opposed to a Kantian law of thought.

What praxeology rejects is positivism, the self-contradictory claim that if a statement is not about an empirically observed fact or a tautology, it is completely meaningless (which of course renders positivism itself meaningless).

Praxeology does derive a priori theorems. But as Mises wrote in HA, “All theorems of economics are necessarily valid in every instance in which all the assumptions presupposed are given [...] [but] have no practical significance in situation where these conditions are not established.”

That's to say, it is important to do empirical work to discover whether the conditions for praxeological laws hold in reality.

In practise, therefore, there's no reason why an Austrian shouldn't be comfortable with employing the tools of modern economics to a certain extent. (Since, after all, he is among the few who actually have a coherent philosophical justification for doing so.) He only treats their ability to hit upon truth with a little more skepticism than they have so far been accorded.

Birthday Pony:
all statisticians are actually Marxists. Except when they make graphs we like. We will take them when we like them.

What we've been doing in this thread is examining the evidence that's been given for the supposed increasing trend in income inequality. I went through an entire study and took a look at the claims being made, and in the end I concluded it didn't provide any convincing evidence of that trend.

This is what people who are actually interested in the truth do, you know. We review evidence, compare it against other evidence, and see whether our original hypotheses hold up.

It just so happens that many of the demagogues shouting and screaming about income inequality, so they can acquire more free benefits from the state at everyone else's expense, have not been doing this.

Birthday Pony:
"capitalist property is inherently inegalitarian"

You know, libertarians actually have a theory about property, about what's justly acquired property and what isn't. We don't simply defend every property title currently in existence.

We generally think property is only justly acquired through Lockean homesteading: you only "own" something if it is the product of your blood, sweat, and tears, or if you acquired it through voluntary exchange with its original owner.

We disapprove of the quasi-feudal power structures, where monopoly rents are coercively extracted by the state and its allies from peasants tilling their own land, that prevail in much of the world today.

(In fact, I recommend you read Chapter 11 of the Ethics of Liberty, where Rothbard basically advocates expropriating land from corporations in the developing world and redistributing it to the poor.)

By the way, all this is more or less the same position the younger Marx took:

The Communist Manifesto, ch. 2:
We by no means intend to abolish [...] personal appropriation of the products of labour, an appropriation that is made for the maintenance and reproduction of human life [...]. All that we want to do away with is the miserable character of this appropriation, under which the labourer [...] is allowed to live only in so far as the interest of the ruling class requires it.

Birthday Pony:
I'll bet there's inequality because of all that integrating in the US. Not because of slavery.

I think the evidence does point to that to some extent, yeah. Especially since "slavery" was pretty much a universal phenomenon:

Economic Facts and Fallacies, p. 180:
For centuries before [the Atlantic slave trade], Europeans had enslaved other Europeans, Asians had enslaved other Asians and Africans had enslaved other Africans. [...] North Africa's barbary coast pirates alone captured and enslaved at least a million Europeans from 1500 to 1800, carrying more Europeans into bondage in North Africa than there were Africans brought in bondage to the United States and to the American colonies from which it was formed. Moreover, Europeans were still being bought and sold in the slave markets of the Islamic world, decades after blacks were freed in the United States.

Re: Can we please get this over with? Wealth inequality study

Birthday Pony — Wed, 07 Dec 2011 22:32:27 GMT

"This has to be a deliberate misunderstanding of what everyone who has ever had a discourse with you has already elucidated; economic laws derived from deduction cannot be refuted from observation for the same reasons that a mathematical proof of the Pythagorean theorem cannot be refuted empirically."

No, I understand that quite well. And mathematics are always correct in a closed system. Economics is dealing with something that is, by nature, not a closed system. It can very nicely prove itself over and over again, but that does not mean it applies to anything outside of itself. Just as any theory, it should be tested and observed to see just how far it goes.

Imagine water droplets. We don't use drops of water to teach sums because its quite possible that one droplet plus one droplet might only make one droplet if they are spaced too close together. Yes, on the atomistic level all the math applies quite well, but it does not tell us about droplets without a number of qualifiers. Does this disprove mathematics as a functional system within itself? No. But it tells us where we shouldn't be using mathematics, or at least how we should be using mathematics.

Then the question becomes whether or not humans are more analogous to atoms or water droplets. There are a number of ambiguities about using a simple eqaution for humans, such as 1 human plus 1 human = X humans. What does the plus mean? Standing side by side? Intercourse? In the case of the latter 1 + 1 could equal 3. And in the case of the former what exactly is the proximity for the "plus"? Once again, there are spots where it applies and spots where it doesn't, and that's just doing arithmetic. Bring in economic equations and theorems and there's even more ambiguity.

To reject empirical data that doesn't stand in line with what you believe doesn't make you more hardcore. And really it weakens your theory to not search for clarity in ambiguous scenarios to see where it applies and where it doesn't. A synthesis of ideas working in conjunction with each other for further clarity and more precise reasoning would probably make your theory stronger than flat out rejecting everything that doesn't fit with your current understanding. But hell, that's the kind of thing you get when "all rights are property rights" or "praxeology encompasses all human action."

Re: Can we please get this over with? Wealth inequality study

Rcder — Wed, 07 Dec 2011 19:22:59 GMT

I hope this is just sloppy wording on your part, because you are essentially saying, "we reject any evidence that doesn't fit what we already believe,"

How did you get that from what I typed? Is it your contention that evidential statements can only be observations?

which is basically (what I think is) just a vulgar caricature of a methodology I disagree with. I was pretty sure that there's a little more to very hardline atomostic deduction than that.

This has to be a deliberate misunderstanding of what everyone who has ever had a discourse with you has already elucidated; economic laws derived from deduction cannot be refuted from observation for the same reasons that a mathematical proof of the Pythagorean theorem cannot be refuted empirically. Moreover, because the action axiom is synthetic a prioi (do you know what this means?) it does not require repeated observations to establish its validity, nor is it subject to the constraitns of probability, i.e. it is always and everywhere true. If you still think I'm constructing a "vulgar caricature" of praxeology then I can send you primary sources on the subject.

Re: Can we please get this over with? Wealth inequality study

Fephisto — Wed, 07 Dec 2011 16:35:00 GMT

It sounds like you're all having a wonderful debate, and I'mma let you finish, but this argument is the most confusing one of all time. Of all time!

Seriously, this has always confused me.

I am reading someone staunchly attacking capitalism. Then, in the middle of the paper is usually a small diatribe about income inequality, how big it is, how it's getting bigger, and there is always a ominous overbearing tome.

Imagine you are someone who is a frequent attender of horror movies. However, nearly EVERY horror movie you've seen, usually incorporates a guy with a newspaper on top of his head. WHENEVER this guy appears, the rest of the audience goes into a sullen, fear-like trance. However, you, obviously, remain fairly confused on the whole matter. So, there's a guy with a newspaper on his head? Why does he show up in every horror movie I've been watching? What is the deal with this? Is there something I'm not getting here? This is beginning to become a pattern...

THE SAME THING HAPPENS TO ME WHEN I SEE INCOME INEQUALITY STATISTICS. They are the "Guy with a newspaper on his head" that appears in every capitalist "horror show" diatribe I've read. What. Is. The. Deal? So some people make a lot of money?

Re: Can we please get this over with? Wealth inequality study

vive la insurrection — Wed, 07 Dec 2011 09:37:41 GMT

I don't actually know, but I've been called one (a cultural Marxist) quite a bit. I figured you would know. Does anyone here know?

This is what I go by:

http://www.amazon.com/Cambridge-Companion-Marx-Companions-Philosophy/dp/0521366259/ref=sr_1_9?s=books&ie=UTF8&qid=1323246728&sr=1-9

This piece cover almost 0 econ and all sociolology / culture. As a non Marx expert - it seems like a good book to go by for cultural Marxism / Mar a sociologist

Re: Can we please get this over with? Wealth inequality study

Birthday Pony — Wed, 07 Dec 2011 07:38:13 GMT

"Misesians reject the notion of econometric data invalidating economic laws which are derived via logical deduction from the synthetic a priori action axiom. Instead, Misesians believe that the information gleaned from econometrics can be rationally interpreted through the lens of economic analysis to a certain extent (conditions of cetris paribus never hold in reality)."

I hope this is just sloppy wording on your part, because you are essentially saying, "we reject any evidence that doesn't fit what we already believe," which is basically (what I think is) just a vulgar caricature of a methodology I disagree with. I was pretty sure that there's a little more to very hardline atomostic deduction than that.

"What's "cultural Marxism"?"

I don't actually know, but I've been called one (a cultural Marxist) quite a bit. I figured you would know. Does anyone here know?

Re: Can we please get this over with? Wealth inequality study

Rcder — Wed, 07 Dec 2011 02:53:51 GMT

Two things Misesesesians hate. Graphs and equality. This thread has both.

An appeal to ridicule as well as an unvalidated assertion.

First of all, graphs are a mode of empiricism, which we all know is cultural Marxism, and all statisticians are actually Marxists. Except when they make graphs we like. We will take them when we like them.

Misesians reject the notion of econometric data invalidating economic laws which are derived via logical deduction from the synthetic a priori action axiom. Instead, Misesians believe that the information gleaned from econometrics can be rationally interpreted through the lens of economic analysis to a certain extent (conditions of cetris paribus never hold in reality).

What's "cultural Marxism"?

Second, "capitalist property is inherently inegalitarian" and therefore, egalitarianism is evil, and most likely Marxist as well.

Any Misesian would tell you that economics is a value-free, i.e. positive science. Therefore, when a Misesian makes a proclamation on whether a certain policy or social construct is "evil" they're no longer acting as economists but rather as philosophers.

You know, these half-hearted attempts at satire would be improved immensely if they even attempted to lampoon what we actually believe in.

Third, I'll bet there's inequality because of all that integrating in the US. Not because of slavery. Because of integration.

What?