Inequality

The New Yorker (Sep 2, 2019) reviews yet more recent work on increasing inequality ("Widening Gyre").  There are many discussions like this one. What to keep in mind? It’s very complicated! Here is a simple checklist. Pick any one for your next chat with a political candidate. I stop at ten.

1. Inequality is not to be confused with poverty – although the zero-sum people seem to think so. Magically double all income and poverty will almost disappear but inequality will increase. Is this ever spelled out?

2. Almost all the data referenced in these discussions are snapshots, even if they are repeated snapshots. Real people move in and out of statistical categories. Only if we track actual people and see how many move up or move down – and over what time span – do we get a useful picture. Is this even hinted at?

3. Are the measurable data we have useful? Measure income? Wealth? Health? Longevity? Happiness? What to count? What can we count?

4. Is consumption inequality getting better or worse? And how would we know in light of the constant quality improvements of most of what we consume?

5. Do we care about equality of opportunity or equality of outcomes?

6. When we see wealth, do we automatically assume ill-gotten gains? If not, why are we fretting?

7. Are all the inequality discussions feeding off (and feeding) the unpleasant human propensity to envy?

8. Is fanning the flames of envy a political convenience for demagogues?

9. Is life unfair in terms of genetic endowment and the inequalities it bestows?

10, Is there some threshold of inequality where class antagonisms come into play to stress the political and social arrangements we need to flourish?

ADDED

Here are two very smart economists discussing many of these points. What do they agree on? Better training is a good idea. How do we do that? 

It's the season

The very long U.S. election season is here.  What to keep on mind? Two things strike me as fundamental.

1. Knowledge is complex and dispersed. This means that innovation (and progress) depend on trial-and-error innovation in a competitive environment – one not encumbered by the heavy hand of you-know-who. This is especially important in a season when the candidates have policies, plans and programs for everything.

2. In fact, there will always be a political class (includes their many private sector cronies) working hard on cronyist plans and policies.

Millions of voters have sat through some version of an economic principles class. How many of them have encountered these two fundamental principles? Too few, I worry.

These two fundamental observations are facts of life and in conflict. That’s what makes it interesting. The economist Peter Boettke has elaborated and even imagined a derby involving “Three S’s”.  Smithian gains from trade, Schumpeterian competition, and, third S for stupid.

All three are always in play. And it’s election season.