The General Economics Thread

I think that wins the prize for the most stupid thing I've seen cloaked in a facade of intellectualism.

Yeah, no kidding

Yeah, I'm not sold on the idea that doubling down on ethno-nationalism and protectionism is the solution to the wealth gap. Xenophobia is not the way.

We'll see whose right in a few decades. You may not like what I'm telling you, but you cannot have your cake and eat it to. My newfound opinions result from me coming to the conclusion that many core liberal/leftist values are mutually incompatible; inequality flourishes in conditions of peace, tolerance depends upon exclusion, and diversity undermines democracy.

I'm not suggesting to do that (it's what I'm most afraid of happening), I'm pointing out what I regard as the opportunity cost of meaningfully reducing the wealth gap. There are certainly policies that could mitigate the negative effects of poverty such as basic income or a negative income tax, but putting a dent into the wealth gap would require them to be set to unsustainable, economically ruinous levels.

Edited by CaptainCapsase on Mar 31st 2019 at 11:12:52 AM

All of this reeks of “too smart for its own good” techno-libertarianism and dark enlightenment bullshit.

I’m not sure you can honestly say that liberal values, or even diversity, is incompatible with democracy. That’s a conclusion drawn from essentially zero supporting evidence.

The hell is that even supposed to mean?

Tolerance depends upon exclusion and diversity can't exist with democracy.

You're just saying non-sequiturs at this point.

The "Dark enlightenment" is a neo-reactionary movement which believes in all sorts of rather illiberal things like gender essentialism, scientific racism, and what not; it's a rejection of the values of the enlightenment and an attempt to return to some sort of imagined pre-enlightenment era of absolutism.


At most you could characterize my thought I suppose as "post-enlightenment", in that it is largely in agreement with the enlightenment on the grounds of basic values.

How Democracies Die, The People vs Democracy, The Great Leveler, The Road to Somewhere; a common theme in the political science scholarship following Trump's election has been the extent to which the so called populist revolt has been driven by internal contradictions within the system of liberal democracies.

Edited by CaptainCapsase on Mar 31st 2019 at 11:19:26 AM

“Dark enlightenment” covers all manner of psudeoscientific nihilism and pontificating about the end of democracy these days. Saying you’re simply a fellow traveler doesn’t look much better.

I’d also point out that none of the works you’re citing specifically draw the conclusion that democracy and liberal values are incompatible. That’s one you’ve more or less pulled out of nowhere.

They'ree all considered together in this essay on why democratic decline may be regarded as a "death by natural causes", and I'd argue they all form a strong narrative about what's going wrong in politics.


I also dislike the notion that I am a fellow traveler to these people, since I regard the "dark enlightenment" crowd coming to power as being every bit as bad as the populist mob; the result would be a systemic crisis that could destroy human civilization; my own political goals center around averting such an eventuality. Nor am I necessarily against deocracy; I in fact support representative democracy to the extent that it can continue to function as a compromise between direct democracy and technocracy, but prefer the latter if forced to choose.


We're unfortunately getting off topic however. This is supposed to be about economics. On that note, I'd like to reiterate that while I do support a negative income tax, and would not be opposed to a global wealth tax if there was some actual reason for doing that beyond a vague notion that the wealth gap must be reduced for its own sake (ie if the revenue for doing so was going to a global basic income or something), my central point is that such policies won't ameliorate income inequality. They will likely improve quality of life for the most vulnerable people.

Edited by CaptainCapsase on Mar 31st 2019 at 11:37:19 AM

Well, for starters that article doesn’t actually seem to be saying much at all, rather just asking questions. But I’d direct you to about halfway down, where he points out that democracy being troubled isn’t a specific indictment of it, but rather more complex issues with individual systems.

He cautions against an “end of history” outlook, and that runs both ways.

But either way, this is a conversation beyond the scope of this thread.

I would just like to point out that Captain’s previous sources about how global inequality is falling don’t actually say that when you dig into the sources. At most you get an article or two about how global extreme poverty has fallen, while the fallen inequality is mearly asserted in a couple of opinion pieces.

Now a fall in global extreme poverty is good (if the World Bank’s definitions and measures are reliable) but that is not what was was being debated.

I also feel that comparisons to people who want to reduce inequality bannonites and brexitters to be ridiculous since their goals are not even remotely the same.

You're right, that was uncalled for I apologize for that. As I look more at available evidence, while the Gini coefficient supports the notion that global wealth inequality is decreasing, there are some flaws in the way that's calculated, enough to doubt that it accurately reflects our current situation.

, but yes, the fall in global inequality is tied to national averages, in as much as developing countries are catching up to the developed world in terms of overall NGP, so that there is less difference than before. However, wealth inequality within developing nations is just as extreme as it ever was, if not worse (the only reason it isnt increasing as rapidly in places like Africa compared to the US/EU is because Africa is already so unequal that there is a real ceiling effect- it can hardly get much worse).

As an aside, the GINI coefficient, while often the best data point we may have, is a very crude measure of inequality. Share of top percentile of total income or wealth per nation is an overall better measure. However, data is limited to nations with valid and reliable income tax figures. We know, however, that in places like India and China wage inequality rose significantly between 2000-2010.

Having said all that, I would not be in favor of prioritizing wage inequality above economic development. For most of the world, development is the top priority. We have made great strides in overall quality of life and reduction of want and disease, and we should keep investing in these kind of programs to build on the success. But inequality is important enough that it should not be ignored. For one thing, it has political consequences- I think that it is contributing to the rise of authoritarian governance around the world, including the US.

Globalization and international competition in wages and labor is partially responsible for falling wages and employment in developed countries, yes, while the same phenomenon has improved the situation overseas, but only for certain specific populations in each region. The benefits were reaped mainly by salaried corporate managers, while the costs were borne primarily by blue collar workers in the US and the EU. This has worsened wage inequality within developed nations, but has done little to alleviate it within the developing nations the jobs were exported to.

BTW, the situation is just as bad for the distribution of capital ownership.

Although you have already conceded it, I just want to point out that these facts do not support your assertions that global wage inequality is "...A. basically a first world issue (sorry I had to say it), and B. that it's only detrimental when it comes from extractive/rent seeking economic activity..."

They don't. I really should stay away from forums when I'm in a stressful period of my life, I get really worked up and cynical and argue in a really inflammatory way. All other things being equal, decreasing income inequality and wealth inequality either between or within countries is a good thing, and to the extent that policies can be designed that will accomplish that without negative externalities, that's a desirable goal.


The main thing I was trying to get at though is that it's very possible, perhaps even likely that the various policy solutions being talked about for income inequality like basic income, progressive taxation, may help curb the worst effects of wealth inequality, but actually reversing that trend may not be feasible without seriously compromising economic growth, especially in developed countries where the rate at which the size of the overall pie is increasing is relatively small or even flat. That's further compounded by the top heavy demographic pyramids of developed countries.

No problem. For the record, I didnt find anything inflammatory about your post, just some misunderstandings that needed to be corrected.

As for your second paragraph, I respectfully disagree. A basic income would encourage consumer spending, which should promote economic growth, at least according to Keynesian theory. Whether or not progressive income taxes promote growth or not depends entirely on how the money collected is spent- certainly I think there are gov't programs which can be counted on to do that, including most entitlement spending. In point of fact, the "top heavy" nature of wealth and income distribution in nearly all countries is the primary barrier holding growth back- the rich dont spend their money the way the middle class and the poor do, so the smaller the proportion of GDP they control, the better for the economy. That proportion shouldnt be "zero", but not as high as it currently is. This is a separate issue, of course, from corporate spending, which, if it is directed toward increasing production of goods and services will then create jobs, but not if directed primarily (as it is) toward financial investments.

Well, that's another report in that wealth inequality is on the rise. Also that the middle class being under pressure might be driving a trend towards anti-democratic voting behaviour, which is interesting.

Money.com: Robots Are Coming to Walmart And Making Employees Scared for Their Jobs

Edited by Soban on Apr 12th 2019 at 1:19:37 PM

Yeah, this is not unexpected at all.

We use our limited resources on private islands to hide from the Torches and Pitchforks, of course.

I meant top heavy in the sense of the age distribution; the kind of rapid growth that "lifts all boats" has historically correlated with a large but not overwhelming amount of population growth, and that's no longer present in the developed world.

IMO it's rather optimsitic to think that Torches and Pitchforks even matter in the 21st century; workers today struggle not against exploitation (there's still plenty of that) but against obsolescence. The leverage the working class once had is being progressively nullified by globalization and by technology, and it's not clear there's any way around that.

Edited by CaptainCapsase on Apr 13th 2019 at 9:28:56 AM

Torches and Pitchforks only became irrelevant because there's so much surplus in America that the poor are more likely to die of obesity than starvation. If that goes away because workers are obsolete, then you're going to see outright chaos once pay slips to the point that moms can't feed their kids on an 80-hour workweek and politicians are telling them to let their kids die faster.

The working classes' leverage was never solely the ability to withdraw their labor; during the Great Depression, it also included the part where they forcibly seized the means of production and distribution. The New Deal was put in place in part to head that off.

Edited by Ramidel on Apr 13th 2019 at 7:17:13 AM

@Captain: "...the kind of rapid growth that "lifts all boats" has historically correlated with a large but not overwhelming amount of population growth, and that's no longer present in the developed world."

It is if you include immigration. As for the torches and the pitchforks, historically class-based social revolution, when it happens, happens very quickly. Resentment builds slowly and out of sight of the public, until someone charismatic and clever enough comes along to organize that resentment, and then the elites of the day are politically displaced in a single event.

As for that happening here, there are some signs. On the left, the anti-Globalization movement waxed a d waned for a generation. Then came the 2008 finance crisis, and the Occupy Movement grew quickly, then seemed to fizzle out. More recently, the anti-Trump backlash has even gotten some progressive candidates elected (you could see the rise of the tea party, and Trump himself, as equivalent signs on the right). I think we could be one economic crisis away from some major changes.

That would only be true with a much more permissive immigration policy than what currently exists, the kind of growth that demands rapid expansion of infrastructure, housing, and support services. That kind of rapid growth isn't necessarily desirable*, but it's comparatively equitable in terms of how gains are allocated, in contrast to technology/innovation driven growth, which favors large, centralized, and broadly unaccountable entities** such as corporations and wealthy individuals. Or a centralized, authoritarian state, hence China.


* Especially given issues of environmental degradation are fairly significant at this time.

** This is fairly specific to modern technology, and is one of the trends I consider to be the most ominous for the future viability of democratic governance.

Edited by CaptainCapsase on Apr 13th 2019 at 4:14:00 AM

Tax cuts for low-income groups help the economy more than cuts for high-income groups.

You don't say.