Hi All
First, thanks for coming this far.
So, what I want to do is try to disprove something I've believed all my life. I'm doing this because people whose opinions I respect think that I might be wrong. Because not everything you learn as a child is true - and even those things that are sometimes might as well be wrong.
The belief is simple - that it is almost always better to increase the size of the overall economy than change the way it's distributed. Or, as I met the idea as a 10 year old, "Why argue about who gets the biggest bit of pie. Make a bigger pie!". In very modern terms (which is the definition I'll be using here) the belief is "Economic growth is more important than reducing inequality, under standard western conditions".
The process which I would like your help with is two(ish) steps long. First, I want to identify the things that would prove that this belief is wrong *to me* - and then gather evidence. An example of the process:
"We have reached the limit of growth". If more growth isn't possible, then more growth can't be more important. Strong evidence against: UK average growth over xx years is 2%. Therefore this statement is provably false.
I've come up with a number of these already, some completely trivial, others not. Even a couple which I'm really not sure about, left in for completeness and potential debate.
The help I'm looking for at this stage is both "More ways that would falsify the theory" and "Evidence that supports previously accepted ways to falsify the theory".
An important point though - while I might not agree with what people say, every contribution will be read and considered. Nothing will be just dismissed, except as outlined below. While I might not agree with you your comments will be respected. Evidence however will be carefully considered, but if this bogs down into a significant literature review this process will be reconsidered - I don't have time to do an undergrad in Sociology to help me reconsider my political views. The election is this year, not next.
Further, I would ask everyone to comment (and read) in the spirit of reasonableness. We may disagree about things but this is no reason to be angry or annoyed. If a comment persuades you of something, say that. Thank them for it. This entire exercise is to try to change my mind - but I'd ask that you accept that it might change yours as well.
Also note that everything will be looked at with sane eyes and rebutted as needed. For example, "Economic growth has killed our children's childhoods" will be rebutted by "Yes, but infant mortality has dropped significantly; less childhood is lost by death in childhood". This could of course be rebutted by some argument on the sexualisation of children and the degraded quality of childhood. At this point I would mark the point as "Insufficiently clear cut without a degree in Childhood studies; this debate is not on the relative quality of childhood. On hold pending further evidence." The point here is not to argue one point into the ground, but to establish clear cut statements. If it boils down to "You can argue it either way in the end, and we don't actually know", this is a perfectly acceptable.
There are some quibbles further below, for the interested. Short version: no misleading stats, no spirit level.
Now there are some of you out there (Alan, I'm looking at you) who will be muttering that you don't have to choose between economic growth and reducing inequlity. I have a couple of answers; 3 really. First, "If you chase two rabbits you will lose both". Second, this is a matter of priority, not an absolute zero sum game. Third, the people who are usually able to make decisions of Growth vs Inequality are politicians - and I don't trust them to get one thing right at a time; let alone two.
So, the Falsifiable statements I already have:
Trivial to dismiss, but included for completeness
1) We have reached the end of growth
2) External costs of growth have significant externality costs that exceed the value of growth
3) Rate of growth so slow that other options are significantly more important/significant
4) Universal acceptance of the need to resolve inequality
5) Economic growth can't be significantly influenced.
Less trivial
1) The cost of redistribution to further reduce inequality is less than zero
2) That current inequality is provably Unfair.*
3) Inequality has significant, clear external costs.
Iffy - might apply, maybe.
1) There is no way to escape poverty, at the level of an individual lifetime for a functional, non-handicapped individual.
2) The rate of growth of inequality is greater than the growth of the economy, including the effects of technological development - and that this matters.
So, people. How else could you prove this theory wrong? What strong evidence can you think of?
Quibbles
When it comes to trying to prove/disprove the statements there are going to be a number of quibbles. While I'm not going to spell out all the quibbles (because that would take forever!) they could all (bar one) be described as "Be reasonable". If something is true, but has only been true for one year, that isn't enough. Obvious misuse of statistics is Bad. Showing that a thing is un/true during an unusual economic period isn't proof, be it WW2, the 2008 recession or the Napoleonic wars. You get the idea.
Where I will be unfair is the book "The Spirit Level". I have great problems with this book. The short version is - where I have specific knowledge of the subject matter it seems to fall apart. For example, take Japan, one of the countries with very long lifespans and an apparently "equal" society. The book doesn't address the severe inequalities in the country. The huge social gulf between Men and Women. The xenophobia foreigners experience. If Inequality influences longevity, surely being treated as a non-person would?? What of Japanese pension fraud? Anyway, every time I look at it the numbers seem to get worse. So this particular book is not going to be considered evidence here.
*Note that the "Unfair" statement has significant additional restrictions. Including but not limited to "Universally accepted as unfair" and "Unfair to all - living, dead and yet to be born". Fair is a concept I have significant problems with, once it's passed out the realm of fair cake distribution. Is it fair to Bob if Alice earns more than him? Would the inequality be fair if Alice's father funded her time at university? Would it be more or less fair if it was a scholarship? How does talent/ability/disability effect matters? As I said, fair is *hard* for me - it's a rabbit hole that is easy to fall down endlessly.
8 comments:
I'm terrible at starting arguments and I'm not convinced I even disagree with your original thesis (my main problem with 'a rising tide raises all boats' is that I can see no evidence that policies supposedly promoting this point of view produce a rising tide, not with the underlying concept).
Some places you might like to start are the fiscal multiplier, the marginal value of money, and the lower propensity of the poor to keep their money static (hence redistribution to the poor increases the velocity of money, which is what economic growth measures actually measure, and probably although not provably correlates with some kind of meaningful pie-size measure).
Martin,
Been a while since I looked at your blog but I thought I'd try to grab a slice of your thoughts on Brexit, should you have one . . . and then I found this and figured, why not?
I do want to state that I've not thought too much about economic expansion vs. income equality--but one thing I have focused on quite a bit in recent years is economic/strategic expansion vs. contraction/consolidation, and such a little discussion might fit in with your original matter. So, for now I'll just talk about the expansion vs. contraction issue, and then maybe later try to address your point. In the meantime, I hope you will forgive my meandering.
In recent years I've come to embrace the principle of contraction more than ever before. I think there are times when you want to expand, and there are times you want to contract. At the risk of seeming like a one-trick pony, yes, I'm going to talk about Stars!
Prior to Hardheads I'd been thinking about rapid, strategic movements, and I employed some of these in the game. For years, by nature, I was inclined to a fair degree of thoroughness and caution--in Stars! and other games it's my inclination to move forward relatively slowly and thoroughly grab up everything important nearby me.
At some point I had an epiphany about being more strategic, and as a result, less thorough, at least to start with. And that's what I did in Hardheads. I proceeded with a very rapid expansion, going so far as to grab up and heavily populate very distant planets very early on, while sometimes ignoring closer planets until later. So, first a rapid expansion phase. Then, once I began to reach the limits of feasible expansion, I contracted, focusing more on the stuff already far behind my borders. I think it proved to be a pretty good idea. Getting those far-flung planets first meant I had distant bases of operations. (You may remember Quark--it's actually my #1 example of this sort of thing. It was five full jumps from Delta, which early on is a VERY considerable distance. But it was a high-value world, and I had already planned ahead of time by having a Super Fuel Xport ready to fuel a whole colonization caravan toward Quark . . . but that's another story.)
So then, I think there are times when it makes sense economically to undergo a rapid forward expansion, focusing on strategic targets, markets, whatever. BUT, if you're not careful, such actions can be fraught with troubles.
I was reading a few years back about America's pioneering of the West, and particularly the Gold Rush. In the Gold Rush, the West ended up being populated by a lot of different people that didn't all necessarily agree with America's values--in particular, there was quite a bit of lawlessness going on. Some people got quite rich, and without sufficient law enforcement to deal with it, crime was rife.
And yet, we can contrast America's story with the story of, for example, some African nations. I found it interesting to discover that a lot of African countries experience extensive corruption and oppression because years back certain parties made such rapid economic gains, due to an abundance of natural resources such as oil, gold, or diamonds. In some cases, certain warlords became so incredibly wealthy that they were able to overthrow the national government after raising their own private armies, and the populace became slaves, mining diamonds or whatever.
I found all this interesting because, as I said, it contrasts with America's story. America, too, has long had an abundance of natural resources. So why didn't we end up with the same fate of some of those African countries? Well, first of all, I think we have, to some degree. There are a lot of corrupt powerhouses in this country, though fortunately it's not nearly as bad as in some parts of the world. And secondly--the US Constitution, and other such things. Because the US initially put a lot of emphasis on foundational principles, on coming up with laws that would protect people better and maintain, most importantly, checks and balances, America had a framework it was able to use to keep things from going all the way to the extreme, and getting way, way out of hand like in some countries.
Now then, let me try to bring this back a little to your original questions.
Getting back to what I said at the start--I think there are times when rapid expansion is the right move, and times when contraction and consolidation is the right move. But in general, I think it's probably best to have a fair balance. You mentioned that if you try to catch two rabbits, you will lose both. I believe that can be true, but I think there are also times when you can hit two rabbits with one stone--and often, in fact, you can have your cake and eat it too. You just have to be smart about it.
From my observations, whenever something, like an economy, undergoes a rapid expansion, it becomes much more susceptible to lots of cracks forming--and we see this in so many ways. Expand your national borders too fast? You may not have a large enough military to patrol your entire border, and, as I mentioned, you get cracks. Expand your economy too fast? All that industry might come at the expense of sustainability, high pollution, and a populace that is overworked and miserable, combined with a disconnection from nature as open space is turned into parking lots and parks turn into strip malls. And further, when you experience such a rapid expansion, certain parties are likely to consolidate a lot of power into their hands, when that might not be a good thing.
You might end up with, for example, ultra-rich companies that have more than enough resources to suppress new, advanced technologies that would make most everyone's lives better--but would cut into those companies' bottom lines. You might see a whole culture rise up, of people whose ideas have been ignored, where justice has not been served, and, in actuality, growth is in fact reduced when compared with what it potentially might have been, because you didn't clean up the dirty back end when you had the chance. They're engaging in passive-aggressive resistance, or even actual aggressive resistance, and the costs of that end up being much higher than if you tried to even things out a bit, and try to get wages and rewards more reflective of actual merit.
When you're continually moving forward without stopping every now and then to make sure you're still on the right path, a lot of things can get out of balance, and you can create a whole undercurrent of discontent, misery, and stagnation.
Hopefully all of this gives you some food for thought. But, to the original question: is it better to try to grow your economy, with the idea being that high tides raise all ships, rather than focusing on raising some of those particular ships that don't appear to be high enough?
As with so much in life, I think it is situational. If through continual deprivations and suppressions you have created a culture, a mood, wherein people are angry at their conditions--because they're basically fermenting in place, becoming embittered because they're unable to achieve the things in life that are important to them--you've created a breeding ground for some form of a revolution, which may either be exploited by external forces, or, if your boundaries are strong enough, result in more subtle forms of drag on the economy, for instance. For example, the guy that feels his paycheck is 20% lower than it ought to be might be so bugged that he decides to work 30% less efficiently than he normally would, or possibly even 50% or 75% or 90%. Multiply that by a few million, and you might have a significant problem on your hands.
Turning around, going back and correcting such issues before they become a real problem is probably going to save you a lot of trouble, money, and headaches in the long run. If you have an economy that's so burdened by effete and inefficient bureaucracy, obstruction, and divisiveness that less and less and less is getting done, it might be a good idea to stop "pushing forward" for a while, turn around and remove those artificial obstacles, to the extent that they really are destructive.
But on the other hand, as I said, it's situational. There are some people that will always want more, and complain loudly and incessantly if they are not fed with an ever increasing diet of "more" (money, food, rights, whatever) regardless of what they actually deserve. It can be difficult to figure out where the balance lies--but I think much of the key is trying to remain as aware as possible of what's going on, and then maintaining and enforcing strong boundaries when it's necessary.
So, this probably isn't entirely thorough, but I've brought up a lot of the things I've thought about in these regards. But, what's my conclusion?
For everything there is a season, and a time for every purpose under heaven. Sometimes you should contract. Sometimes you should expand. If you expand too fast for too long, you risk the creation of a lot of injurious backlashes, in various forms. It's often better to go back and resolve them. If you give too many concessions to those that consider themselves underprivileged, you risk creating an environment where you can't get anything done, because some of those "underprivileged" will always protest, boycott, etc at the drop of a hat.
Anyway, I could probably write more . . . I know this isn't thorough, and I guess I'm not much of a number quoter, but hopefully it will help.
Iconian
Actual response forthcoming, Thursday's aren't a day for reflection.
Martin, have you had a chance to reflect on this yet?
Iconian
I emailed you directly - do you still have the same address?
Sorry, I rarely ever check that email, but I just looked and will read what you wrote.
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