[ExI] Status, Envy, and Economics

[Damien Sullivan]

On Thu, Feb 14, 2008 at 10:22:43AM -0800, Lee Corbin wrote:

> I ask since, so far, the rich have been rather well behaved (here
> in the west). Yes, there has been corruption---too much, of course.
> But the benefits we get from having a lot of rich people around vastly

The West also has strong governments enforcing the laws and
redistributing income to the desperate.  Even the richest people are
small before the budget of the central government.

> I'm not sure what you mean by "*how's that enforced*?".  The same
> way all our laws are.  That is, regardless of how rich Bill Gates get,
> the actual guns and badges do remain in the hands of the properly
> authorized. Private soldiers have not been a threat. You presume

But would that remain true if Bill Gates went from having at most 1% the
combined income of everyone else in the country to have a million times
the combined income of everyone else?

> that unless we ramp down the inequality, then private armies will
> be inevitable.

And you're presuming that exponentially greater inequality than we've
experienced would not be a problem.

> Rich people do not own guided missles, tanks, machine guns, and
> atom bombs even now, although surely (it would seem) following
> your logic they ought to.

Hardly; those progressive-tax-supported governments would raise an
objection.

> > I forget about you,
> that's nice.  OTOH I do try to keep you in mind.  :-)

Heh.  I remember you, I just don't remember where everyone is on the
libertarian scale.  It's been a while since I've dipped in, after all.

> > Eh?  We know damn well it's possible to diminish
> > economic inequality, every First World country
> > does it to varying degrees, via progressive
> > taxes and welfare payments and various labor laws.
> 
> Yeah, and the more they do it, the more their economies
> suck. To some extent, the great Scandanavian nations
> you admire so much are technically being pulled along
> by the U.S. and other advanced nations.  I believe that
> technical progress would come to a complete stop if

Do you have evidence for those beliefs?  I'll pre-empt with
http://www.nybooks.com/articles/17726
And how do you define economies sucking?  Productivity?
http://www.nationmaster.com/graph/eco_ove_pro_ppp-economy-overall-productivity-ppp
has the US showing 25% higher GDP/capita than France.  But going by
Judt, Americans are probably working 20% more hours, so most of the
difference is just working longer, not better.  And the stat is GDP(PPP);
PPP makes a lot of countries look poorer than the US, I suspect
*because* they're more egalitarian and so there's less local cheap labor
(but no one has to be the local cheap labor.)  Raw GDP -- which is
relevant for imports, and international competetiveness -- is much
closer, meaning that lots of those countries are probably *more*
productive than the US.

Patents per capita might be another measure.  Japan and S. Korea kick
our butt, Sweden comes in right behind the US, other major social
democracies aren't far behind, though some trail down a lot (Canada,
Italy.)  All the Nordics are doing decently for themselves, apart from
Denmark and Iceland.
http://www.nationmaster.com/graph/eco_pat_gra-economy-patents-granted

Economic Freedom?  By the rankings of the Heritage Foundation -- which
is rather conservative -- Denmark ties the US (which isn't nearly
first), and Sweden and Finland are right behind.
http://www.nationmaster.com/graph/eco_eco_fre-economy-economic-freedom

I have no idea what this "technological achievement" is measuring, but
the US bracketed by Finland above and Sweden and Japan below.  The US
tops "innovation" but not by a huge margin.
http://www.nationmaster.com/graph/eco_inn-economy-innovation
Then there's this funky
http://www.nationmaster.com/graph/eco_gro_com_sco-economy-growth-competitiveness-score
again, Finland US Sweden leading.
US is 7th in R&D, or 6th discounting the Togo outlier:
http://www.nationmaster.com/graph/eco_res_and_dev_spe-economy-research-and-development-spending

> we leveled wealth as much as you seem to want to.

So, other countries have high GDP/capita, especially adjusting for hours
worked; they have high patents/capita and "innovation", some of them
have high levels of high-tech exports -- Canada or Australia might
depend heavily on exporting natural resources or agriculture, but Sweden
and Finland don't... what's your basis for "suck", or "technical
progress would come to a complete stop"?  (Which reminds me; back in
1999, the Wall Street Journal reported how Europe was 1.5 years ahead of
us in cell phone technology, and Japan 1.5 years ahead of Europe.)

> And just how much *do* you want to take from the
> rich (damaging their incentives and motivations) and
> give to the poor (damaging theirs even more)?  Want
> to go back to tax rates of 98%, but this time no loop
> holes?  What about just flat out "from each according

Excluded middle, much?

> >> It does seem interesting that some of the countries that
> >> have been most adept at snuffing out corruption have
> >> also permitted inequality to rise to its "natural", i.e.,
> >> free market levels.
> > 
> > Actually that's not the case.
> > http://www.transparency.org/policy_research/surveys_indices/cpi/2007
> 
> A mere glance at that map make seems to make exactly the
> opposite point. Considering the whole range of corruption that
> is possible, the entire west does well.

...yes, but does anywhere in the West allow inequality to rise to
"natural" or "free market" levels?  Even the US has a somewhat decent
social welfare system, compared to the total lack of one.

> > The *most* adept countries are largely low-inequality social
> > democracies: the Usual Suspects of the Nordics and Netherlands, plus
> > Canada and New Zealand... also Singapore and Switzerland.
> 
> Don't underestimate the degree also to which the beloved nordic
> countries still have their share of rich people despite some successful
> leveling. You can't prove that there is a strong relationship between

How is that relevant?  The point is that they do level, or raise the
bottom, famously much more so than anyone else, and they're the least
corrupt.

> what may be a little less corruption there and high tax rates,

I've at least offered some evidence; what do you have?

Thinking out my ass, I'd guess that corruption of the civil service is
diminished most by paying them a decent salary in the first place,
followed by a culture that believes in civil *service* vs. civil
exploitation.  Commonly held memes that the government does in fact
exist to serve the public, rather than prey upon or hinder the public.

As for the corruption of high-level politics, that's probably a function
of transparency of official lives and campaigning, and perhaps yes, how
much extra economic power the rich have over everyone else.

> No, there are *cultural* and historical differences that account for
> these (minor) disparities between the separate advanced nations

How do you know?
And why are non-overlapping margines of error "minor"?

-xx- Damien X-)