Inequality What Can Be Done?

In 'Inequality,' A Respected Scholar Wades Into A Contentious Political Issue

In ‘Inequality,’ A Respected Scholar Wades Into A Contentious Political Issue by Jonathan A. Knee, The New York Times

The crisis of “income inequality” has become a cause célèbre. Until recently, the gap between the rich and poor was a topic rarely championed aggressively even by the more liberal wing of the Democratic Party out of fear of being branded a tax-and-spender or class warmonger.

Now, both declared and would-be Republican presidential contenders are trying to gain advantage over one another with the depth of their concern over how much of the pie is going to the very richest. “We’re facing right now a divided America,” the conservative Ted Cruz recently complained, “the top 1 percent earn a higher share of our national income than any year since 1928.” Even the 2012 Republican ticket bearers of former Gov. Mitt Romney and Representative Paul Ryan have felt obliged to get in on the act. Each has separately expressed disappointment that since the election, “the rich have gotten richer,” which has “exacerbated inequality.”

The source of the sudden universal embrace of income inequality as “the defining issue of our time,” as former Gov. Jeb Bush of Florida recently described it, is unclear. The unexpected success of the French economist Thomas Piketty’s 700-page 2013 tome, “Capital in the Twenty-First Century” was, at a minimum, an important accelerant.

Even less clear is whether all those professing a commitment to greater income equality are actually talking about the same thing. Indeed, universal rhetorical consensus in the political realm is more than likely to mask fundamental disagreements that ensure continued finger-pointing and policy inertia.

Into this charged environment steps Prof. Anthony B. Atkinson, the godfather of modern income inequality research, whom Mr. Piketty himself describes as the “model” for his initial graduate work on the subject. There is no one better placed to summarize what the research says about the what and why of income inequality and light a path forward. Unfortunately, Professor Atkinson’s new book, “Inequality: What Can Be Done?,” papers over critical differences to preach largely to the converted.

The most interesting part of “Inequality” is its review of the historic research. What quickly becomes clear is that definitions matter enormously. Are we concerned with inequality of income or wealth? Are individuals or households the relevant unit of measure? Should we really be concerned about the absolute level of poverty rather than the difference between the bottom and the top of the pyramid?

Depending on how we answer each of these fundamental questions, the data leads to radically different conclusions. So, for instance, the drastic increase in the number of women in the work force over the decades after World War II ensured that overall household income inequality remained relatively stable even as wages of America’s top and bottom earners dispersed. Similarly, although inequality – as defined by a nonintuitive economic term called the Gini coefficient – has soared since the 1980s, the rate of poverty has remained relatively constant.

See full article here.

Inequality: What Can Be Done? – Description

Inequality: What Can Be Done? by Anthony B. Atkinson

Inequality is one of our most urgent social problems. Curbed in the decades after World War II, it has recently returned with a vengeance. We all know the scale of the problem?talk about the 99% and the 1% is entrenched in public debate?but there has been little discussion of what we can do but despair. According to the distinguished economist Anthony Atkinson, however, we can do much more than skeptics imagine.

Atkinson has long been at the forefront of research on inequality, and brings his theoretical and practical experience to bear on its diverse problems. He presents a comprehensive set of policies that could bring about a genuine shift in the distribution of income in developed countries. The problem, Atkinson shows, is not simply that the rich are getting richer. We are also failing to tackle poverty, and the economy is rapidly changing to leave the majority of people behind. To reduce inequality, we have to go beyond placing new taxes on the wealthy to fund existing programs. We need fresh ideas. Atkinson thus recommends ambitious new policies in five areas: technology, employment, social security, the sharing of capital, and taxation. ? He defends these against the common arguments and excuses for inaction: that intervention will shrink the economy, that globalization makes action impossible, and that new policies cannot be afforded.

More than just a program for change, Atkinson’s Inequality: What Can Be Done? is a voice of hope and informed optimism about the possibilities for political action.

Inequality: What Can Be Done? – Review

Tony Atkinson is the godfather of modern research on the distribution of income and wealth. Combining the statistical rigor of Simon Kuznets and the radical reformism of William Beveridge, he has been a role model for entire generations of scholars. (Thomas Piketty, Paris School of Economics)

Tony Atkinson has done more than anyone else in helping us to understand the meaning of inequality, why it is important, how it has changed over time, and how it can be influenced. He is one of the great scholars of our time. (Nicholas Stern, London School of Economics and Political Science)

Atkinson thinks that the division between inequality of outcome and inequality of opportunity is largely false. He believes that tackling inequality of outcome is a very good way to tackle inequality of opportunity. (If you help a grownup get a job, her kids will have a better chance of climbing out of poverty, too.) Above all, he disagrees with the widespread assumption that technological progress and globalization are responsible for growing inequality. That assumption, he argues, is wrong and also dangerous, because it encourages the belief that growing inequality is inevitable. (Jill Lepore New Yorker 2015-03-16)

Inequality has replaced house prices as a fashionable topic for discussion. But anyone looking for a serious treatment of the problem, rather than just a dinner party conversation, should turn to [this] book by [an] eminent economist who [has] made the study of inequality [his] life’s work…[Inequality: What Can Be Done?] sets out a range of policies for bringing about a significant reduction in inequality. (Paul Collier Prospect 2015-05-01)

Like it or loathe it, this is ambitious stuff. (Tim Harford Financial Times 2015-04-24)

Atkinson is a pioneer of the study of the economics of poverty and inequality. His latest work, Inequality: What Can Be Done?, is an uncomfortable affront to our reigning triumphalists. His premise is straightforward: inequality is not unavoidable, a fact of life like the weather, but the product of conscious human behavior. (Owen Jones The Guardian 2015-04-08)

About the Author

Anthony B. Atkinson is a Fellow of Nuffield College, Oxford, and Centennial Professor at the London School of Economics and Political Science.

Inequality What Can Be Done?

Inequality: What Can Be Done? by Anthony B. Atkinson

Comments (35)

  • Richard Britton Scroggins

    “You can only aim at equality by giving some people the right to take things from others. What ultimately happens when you aim for equality is that A and B decide what C shall do for D; except that they take a little bit of a commission off on the way.”
    -Milton Friedman

    June 2, 2015 at 10:39 am
  • Garry Anderson

    Quote: although inequality – as defined by a nonintuitive economic term called the Gini coefficient – has soared since the 1980s

    It is worse than you think – the Gini coefficient is a confidence trick to hide worsening inequality between the millions of poorly paid and the privileged rich at the top.

    It is like measuring inequality with a rubber band – the poor stay the same and the rich get richer – stretching the measure and getting a similar result.

    http://www.youtube.com/watch?v=x1Y_fUlYs-Q

    Think about it – when has the gap between the rich and poor ever narrowed?

    June 2, 2015 at 10:45 am
    • kart_125cc

      The thing with the Gini coefficient is that it’s actually a ratio. You could have everyone being far better off but still have a “worse” Gini is those at the top benefited more. Those at the bottom could still be far better off but a worse Gini coefficient makes it look like people are worse off. The problem is that people assume it is a zero sum measure when it simply is not at all any measure of zero-sum outcomes.

      June 3, 2015 at 2:44 am
  • Craig Clark

    Tax Cuts for the Rich, trickle down econ ALL thanks to the Gop, the party of the 1% and the stupid Fox news lemmings

    June 2, 2015 at 11:10 am
    • Pimpdalyrical

      Who is President? Which party had complete control for 2 whole years and only made things worse??
      Pull your head out of your @$$, socialist libtard.

      June 2, 2015 at 12:16 pm
      • Fearless Leader

        Pimp, nothing like name calling to make your comment constructive and valuable. And if you think 2 years of Dem control caused the current economic malaise, you are the one with his head up is @rse.

        June 2, 2015 at 4:16 pm
  • chynna12169

    Income inequality = opportunity inequality.

    June 2, 2015 at 11:40 am
    • kart_125cc

      No, it does not. Not acting on opportunity = income inequality.

      No opportunity ever created income for anyone without that someone acting on that opportunity. It is the absence of acting on that opportunity that results in income inequality, not lack of opportunity.

      Of course to act on opportunity, one must first see opportunity for what it is. If you aren’t seeing opportunity, well there is your problem.

      There is the story of the shipwrecked man. Every day adrift, he prayed to God to be rescued. One day a helicopter flies overhead. It flies down and they ask the man if he needs help. The man replies, “no, God will save me.” Later, a ship passes by and they go over and ask the man if he needs help. The man replies, “no, God will save me.” eventually the man dies. In heaven he asks God why he didn’t save him. To which God replies, “I sent a helicopter to rescue you, I sent a ship to rescue you, why did you not see that?”

      There are millions of people who come to this country because they see opportunity that apparently you cannot.

      June 2, 2015 at 11:57 am
      • chynna12169

        “There are millions of people who come to this country because they see opportunity that apparently you cannot.”

        Slow down Paco….you don’t know anything about the opportunities I have had nor do you know what I have decided to do with them. Stop trying to make this personal as that is as ignorant as ignorant can be.

        Currently we do have a problem with opportunity….college tuition being one thing that comes to mind. In the 60″s when college was affordable many people attended as they were taking advantage of an OPPORTUNITY. Now that college is unaffordable for many people can’t attend as there has been a stifling of opportunity for those who want to go but can’t afford college. You got it Sherlock?

        June 2, 2015 at 5:08 pm
        • kart_125cc

          Firstly, so what about the illegal aliens flooding our boarders that we ca’t keep out? You think they con here for the scenery? And what about the flood of H1B visas? You think they come here for the beer? THey come here for the opportunity that exists in degree and magnitude no where else – or else that’s where they’d be going.

          When I started out in life, I could only dream of having the opportunity that exists today. Actually I couldn’t because then it was completely unimaginable. What I would give to have had the opportunities then that exist now. If nothing else we are flooded with information and knowledge right there at our very finger tips, there for the “googling” – something I never had access to when I was getting started. If I could be as successful today as I am without have that opportunity then what is anyone’s excuse today?

          Everyone has access to free education. But that only works if you show up and actively participate.

          And even at the cost of a college education (but for that matter what about community colleges that are next to free?) it is still a bargain Say you take out $50K in debt. It’s not worth a $50K investment for (on average) $1 million more in lifetime earnings that those without? It’s not worth a $50K investment to be looking for work in an environment of 5% (or lower) unemployment than to be fighting with far more people in a 10% (or higher) unemployment market?

          But hey, if you think college is so not worth it – great, you go with that. That just means less competition for me in work that pays six figures. I’m just trying to help you get access to that opportunity too. But if you don’t that’s your loss, not mine. Good luck with that, Sherlock.

          But then why is college getting so expensive? How many new colleges are being constructed or expanded? There are far more prospective students that college openings. It’s simple supply and demand. And a bit of lack of competition as colleges don’t have to run a tight ship to keep costs down anymore. Instead of using tax dollars as hands outs for the purposes of pandering, perhaps those dollars would be better spent on building and expanding colleges. But you don’t hear people whining for government to push for more colleges being built, do you? No, it’s all just gimme gimme gimme.

          So as was the point of the little story of the shipwrecked man, just because you don’tsee opportunity (or are simply in denial of it), does not mean it doesn’t exist. It more likely the case that opportunity is not what you are expecting it to be. And since it doesn’t look like what you expect, you don’t see it when it “helicopters in” and so you don’t take advantage of it when it is there to be acted upon.

          June 3, 2015 at 12:05 am
        • Fearless Leader

          Chynna – College access changed dramatically as the Baby Boomer generation came of age. Too many kids and not enough seats in the college/university system sent prices rocketing. They have not slowed down since. The real problem with high education is the high paying jobs are all in very technical areas that our universities are not geared towards producing.

          June 3, 2015 at 1:05 pm
  • kart_125cc

    While it is true that there should be a distinction between wealth and income, that is not what I think is at the crux of the issue.

    What the issue is is doing or not doing that which leads to wealth. The thing is, if people are not doing that which leads to wealth, then which side of the gap are they going to fall on? To the extend that some people are doing less and less of that which leads to wealth, is that gap going to shrink or widen?

    The point being that the the “inequality” gap is a result of people NOT DOING that which leads to wealth and success. If you aren’t doing that which adds greater value which side of the gap are you going to be? If you are flipping burgers or inventing cures (to be hyperbolic for illustration), which adds more value and which adds less? Which is going to be on which side of that gap?

    Do you shrink the gap by getting more people to do more of what adds more value or to just pay people more for creating less value? Which actually grows the economy and creates more wealth for everyone and which is, at best, a zero-sum game if not just a net loss of wealth for everyone?

    It’s not rocket science. You close the inequality gap by getting more people doing more of that which creates more value. Notice I said nothing of “hard work” – that’s just mush. It’s not about “hard work” – no one is going to pay you as a reward for doing useless work just on account of it was “hard” work. What people are going to pay you for is for doing things that add more VALUE to their goals and objectives. The more value you create and add, the more they will pay you. For example which degree is going to add more value to someone else’s business – an art history degree or a degree that is relevant to getting their product out the door in the most effective manner possible? Which degrees should people be getting? What is then the expected outcome from wasting that opportunity on an “art history” degree? Like “hard work” the promise of “getting a college degree” is mush. It’s not a piece of paper that matters, it’s the ability to add value to someone else that one gains (or not) from the process of getting that degree that is what generates wealth (or not).

    But the problem is it is not PC to talk about doing and the actual economic value of that which is being done.

    Get people to do more of that which creates more value. There. Problem solved. Now all that is needed is leadership that will motivate people to add value rather than promising to force other people to pay more for less value. Stop expecting people to owe you stuff and instead ask “what value am I creating for others such that they will compensate me highly for bringing that value.” The more value you bring, the more wealth you create and get in exchange. When you do that, you are not reliant on others to extort for you from others that which you think you are “owed” and instead you generate wealth for others and yourself.

    June 2, 2015 at 11:56 am
    • Fearless Leader

      In a fair market with reasonable folks, that would be true. But, humans are greedy and the top, the bottom and all in between. You may find a cure for cancer, but as a salaried employee at BigCorp, you will not see the profits from the value you created, BigCorp executives will see that profit. Happens everyday in Corp America. There was a time when those at the top understood and respected those that worked under them. Since the 1970’s, the social gap and income gap between those who are “owners” and those who are “workers” has been widening each and every year.

      June 2, 2015 at 4:21 pm
      • kart_125cc

        Actually it’s exactly the opposite. Competitive free markets actually assumes the greed of people. It is socialism that assumes people would cooperate – that whole “for the common good” nonsense. And that’s why socialism inevitably fails on account of that.

        Now as for competitive free markets, the point being is that the only way to make a profit is when other people choose to buy your product. If they don’t choose to buy your product you get nothing. If they choose the product produced by someone else, that someone else gets the profit. So how do you maximize your profit? By producing products the people will choose over those made by others. And those others are not going to sit idly by while you take their business, so they will be trying (competing) to provide an even better product to get people to then choose theirs so they can get that profit.

        So you see – it doesn’t even matter the motive behind it – they have to give you the better offer (competitively to the point of the best offering possible) to make a profit. Failing to offer the best product possible, someone else will and they will get the profit, you get none. In fact, the greedier the person the more they are going to try to give you the better product so they can get more profit.

        That leads to the highest productivity, the highest abundance, the highest affordability, the highest quality, the highest of whatever it is the consume bases his choice on. The consumer get s the best possible product in accordance to what they most want when it comes to freely choosing in the marketplace.

        Now to the extent that people don’t produce more value, as I said, they are not getting the wealth that those who DO produce greater value get.

        Show me a problem caused by competitive free markets and I’ll show you a problem that exists because it is NOT a competitive free market. The solution to the problem then is to restore fully functioning competitive free markets, not to undermine them even further which caused the problem in the first place.

        June 2, 2015 at 11:45 pm
        • Fearless Leader

          You said, “That leads to the highest…”
          That’s not true as people tend to try to maximize their gain with the least amount of effort. Hence, the existence of piracy. A completely “free market” is fine until someone breaks the rules as sells a product that is dangerous to the consumer. For example, Ethylene Glycol in Baby Formula from China. But this is all beside the main point. I agree with Free Markets and I agree with Regulations designed for Consumer Protection. I do not agree with Free Markets that allow or encourage Monopolies.

          The issue at hand is inequality. Inequality cannot be resolved through Free Markets nor can it be resolved through so-called “redistribution of wealth.” It can only be resolved by people working together for the common good (a healthy economy) by providing honest labor for honest wages. Worker Unions help usher in a golden age for our economy, but greed and propaganda from both sides has soured the image of labor unions.

          The Golden Rule of the Free Market system is: “He who has the gold makes the rules.”
          The counter axiom is: “A group united is stronger than the sum of the individuals.”

          Lastly, I’m not advocating Socialism or Capitalism, I’m advocating fairness and humility. Something that greed and avarice seek to destroy.

          June 3, 2015 at 9:21 am
          • kart_125cc

            That’s not true as people tend to try to maximize their gain with the least amount of effort

            How is that a bad thing? Why would you want to produce value with more effort than necessary? Why would you want anyone else to? If you are producing value with more effort than required, that’s just stupid and wasteful. That’s why we have the most productive economy on earth because people want to produce more with the least effort.

            But the thing is too is that gain can only be obtained when someone else also gains. You cannot gain unless you produce something for which someone else chooses to buy from you. Why would they so choose? Because they gain something in buying it from you. Your gain plus their gain = net gain in the economy. And if you want to gain more, the only way to do that is by producing more gain for others. How is that a bad thing?

            A completely “free market” is fine until someone breaks the rules

            Same thing can be said for personal freedoms in a free society. That’s why we have things like laws. It’s illegal to kill or steal. It’s illegal to commit fraud. Problem solved. And you say that like people won’t break the rules for any system. In that way, competitive free markets are no worse than any other.

            sells a product that is dangerous to the consumer.

            Which is supposed to mean what? Power saws are dangerous to the consumer too. It’s up to the consumer to decide if the “danger” is worth the benefit obtained from that product. If not, the consumer should not buy it. If no consumer buys it because it is too dangerous, how is any profit made? With no profit to be made, there is no point to make the product. The product does not get made. No one is harmed by it. Problem solved.

            I do not agree with Competitive (fixed that for you) Free Markets that allow or encourage Monopolies.

            Neither do I. A monopoly is NOT a competitive free market, now is it? Duh. That’s why there are anti-monopoly laws to restore competitive free markets.

            The issue at hand is inequality. Inequality cannot be resolved through Free Markets

            Actually that is how it is best resolved. Prices are often referred to as “economic signals”. A high price is a signal that more of a thing is needed/wanted in the economy. A low price is a signal for less of it. Wages are the price for labor. Thus high wages are a signal for more of that type of labor to be supplied for a more optimal economy. A low wage is a signal for less of a type of labor to be supplied for a more optimal economy. If people listened to those signals and acted on them that would reduce inequality AND result in a more economically productive economy. To the extent that people try to thwart those signals, THAT is what grows inequality and results in a less productive economy than could be had.

            The problem is a result of trying to thwart free markets.

            nor can it be resolved through so-called “redistribution of wealth.”

            true.

            It can only be resolved by people working together for the common good (a healthy economy)

            That’s correct. And how do we know what is for the best possible common good and healthy economy? That which market price signalling is telling is is so. In that sense, the problem is that people are refusing to do what the economy is trying to tell us is in the “common good” for a healthy economy. It should be noted as to how those “signals” are generated: prices get bid up when people want or need more of a thing and bid down when they they want less of a thing (probably so they can have that more of the other thing). So those prices are telling us what we want and what we need to do to optimally have what we want.

            by providing honest labor for honest wages.

            And what exactly would an “honest wage” be besides just a glittering generality? Would it be to pay in equal measure to the economic value one contributes to the economy? Or is it to pay a person far more regardless of how little value their work contributes to the economy. How do we know the value to the economy of any job? By the market price it pays. So by paying more than market price, you are saying that person should be given more from the economy than they contribute to it. Now, that’s not inherently a bad thing – it’s called charity. But why should an employer be obligated to provide that charity? If the people want to provide blanket charity, then the people need to be the ones paying for it, not trying to pretend it isn’t charity and trying to pawn off paying for it on someone else to enable that self-delusion.

            The Golden Rule of the Free Market system is: “He who has the gold makes the rules.”

            No, that’s what people who don’t get competitive free markets say is the golden rule. But let’s say it is. And how did they get that gold? By providing goods and services that people choose to buy because those products enriched their lives. They got that gold because they enriched the lives of others. You would prefer those people did not have their lives enriched?

            The counter axiom is: “A group united is stronger than the sum of the individuals.”

            What do you think a business is? And that what competitive free markets do. It makes people work together for the betterment of society because it is profitable to do so. The counter argument is that people DON’T work together unless it is profitable to do so. The fallacy is thinking that people would just work cooperatively. They simply don’t unless there is profit in doing so. This is why socialism always fails.

            And here is another thing: Free markets do NOT preclude charity, non-profit seeking, etc. It is after all a FREE market – that what the FREE in free markets mean, people are FREE to buy and sell on account of whatever motivates them. If they are not motivated by profit, they are free to work for other motivations. It’s like people think there are “profit police” that force people to maximize profits. People are going to tend to maximize profits regardless. Competitive free markets assumes this to be the (as opposed to be in denial of that as is socialism) and uses that to produce maximal benefit to consumers.

            The things is, competitive free markets do not preclude people from people acting altruistically like socialists seem to think people ought to. You aren’t going to make people act altruistically. But in denying people the ability to maximize profits, you don’t create altruistic behavior, you simply eliminate that which would have been had if people were allowed to act on their profit motives to provide goods and services that people want. Thus free markets provide all the altruism that would be there plus all the benefits obtained when people can profit by providing the goods and services people want. You’re not going to get more altruism by denying profit. Thus free markets provide for the maximal altruism you would get any way plus the benefits to consumers that profit making makes possible.

            I’m advocating fairness and humility. Something that greed and avarice seek to destroy.

            As am I. Free markets is the most optimal case for maximal fairness and benefit to humanity. It’s not perfect, but it’s the best possible outcome. Especially given that there is GOING to be greed and avarice. Free markets admits this and actually directs that to mutually beneficial gains. You think you are going to eliminate avarice and greed? You think people won’t direct that to zero-sum outcomes given the opportunity or the only recourse (in denying profit making)? So do you want to harness that “avarice and greed” to producing beneficial goods and services for the people? Or do you want to be in denial of that such that people then direct that avarice and greed to zero-sum ventures?

            And here is one more thing competitive free markets do for us. They find that least amount of profit to be “allowed” such that we get sufficient supply to meet our wants and needs. I say “allow” because that is how liberals view profits – people get profits only on account of they are “allowed” to. No, people get profits because that is what it takes to get the supply to meet out needs and wants. If we could get that with less profit, what idiot would “allow” more profit than that?

            What does competition do? It makes people put in the best possible performance (product offering) than the competition to get the “prize (the sale, and thus the revenue and profit from the sale). How much is one willing to put in work and training (forgoing profit to offer a more competitive product offering) before one decides it is not worth it to enter the competition? Only that person can decide that. Expecting a person to put in yet more training (forgoing more profit) will only cause them to drop out of the race. With fewer competitors that is less choice and supply in the market. AS people are already running at the least profit for which they will continue to compete, mandating less profit only reduces supply. You ma not like the amount of profit, but in mandating less profit, you’ll just get less of whatever it is. And that can be in terms of supply or quantity of supply, or some other detrimental effect on the supply.

            June 3, 2015 at 11:04 am
          • Fearless Leader

            So, cut to the chase: Are you advocating a completely free market with no regulations?

            June 3, 2015 at 11:59 am
          • kart_125cc

            No. But that depends on what you mean by regulations. I oppose regulations that deny choice and freedom.

            Think of it like personal freedom. Would you advocate for a “completely free society with no laws”? Pretty stupid thing to say isn’t it? So why do people insist on such absurd argumentum ad absurdum against free markets? Do people say that if you oppose laws that infringe personal freedom that means you want anarchy? That would be argumentum ad absurdum. But when people argue against the economic freedom analog being regulatory overreach, that is exactly the counter argument that always gets made.

            When we say freedom do we mean a society absent laws and governance? Of course not. We have laws against things like killing and stealing – basically, laws against violating the freedoms of others. That is, in a “libertarian” sense anyway – not that we don’t have laws that go beyond that to deny people their personal freedoms even when exercising that freedom doesn’t violate anyone else’s freedom. For example, things like drugs and gay marriage – how does getting high infringe anyone else’s freedom (to not get high)? How does gay marriage infringe anyone else’s freedom (to not be in a gay marriage)?

            So the same principles apply to regulation. The consumer should get to decide what goods and services they buy or don’t buy. And producers should get to decide what goods and services they produce or don’t produce. And if the people decide they dislike dome product they are free to not buy it. And the producer of that is free to decide what they will do in the face of no revenue from that product.

            Now what producers don’t have a right to do is to misrepresent their product. They don’t have that right because that infringes the consumers right to make a “free” choice. A choice based on misrepresented information is not a free choice.

            Beyond that, what regulations are really needed?

            For one example out of countless such examples, what about Circuit City? Di they just pack up and quit because they got tired or bored with the business? No, they went out of business. Why did they go out of business? Did government force them out of business? No. They went out of business because people stopped buying from them. Why did they stop buying from them? Because C.C. became passe or irrelevant or some such. Imagine that, consumers put a perfectly good business out of business for doing nothing than to have become passe or irrelevant. So if consumers can put a business out of business for some such triviality, why is it so implausible that consumers could not do so if a business does something actually egregious and harmful?

            As such an example, remember the pink slime debacle? Remember when that story broke and the producers of that were literally shuttered then next day. How long would it take for government to craft regulation, enact it, enforce it, bring a court case, conclude the court case, and impose some superficial fine? The thing is, the “court of the free market” is far more vindictive, capricious, and sudden in enforcing consumer ire than any regulation ever could. And the the “court of the free market” is not burdened the the aforementioned legislative and judicial process.

            And for a third example of the redundancy of such regulation: what is the common refrain when it comes to product safety? Business simply won’t make safe products without regulation forcing them to. But just look at automotive safety. Cars are coming out with a plethora of driver aids and safety technology to make cars safer. Where is the regulation forcing them to do that? One such technology is backup cameras. That has been tossed around as a “need” for regulation to force them to be equipped. But just the other day as a matter of fact, I saw a Honda ad where they were announcing that backup cameras will be a standard feature across the entire product line. They will do that because it sells cars because people want it and will buy cars that have it (At least many people will). My parents are such people. They bought the car they bought specifically on account of the safety tech it has, specifically to get that safety tech. That’s why a manufacturer would make a safer product without being forced to by regulation.

            A large part of the problem is this pervasive narrative that consumers are powerless against businesses. The reality is that consumers have the greatest and most coercive power against them. Consumers have veto power. They have the power to decide to buy that companies products and provide them with revenue and profit, or to deny a business any revenue and thus any profit. In that sense they have the power to deny a business the ability to conduct business at all. But people need to cling to that narrative to “justify” their thuggery against other people simply exercising their economic freedom. Same as people want to ban things like gay marriage.

            But why should people be forced to pay the price for it if they don’t want it? Here’s where such regulation harms people. Say a person has an old car and they would like to upgrade. A new car would certainly be a safer car and have other benefits over their old car. But what happens to that person when mandates are imposed for even more stuff to be included on the car? That adds cost and causes a higher price. Well, now that better safer car may be priced out of reach such that that person is now unable to obtain what still would have been a safer better car and they are harmed by being denied that and caused to continue to drive their less safe car.

            June 4, 2015 at 12:20 am
          • Fearless Leader

            A quick note on Honda and their camera on all models: From CNet 2014-03-31: The National Highway Safety Transportation Agency (NHTSA) announced a new rule today that will require vehicles built from May 1, 2018 on to have a back-up camera. The rule applies to all road-legal vehicles under 10,000 pounds.

            Honda has simply gotten out in front of this and turned it into a excellent PR campaign.

            June 4, 2015 at 10:35 am
          • kart_125cc

            turned it into a excellent PR campaign

            Um, yeah, duh. What does that have to do with it being a (far future) requirement? You seem to think it is an excellent PR campaign only because it is being required in the far future. And you seem to think it wouldn’t have happened with out that. I mean, if it were better for “maximizing profits” to not offer it, then why not wait until closer to the deadline to eek out a little more “profit maximizing”? Or maybe it is “profit maximizing” to give the people what they want as opposed to not. And it still doesn’t explain the plethora of other safety technology that many manufacturers already offer. And for that matter, those same manufacturers using said technology as the basis for ad (PR) campaigns. If it didn’t help sell cars, why would you base an ad (PR) campaign on it? And since they obviously think it helps sell cars, why would they not offer that?

            It’s like people seem to think that a company for some reason would not offer something that consumers want if it’s safety related. “We’ll give you all the cup holders and power windows and entertainment systems you want, but if it’s safety related stuff you want that would get you to buy our cars, forget it, we’re going to deny that to you. We’d rather not sell cars with safety features and lose that profit than to put safety features in them and make safe cars people want, because we’d rather build unsafe cars than to build the safe cars you want and would buy.”

            If people want a feature, then manufactures will find a way to offer that feature. Even if it i safety related. The issue is how much to people really want that safety feature? Enough to pay what it costs? Really, that’s all regulations do is to force people to buy something they otherwise wouldn’t. Because if the people would buy it, it wouldn’t “need” to be mandated. The point being it’s not the manufacturers refusing to put things on product that people want, it’s people not wanting to pay what it costs to be provided.

            June 4, 2015 at 11:14 am
          • Fearless Leader

            1) 2018 is not far future. Far future is 2030 or 2040, like when SSI is expected to go bankrupt.
            2) All cars will have it in 2018 whether the consumer wants it or not.
            3) Many folks may not be aware of the coming mandate.
            4) Honda has always had a future looking perspective in their product.

            I do think it is a outstanding marketing campaign. Why? Because when the other car companies finally decide to comply with the new regulation, many people will think GM/Saab/whoever is copying Honda’s lead. You see, it’s not just Honda selling cars today. It’s Honda projecting themselves as a leader that other companies follow (which is true in a sense) and that will help Honda sell cars next year and the next and the next. Brand perception is a vital key to true success in the market place (Apple is another great example of this type of marketing). That’s what make’s it a brilliant strategy.

            June 4, 2015 at 12:14 pm
          • kart_125cc

            1) in product lifecycles it is. And that includes automobile features.

            2) So why should they be forced to have and pay for it if they don’t want it.

            – Now, I will admit that backup cameras is a unique safety feature in that the concern is not so much for the driver safety as it is for possibly people behind the car. But that is not the case with most other “safety” features people are forced to have whether they want to pay for them or not.

            3) true – thanks for the info. Obviously I have been more or less following it. SO good to get an update on it’s status.

            4) Sure – and clearly Honda sees the benefit to their bottom line to provide that for their customers and have found a way to do so without blowing out their target price point. Meaning the technology has finally come down to a price point to make that possible. So because of that expect others to soon follow suit. Makes the mandate kind of moot as that would be the case whether the regulation was passed or not.

            I do think it is a outstanding marketing campaign. Why? Because when the other car companies finally decide to comply with the new regulation

            The fallacy of that statement is that you think they would only do it for the regulation and not be cause competition and consumer demand forces them to do it.

            Every thing you state is just common business sense and nothing you have stated has anything to do with regulation – it would be exactly as you say even if the regulation didn’t exist because it is simply good business.

            Look at Mercedes. They were one of the pioneers to have a lot of the new safety technology that is now available from many other marques. Lane departure, automatic braking, etc. And in general there is stability control – first on sports cars and now also virtually ubiquitous. Where is the regulation that made them do that? They did it because it’s good for business because consumers want it – as if any other motivation is required else they wouldn’t do it. Like I said, it’s like people think that car makers would resist doing a thing that is good for business that is safety related unless they are forced to. Sure, a brilliant strategy, that’s exactly what I’m saying – and nothing to do with regulation.

            And here is an idea I had as a thought experiment. As I said, the issue isn’t mandating car manufactures to include it – they will include whatever consumers want and are willing to pay for. Why would they not? So what if the “regulation” was instead that consumers could only buy cars with backup cameras? (or whatever the feature in question may be) The end result is no different – a distinction without a practical difference. But what do you think the public’s reaction would be? There would be outrage. The irony is that in the end, either way, it is consumers being forced to buy the feature (makers aren’t going to put it in for free, they will adjust the price to cover the cost) but they would feel “vindicated” in mandates on the manufactures that simply result in (indirectly) being forced to buy it but outraged if they were directly forced to buy it. The irony is that the narrative is that manufacturers won’t do a thing unless mandated when the reality is that it is in fact consumers won’t buy a thing unless mandated to do so. It may be a distinction without a difference, but the point is in the difference that results from the nuanced distinction of who is being mandated and who is ultimately mandated.

            June 5, 2015 at 12:40 am
          • Fearless Leader

            On the subject of mandates, I agree and disagree with your hypotheses.

            Just because most consumers would like a feature, like air bags. The expense kept it out of many consumers price range. By mandating the frontal air bag as a requirement for all vehicles, cars became safer (insurance co.s saved money on hospital costs) and the quantity of air bags being brought to market brought the price down per unit. I do not remember there being in Anti-AirBag rallies in Wash DC. The point being, govt vehicle mandates are for proven safety reasons only and do not tend to make consumers unhappy. Bumper height, windshield wiper coverage, etc.

            Another example is the US does NOT have a daytime headlight mandate, whereas both Europe and Canada do. Most imports have this feature whereas many US made cars do not have it. Consumers do not focus on the safest cars, they focus primarily on price and beauty (physical form), others think about gas mileage or towing capacity, etc. That’s where the free market works best, balancing consumers desires/needs against price and function.

            Regulations are a good thing when used for the betterment of society as a whole. Yet, they place restrictions on some inductries that would prefer to profit at the expense of society. Dumping toxic waste in the local river is a good, common example still occurring today in most parts of the world. Hence we have the EPA to prevent such abuses to our much needed nature resources.

            Now, a mandate such as the ACA forcing everyone to buy so called Medical Insurance from private for profit institutions is a total abuse of govt regulation.

            Still, this is off the subject of inequality. See my previous posts.
            I still love Honda (yes, I own one). I like Toyota and Porsche, too.
            I love my Saturn, but I despise GM for ruining it in the early 2000’s.

            June 5, 2015 at 10:48 am
          • kart_125cc

            The expense kept it out of many consumers price range

            True. But mandating it isn’t going to put into everyone’s hands. That’s the point(s) I made earlier. Mandating doesn’t make it free. Manufactures are going to add that cost to the price of the car. So now you are still buying it. But the thing is – that car is now more expensive -it’s still going to be out of reach of those people affected by that price increase. And what’s more, is that now they don’t have any new car option available to them such that they can not get even those benefits (safety and otherwise) that they would at least be able to get if they were able to a new car without whatever the mandated feature is. You haven’t really helped people get some feature that they otherwise couldn’t – they still can’t – but you have now denied them even those other benefits they could have has in a new car that they now can’t afford.

            And again, so how do you explain manufactures offering far more airbag protection than the minimum mandated?

            The point being, govt vehicle mandates are for proven safety reasons only and do not tend to make consumers unhappy.

            If it didn’t make them unhappy, then why do the have to have a mandate that essentially forces them to buy it? If it made them happy to have it – they would just buy it without having to be forced to. My parents wanted a car that offered advanced safety technology, so that is what they bought. They didn’t need a mandate to force them to buy something they already wanted. But on the other hand, if they didn’t want it, why should they be forced to pay for it? Now, of course I am very glad they did, and people in general should, but it’s not the government’s job to force people to care for their own safety – that’s part of the point of a free society – to decide for oneself how to live, even if that means being allowed to do “unsafe” things (for themselves) that others might disapprove of.

            And since we’re talking about automotive mandates, read how we have been denied beneficial features on account of those mandates, another adverse outcome from mandates:

            (apparently they don’t post links so search for popularmechanics 10-car-options-the-law-wont-let-you-have)

            Regulations are a good thing when used for the betterment of society as a whole.

            Sure, but more often that not that is simply used as a glittering generality to “justify” overreach that is really not.

            Dumping toxic waste in the local river is a good, common example still occurring today in most parts of the world.

            So don’t buy from those producers, problem solved. And that’s the beauty of a competitive free market – when people care about that, that creates a profit opportunity for it. And when there is a profit opportunity, it will get produced. If I can sell more product by not polluting because that’s what people want, why would I not? I don’t need a regulation to make me do it, I do it because it’s good for my business. And when everyone else loses business, they either change their ways to regain competitiveness, or they go out of business. Either way, no more polluting. Regulation is moot.

            As for elsewhere in the world, eg China, one of the more egregious? Well they don’t exactly have strong competitive free markets, now do they?

            June 5, 2015 at 11:22 am
          • Fearless Leader

            One, I do not have to justify or explain why car makers offer side airbags or any other additional safety feature. That’s a stupid question. We both agree free markets work for the betterment of society.
            You’re still in debate mode, there’s no debate here on that subject.

            The point you do not seem to understand or are willing to admit is that free markets can not take care of the environment. Joe Sixpack in Missouri does not care that GE was polluting the Hudson River in New York 50 years ago no more than you care about labor atrocities committed by Foxxconn in China today.

            I’ll will look up the Pop Mech article.

            The automobile safety mandate is because too many people only buy cars based on the cheapest price. That leads to cars that are not safe in a car crash. For example, the 1965 MGB did not have door locks or seat belts, both common in that day. I was fun to drive, but in a crash it was very unsafe.

            The point to safety mandates is to protect both passengers and insurance companies from high medical bills. A seat belt will safe your life in a 30 MPH head on crash. Not wearing a seat belt in a 30 MPH crash will send you to the ER and a $100K+ medical bill. As we have laws on seat belts now, not wearing your seat belt is a legal excuse for an Insurance co to NOT pay your medical bills.

            June 6, 2015 at 3:41 pm
          • kart_125cc

            The automobile safety mandate is because too many people only buy cars based on the cheapest price. That leads to cars that are not safe in a car crash.

            Sure. And how is it your right to tell them they can’t have that if that’s what they want? What if it’s a question of having a “cheaper car” that is less safe than you would like them to be driving versus not having a car at all to get to work? How is it your right to make that choice for them? The fallacy is in presuming to know what is best for others than they they know for themselves?

            I was fun to drive, but in a crash it was very unsafe.

            Exactly. Does someone else have the right to decide for you between fun to drive or safe? Shouldn’t that be your choice what balance you wish to strike between fun and safe?

            The point to safety mandates is to protect both passengers and insurance companies from high medical bills. A seat belt will safe your life in a 30 MPH head on crash. Not wearing a seat belt in a 30 MPH crash will send you to the ER and a $100K+ medical bill.

            Where did I say safety features didn’t provide safety? Did I not say I was glad that my parents chose to by a Mercedes with all the latest safety technology available? You seem to have the mistaken assumption I am somehow opposed to safety.

            did not have door locks or seat belts, both common in that day

            But let me rephrase that: door locks are ubiquitous today, as are air bags.

            But, so too are power windows, automatic transmissions, A/C, CD players, and (becoming that way) Bluetooth connectivity. (Can you even get a car that doesn’t have power windows these days. I think you can get a car without a CD player, but you basically have to ask to not have a CD player installed.)

            Why is that exactly? Where are the regulations and mandates that require power windows, automatic transmissions, A/C, and CD players? It is that way because people want it. And because people want it, competitive free markets have caused makers to find ways to reduce the cost of those technologies so that they can be ubiquitous to the point of being taken for granted. So why is it so implausible that won’t happen with safety features and technologies? People want those things just like they want power windows, automatic transmissions, and CD players. So if the mere fact of consumers wanting a things in a competitive free market makes it become standard equipment, why do people think safety equipment are somehow exempt or not subject to those exact same markets forces and outcomes?

            Manufactures made power windows and such standard equipment all without regulations and mandates forcing them to do so, contrary to the narrative that manufactures won’t make things standard equipment unless forced to do so. So, why is it so implausible that the exact same thing won’t or can’t happen with safety features? That’s the point you seem unable to understand.

            The point you do not seem to understand or are willing to admit is that free markets can not take care of the environment.

            Before going down that argumentative rabbit hole. You need to understand the economic distinction between public goods and private goods (vis a vis the environment as a “public good”). The best explanation for that I have found is given in the paper “Public Goods and Public Choices” written by Nobel Laureates Vincent Ostrom and Elinor Ostrom (google it). It’s actually a crucial concept to understanding the proper role for government in an environment of competitive free markets. I think it would be good for you to read, and I say that in all sincerity. This isn’t to impress you but to offer an educational opportunity on the real economic principles behind where government does belong and where it does not belong in an economy and why. Without first understanding those concepts, try to debate the issue is a fool’s errand.

            June 6, 2015 at 4:34 pm
          • Fearless Leader

            The we are in agreement to what a free market is and how it should work. That however does not address the issue of income inequality.

            Income inequality is a function of the employer-employee relationship. As the IT revolution has increased worker productivity since the 1960’s and “global competition” from free trade agreements has encouraged off-shoring of jobs, employers have been reducing their US work forces while also applying downward pressure on existing worker wages and benefits as the number of jobs has not kept pace with the supply of US workers. Combined with reforms in the “rights of shareholders” from the early 70’s, a CEO’s job has changed from running a company to providing Wall St with encouraging news from quarter to quarter.

            In order to increase the bottom line each and every day, all corporations must cut US workers in favor of employing foreign workers and building products on foreign soil to remain competitive in the US market place. As such, the corporate executive and the shareholders are taking the lion’s share of profits and while starving the actual producers (aka workers) of those profits. The long term results of Down Sizing, Out Sourcing, and Off Shoring has been to diminish the US Middle Class (workers/professionals) in favor of the Upper Class (top 1%/owners/shareholders).

            The reasons for the inequality is multifaceted, but the largest factor is the US Trade Deficit and the lack of Congressional oversight on this key vector. Taxes and US National Debt have played no significant role in the destruction of the middle class to date. Allowing and even encouraging (through tax loopholes) corporations to produce goods and services abroad while importing them almost duty free and selling those goods and services in the US market place has crushed the US middle class and crippled the US economy.

            That economic destruction has lead directly to the Great Depression of 2008 and the enormous national debt that is growing by over a $Trillion every year. Additional disruptive effects will continue to ripple through our economy until the ground rules are changed and our economy is reverted back to a mercantile economy instead of a consumer economy.

            The Free Market cannot and will not accomplish this great task. The consumer is powerless to due this as the consumer does not regulate the ground rules for import and export of good and services of this great nation. That power lies strictly in the hand of the US Congress.

            Yet, to change the ground rules means to snatch the lollipops (profits) from the current owners and shareholders that are currently enjoying the benefits of the current rules. They do not want to change the rules, that have spent 70 years changing the rules to sit in their favor and have no intentions of allowing it to be reverse. In fact, they seek more concessions to their wealth and power from Congress each and every year. Both Democrats and Republicans have been more than willing to provide them those concessions and when one party fails to deliver, the other party is pushed into play to continue the course.

            The changes required will be painful for the US Consumer because the fix will require personal austerity measures that the average consumer is unwilling to sacrifice. Just as you mention in your post about cars being better and safer (that can be debated on a case by case basis), the cars that are actually better are typically more expensive, more so that cheaper made, less durable cars are the main stream consumer product, i.e., GM (lesser) vs. Honda (better). The majority of the Baby Boomer generation fueled the US Consumer economy of the last 50 years and their children never knew a real economic crisis until 2008. Now, the next generation coming of age is seeing high prices, high costs of education, and poor job prospects. Sure, there are good jobs out there, but there’s not enough good jobs for everyone. That in turn means under utilizing our nations greatest asset, the US worker.

            June 4, 2015 at 11:41 am
  • HRR

    “Inequality is one of our most urgent social problems.” Only in the minds of people that do not embrace the hard work, discipline and perseverance it takes to be successful in a free economy.

    June 2, 2015 at 12:07 pm
  • Brady Shackelford

    How can author say that globalization and technological progress have NOT affected the income gap? Globalization flattens income because the increase in the supply of labor puts downward pressure on salaries. Furthermore, technological advancements constantly eliminate jobs from the workforce, putting downward pressure on the salaries of those who have not kept their skills up to date. Combine the two, and it’s no wonder that incomes have stagnated since the late 70’s.

    June 2, 2015 at 12:14 pm
  • Pimpdalyrical

    There is no crisis. An income gap means nothing given that our poorest still live better than most of the world. None of these people want to see the poor do better. They just feed the poor’s envious desire to see those who have done better brought down.

    June 2, 2015 at 12:17 pm
  • Ni Gel

    Other than rare athletic or musical skills, the only tried and true method to escape poverty is education. Unfortunately, the democrats and teachers unions have turned their backs on math and science and instead have embraced role playing, social justice, self esteem, gay sympathy studies and lousy teachers so that poor children don’t have a CHANCE of getting a good and relevant education. In Chicago, many teachers refuse to administer standardized tests since it will expose their poor performance. When teacher egos TRUMP student needs, the net effect is a lifetime of poverty for the students. Nice.

    June 2, 2015 at 4:54 pm
  • Pitdownman

    There is another way to look at it. There are two ways to generate income. Through
    employment or investment. The top CEO of 2009 made $84.5 million – $6.1 million
    in pay, 78.4 million in stocks and options. The wealthy know the real money is
    in investment. Read in to “The Universal Annuity System”.

    June 2, 2015 at 6:20 pm
    • JosephConrad

      Blue-sky crap. There’s no taxing of financial transactions or said income as part of total income for SSI and income tax purposes. That will never change but must or this nation will fall into a toilet of soci-political-economic chaos in a decade or less –despite killer white cops.

      June 2, 2015 at 10:46 pm
  • JosephConrad

    As long as systemic race-based discrimination permeates a socio-economic-political system, you will have inequality of outcome and opportunity. An example of this is the refusal of the government to readjust the Social Security system and to tax financial transactions or to confront the disparate incarceration, probation and parole rates of African-American men.Hey, U.S. History reveals this nation is a race-based hierarchy and racism-driven Oligarchy maintained through imbedded race, sex and age-based discrimination to ensure the WAGE SLAVE population is adequate in number.

    June 2, 2015 at 10:37 pm

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