As apart from just having a Panglossian view of what’s actually the case in the world.
Putting aside my objections to the connotations of delusions associated with the term "Panglossian," which may or may not have been intended, we don't have a Panglossian view even in a strictly literal sense. Libertarians are, as a rule, very much concerned about the metastasis of government into areas we think should remain in the private sphere, and with the inexorable growth of individual and corporate welfare. To say that libertarians are Panglossian because we don't think there's a problem with income inequality is like saying that leftists are Panglossian because they don't think there's a problem with those things.
That is, if I thought that income or wealth inequality was such a big problem that the government needed to step in and do something about it, I'd be a leftist.
I would argue that redistribution based on natural endowments is both more fair and associated with less deadweight loss than redistribution based on income.
Harrison Bergeron wasn't really about redistribution, though. Exceptional qualities and abilities weren't so much redistributed as destroyed. Though in some extreme cases (e.g., Zimbabwe) redistribution has essentially ended up working that way.
I should add that there's nothing nefarious here. They're fairly up-front about having used different deflators, and their reasons for doing so were sound. But I think it's inappropriate to compare these trends when they're not really commensurate.
I took another look at the EPI article from which the chart came, and it looks like they're using different deflators to adjust productivity and wages for inflation, and that this accounts for a third of the gap in between 1973 and 2011. That is, the average prices of the things that consumers buy have risen more quickly than the average prices of the things that they produce at work. Which is to say, a third of the apparent gap is just a statistical artifact of the way they adjusted for inflation.
What does personal wealth inequality have to do with regulatory capture? Granted, if a market is dominated by a few large firms, it's likely that there will be greater wealth inequality than if it were dominated by many small firms, assuming that the founders of these firms retain enough stock to receive a significant portion of their firms' profits. But the usual method of reducing inequality, progressive taxation, does nothing to reduce the market share of those firms.
Rather, concerns about regulatory capture might better be addressed by more vigorous antitrust enforcement, with the caveat that antitrust enforcement itself is subject to regulatory capture.
If you're concerned with the market catering more to the tastes of the wealthy, it's important to look at consumption inequality rather than wealth inequality. The wealthy are wealthy in part because they don't consume every penny they have as soon as they get it, so consumption inequality will naturally be lower than wealth or income inequality, and also tend to grow more slowly. And it's also worth remembering that a lot of mass-market consumer items got their start as luxuries for the rich, who subsidized the development of more economical production techniques.
Finally, income inequality isn't increasing. It only appears to be increasing if you arbitrarily limit your data to a single country. Global inequality---and more importantly, poverty---is decreasing.
Question: What major, macro-economic, economy-wide, and permanent, change occurred then?
One factor may have been feminism, more specifically the mass entry of women into the workforce. The labor force participation rate rose from 59% around 1965 to to a peak of 67% in 2000. Worker compensation is in part a function of the capital-to-labor ratio, and it's likely that the increase in the denominator of that ratio resulted in suppression of wage growth.
It's a decent heuristic. If you're working, you may or may not be doing something productive. If someone's paying you to do it---and if you're going to be working anyway, you might as well get someone to pay you---it's even more likely that what you're doing is productive. If you're not working, you probably aren't doing anything productive.
There’s a strain, particularly in American conservatism, that argues that market outcomes are fundamentally just.
Whether it's just or not is, I think, beside the point. Paying people in accordance with the marginal product of their labor is good because it gives people an incentive to maximize the marginal product of their labor. We valorize productivity because we want more of it. I'm not sure that "Is this just?" is actually a coherent question.
Whenever someone talks about intervening to make this process more "just," it pretty much always involves blunting the incentives for productivity for the sake of some fairly arbitrary conception of justice.
Employers have every incentive to make their workers more productive, so chances are, if there are ways of doing this they will be non-obvious, difficult to implement and/or involve factors employers can’t control.
Or just more expensive than the productivity improvement justifies. An employer may be able to improve his workers' productivity by spending a million dollars on new equipment, but if that new equipment only generates an extra $20,000 per year in profits, he's not going to do it.
A corollary to this is that the cheaper and more abundant capital is, the higher worker productivity will be. Which, again, is why redistributing wealth from those with low marginal propensity to consume to those with high marginal propensity to consume is bad for workers in the long run.
My suggestion is the additional gains went somewhere: where?
Non-cash compensation and above-average workers, I think. And government transfers, of course. That's the one real growth sector.
Besides, there’s things that are deliberately left out of the official measurement that result in understating inflation anyway.
On the other hand, hedonic adjustments probably don't sufficiently capture increases in standard of living. All things considered, I strongly suspect that the median standard of living has risen considerably since the late '70s, but I'm not old enough to say from personal experience.
-It's comparing aggregate productivity---i.e., of the whole economy---with median cash compensation for a subset of workers, specifically private-sector production/non-supervisory workers. This isn't nefarious, since it really isn't possible to measure the productivity of individual workers due to synergies between different actors in the economy, but it is worth keeping in mind that the fact that these aren't perfectly correlated isn't proof of some great injustice.
-I'm pretty sure it's median cash compensation, i.e., ignoring benefits, which have grown faster than wages. And no, it's not paying more for the same quality of health care, it's paying more for better health care.
Objections to your analysis: Continuing productivity gains no longer met with reward for job well done, and the costs of living went onward unfazed.
First, productivity gains don't necessarily mean that workers are doing a better job. It often just means that they're working with better tools. The reason American workers are so much more productive than Chinese workers isn't that Americans are just plain better---it's that Americans have much more capital enhancing their productivity.
Second, that chart is inflation-adjusted. Costs of living have not risen faster than wages, as you imply.
So there's no confusion on this point, I was not accusing M.A. of antisemitism, merely pointing out the parallels between antisemitism and anti-rich bigotry.
*Comment archive for non-registered commenters assembled by email address as provided.
On “A Clash of Models”
Damn you, I was drinking a soda and your comments were so inane I did a spit-take.
Your presumption of superiority here is, aside from being characteristically dickish, grossly unwarranted.
On “Government Enforced Inequality”
One could, yes. I suspect that most people would resolve that cognitive dissonance one way or the other, though.
"
I didn't intend to imply there that leftists are generally on board with corporate welfare.
"
As apart from just having a Panglossian view of what’s actually the case in the world.
Putting aside my objections to the connotations of delusions associated with the term "Panglossian," which may or may not have been intended, we don't have a Panglossian view even in a strictly literal sense. Libertarians are, as a rule, very much concerned about the metastasis of government into areas we think should remain in the private sphere, and with the inexorable growth of individual and corporate welfare. To say that libertarians are Panglossian because we don't think there's a problem with income inequality is like saying that leftists are Panglossian because they don't think there's a problem with those things.
On “Why Inequality Might Matter”
I want to see the irritating parts.
On “Government Enforced Inequality”
That is, if I thought that income or wealth inequality was such a big problem that the government needed to step in and do something about it, I'd be a leftist.
"
Why does it follow form a libertarian perspective that there is nothing wrong with wealth or income inequality or rising wealth or income inequality?
Other way around. Libertarianism follows from the observation that there's nothing wrong with income or wealth inequality as such.
"
Immigration and outsourcing. I always get a bit of a giggle out of people who are ostensibly against inequality railing against outsourcing.
On “Dance 10, Looks 3 – Inequality of Talent and Looks”
I would argue that redistribution based on natural endowments is both more fair and associated with less deadweight loss than redistribution based on income.
"
Harrison Bergeron wasn't really about redistribution, though. Exceptional qualities and abilities weren't so much redistributed as destroyed. Though in some extreme cases (e.g., Zimbabwe) redistribution has essentially ended up working that way.
"
Not really a book. It was only like two pages, IIRC.
"
How one would do this would be, I suppose, a bit more difficult than redistributing wealth.
Face transplant!
On “How we got here”
Besides, there’s things that are deliberately left out of the official measurement that result in understating inflation anyway.
You're thinking of "core inflation." They don't do this with the CPI, which I'm pretty sure is what was used to adjust the wages in this chart.
"
I should add that there's nothing nefarious here. They're fairly up-front about having used different deflators, and their reasons for doing so were sound. But I think it's inappropriate to compare these trends when they're not really commensurate.
"
I took another look at the EPI article from which the chart came, and it looks like they're using different deflators to adjust productivity and wages for inflation, and that this accounts for a third of the gap in between 1973 and 2011. That is, the average prices of the things that consumers buy have risen more quickly than the average prices of the things that they produce at work. Which is to say, a third of the apparent gap is just a statistical artifact of the way they adjusted for inflation.
On “Why Inequality Might Matter”
What does personal wealth inequality have to do with regulatory capture? Granted, if a market is dominated by a few large firms, it's likely that there will be greater wealth inequality than if it were dominated by many small firms, assuming that the founders of these firms retain enough stock to receive a significant portion of their firms' profits. But the usual method of reducing inequality, progressive taxation, does nothing to reduce the market share of those firms.
Rather, concerns about regulatory capture might better be addressed by more vigorous antitrust enforcement, with the caveat that antitrust enforcement itself is subject to regulatory capture.
If you're concerned with the market catering more to the tastes of the wealthy, it's important to look at consumption inequality rather than wealth inequality. The wealthy are wealthy in part because they don't consume every penny they have as soon as they get it, so consumption inequality will naturally be lower than wealth or income inequality, and also tend to grow more slowly. And it's also worth remembering that a lot of mass-market consumer items got their start as luxuries for the rich, who subsidized the development of more economical production techniques.
Finally, income inequality isn't increasing. It only appears to be increasing if you arbitrarily limit your data to a single country. Global inequality---and more importantly, poverty---is decreasing.
On “Government Enforced Inequality”
You missed a huge one, arguably the biggest: National borders.
On “How we got here”
Question: What major, macro-economic, economy-wide, and permanent, change occurred then?
One factor may have been feminism, more specifically the mass entry of women into the workforce. The labor force participation rate rose from 59% around 1965 to to a peak of 67% in 2000. Worker compensation is in part a function of the capital-to-labor ratio, and it's likely that the increase in the denominator of that ratio resulted in suppression of wage growth.
On “A Clash of Models”
It's a decent heuristic. If you're working, you may or may not be doing something productive. If someone's paying you to do it---and if you're going to be working anyway, you might as well get someone to pay you---it's even more likely that what you're doing is productive. If you're not working, you probably aren't doing anything productive.
"
There’s a strain, particularly in American conservatism, that argues that market outcomes are fundamentally just.
Whether it's just or not is, I think, beside the point. Paying people in accordance with the marginal product of their labor is good because it gives people an incentive to maximize the marginal product of their labor. We valorize productivity because we want more of it. I'm not sure that "Is this just?" is actually a coherent question.
Whenever someone talks about intervening to make this process more "just," it pretty much always involves blunting the incentives for productivity for the sake of some fairly arbitrary conception of justice.
"
Employers have every incentive to make their workers more productive, so chances are, if there are ways of doing this they will be non-obvious, difficult to implement and/or involve factors employers can’t control.
Or just more expensive than the productivity improvement justifies. An employer may be able to improve his workers' productivity by spending a million dollars on new equipment, but if that new equipment only generates an extra $20,000 per year in profits, he's not going to do it.
A corollary to this is that the cheaper and more abundant capital is, the higher worker productivity will be. Which, again, is why redistributing wealth from those with low marginal propensity to consume to those with high marginal propensity to consume is bad for workers in the long run.
On “How we got here”
My suggestion is the additional gains went somewhere: where?
Non-cash compensation and above-average workers, I think. And government transfers, of course. That's the one real growth sector.
Besides, there’s things that are deliberately left out of the official measurement that result in understating inflation anyway.
On the other hand, hedonic adjustments probably don't sufficiently capture increases in standard of living. All things considered, I strongly suspect that the median standard of living has risen considerably since the late '70s, but I'm not old enough to say from personal experience.
"
Some objections to the chart:
-It's comparing aggregate productivity---i.e., of the whole economy---with median cash compensation for a subset of workers, specifically private-sector production/non-supervisory workers. This isn't nefarious, since it really isn't possible to measure the productivity of individual workers due to synergies between different actors in the economy, but it is worth keeping in mind that the fact that these aren't perfectly correlated isn't proof of some great injustice.
-I'm pretty sure it's median cash compensation, i.e., ignoring benefits, which have grown faster than wages. And no, it's not paying more for the same quality of health care, it's paying more for better health care.
Objections to your analysis:
Continuing productivity gains no longer met with reward for job well done, and the costs of living went onward unfazed.
First, productivity gains don't necessarily mean that workers are doing a better job. It often just means that they're working with better tools. The reason American workers are so much more productive than Chinese workers isn't that Americans are just plain better---it's that Americans have much more capital enhancing their productivity.
Second, that chart is inflation-adjusted. Costs of living have not risen faster than wages, as you imply.
On “The League’s Inequality Symposium Starts Tomorrow”
I was calling you out for your hate-filled, disgusting, worthless bigotry. You're the one who crossed that ugly line---I just pointed it out.
"
So there's no confusion on this point, I was not accusing M.A. of antisemitism, merely pointing out the parallels between antisemitism and anti-rich bigotry.
*Comment archive for non-registered commenters assembled by email address as provided.