Posts tagged with: Distribution of wealth

greedy-bastardsRecently, Rev. Robert Sirico spoke in Chicago. He was asked a question regarding income inequality. His answer was that he didn’t care how much money Bill Gates had, nor did it matter to him the difference between Gates’ income and say, Warren Buffet’s. Nor did he care about the difference between how much wealth Gates has and his own personal income. No, Sirico said, what he cared about were the poor: those people so disconnected from the global marketplace that they were not able to live above subsistence level. How do we help them?

One popular answer right now is to “share the wealth.” Those with a lot of money should give a big chunk of it to the poor. Then everyone will be “even.” That seems reasonable, right?

Not so fast, says Rev. Dwight Longenecker, writing at his Patheos blog, Standing On My Head.


unbalanced“The bottom half of the world’s population owns the same as the richest 85 people in the world.”

The stat was quoted last month in a report by the development organization Oxfam, but similar claims have become common. You’ve probably seen this statistic—or one like it—before in articles about economic inequality and assumed they must be somewhat true.

But they aren’t. In reality, they are completely meaningless.

One of the problems is that the comparisons are based on net worth (assets minus liabilities). If you aggregate all the people who have a negative net worth into one category and call them the “bottom half” then you come up with some peculiar conclusions. As Felix Salmon says, “My niece, who just got her first 50 cents in pocket money, has more money than the poorest 2 billion people in the world combined.”

noun_86179_ccToday at Think Christian I reflect on President Obama’s State of the Union message last night. I think it was perhaps the best speech I have heard him give in terms of delivery and general tone. There are numerous things that one might quibble with in a speech of that length, of course.

My TC piece is an attempt to help us to put into proper perspective political promises and policy proposals. I look particularly at the question of economic inequality and the assumptions underlying the government’s redistributive actions.

As Danielle Kurtzleben puts it, “Obama is making a case that the economy’s distribution engine is broken, and that the recovery simply won’t fix it. His solution is for government to approach redistribution as a positive good rather than a necessary evil.”

o-man-taller-facebookFor most of my life I was, at 5-foot-10, of exactly average height. But in the span of one day in 1989 I became freakishly tall.

While I hadn’t grown an inch upward, I had moved 6,000 miles eastward to Okinawa, Japan. Since the average height of native Okinawans was only 5-foot-2, I towered over most every native islander by 8 inches. It was the equivalent of being 6-foot-6 in the United States.

Unfortunately, when I would leave the towns of Okinawa and step back onto the military base I instantly shrunk back to average height. My height advantage only lasted as long as I got to choose my point of reference.

Where did the truth lie? Was I truly tall or only of average height? The answer was completely dependent on my point of reference. Height, after all, is just a statistical artifact.

While this example may seem silly and rather obvious, it highlights how we our choice of what is a relevant standard of comparison can shape our thinking on important matters of economic policy. Take, for instance, the issue of poverty and income inequality. As Robert Higgs explains,

Earlier this month, I wrote a two part article for the Library of Law & Liberty, critiquing the uncritical condemnation of income inequality by world religious leaders.

In part 1, I pointed out that “while the Pope, the Patriarch, the Dalai Lama, and others are right about the increase in [global income] inequality, they are wrong to conclude that this causes global poverty—the latter is demonstrably on the decline. And that, I would add, is a good thing.”

F. A. Hayek

In part 2, drawing on the work of F. A. Hayek, I noted, “As societies learn to use their resources ‘more effectively and for new purposes,’ the cost of manufacturing luxury goods decreases, making them affordable to new markets of the middle class and, eventually, even for the poor.” I continue, “Such inequality not only accompanies the very economic progress that lifts the poor out of poverty, it is one essential factor that makes that progress possible.”

We may add to this two more ways in which focusing solely on income inequality can be misleading from article in the Wall Street Journal yesterday by Nicholas Eberstadt: increased equality in lifespan and education. He writes,

Given the close correspondence between life expectancy and the Gini index for age at death, we can be confident that the world-wide explosion in life expectancy over the past century has been accompanied by a monumental narrowing of world-wide differences in length of life. When a population’s life expectancy rises from 30 to 70, the Gini index drops by almost two-thirds—from well over 0.5 to well under 0.2.

This survival revolution—and the narrowing of inequalities in humanity’s life chances—is an epochal advance in the human condition. Since healthy life expectancy seems to track closely with overall life expectancy, a revolutionary reduction in health inequality may also have occurred over the past century. Improvements in global mortality for the poor have contributed to the very “economic inequality” so many now decry. This is another reason such measures can be deceiving.

The spread and distribution of education has had a similar impact. In 1950 roughly half of the world’s adults—and the overwhelming majority of the men and women from low-income regions—had never been exposed to schooling. By 2010 unschooled men and women 15 and older account for a mere one-seventh of the world’s adults, and about one-in-six from developing areas. (more…)

Francis (1)“If there is one thing that religious leaders around the world seem to agree on today,” says Acton research associate Dylan Pahman, “it is the evils of income inequality stemming from a globalized economy.” But as Pahman points out, there is a connection between inequality and poverty alleviation that affirms the moral merits of economic liberty:

It would seem the consensus is that economic inequalities have increased worldwide, and this is a clear moral evil. But when we examine the numbers, a somewhat different picture emerges. Even as inequality has increased, extreme poverty has simultaneously decreased—a clear moral good. Considered in this light, and with the help of Nassim Taleb and (in Part Two of this post) Friedrich Hayek, I will examine the connection between inequality and poverty alleviation and argue that the data affirm, rather than refute, the moral merits of economic liberty.

It stands to reason that if religious leaders are so willing to condemn global capitalism for its apparent evils, they ought to be even more eager to praise its actual goods. I will recommend a different moral metric, drawn from St. John Cassian and St. John Chrysostom, that would support people of faith in being attentive to the plight of the poor while prudently engaging the economic realities at hand.

Read more . . .

eat the richThe rich get richer and the rest of us…well, we struggle along. Shouldn’t those with more money be spreading it out a bit more? My coffers clink with spare change; I sure could use some of that money. It only seems fair, right?

Peter Morici, at Breitbart News, tackles the truth of income inequality. Those of us in the “rest of us” category are getting crushed by monopolies, unjust taxation, and political corruption. That, Morici says, is the truth of income inequality. It’s so bad that Vermont Senator Bernie Sanders (I) compared our situation to that of Russia, and a lot of folks nodded their heads in agreement.

Vermont Senator Bernie Sanders (I) recently asked Federal Reserve Chairwoman Janet Yellen “are we still a capitalist democracy or have we gone over into an oligarchic form of society in which incredible economic and political power now rests with the billionaire class?”

Russia’s oligarchy has two salient characteristics. The government uses its power to regulate markets to concentrate wealth in the hands of an influential few, while most of its citizens stay poor by western standards.