Comments on: Financial stress correlated within families

By: Mike

Mike — Tue, 02 Feb 2010 00:29:36 +0000

Razib,
I’m not an economist and maybe I was a little flippant in my first response (shades of Laffer curves and rising tides, from my formative years. Growth (at least if all costs are properly accounted for) is not what I have a problem with. Maybe what I don’t understand is the cause/effect relationships between inequality and growth. Is it possible that there are positive and negative feedbacks affecting both? Couldn’t the end of slavery positively effect both, active government intervention help/hurt each independently or together depending on the situation (redistribution, ending or enhancing aristocratic prerogative, expanding access to knowledge, expansion of political participation, monetary policy, military investment, corruption, making externalities invisible or visible, protectionist policies based on industrial maturity), entrepreneurship that promotes “better” things versus dishonesty that is profitable in the face of imperfect information?
It seems to me that this is a complex system, where deriving the appropriate equations is very difficult.

By: TGGP

TGGP — Sun, 31 Jan 2010 20:19:01 +0000

Aren’t you describing our hunter-gatherer past, Razib?

By: russell1200

russell1200 — Sun, 31 Jan 2010 18:49:04 +0000

In non growth economic systems the Malthusian cycle can be very punishing (eventually) on the wealthy class. One possible argument is that the economic growth has extended the cycle further along. But much as the Roman conquests of wealthy adjacent territories helped hold off the day of reckoning for a time, the inevitable fluctuations in technological progress are also likely to bring a day of reckoning at some point. The historians who write on this subject seem to go out of their way not to be alarmists, but the obvious (and even many of the subtle) interpretations of their work can be alarming. This is a very good (slightly older) book on the subject: http://www.amazon.com/Great-Wave-Revolutions-Rhythm-History/dp/019512121X/ref=ntt_at_ep_dpi_7 And this is another author's website: http://cliodynamics.info/

By: razib

razib — Sat, 30 Jan 2010 20:23:43 +0000

do you think egalitarianism is feasible in the long term (e.g., 3 generations of ~ no increase in inequality) in a low-to-zero growth economic environment?

By: Mike

Mike — Sat, 30 Jan 2010 14:00:50 +0000

The fact that in certain periods of time in certains areas of the world there is a correlation between growth and income distribution does not mean that it is “essential” and my point was more that even in high growth environments income distribution can and does get worse at times.

By: razib

razib — Sat, 30 Jan 2010 07:51:15 +0000

I missed the part where growth has any relationship to how wealth is distributed. in farewell to alms the economic historian greg clark reports that the unskilled workers (the majority) made massive gains in income vis-a-vis the skilled (the minority) between 1800 and 1970 (the starting point varies by when a particular developed nation entered the "industrial revolution"). those gains leveled off around 1970, in the past generation the skilled (those with education) have started to open up the gap again. but it still isn't what it is pre-1800. so in any case, you missed the part where growth had a relation to how wealth is distributed because you didn't know some basic economic historical facts i guess. since economic growth and gains in productivity have been far greater since 1800 than before, and, many societies (mostly developed) such as france and england were undeniably more equal after rapid economic growth become the norm than before. the bigger picture is a shift from zero-sum to non-zero-sum dynamics and outlooks.

By: Mike

Mike — Sat, 30 Jan 2010 04:13:03 +0000

How does “economic growth and gains in productivity” necesarily change the dynamic of certain related groups being less able to deal with cyclic downturns? I missed the part where growth has any relationship to how wealth is distributed.