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August 04, 2009

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Luis Enrique

It's easier to understand why a drop in population may help an overcrowded, land-scare agricultural economy than it is to understand why it would help a more modern economy, where one might expect a shortage of workers would be offset by an equal reduction in consumers (demand). Presumably WW1 killed off people who were more 'worker' than 'consumer' - perhaps because in those days men were more 'workers' and families more 'consumers' and also because fewer rich people (more consumer than worker) died?

Or is there some sort of sticky price / money supply / assets thing going on, where after a large drop in population you have X quantity of money / productive assets in the hands of fewer people, wealth-per-person rises, and that stimulates demand?

Jackart

You're missing one word: "History, then, suggests that state can be a force for equality [only] by massacring its subjects."

Or indeed letting them die of plague.

Luis Enrique

Do these arguments apply to countries that lost large percentages of their population in the second world war? Although some of those places also had capital destroyed, which I guess the UK didn't so much in WW1.

Tim Hicks

If you're interested in more extensive musings on this theme, you might like a recent conference paper by Ron Rogowski: "What Changes Inequality, and What Does Inequality Change? Vicious and Virtuous Cycles". http://tim.hicks.me.uk/conference2009/papers/Rogowski2009

Your point about war being a good way of pursuing equality came up in the Q&A, to some bewilderment, as you might imagine.

jameshigham

To what extent can state intervention reduce inequality?

It has been shown in so many ways that is can't and by definition, cannot. In fact, it achieves the opposite.

End of post. Next post, Chris.

Charlie

Chris talks as if the welfare state began in 1945. Of course, a nascent welfare state was up and running from the late 19th C. Public health programmes, state education, unemployment pay, pensions, public transport, etc., etc. did not begin in 1945 – so it’s disingenuous to pretend that the state had no positive role in reducing inequality before 1945. That reduction in inequality continued through to the late ‘70s – at which point the neoliberals regained the initiative and began the long march to the levels of inequality we see today – not just coincidentally much different from where we came in!

Laban Tall

Jackart's point - didn't the Black Death lead to higher wages and the collapse of serfdom ?

Always look on the bright side ...

Alex

Of course, the period in question begins with a major expansion of the welfare state after the 1909 budget, introduction of wages councils, extension of education, pensions, unemployment benefit etc.

There's also the post-WW1 industrial come-back in there, with the Second Industrial Revolution (chemistry, electrickery, cars etc) finally landing in the UK and the Third (electronickery, aviation, intermodal transport) revving up.

Samuel X

"History, then, suggests that state can be a force for equality, by massacring its subjects."

Or halting the number of immigrants?

Straus

Alex mentions the extension of education as one of the factors tending to improve income levels of the working/lower classes. By the same token, is not the withering of the education system in the UK's direr districts at the heart of the slide towards inequality over the past few decades? This is one area where judicious state intervention can certainly help to create a more productive and all-round richer society.

reason

Chris,
I don't understand at all the thrust of this post. I didn't think it was the least bit disputed that the state can reduce inequality after taxes and transfer payments. (Pre-tax income inequality is another issue). I thought the argument was about whether it should?

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