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May 17, 2019

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Tasker Dunham

You suggest plausible mechanisms by which inequality might have a negative effect, but what are the mechanisms by which greater equality might have a positive effect?

David

To a laymans eye a straight line can be drawn from 1780 to 1970, so playing post conflict catch-up looks very likely.
Is it a UK chart or global or developed countries?
The downward trend is dramatic.
Inequality?
Or de-regulation. or real investment moving to developing countries, or information technology and the move to services and away from manufacturing? What some call "Globalisation".

georgesdelatour

In general I like this article.

However, I still don’t think we’re getting at “the causes of inequality”.

Gini coefficients are measured both before taxes and transfers and after taxes and transfers. It’s the pre-taxes and transfers figures which are especially revealing. They show that some societies are very equal even before their government has enacted any policies to make them so. South Korea is just such a society. Ditto Iceland.

Other societies, such as Brazil, are very unequal both before and after taxes and transfers. Basically, Iceland will still probably come out a lot more equal than Brazil, even if Iceland adopts Ron Paul policies and Brazil adopts Bernie Sanders policies.

Suppose we discover that countries with coastlines are generally richer than landlocked countries (I suspect that this may be true BTW, though Switzerland is an obvious exception). The problem is, there aren’t any policies a landlocked country’s government can enact to acquire a coastline, short of war. I don’t think the Iceland / Brazil inequality disparity is as brutally immutable as our hypothetical coastline / landlocked disparity. But I still suspect we’re dealing with disparities rooted in geography, history, culture and demography.

Kester

One way to counter inequality would be a 100% land value tax and basic income.

A land/location value tax (LVT), also called a site valuation tax, split rate tax, or site-value rating, is an ad valorem levy on the unimproved value of land. Unlike property taxes, it disregards the value of buildings, personal property and other improvements to real estate, only "location, location, location" value remaining. A land value tax is a progressive tax, in that the tax burden falls on titleholders in proportion to the value of locations, the ownership of which is highly correlated with overall wealth and income.

Bearing this in mind, can it really be right that land owners (from the largest to the smallest, and including indirect landowners, i.e. the banks who collect land rents via mortgage lending) are allowed to enjoy or collect all this rental value for little or no payment, even though it is clearly the whole of society which creates rental values - whether directly or indirectly, whether through their own presence, the work they do or the taxes they have deducted from their earnings?

A tax on land values is merely a user charge and largely voluntary - if you want to live in a nice house, you pay more, and in return for that payment you get a direct tangible benefit in return, which you would have to pay for anyway, with or without LVT.

So if it is acceptable for private landowners to collect land rents, it is more than acceptable for "society as a whole" to collect those rents. The current tax system just boils down to welfare for the wealthy, paid for by taxes on the middle (who also have to pay for welfare for those at the bottom).

andrew

Not sure about No6

6. Inequalities of power –
... That has disincentivized investments in labour-saving technologies.

Well, it may have in places like the UK, but that is still happening in France etc, and if that new tech makes money in the UK, pretty sure it will be used.

vdMandele

I am missing 2 possible economic arguments against inequality:
-Higher inequality leads to a lower velocity of money: rich people hoard, poor people (need to) spend. As more money gets concentrated more, demand therefore goes down, eventually lowering economic activity.
-Even if /productivity/ would be more efficient in a more unequal world, it is almost without question that inequality leads to inefficient /spending/. If you don't believe me, just watch Elon Musk shoot a Tesla into orbit.

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