Posts filed under “Philosophy”
Conservatives and Liberals Agree: Unparalleled Levels of Inequality Is Killing Our Economy and Society
Leading economists agree that rampant inequality leads to unstable economies and depressions, and makes the middle and lower classes poorer.
While the stereotype is that liberals care about inequality and conservatives don’t, that is actually a myth.
According to the voice of Canada’s business establishment: “High inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions. .
A mounting body of research shows that, left unchecked, a growing income gap affects the rich, the poor and everyone in between.
No matter your political leanings, most people understand that endless concentration of income, wealth and power is bad for the economy. After all, businesses rely on rising purchasing power of the many, not the few, to deliver growth and profits.
No one knows the tipping point, but lock enough people out of the promise of gains and at some point, instead of stability and growth, you get social unrest.
History has shown us, time and again: When too much is controlled by too few, something has to give. Continuously rising inequality is unsustainable.
Everyone has a stake in fixing this. And the fix has no political colour.
(The Post is correct about the potential for social unrest.)
Moreover, IMF economists have demonstrated that inequality increases a nation’s debt. Because conservatives are passionate about reducing debt, reducing inequality is a conservative value.
And as I noted in February:
Renowned behavioral economist Dan Ariely (Duke University) and Michael I. Norton (Harvard Business School) recently demonstrated that everyone – including conservatives – thinks there should be more equality.
Their study found:
Respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution. Most important from a policy perspective, we observed a surprising level of consensus: all demographic groups—even those not usually associated with wealth redistribution such as Republicans and the wealthy—desired a more equal distribution of wealth than the status quo.
Taken as a whole, the results suggest to us that there is much more agreement than disagreement about wealth inequality. Across differences in wealth, income, education, political affiliation and fiscal conservatism, the vast majority of people (89%) preferred distributions of wealth significantly more equal than the current wealth spread in the United States. In fact, only 12 people out of 849 favored the US distribution. The media portrays huge policy divisions about redistribution and inequality – no doubt differences in ideology exist, but we think there may be more of a consensus on what’s fair than people realize.
How could the media portrayal regarding this issue be so wrong?
Well, for one thing, as a study the Pew Research Center found, the corporate media tends to take Wall Street’s view on economics. Indeed, the media is largely set up to spout propaganda which supports the view of the powers-that-be. The financial sector has been by far the biggest beneficiary of government policies over the past 10 years or so. So the media tends to defer to Wall Street’s own arguments against equality.
Everyone agrees that a system which uses the power of the state to reward the fraud and gambling of the largest banks and biggest corporations through socialism for the rich and capitalism for everyone else is not free market capitalism, and is downright anti-American.
As I noted last November:
Conservatives tend to view big government with suspicion, and think that government should be held accountable and reined in.
Liberals tend to view big corporations with suspicion, and think that they should be held accountable and reined in.
Specifically, a Rassmussen poll conducted in February found:
70% [of all voters] believe that the government and big business typically work together in ways that hurt consumers and investors.
(and see this).
Remember that the government helped and encouraged the giant banks to get even bigger, and then has hidden their insolvency and shielded them from the free market, and helped them grow even during the severe downturn.
In return, the big banks and giant corporations have literally bought and paid for the politicians.
Conservatives might call it “socialism” and liberals might call it “fascism” – they are the same thing economically.
But all Americans – conservatives and liberals alike – can agree that it is not capitalism, and it is not American.
As I pointed out in December:
Conservatives hate big unfettered government and liberals hate big unchecked corporations, so both hate legislation which encourages the federal government to reward big corporations at the expense of small businesses.
As an example, both liberals and conservatives are angry that the feds are propping up the giant banks – while letting small banks fail by the hundreds – even though that is horrible for the economy and Main Street.
The Dodd-Frank financial legislation … enshrines big government propping up the big banks … more ore less permanently.
Many liberals and conservatives look at the government’s approach to the financial crisis as socialism for the rich and free market capitalism for the little guy. No wonder both liberals and conservatives hate it.
And it’s not just the big banks. Americans are angry that the federal government under both Bush and Obama have handed giant defense contractors like Blackwater and Halliburton no-bid contracts. They are mad that – instead of cracking down on BP – the government has acted like BP’s p.r. spokesman-in-chief and sugar daddy.
They are peeved that companies like Monsanto are able to sell genetically modified foods without any disclosure, and that small farmers are getting sued when Monsanto crops drift onto their fields.
They are mad that Obama promised “change” – i.e. standing up to Wall Street and the other powers-that-be – but is just delivering more of the same.
They are furious that there is no separation between government and a handful of favored giant corporations. In other words, Americans are angry that we’ve gone from capitalism to oligarchy.
So if both liberals and conservatives hate something, it doesn’t necessarily mean it’s a compromise. It may mean that they feel disenfranchised from a government that is of the powerful and for the powerful.
In other words, while many conservatives are against raising taxes on the wealthy, they are overwhelmingly for stopping the use of the power of the state to increase inequality. See this, this and this.
This is an area of agreement between people of good faith on the left and on the right. As Robert Shiller said in 2009:
And it’s not like we want to level income. I’m not saying spread the wealth around, which got Obama in trouble. But I think, I would hope that this would be a time for a national consideration about policies that would focus on restraining any possible further increases in inequality.
If we stop bailing out the fraudsters and financial gamblers, the big banks would focus more on traditional lending and less on speculative plays which only make the rich richer and the poor poorer, and which guarantee future economic crises (which hurt the poor more than the rich).
Indeed, if we break up the big banks, it will increase the ability of smaller banks to make loans to Main Street, which will level the playing field.
Moreover, both conservatives and liberals agree that we need to prosecute financial fraud. As I’ve previously noted, fraud disproportionally benefits the big players, makes boom-bust cycles more severe, and otherwise harms the economy – all of which increase inequality and warp the market.
And as I noted last April, prosecutors could claw back ill-gotten gains from the criminals and use that money to help the economy:
The bottom line – as conservative blogger Michael Rivero writes – is that too much inequality kills the market:
For an economic system to be a system, money must flow freely at all levels and in all corners. When those in charge of the system decide to so order the mechanisms of the financial sector to drive the money into a single huge pile, the system cease to be a system and a crash becomes inevitable. One might as well force all the blood in your body to stay in the brain. The end result is the same; death for the body.
This morning, I got to listen to a (too short) discussion with hedge fund manager Ray Dalio of Bridgewater Associates at the Bloomberg Market 50 Summit (video here). Ray Dalio is a fascinating guy . . . he has what some people describe as a very idiosyncratic approach, but I find it logical and intelligent….Read More
Yesterday, I lamented the missed opportunity of the Bloomberg 50, a predictable list featuring the usual suspects. It was your grandpa’s list. Let’s takes this up a notch — change the 5 categories of Meh! to something worthwhile, and see what sort of list you, dear readers, can help put together: Asset Managers Technicians/Analysts Researchers/Strategists…Read More
Hat tip Brainpicker
Speakers in order of appearance:
1. Lawrence Krauss, World-Renowned Physicist
2. Robert Coleman Richardson, Nobel Laureate in Physics
3. Richard Feynman, World-Renowned Physicist, Nobel Laureate in Physics
4. Simon Blackburn, Cambridge Professor of Philosophy
5. Colin Blakemore, World-Renowned Oxford Professor of Neuroscience
6. Steven Pinker, World-Renowned Harvard Professor of Psychology
7. Alan Guth, World-Renowned MIT Professor of Physics
8. Noam Chomsky, World-Renowned MIT Professor of Linguistics
9. Nicolaas Bloembergen, Nobel Laureate in Physics
10. Peter Atkins, World-Renowned Oxford Professor of Chemistry
11. Oliver Sacks, World-Renowned Neurologist, Columbia University
12. Lord Martin Rees, Astronomer Royal
13. Sir John Gurdon, Pioneering Developmental Biologist, Cambridge
14. Sir Bertrand Russell, World-Renowned Philosopher, Nobel Laureate
15. Stephen Hawking, World-Renowned Cambridge Theoretical Physicist
16. Riccardo Giacconi, Nobel Laureate in Physics
17. Ned Block, NYU Professor of Philosophy
18. Gerard ‘t Hooft, Nobel Laureate in Physics
19. Marcus du Sautoy, Oxford Professor of Mathematics
20. James Watson, Co-discoverer of DNA, Nobel Laureate
21. Colin McGinn, Professor of Philosophy, Miami University
22. Sir Patrick Bateson, Cambridge Professor of Ethology
23. Sir David Attenborough, World-Renowned Broadcaster and Naturalist
24. Martinus Veltman, Nobel Laureate in Physics
25. Pascal Boyer, Professor of Anthropology
26. Partha Dasgupta, Cambridge Professor of Economics
27. AC Grayling, Birkbeck Professor of Philosophy
28. Ivar Giaever, Nobel Laureate in Physics
29. John Searle, Berkeley Professor of Philosophy
30. Brian Cox, Particle Physicist (Large Hadron Collider, CERN)
31. Herbert Kroemer, Nobel Laureate in Physics
32. Rebecca Goldstein, Professor of Philosophy
33. Michael Tooley, Professor of Philosophy, Colorado
34. Sir Harold Kroto, Nobel Laureate in Chemistry
35. Leonard Susskind, Stanford Professor of Theoretical Physics
36. Quentin Skinner, Professor of History (Cambridge)
37. Theodor W. Hänsch, Nobel Laureate in Physics
38. Mark Balaguer, CSU Professor of Philosophy
39. Richard Ernst, Nobel Laureate in Chemistry
40. Alan Macfarlane, Cambridge Professor of Anthropology
41. Professor Neil deGrasse Tyson, Princeton Research Scientist
42. Douglas Osheroff, Nobel Laureate in Physics
43. Hubert Dreyfus, Berkeley Professor of Philosophy
44. Lord Colin Renfrew, World-Renowned Archaeologist, Cambridge
45. Carl Sagan, World-Renowned Astronomer
46. Peter Singer, World-Renowned Bioethicist, Princeton
47. Rudolph Marcus, Nobel Laureate in Chemistry
48. Robert Foley, Cambridge Professor of Human Evolution
49. Daniel Dennett, Tufts Professor of Philosophy
50. Steven Weinberg, Nobel Laureate in Physics
Ian Shepherdson of High Frequency Economics essentially saying you can blame the Tea Party if market collapses: “The Speaker is in office, but not in power, because the Tea Partiers do not respect party discipline. They argue that they are standing up for principle, but the principle they have chosen to defend is the idea…Read More
I have been meaning to get to this interesting article Heidi N. Moore wrote over at Marketplace radio. “They Are Day Traders. Hear them Roar.” A terrific looking commercial for OpenTrader accompanies the article (video here). The video is pretty slick. But as intriguing as it looks, it overstates what I believe is the true…Read More
How prescient was this, circa January 2008: “Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics: First, asset market collapses are deep and prolonged. Real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over…Read More