Economic inequality

divergence in economic well-being within a group
(Redirected from Income inequality)

Economic inequality refers to how economic goods are distributed among individuals in a group, among groups in a population, or among countries.

The first man who, having enclosed a piece of land, thought of saying ‘This is mine’ and found people simple enough to believe him, was the true founder of civil society. How many crimes, wars, murders; how much misery and horror the human race would have been spared if someone had pulled up the stakes and filled in the ditch and cried out to his fellow men: ‘Beware of listening to this impostor. You are lost if you forget that the fruits of the earth belong to everyone and the earth itself belongs to no one!” ~ Jean-Jacques Rousseau

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  • We live in an unequal world. The differences among nations are similar to those between the two parts of Nogales, just on a larger scale. In rich countries, individuals are healthier, live longer, and are much better educated. They also have access to a range of amenities and options in life, from vacations to career paths, that people in poor countries can only dream of. People in rich countries also drive on roads without potholes, and enjoy toilets, electricity, and running water in their houses. They also typically have governments that do not arbitrarily arrest or harass them; on the contrary, the governments provide services, including education, health care, roads, and law and order. Notable, too, is the fact that the citizens vote in elections and have some voice in the political direction their countries take.
    • Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012)
  • The great differences in world inequality are evident to everyone, even to those in poor countries, though many lack access to television or the Internet. It is the perception and reality of these differences that drive people to cross the Rio Grande or the Mediterranean Sea illegally to have the chance to experience rich-country living standards and opportunities. This inequality doesn’t just have consequences for the lives of individual people in poor countries; it also causes grievances and resentment, with huge political consequences in the United States and elsewhere. Understanding why these differences exist and what causes them is our focus in this book. Developing such an understanding is not just an end in itself, but also a first step toward generating better ideas about how to improve the lives of billions who still live in poverty.
    • Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012)
  • The differences between the United States and Mexico are in turn small compared with those across the entire globe. The average citizen of the United States is seven times as prosperous as the average Mexican and more than ten times as the resident of Peru or Central America. She is about twenty times as prosperous as the average inhabitant of sub-Saharan Africa, and almost forty times as those living in the poorest African countries such as Mali, Ethiopia, and Sierra Leone. And it’s not just the United States. There is a small but growing group of rich countries—mostly in Europe and North America, joined by Australia, Japan, New Zealand, Singapore, South Korea, and Taiwan—whose citizens enjoy very different lives from those of the inhabitants of the rest of the globe. The reason that Nogales, Arizona, is much richer than Nogales, Sonora, is simple; it is because of the very different institutions on the two sides of the border, which create very different incentives for the inhabitants of Nogales, Arizona, versus Nogales, Sonora.
    • Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012)
  • The United States is also far richer today than either Mexico or Peru because of the way its institutions, both economic and political, shape the incentives of businesses, individuals, and politicians. Each society functions with a set of economic and political rules created and enforced by the state and the citizens collectively. Economic institutions shape economic incentives: the incentives to become educated, to save and invest, to innovate and adopt new technologies, and so on. It is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works. For example, it is the political institutions of a nation that determine the ability of citizens to control politicians and influence how they behave. This in turn determines whether politicians are agents of the citizens, albeit imperfect, or are able to abuse the power entrusted to them, or that they have usurped, to amass their own fortunes and to pursue their own agendas, ones detrimental to those of the citizens. Political institutions include but are not limited to written constitutions and to whether the society is a democracy. They include the power and capacity of the state to regulate and govern society. It is also necessary to consider more broadly the factors that determine how political power is distributed in society, particularly the ability of different groups to act collectively to pursue their objectives or to stop other people from pursuing theirs.
    • Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012)
  • That unequal should be given to equals, and the unlike to those who are like, is contrary to nature, and nothing which is contrary to nature is good.
    • Aristotle, Politics, 1325b, in Basic Works of Aristotle (2001), p. 1282
 
Human rights are not only violated by terrorism, repression or assassination, but also by unfair economic structures that create huge inequalities. ~ Pope Francis
  • Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.
  • While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.
  • Capitalism is the greatest social technology ever invented for creating prosperity in human societies, if it is well managed, but capitalism, because of the fundamental multiplicative dynamics of complex systems, tends towards, inexorably, inequality, concentration and collapse. The work of democracies is to maximize the inclusion of the many in order to create prosperity, not to enable the few to accumulate money. Government does create prosperity and growth, by creating the conditions that allow both entrepreneurs and their customers to thrive. Balancing the power of capitalists like me and workers isn't bad for capitalism. It's essential to it. Programs like a reasonable minimum wage, affordable healthcare, paid sick leave, and the progressive taxation necessary to pay for the important infrastructure necessary for the middle class like education, R and D, these are indispensable tools shrewd capitalists should embrace to drive growth, because no one benefits from it like us.
  • The problem isn't that we have some inequality. Some inequality is necessary for a high-functioning capitalist democracy. The problem is that inequality is at historic highs today and it's getting worse every day. And if wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France. That was France before the revolution and the mobs with the pitchforks. So I have a message for my fellow plutocrats and zillionaires and for anyone who lives in a gated bubble world: Wake up. Wake up. It cannot last. Because if we do not do something to fix the glaring economic inequities in our society, the pitchforks will come for us, for no free and open society can long sustain this kind of rising economic inequality.
    All highly prosperous capitalist democracies are characterized by massive investments in the middle class and the infrastructure that they depend on.
  • Over the last 30 years, in the USA alone, the top one percent has grown 21 trillion dollars richer while the bottom 50 percent have grown 900 billion dollars poorer, a pattern of widening inequality that has largely repeated itself across the world. And yet, as middle class families struggle to get by on wages that have not budged in about 40 years, neoliberal economists continue to warn that the only reasonable response to the painful dislocations of austerity and globalization is even more austerity and globalization.
  • In fact, a growing number of academics and practitioners have concluded that neoliberal economic theory is dangerously wrong and that today's growing crises of rising inequality and growing political instability are the direct result of decades of bad economic theory. What we now know is that the economics that made me so rich isn't just wrong, it's backwards, because it turns out it isn't capital that creates economic growth, it's people; and it isn't self-interest that promotes the public good, it's reciprocity; and it isn't competition that produces our prosperity, it's cooperation.
  • If it could be shown that the great Trust magnate or the great Aristocratic landowner, apart from the advantages of his inherited wealth, was a more highly developed species of humanity than the poor struggling sempstress or the unemployed docker, then there might be some justification for allowing the docker and the sempstress as the representatives of a weaker class to die out in order to enable the more highly developed creature to survive; but one moment's reflection will show that the alleged superiority of the landowner or the Trust magnate rests on one fact alone, namely, that he owns certain material possessions, usually inherited, which enable him to dictate the terms upon which his less fortunate fellow creatures shall be permitted to live.
  • Today, some 4.3 billion people - more than 60 per cent of the world's population - live in debilitating poverty, struggling to survive on less than the equivalent of $5 per day. Half do not have access to enough food. And these numbers have been growing steadily over the past few decades. Meanwhile, the wealth of the very richest is piling up to levels unprecedented in human history. As I write this, it has just been announced that the eight richest men in the world have as much wealth between them as the poorest half of the world's population combined.
    • Jason Hickel, The Divide: Global Inequality from Conquest to Free Markets (2018), p. 2
  • Now our struggle is for genuine equality, which means economic equality. ... What does it profit a man to be able to eat at an integrated lunch counter if he doesn't earn enough money to buy a hamburger and a cup of coffee?
  • The measures adopted by the Commune and emphasized by Marx are particularly noteworthy, viz., ... the reduction of the remuneration of all servants of the state to the level of "workman's wages." ... Circumstances can (and must) strip those functions of every shadow of privilege, of every semblance of "official grandeur."
    • Vladimir Lenin, The State and Revolution (1917), in Essential Works of Lenin (1966), pp. 301-302
 
A superabundance of actual wealth in the hands of the few must create hunger, typhus, and other epidemics among the many. The injustice - yea the idiocy - of this state of affairs is evident. The money-bags of course merely shrug their shoulders. This they will continue to do until a rope well tied over their shoulders will end all further shrugging. ~ Johann Most
  • Not only do we have no real right to the things of the world, because belonging always essentially to God they can never belong to creatures; but we are also limited by the laws of God in the use of those possessions; for it must not be imagined that God gives them to us so that we may dispose of them as we wish. He is too just to have made such an unequal distribution. These goods being the means destined by his Providence for the subsistence of men, he gives to some more than they need only so that they may distribute it to others. A rich man, in so far as he is rich, is thus no more than steward of God's good things.
 
When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based. ~ Thomas Piketty
 
Austerity, inequality and job insecurity are bad for mental health and governments should counteract them if they want to face up to the rising prevalence of mental illness. ~ Dainius Pūras
  • Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance (of fortunes accumulated in the past) predominates over saving (wealth accumulated in the present). ... The inequality r > g in one sense implies that the past tends to devour the future: wealth originating in the past automatically grows more rapidly, even without labor, than wealth stemming from work, which can be saved. Almost inevitably, this tends to give lasting disproportionate importance to inequalities created in the past, and therefore to inheritance.
  • At the time of the Prophet's call to risalah, Arab society was devoid of proper distribution of wealth and devoid of justice. A small group monopolized all wealth and commerce, which increased through usury. The great majority of the people were poor and hungry. The wealthy were also regarded as noble and distinguished, and the common people were not only deprived of wealth but also of dignity and honor.

    It can be said that Muhammad—peace be on him—was capable of starting a social movement, declaring war against the class of nobles and the wealthy, taking away their wealth and distributing it among the poor.

 
The way to combat Communism is not war. What is needed in addition to such armaments as will deter Communists from attacking the West, is a diminution of the grounds for discontent in the less prosperous parts of the non-communist world. ...Communism is a doctrine bred of poverty, hatred and strife. Its spread can only be arrested by diminishing the area of poverty and hatred. ~ Bertrand Russell
  • Social and economic inequalities are to be arranged so that they are both (a) reasonably expected to be to everyone's advantage, and (b) attached to positions and offices open to all.
  • The natural distribution is neither just nor unjust; nor is it unjust that persons are born into society at some particular position. These are simply natural facts. What is just and unjust is the way that institutions deal with these facts. Aristocratic and caste societies are unjust because they make these contingencies the ascriptive basis for belonging to more or less enclosed and privileged social classes. The basic structure of these societies incorporates the arbitrariness found in nature. But there is no necessity for men to resign themselves to these contingencies. The social system is not an unchangeable order beyond human control but a pattern of human action.
  • We are the first nation to starve to death in a storehouse that's overfilled with everything we want.
    • Will Rogers, Daily Telegram #1355, The First Good News of the 1928 Campaign! Mr. Rogers Says He Will Not Run For Anything (26 November 1930); as quoted in A Quote for Every Day by Peter A. Laporta (2011)
  • The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need to is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows. Again, comrades over there, take the lesson from your own experience. Not only did you not grudge, but you gloried in the promotion of the great generals who gained their promotion by leading their army to victory. So it is with us. We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country than we have yet had, but I think we have got to face the fact that such an increase in governmental control is now necessary. No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered-not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective-a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.
  • The first man who, having enclosed a piece of land, thought of saying ‘This is mine’ and found people simple enough to believe him, was the true founder of civil society. How many crimes, wars, murders; how much misery and horror the human race would have been spared if someone had pulled up the stakes and filled in the ditch and cried out to his fellow men: ‘Beware of listening to this impostor. You are lost if you forget that the fruits of the earth belong to everyone and the earth itself belongs to no one!”
  • The way to combat Communism is not war. What is needed in addition to such armaments as will deter Communists from attacking the West, is a diminution of the grounds for discontent in the less prosperous parts of the non-communist world. ...Communism is a doctrine bred of poverty, hatred and strife. Its spread can only be arrested by diminishing the area of poverty and hatred.
 
American families are in the process of passing along a $9 trillion legacy from one generation to the next. This is a lot of money, but it is distributed very unevenly. Most whites do not inherit considerable wealth; an even smaller percentage of African Americans benefit. Hand in hand with this money, I submit, what is really being handed down from generation to generation is the profound legacy of reproducing racial inequality. The legacy is difficult to discern because the language of family heritage hides it from our political consciousness. ~ Thomas M. Shapiro
  • Mainstream sociological theory sees differences in jobs, skills, and education as the primary causes of inequality, and substantial wealth transfers embarrass this theory. The classical sociologist Emil Durkheim, for example, predicted that family inheritances would decline over time in favor of giving to charitable and nonprofit organizations, but studies examining actual bequests invalidate this predication. Andrew Carnegie's belief that giving relatives money only makes them lazy (a belief he put into action) may correspond with this perspective, but the empirical evidence tells a different story. In 1989 charitable bequests constituted less than 10 percent of proceeds of estates valued at over $600,000 in the United States.
  • Ongoing racial discrimination in employment and housing is a particularly acute problem and has a disproportionate negative impact on the poorer members of racial minority groups, as the education, financial resources, and social capital of more advantaged members allow them greater social mobility despite continuing racism.
    If under this institutional arrangement the tax scheme allows enormous intergenerational wealth transfers within families, some families will maintain considerable socioeconomic advantages over others, which allows them to provide better educations and better environments (both residential and familial) for their children, and their children's children. Moreover, the wealthy and well educated will be greatly advantaged in the competition for positions of political authority, so that their superior material assets and educational opportunities will often be tickets to political power, an augmenting their already disproportionate influence on government policy via campaign contributions and support for various lobbying efforts.
  • If, because a social scheme had the characteristics described above, the life prospects of some children were vastly inferior to those of others, it would be reasonable to regard these disadvantaged children as members of the lowest stratum in a descent-based social hierarchy. When such a hierarchy is, and has long been, marked by racial distinctions, equal citizenship, in any meaningful sense, does not obtain. In a society with an established democratic tradition, such a quasi-feudal order does not warrant the allegiance of its most disadvantaged members, especially when these persons are racially stigmatized. Indeed, the existence of such an order creates the suspicion that, despite the society's ostensible commitment to equal civil rights, white supremacy has simply taken a new form.

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