Re: Don't be fooled by the wealthy's economic research deception

Posted: Sun Apr 14, 2019 2:08 pm, #10
by MaureenCarter
Reducing poverty and reducing economic inequality are not the same thing regardless of liberal or conservative ideology. We should not fall for this deception or be fooled into thinking that just because poverty decreases, economic inequality simultaneously decreases. Although the two interact with each other, they are two distinct entities. Winning the war on poverty is not the same as winning the war on inequality.

A friend just sent me the following remarkable and wonderful article from the New York Times,

Winning the War on Poverty
The Canadians are doing it; we're not.
By David Brooks, April 4, 2019 ... ecord.html
According to recently released data, between 2015 and 2017, Canada reduced its official poverty rate by at least 20 percent. Roughly 825,000 Canadians were lifted out of poverty in those years, giving the country today its lowest poverty rate in history.
Although my friend thinks that because poverty in Canada was significantly reduced, this must also apply to their levels of economic inequality; this is not necessarily true.

Poverty And Inequality Are Not The Same Thing So Let's Try Not To Confuse Them By Tim Worstall March 19, 2015 ... c48f52483f

Don Boudreaux is getting mad with people who seem to be incapable of distinguishing between poverty and inequality. They are different and they need to be treated as different things. Most importantly, the one thing currently driving global poverty downwards is also the thing driving inequality upwards in many countries. So we do need to distinguish between the two, work out which we're less worried about and only then can we decide upon the public policy to deal with that cause: globalisation.

Here's Boudreaux:

It's disappointing that Michael Gerson joins the crowd of confused people who mistake inequality for poverty (The effects of inequality on America's kids, March 17). An unequal distribution of income does not mean that people at the bottom of the distribution are poor in any absolute sense. And in a world such as ours in which the amount of total wealth grows over time, everyone can become wealthier - indeed, become fabulously rich - even if income inequality increases.

It's important to keep in mind the distinction between inequality and poverty.

The distinction should be simple: poverty is when people don't have very much and inequality is when some people have more than others. A society in which some people have millions of dollars a year to live on and others only tens of thousands might well be very unequal. But as long as people do have those tens of thousands then there's going to be less poverty than in a society where everyone is more equal but only has $500 a year to live upon.

Please see the first 4 minutes of Richard Wilkinson's video on inequality on the website:

In the remarkable Canadian study they were able to move people out of poverty. But within a society you need to look at relative income (also social position or social status). In other words, where are we in relation to other people. So just because the poor are now less poor, the wealthy may also have also increased their wealth (as in the case of the USA). It is the difference of seeing where one is in the economic hierarchy, that is to say, seeing where one is compared to other people that causes the harmful effect of economic inequality.

From a posting on the website,

Re: Let us know what you think about Wilkinson's video?
Post by Jessica, Sun Aug 12, 2018 4:10 pm
Wow! Try to wrap you mind around this concept, "Why society might be more stable if we had more poverty and less inequality."

This is from a Vox article, Income inequality is changing how we think, live, and die, by By Sean Jun 14, 2018. ... in-america

Researcher Keith Payne has found something surprising: When people flying coach are forced to walk past the pampered first-class flyers in the front of the plane, the likelihood of some sort of air rage incident rises sharply.

In his 2017 book The Broken Ladder, Payne, a social psychologist at the University of North Carolina, argues that humans are hardwired to notice relative differences. When we're reminded that we're poorer or less powerful than others, we become less healthy, more angry, and more politically polarized.

What people underappreciate is how having extreme inequality driven by the high end of wealth also causes trouble for society and for people's well-being. Poverty is a related but separate problem. The presence of extreme inequality destabilizes a society in ways that are hard to understand but absolutely devastating.

The perception of inequality around us has a couple of different effects. One is that it makes the average person feel poorer, [in] comparison to those who have more. And the second is that it raises our expectations. It raises our standards for what we think it is to be normal. Now, that all seems very subjective, but when you perceive yourself as poor compared to other people, that sets off a chain of events that translates into physical outcomes.

The article's author then presented the following question to the social psychologist and here is the exchange below,

Sean Illing

Do you think we would be healthier and happier if we had more poverty and less inequality?
Keith Payne

I think there's a case to be made that trading off some measures of wealth, like the gross domestic product, would be worth it for the benefits that come with reduced inequality. The problem now isn't that there's too much wealth; it's that nearly all of the increases are going to the wealthiest members of society.

This really drives home the counter-intuitive impact of economic inequality. In other words, individuals may be impoverished but if there is less of an economic inequality gradient, there is the possibility they can be healthier physically, psychologically, and have a more functional society. Perhaps this explains some of the reports I have read where some of the less wealthy countries have a higher ranking on happiness and contentment reports than more wealthy countries.