Saturday, March 1, 2014

Peter Radford — Inequality

I am preparing a talk on inequality here in America, and so have been re-reading the Piketty and Saez work. Amongst the more eye-opening facts I have come across is the assertion, by Saez, that the surge in the top 1% incomes is so large that the growth of the bottom 99% amounts to only half the average [mean]. 
Think about that for a moment.
It would be like walking into a room full of people two feet tall with one thirty footer in the corner. The mean average is meaningless in such circumstances. We are all taught that in statistics class, but to come across such an egregious example in a dataset as large as all US tax returns is astonishing.
Not only is this an alarming fact, but to portray it adequately on a chart is difficult to do. The line representing that 1% doesn’t fit well with the 99% because any scale you use cannot easily accommodate such extremes.
When I chat with people about the topic I realize that most have no clue as to how skewed and screwed up the economy now is. Even when they start to comprehend they retreat into a kind of ‘it doesn’t affect me’ denial. The fact seems to be that most people want to cling onto the mythological image of America they carry with them, perhaps because confronting the reality we have made for ourselves means accepting unpleasant and disturbing facts.
It's called being either uninformed (not paying attention), or being in denial (a type of psychological dysfunction). Often, people mask denial with seeming ignorance. Perhaps not coincidentally, this often is the case in abuse relationships in which the victim seems to be unaware of the obvious, like a philandering spouse, but is actually in a state of denial that precluded noticing. This also happens when trusted leaders lie to their followers, who cannot imagine the leadership doing such a thing. Again, often a case of being in denial of the obvious. But here, the figures do not lie. Are the rubes not paying attention or in denial?

Real-World Economics Review Blog
Inequality
Peter Radford

7 comments:

Unknown said...

He is running into the situation that has been well documented by Norton and Ariely - What We Know About Wealth and Wealth Inequality

Anonymous said...

It's not just ignorance. Lots of Americans have been so indoctrinated to worship the rich that they don't care. I argued with a guy online who said he would rather live in a country where "the sky is the limit" than have his wages limited or regulated. He also defended a sort of pseudo-Darwinist view of survival through competition as the ultimate value.

Tom Hickey said...

Not sure if it's that they've been indoctrinated. A lot of people are just self-centered, although that's somewhat of cultural thing, too — America is the land of the "rugged individualist."

Most people that go after power are even more narcissistic that those who pursue wealth. At some point a character flaw becomes psychopathy.

Clonal said...

One of the best books I have come across on psychopathy is Political Ponerology

Clonal said...

Dan,

Even the person online that you had a conversation with, if asked the Norton questions, would likely be somewhere between theleft and the center graph, and would still likely say that the center graph represented actual wealth distribution, and not the right one. However, even the right one misrepresents the actual distribution, because half of the top quintile portion is taken up by less than 1% of the population.

Clonal said...

Also, Paul Krugman won’t save us: We need a new conversation about inequality

Matt Franko said...

"He also defended a sort of pseudo-Darwinist view of survival through competition as the ultimate value."

This is simply what we are taught/indoctrinated with Darwin's "natural selection is survival of the fittest" approach ... so the financially successful can be looked at as "the fittest" and just a "natural" part of "natural selection"... micro-foundations, etc...

I dont see how someone who is believing Darwinism is true is indignant about ANY economic outcome that occurs.... the 1% could just be naturally branching off into a new species... this perhaps should be welcomed under Darwinism I would think .... like honey bees have "drones", "workers", "Queens" etc... humans could just be "evolving" into like a bee hive type paradigm per Darwinism... human "drones", etc..

its just "natural"...

Here's Darwin himself in his own words:

"This principle of preservation, or the survival of the fittest, I have called Natural Selection. It leads to the improvement of each creature in relation to its organic AND inorganic conditions of life, and consequently, in most cases, to what must be regarded as an advance in organisation. "

http://www.bartleby.com/11/4011.html

This re-distribution of resources towards the "survivors" is just "an advance in organization".... we shouldn't be indignant about this we should be welcoming this... per Darwinism...

rsp,