Income Equality: Problem? If So, What to Do?

[MicroBalrog]

Brazil and many LA countries are countries without a robust middle class.  Tehre is only the masses of poor and the thin crust of the affluent.  Is this a problem? 

The reason you don't see me arguing against your specific example is not because I agree with you in principle, but because I know very little about Latin America. I've read - most particularly in Hernando de Soto's writings, who is a Latin American intellectual of great standing - that the problem there is not so much the lack of property in the hands of the poor, but the lack of proper mechanisms of property enforcement and property recording. For example, the poor in third-world states own de-facto up to 11-15 trillion dollars' worth of stuff between them, but because a lot of that ownership is informal - for example, poor people owning homes but not holding formal 'title' on them for whatever reason, they're unable to leverage that into financial success.

I am not sure that is true, however.

[roo_ster]

The reason you don't see me arguing against your specific example is not because I agree with you in principle, but because I know very little about Latin America. I've read - most particularly in Hernando de Soto's writings, who is a Latin American intellectual of great standing - that the problem there is not so much the lack of property in the hands of the poor, but the lack of proper mechanisms of property enforcement and property recording. For example, the poor in third-world states own de-facto up to 11-15 trillion dollars' worth of stuff between them, but because a lot of that ownership is informal - for example, poor people owning homes but not holding formal 'title' on them for whatever reason, they're unable to leverage that into financial success.

I am not sure that is true, however.

Sounds to me that you (or rather, de Soto) implicitly argue that the basic institutions of Western (Classical) Liberal Civilization (rule of law, contract law, property rights, free markets, etc.) are prerequisites for any chance at attenuating(1) the profound inequalities found in places like Brazil, Saudi Arabia, etc.

A sound argument, IMO.

Such institutions never developed in some places.  When everyone was suck-*expletive deleted*ss poor, all were equally so.  When oil, resources, or something else was discovered, the lack of such institutions naturally result in a few making good, while the vast majority remain in a "suck-*expletive deleted*ss poor" state.

Running with the premise above, is the erosion of the basic institutions of Western (Classical) Liberal Civilization partly/mostly/wholly to blame for the growing economic and social inequality in America?  For example, rule of law being supplanted by rule of (wo)men ["Are you serious?" says Nancy Pelosi; not enforcing immigration law; activist judges], contract law eroding, gov't intrusion into the market, and all the rest.

I find it ironic that the very erosion sought by progressives is partly responsible for the inequality they claim to deplore.



(1)  Attenuate rather than eliminate.  Complete elimination of any of society's ills usually entails unintended consequences much graver than the ill itself.

[MicroBalrog]

Sounds to me that you (or rather, de Soto) implicitly argue that the basic institutions of Western (Classical) Liberal Civilization (rule of law, contract law, property rights, free markets, etc.) are prerequisites for any chance at attenuating(1) the profound inequalities found in places like Brazil, Saudi Arabia, etc.

My argument is effectively this (and I think De Soto would agree, if I understand his book correctly):

The mere inequality of property is in itself not a bad thing. However, what is difficult is the inequality of privilege. In Russia or Egypt - to take an example - a wealthy man is most often also a politically powerful man in ways in which an American wealthy man cannot even imagine. It used to be possible (and some claim it still is) for example, for a Russian factory owner to arrange for police to 'raid' the offices of a rival company, breaking or seizing equipment, to drive down its stock price. This is the sort of thing even George Soros cannot arrange to have done on a whim. An Egyptian millionaire can have title to an appartment transferred in days because he knows and perhaps bribes the right people. A poor Egyptian would take years. Literally.

This is the issue.

The mere difference in fiscal income - how many dollars does one have - is not in itself the problem. The problem is - as it was with the nobility of 18th century France - these sort of privileges. The French eventually found a very effective solution.

[P5 Guy]

Income inequality?

The worth of a person's labor is worth EXACTLY what the highest bidder for that labor in a free competitive market is willing to pay - no more, no less.

Asserting that income ought to be "equal" is equivalent to saying that all work is of equal value, and not subject to the laws of supply and demand.

It isn't.

No, all this "Free Market" utopian stuff runs a foul of the real world market place. Not that there is anything wrong with dreamers.
The "Bosses" always collude to keep wages as low as possible; ie Labor Unions, out of their equation, and maximize their return on investment.
The politicos make the laws to favor their handlers, the Bosses. No one wants to have to compete for profits and there is the major fault in the "Free Market" utopian vision. The Boss is just as big a Goldbrick as the Union Man.