Tuesday, January 14, 2020

The Great Leveler: Violence and Inequaltiy

Barack Obama thought, rising inequality "is the defining challenge of our time."  The future is intertwined with several concerns, climate change, pollution, nuclear tensions, but underlying them all is a feeling that the average person has no impact.

The rich get richer and the poor get poorer has long been a cliche, but like most cliches there is a base element.  Inequality is natural and if unchecked tends to increase.  Not all bad as the pursuit of wealth has motivated many to innovate and work harder to improve the lives of the rest of us.  Scheidel uses some of the material uncovered by Thomas Piketty, although does not agree with all his conclusions.  http://www.therealjohndavidson.com/2014/10/capital-in-twenty-first-century.html

Using a wide range of information Scheidel uses the Gini Co-Efficient to compare different societies at different times.  Obviously there is a limit imposed by the lack of numerical data for much of what he studies.  He improvises with such things as burial goods, size of housing, prices of different commodities.  His conclusions do not suffer.

Violence has proved to be the most reliable leveler of inequality.  The author classifies what he called the "Four Horsemen" the factors that have leveled inequality:  1). mass mobilization warfare;  2). transformative revolution;  3). state failure and 4). lethal pandemics.

In the course of over 300 pages he recounts instances of these leveling factors.  Inequality first became a fact with the agricultural revolution which made possible specialization and the accumulation of surpluses that enabled some to increase wealth and power.  Before in a hunter foraging economy everyone was important for overall survival and although some people are more talented or hard working than others they could be kept in line.  Two tools enabling inequality were land/livestock ownership and the ability to transmit wealth to future generations.

Many minor events could have a very temporary effect on inequality, but it takes a massive event to really level inequality with some examples being World War II, the Black Plague (followed in quick succession with other pandemics), the Russian Revolution, European invasion of the Americas  and the American occupation of Japan.  Some major events actually increase inequality or the wealthy are replaced with other wealthy people.  In all cases inequality restarts significantly over time.

What about the future?  The author concludes that the four leveling factors will have less likely impact in the future, so it seems likely inequality will always be with us.  Modernisms work both ways.  Those in power have more tools to stay in power.   The masses of people have more effective communication and ability to organize. 

There have been many suggestions to rectify or moderate inequality.  Progressive taxation, estate taxes, wealth taxation, boosting unions, universal medical insurance.  Poorer people tend to vote less than their wealthier fellow citizens suggesting perhaps that education might make a difference.  There will be resistance and costs to any radical solutions.

An earlier blog gives the perspective of John Maynard Keynes who thought the only purpose of economics should  be that everyone could live better.  He understood about the pendulum of the ups and downs of the economy.  http://www.therealjohndavidson.com/2012/04/book-on-john-maynard-keynes.html

Although inequality has the advantage of offering incentives that generate innovation and hard work, there are disadvantages that become more evident as it becomes more extreme.  Number one is the inequality of opportunity that eventually hurts everyone when merit is secondary to connections.  Universal health care ensures that the poorest have an opportunity to receive preventive care that ensures the health of the rest.  A sense of fairness such as accepting that some people contribute more and deserve more is best achieved when the discrepancies are not too threatening.

My own thoughts on the inevitability of inequality.  If you took a random room of 100 people and were somehow able to redistribute the wealth to for example, $100,000 each, within minutes things would start to change.  Some would want to spend some to enjoy some of the things they had long wanted.  Others would see an opportunity to sell something, loan money so others could get what they want faster.  Some might be a bit fearful of the "rainy day" and keep their spending under (relative) control deferring gratification.  Some would steal from the others in the form of theft, intimidation, or fraud.  Of course some have more relevant talent than others.  It boils down to short term thinkers versus long term thinkers and yes a bit of luck, but essentially this has been our history.  

There is a lot of meat in the book provided by Walter Scheidel.  I found many of my thoughts debunked, but also gained a better understanding of the mechanisms that account for inequality.  The future is unpredictable, but many of the factors that will determine the life style of future generations are identified..

Confession.  I stumbled on this book because I had heard of a more recent book of the author, Walter Scheidel called "Escape from Rome."  Being cheap (and patient?) I just checked the library which had not yet ordered it, but had this other from the same author.  I have long concluded that there is more than one good book in any author and we often miss the early ones when they might have been more enthusiastic because they had not yet reached a tipping point.  I am on the look for "Escape from Rome" and for that matter other books by Walter Scheidel.

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