Real Time discusses income inequality and the Great Depression

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SUMMARY

The forum discussion centers on the relationship between income inequality and economic growth, referencing economist Marriner S. Eccles' insights on the detrimental effects of wealth concentration. Participants argue that current income inequality in the U.S. is at its highest since the Great Depression, potentially leading to systemic issues. The conversation also touches on the dynamics of the "working rich" versus "old money," and how economic policies, particularly those of the Obama administration, may influence growth. The discussion concludes that while income inequality can drive growth, it also raises concerns about long-term economic stability.

PREREQUISITES
  • Understanding of economic theories related to income inequality
  • Familiarity with the historical context of the Great Depression
  • Knowledge of economic policies and their impact on growth
  • Awareness of the concepts of oligarchy and polyarchy in political science
NEXT STEPS
  • Research the effects of income inequality on economic growth using case studies
  • Examine the historical economic policies of the U.S. during the Great Depression
  • Explore the implications of progressive taxation on wealth distribution
  • Investigate the role of entrepreneurship in modern economic systems
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Economists, policymakers, social scientists, and anyone interested in understanding the complexities of income inequality and its impact on economic growth.

  • #31
wildman said:
It is the old chicken and egg thing.
No, it really isn't. There is a reason that Microsoft (by that I mean the computer and internet revolutions) was started in the US and not in Europe. The structure of the American economy and political system made it much more likely to happen here than anywhere else.
 
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  • #32
Astronuc said:
Socio-economics systems work well when self interest = common interest (or common good).
That's a pretty bold claim - could you provide one example of where it has been true on a national level (in modern times)? It sounds to me like something Marx would say and AFAIK, it has never been true. People often dream of a cooperative society, but dreams are not reality and wishing for them doesn't make them happen.
Interest on credit redistributes wealth as effectively as taxes.
That sounds like an odd statement to me - could you explain a little more what you mean? It would seem to me that the profit from interest goes to banks and investors and does not get redistributed. The whole issue of wealth inequality is one of investment income, is it not?
 
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  • #33
russ_watters said:
I'm confused too. I don't see how anything I said in any way implied that characterization. That's a choice people are free to make in the US but not free to make in Europe. In the US, though, people tend to choose the longer work weeks

Because if they say they want more vacation time someone else gets hired instead
 
  • #34
russ_watters said:
That's a pretty bold claim - could you provide one example of where it has been true on a national level (in modern times)? It sounds to me like something Marx would say and AFAIK, it has never been true.

I think you misunderstood Astronuc (or otherwise, I did). I think he said about exactly the opposite of what you argue against, namely that if we cannot structure society such that whatever we desire as common interest, will also be driven by selfish self-interest, then it is not going to work. The most obvious violation of that idea is the idealistic communist vision, where we should all work for the common interest, while that is not really promoted when you just selfishly look at your own advantages. It is probably the reason why it didn't work. It is essentially Adam Smith's basic thesis.

And maybe I should shut up and let Astro explain what he said :-p
 
  • #35
Office_Shredder said:
Because if they say they want more vacation time someone else gets hired instead

That's indeed the reason. You cannot go to your boss and tell him: hey, I'd like to work a bit less, I don't mind a lower salary. I do want an interesting job, and responsibilities. But in moderate amounts. Legally, you could. But it won't work.

You don't get hired for that. It is not the looked-for profile of the desired collaborator. So people who would actually settle for less, and take it a bit cooler, just HAVE to compete with those who want to go hard and earn much. In that case, they'll also earn more, but they don't desire this. They'd prefer to do it slower. The winner takes it all.

So we have two different views:
1) leave the job market totally free, and force high working rates and high salaries upon everybody
OR
2) regulate the job market and force medium or low salaries and leisurely working rates upon everybody

Of course, the economy will do better with 1). But if 2) is what is democratically desired for, then I don't see what is *a priori* wrong with it - on the condition that one understands what it means: higher unemployment, lower wages, smaller growth, less wealth.
 
  • #36
vanesch said:
Of course, the economy will do better with 1). But if 2) is what is democratically desired for, then I don't see what is *a priori* wrong with it - on the condition that one understands what it means: higher unemployment, lower wages, smaller growth, less wealth.

Might not choice 2 mean no impact on wealth and growth (in terms of GDP), less unemployment (more people working, but less hours of work and lower pay on average), and a larger population with some sustainable "wealth"... with possible huge benefits on national health (via the fact that vacations are shown to help this... as well as better heath/nutrition for perhaps now employed "lower classes"). Of course national health care would make this more feasible, since benefits (especially those effecting health) are often tied to employment status. Just a thought.
 
  • #37
physics girl phd said:
Might not choice 2 mean no impact on wealth and growth (in terms of GDP), less unemployment (more people working, but less hours of work and lower pay on average), and a larger population with some sustainable "wealth"... with possible huge benefits on national health (via the fact that vacations are shown to help this... as well as better heath/nutrition for perhaps now employed "lower classes"). Of course national health care would make this more feasible, since benefits (especially those effecting health) are often tied to employment status. Just a thought.

Yes, that's more or less the "French left's dream". But what didn't work out well, was the "redistribution of employment". It is that famous "35 hour week" which converted in 50 days off per year which was the French left's idea to diminish unemployment (the reasoning being: given that workers will work less, employers will have to hire more, and hence this will reduce unemployment). With the proposition came the decision to freeze wages for 3 or more years, to compensate. However, studies demonstrated that the effects on unemployment were minimal. What had more effects was the lowering of social taxes, rendering employment conditions more flexible and things like that.

Under Sarkozy, we're getting closer to a bit more free market situations. But even though in France he's seen as a right wing guy, I take him as a social-democrat who ignores himself :smile:
 
  • #38
physics girl phd said:
...(via the fact that vacations are shown to help this... as well as better heath/nutrition for perhaps now employed "lower classes")...
Some vacation time sure, but where does it possibly show that 50 days a year off increases health significantly over, say, 21?
 
  • #39
mheslep said:
Some vacation time sure, but where does it possibly show that 50 days a year off increases health significantly over, say, 21?

I don't know. Probably it lowers life expectancy, as people go more on trips ?
Again, the initial drive was not to increase holidays, the initial drive was a political project of "redistribution of working time" to tackle unemployment. Initially, work days would simply be shorter (you'd go home at 4 pm instead of at 5 pm or so). But then workers' unions changed this into extra holidays. So that's how we got about 23 extra days off.

I can say that this is very practical if you have young kids. In fact, most of these extra days I don't use them to go on a holiday, but just to do things at home, look after the kids,... most people actually do. So it became "more time for family stuff" ; not so much more swingers time.

However, it has an undeniable negative effect on the job. It becomes difficult to have whole-department meetings, because there are always a few persons on leave (ok, this can be imposed of course). If you need to work with several collegues, you really have to sit down and plan days off, because otherwise the group is almost never complete.

So, family life got better, job life not necessarily so.