On Inequality

     So one of the big things as of late seems to be the focus on the subject of inequality. Whether it is New York Times columnist Paul Krugman, Robert Reich, or any number of other left-of-center columnists and commentators, there is this growing obsession with the subject of inequality in America, and in particular, how it has been growing over the past few decades (i.e. since the start of the Reagan presidency). What tends to be bandied about is that "the rich" are getting richer while the rest of America is being left behind, or seeing their incomes and wages stagnate.
     The thing that gets me with this whole fiasco is how oversimplified the subject seems to be and how it is used so much by certain politicians, the media, and certain academics to play on people's emotions. To start with the oversimplifications, let's look at how the topic of inequality itself. Although the terms "inequality" and "equality" are spoken about as if everyone knows their meaning, these words actually can have very different meanings. For example, there is equality under the law, there is equality of opportunity, and there is equality of outcome. There is also equality before God for the religious people.

Equality under the law means we are all subject to the same laws, rules, regulations, etc...irregardless of race, ethnicity, religion, color, sex, whatever.

Equality of opportunity means that no one should be prevented via arbitrary obstacles from being able to pursue their own goals and objectives.

Equality of outcome means that everyone has an equal outcome (at least economically) in life.

In the early days of of our republic, the word equality generally meant equality before God. Then later it evolved more to refer to equality of opportunity. Now equality of opportunity unto itself is a tricky subject, because literal equality of opportunity is impossible. Some people are born more talented or gifted physically or intellectually than others. To quote Milton Friedman in his book "Free to Choose,"

     Like personal equality, equality of opportunity is not to be interpreted literally. Its real meaning is perhaps best expressed by the French expression dating from the French Revolution: Une carriere ouverte aux les talents---a career open to the talents. No arbitrary obstacles should prevent people from achieving those positions for which their talents fit them and which their values lead them to seek. Not birth, nationality, color, religion, sex, nor any other irrelevant characteristic should determine the opportunities that are open to a person---only his abilities.
     On this interpretation, equality of opportunity simply speells out in more detail the meaning of personal equality, of equality before the law.

     These days, when people talk about "the growing inequality in America," what they usually are referring to is economic outcomes, not a growing inequality under the law or of opportunity. As said, the basic gist of this is that "the rich" are becoming richer, while the rest of America is either being left behind, or is falling further and further behind. Some claim that America used to be a much more equal society, but is now far more unequal than it was back in the 1950s and 1960s. What I am hoping to argue in this post is that not only is this not true, or grossly oversimplified anyway, but that it is even backwards in certain respects.
     To start with, note the obsession with there being an inequality of outcome. They seem to think that this is a bad thing in a free society. Well that depends on how you look at it. If you have a fixed pie of wealth, and one group is getting richer by taking and hogging all of the wealth for themselves, so that everybody else is poor, then yes it's bad. This is what tends to happen in socialist and communist countries, the most infamous being the old Soviet Union. The Communist Party would hog all of the resources that existed for themselves, while the average citizen had virtually nothing.
     But that isn't how it works in a free-enterprise society. Free societies that combine liberal democracy with market capitalism CREATE wealth. One thing important to remember is that wealth is not money. Wealth is the goods and services produced in society. Money is what we use to measure how much wealth we have and to trade it (trade goods and services). If you were worth $30 million in 1892, you were still poorer than a person worth $30,000 in modern America, because the person in modern America has access to goods and services that the person in 1892 could only dream about. In the 1980s, if you were rich, your car likely had a phone in it and a television (a miniature cathode ray-tube television). You were the big cheese with those in your car. Nowadays, a poor person can watch television or surf the Internet on their flat iPad or smartphone in their car, or of course make calls. And let's not even get started on the SUVs and cars priced for middle-income people, as these things are so loaded, they can make luxury cars of the 1980s and 1990s look sparsely-equipped.
     What this shows is that in a free and prosperous society, even if there is a large amount of inequality of outcome, people are still wealthy. It's just that they are unequally wealthy. In previous times, people were mostly equally poor. During the Middle Ages for example, even the richest people were very poor in comparison to what modern people have access to, minus a few things (they had castles or mansions, but even then, those things didn't have running water, electricity, or heating the way modern homes do;  castles in particular were dark, damp, and drafty). Your poor people of the old days were, well, super poor by modern standards.
     Now what is odd is that most of the people obsessing over the subject of wealth inequality seem to fall hook, line, and sinker for the fixed-pie fallacy, or they know of the above argument, but just choose to ignore it for whatever reason. The only thing I can think of is that they are just so hunkered down in their own ideology that they refuse to acknowledge points that refute it, sort of how socialists during the 20th century refused to acknowledge many of the obvious points regarding how socialism could not be made to work. But wealth inequality is not bad if everyone is unequally wealthy and continues to grow more wealthy. The "good times" many of these pundits speak of, where there was more "equality," were when people were more equally poor.
     In this sense, I would say never before in history has there been a time in which the citizens of this country were MORE equal with one another in terms of wealth. Never before have we had a period in which the standard of living for the average person can be so similar to that of a wealthy person. Back in the 1900s, for example, being poor meant you were poor. Being middle-income was still poor by modern standards. Becoming wealthy could really, REALLY change your lifestyle, your standard of living. In modern times however, this isn't so much the case. If you are comfortably middle-income, you can have all of the following (even if you are LOWER middle-income to below the poverty line, you can have much of this stuff):

Car with power windows, power doorlocks, navigation system, backup camera, ability to make calls, surf the Internet, or watch television from the car, air conditioning, heating, cruise control, leather seating, radio with CD player, and so forth (these are basic features for today's vehicles)

Home or apartment with running hot and cold water, electricity, air conditioning, heating, kitchen with all manner of appliances, flat-screen television, high-quality surround-sound, cable, high-speed Internet, high-tech videogame systems, high-speed modern computer, comfortable furniture, music players that can store hundreds or thousands of songs all on one player (no need to carry around tapes or a packet of CDs), etc...

Instant access to thousands of books either available online to read (usually the classics are) or if not, you can order them or now DOWNLOAD them right off-line, instant access to every work of music ever done, instant access to all movies and television shows, instant access to videos of all kinds, and so forth.

Fresh fruits and vegetables, fresh meats and cheeses, sweets and treats of all kinds, access to expensive sweets and treats, cheeses and meats if you're willing to pay more, access to innumerable beverages of all kinds (beers, wines, coffees, teas, fruit drinks, etc...of all prices and qualities).

Nice clothes and shoes

A bunch of other stuff I can't think of off the top of my head right now, but the average and less-than-average person can still buy them.

     With access to all of this stuff, the average person is rich by global standards. They aren't like a person in a Third World country who has to eat rice maybe once a day or every few days, who has to go and collect wood to burn for a fire to cook and/or keep warm, with no access to cheap electric light, no sanitation or running water (the same water they drink may be the same water they relieve themselves in), who has to worry about if they get a cut on their hand, will it get infected and kill them, etc...in America, we consider a McDonald's quarter-pounder to be a cheap, low-quality food. Imagine how such a Third World person would react if they could eat such a food each night! It would be a luxury to them, all that meat, and those fries. In America, if you get a cut on your hand, you can go to the sink, turn on the water, wash it with soap, disinfect with alcohol or hydrogen-peroxide, use neosporin, and place a bandage on it. The idea of dying from such a thing is almost unheard of, unless you have the unfortunate luck to cut yourself on say a rusty nail, and even then, it depends.
     Because the average American is so rich by global and historical standards, becoming what Americans generally think of as "rich," while it does mean a big change in lifestyle, the change is not anything near what the change would have been for a person in the 1800s going from poor or middle-income to rich would have experienced. The average person becoming rich gets access to what? A bigger home? With some nicer or newer versions of many of the appliances they already have. They get access to a nicer, more expensive car, again with just nicer versions of many things they already have. They can buy more high-end versions of everything, but the point is, they just get access to things they already have usually decent-quality versions of already. The areas where they would probably see the most major improvement would be in the quality of healthcare and education that they would be able to purchase. Whereas they were rich before, they are just richer now. So to sum up that point, I see Americans as being more equal in terms of wealth, when measured by access to goods and services, than ever before. And as time goes on, we will only continue to become even wealthier. Imagine what televisions, appliances, personal computers, smartphones, music players, the Internet, automobiles, etc...will be like within another thirty years (it boggles the mind!). Another thing to think about here is to compare the fortunes of earlier times adjusted for inflation. For example, Andrew Carnegie accumulated a fortune of around $500 million or so. But adjusted for inflation, he was worth by modern standards hundreds of billions of dollars. Now that is a severe amount of inequality. You have guys worth the equivalent of hundreds of billions of dollars, meanwhile the average person lived a life stuck in squalid poverty. Today, the richest people are worth "only" in the $50 billion range, and even the people below the poverty line are rich by global and historical standards.
     Moving to my next point, which will be shorter, one thing I wanted to point out also is that, inequality of wealth in the natural outcome of a free society. In a free society, people can do as they please. They can either sit around and do the bare minimum needed to survive, or they can be industrious and work a lot and seek constantly to work productively. Thus, there are always going to be "poor" and "rich" in a free society. What's important is that, minus the few truly poor (such as homeless folk), that overall society constantly becomes richer and richer, even if everyone is unequally wealthy. And as society becomes wealthier and wealthier, everyone becomes more and more equal in terms of standard of living.
     My next point addresses a particular pet peeve of mine which I think I may have mentioned in some posts before, but I can't remember, and that is the issue of using terms such as "the rich" and "the poor" and "the top 1%" and so forth. Speaking in this manner implies that society is divided into fixed classes of people, that there is a class of poor people, a middle class (which it is always claimed is shrinking), and a rich class, a permanent plutocracy or aristocracy essentially. What pundits claiming this are usually doing is confusing what are statistical income brackets with being fixed classes of people.
     For example, let's talk about the "top 1%" in terms of income. One of the things claimed (or pointed out) recently is that over the last decade, the top 1% has seen its incomes increase faster than the rest of society has seen theirs increase. Another claim made is that the top 1% control a larger chunk of the country's wealth today than in previous times (this claim also makes the fixed pie fallacy). The thing is, measuring the top 1% in terms of either income or wealth over time, does not represent the actual flesh-and-blood human beings that move into and out of that bracket over time. The reality is that people move into and out of all of the brackets all the time. One claim made is that since the financial crisis, the top 1% has seen its incomes increase while the rest of society's incomes have remained stagnant or even declined. This implies that the top 1% is some fixed plutocracy that have the game rigged to always benefit them. It ignores the fact that a statistical bracket ignores whether the actual people in it are changing constantly.
     Think of it this way: Let's say there is a statistical bracket that measures the fastest 5% of cars on the American highway system. Let's say that in the morning, the fastest 5% is increasing in speed at the same rate as the slower and middle-speed brackets of cars. Now let's say at noon, the fastest 5% starts increasing in speed faster than the other brackets. To someone who doesn't know what they are looking at, they might well assume that this bracket measuring the fastest 5% of the car population represents a fixed population of cars that is constantly driving on the highway, and constantly at a faster speed than everyone else. They do not realize that while the statistical bracket labeled "fastest 5%" is permanent, the actual cars that make it up are changing constantly. The cars making up the fastest 5% at 6 AM are not the same ones making it up at 12 PM. And so forth. Even though cars move into and out of the different brackets all day long, those brackets remain.
     Wealth and income are no different. Looking at statistical brackets can confuse people into thinking that these are classes of people when they're no such thing. A lot of people who were in the highest-earning 1% prior to 2008 are now in one of the lower brackets, even though the bracket itself can give the misconception that some fixed class of rich is doing well right now, even better than before. The bracket may be performing better, but with a whole slew of different people in it, as the previous people got knocked out of it. Regarding the misconception about the wealthy holding a larger chunk of the wealth than in previous times, well in addition to there being no fixed class of wealthy, what is forgotten here is that the pie grows in size. And during periods of large-scale wealth creation, you tend to end up with a lot more wealthy people. The corollary though is that usually this means a rising standard of living for the rest of society (the rest of society becomes richer too) because in order to get rich, usually these people have to be providing some type of product or service to society. It is truly amazing how pervasive this fallacy can be though. In reading one political pundit who could make some pretty decent arguments about things, with regards to the wealthiest 1% holding a larger chunk of wealth, he literally said, "This is because the wealthy have managed to redistribute more of society's wealth up to them." In other words, a fixed class of wealthy are hogging more of the wealth for themselves, and thus leaving less for the rest of us. He ignores, or is completely oblivious, to the constant increasing wealth of the average person, of the fact that the pie is not fixed and thus for one person to create a fortune doesn't mean the rest of society must be shorted by that same amount, and of the fact that there is no fixed upper class.
     Okay, now onto my next pet peeve: the claims about the "distribution of income" and the "distribution of wealth" in society. These terms one will often here made by political pundits who like to portray society as, again, rigged to benefit a fixed class of rich while taking from everyone else. The problem here is again confusing what is just a statistic with being an actual thing. The fact is that there is really no such thing as a "distribution of income" or a "distribution of wealth." That implies that there is a fixed amount of wealth and a fixed amount of income created each year that then is doled out to each member of society by a central authority. According to the pundits, the supposed fixed "rich" class have the system gamed so they can hog most of the income and wealth for themselves.
     The reality however is that the terms "distribution of income" and "distribution of wealth" are just statistical abstractions. Income is not doled out by a central authority, it is what a person earns for trading whatever skills, products, or services they have on the free market. Wealth is determined by how many goods and services people produce.
     Now onto yet another pet peeve of mine, the term "allowed to keep" regarding your tax bill. President Obama made a statement about this not too long ago, talking about how he would not support a policy that "allows him to keep" so much money. The Republicans fell for it too, in one debate where a teenager asked the candidates the question, "What do you think is a reasonable amount of money a person should be allowed to keep when paying taxes." Absolutely ZERO of the candidates jumped on this and pointed out the fallacy of this type of thinking, which is something I was rather shocked by. If any candidate had, they would have probably scored some major political points I'd imagine.
     But anyways, the term "allowed to keep" implies that the government ultimately owns everything you produce. That you are just a worker bee that works for the almighty government and whatever you produce goes to the government. The government then "lets you keep" a certain amount of this money. But that's not how America is supposed to be set up. This is a country about freedom, and in particular, economic freedom. In a country about economic freedom, one that was set up to limit the powers of the government, what a person produces is THEIRS. Not the governments. People produce for themselves. But in order to have a functioning society with rule of law, protection of private property, a national defense, and so forth, we have to have a government, and that means that the people must be taxed, which means that the government must unfortunately take some of what everyone produces. But the proper question here then is not, "How much should one be allowed to keep," but rather, "How much should the government be allowed to take?"
     Okay, onto another pet peeve: the confusing of wages with incomes. This, AGAIN, is usually done by political pundits who want to imply that things are worse than they really are. Oftentimes pundits will point out that wages are stalled or shrinking. Or they will point out household incomes are stalled or shrinking. Household incomes are a faulty way of measuring the subject because one is going by the incomes of a group of people, and households can change sizes over time. The one to measure is individual incomes, which such pundits almost always ignore, because individual incomes have been going up for many decades now. They usually stall when a recession occurs, then they begin increasing again. For example, they stalled during the 1981-1982 recession, they stalled in the recession of the early 1990s, they stalled in the early 2000s recession, and now they have stalled due to this current recession. Regarding wages, wages are not incomes. They are a part of incomes. Incomes consist of wages + the various benefits one receives. Wages being stalled or even declining doesn't mean that incomes are not increasing. What stalled or declining wages with rising individual incomes means is that the benefits portion of incomes is increasing in cost faster than incomes themselves are increasing, which means that more and more of a person's income is having to be devoted towards paying for the benefits provided by their employer, as opposed to paying for that person's wage. Considering that healthcare is increasing exponentially in cost, and has been for years, and that in the United States, healthcare is mostly provided via one's employer, it is not at all surprising that while individual incomes have been increasing for years, wages have been stalled or even declining in certain sectors of the economy.
     A final pet peeve of mine is the notion that the "middle-class" is shrinking or disappearing and that we are becoming a society of "rich" and "poor." As we've seen, this is not true in that everyone continues to grow richer as the years go by. What causes this confusion is that the term "middle-class" refers to a large segment of the population that earned an income that, back at one point in time, was generally what one needed in order to have a comfortable middle-class living. As the years have passed, the number of people making that particular income has been shrinking. But this doesn't mean that society is growing poorer. To the contrary, what it shows is that the income that represents a comfortable middle-class living has been increasing, which isn't surprising as inflation has constantly been occuring over the years and individual incomes have consistently been increasing. Today, the average middle-class person makes a higher income than a comparable person in the 1950s made, and a middle-class person today also has access to a whole lot of goods and services that a person making a similar income in the 1950s had no access to. Society grows richer as the years move on. What has happened to the large segment of the population that makes up the middle-class is that it has moved out of that income bracket that used to be considered middle-class and into a higher income bracket (this also giving the illusion that we are becoming a society of just "rich" and "poor"). Because individual incomes keep increasing, the middle-class now makes what in previous times was considered a high income. And what we think of as the "lower-middle-class" now lives a standard of living that used to be comfortably middle-class. Give it enough years and even people living below the "poverty line" will be making what right now is considered a high income. And you can be sure that when this happens, pundits will scream we are a banana republic, not realizing that we are no such thing, we are a society that is so rich, everyone is rich, just we are unequally rich.
     Another thing to keep in mind is that as incomes go up over time, the prices of goods and services continues to come down. For example, flat-screen televisions used to be incredibly expensive. They also were energy hogs. Now they are much more energy-efficient and the prices of them have come down greatly. Modern automobiles are equipped with features that luxury vehicles in years past did not have.The same has happened, and will continue to happen, with innumerable other goods and services as the years go on.

Do You Feel the Need, the Need for Tweed?

....so is titled an article in Of Rogues and Gentleman, a blog written by Brooks Brothers. Tweed is one of my favorite fabrics, as it looks beautiful, but is also very rugged and durable. Wearing it gives one a "civilized-rugged" appearance, in that you look like you could go out into the wilderness or whatnot, yet you also look extremely professional and civilized. Here is the article: LINK

MGA Entertainment Update

      I'm about a month behind, but MGA lost in their attempt at an antitrust suit against Mattel: LINK