Poor rich people

[Mr. Tea]

So the top 9 were all soviet communist, until recently. What brings this wave of depression? Confused by the sudden abundance of consumer choice? Pissed off that all the hot girls emigrate to London on the arm of thieving plutocrats? Or just being told that everything they 'knew' was true is offically 'wrong'.

I strongly suspect those rates were as high, or higher, during the Soviet years, although finding reliable official records from that time might be non-trivial.

 

[crackerjack]

I strongly suspect those rates were as high, or higher, during the Soviet years, although finding reliable official records from that time might be non-trivial.

I think you'll find it was a paradise of equality, liberty and soaraway tractor production, comrade.

 

[Guybrush]

Doesn’t Sri Lanka look like an odd bird on that list? I mean, we all know about the Japanese code of honour, or: we think we know about the Japanese code of honour. But Sri Lanka? I cannot find any good statistics to back it up, but it seems like Russia’s reputation for being a nation of alcoholics is well-deserved:

As by official statistics, Russia has about 7 million alcoholics. Experts indicate that real national totals are a lot higher. Each Russian drinks 27 liters of alcohol (the number includes both legal and counterfeit alcohol) per year. The statistical average is based on every group of the population, the newborn, elderly and abstainers inclusive. The WHO estimates stress the point that a nation is likely to die out if its citizens drink an average of 8 liters of alcohol per year.

 

[Guybrush]

Unfortunately, WHO’s website is complete bitch to navigate through.

 

[Guybrush]

One would think that easy access would be one of their main priorities. But not so.

 

[noel emits]

Is that 27 litres of alcohol or 27 litres of drinks containing alcohol?

The first one seems an enormous amount and the second isn't all that much is it?

I suppose it must be 27 litres of actual alcohol.

 

[vimothy]

Economic Freedom

I keep mentioning this because countries that have the largest levels of economic freedom are among the poorest, i.e. many 3rd world countries. no state interference stops the poor fisherman in the philippines or the farmer in the arid brasilian north-east from starting enterprises. They don't. Why do you keep ignoring this fact? OTOH, the rich european, SE asian countries, the US have countless regulations for economic behaviour in place. In the EU, if you want to start a hotel, a restaurant you have to meet countless health and hygiene standards. not so in bolivia. yet, hotels in the EU are much more profitable than in bolivia.

You're still misrepresenting libertarianism. Simply having reguations is neither here nor there. The important point is whether or not the regulations are wise, whether or not they restrict growth and productivity.

On economic freedom, you are just plain wrong. In 2007 the Index of Economic Freedom ranked Hong Kong the economically free-est country in the world, followed by Singapore, Australia, the US and New Zealand. The UK is sixth. A big anglophone influence (make of that what you will). Unsuprisingly (for some!) there are no third world countries in the top ten. Third world countiers are generally not economically free at all, which is part of the reason that they are third world counties.

The Economic Freedom of the World Report is here, and has some good stuff on what constitutes economic freedom. It also places Hong Kong and Singapore in the top two places, with New Zealand Switzerland and the United States sharing third place. Again, there are no third world counties in the top ten - this is because third world counties are not economically free. If you actually read some De Soto you would know this (for e.g. his famous example of the number of steps (in the hundreds) required to register a business in Peru), but instead you are making a knee-jerk assumption that mistakes poverty for freedom. (FWIW, Bolivia is ranked 63rd, the Philipines 68th, and Brasil 88th).

From the press release:

Easterly demonstrates that foreign aid has no positive impact on economic growth in the poorest nations. His research shows that economic freedom has a strong and positive impact on prosperity in general and on helping lift nations out of poverty. Once economic freedom is taken into account, poor nations, far from being caught in a perpetual cycle of poverty, grow faster than rich nations. “A key component of the success created by economic freedom is the ability to experiment, find economically successful areas of production, and prune those that do not succeed so that resources may be transferred to where they are most productive,” said Fred McMahon, The Fraser Institute’s director of trade and globalization studies.​

 

[borderpolice]

On economic freedom, you are just plain wrong. In 2007 the Index of Economic Freedom

Oh the Heritage foundation says so, so it must be true.

The HF was started by ultra conservative Joseph Coors, co-owner of the Coors Brewing Company, who was IIRC in Reagan's cabinet and who was among the wealthy industrialists that benefitted most from that administration's policies. It has since received corporate backing from among others Chase Manhattan, Dow Chemicald, Ford, General Motors, GlaxoSmithKline, Mobil, and Procter & Gamble.

Coors was also involved in the Iran-Contra scandal!

 

[vimothy]

The Nordic countries have the world’s highest taxes, the world’s largest income equality, and they do pretty well when it comes to comparisons like GDP per capita. The thing about Sweden having a lower GDP per capita than the poorest state in the U.S. is correct, but it’s a completely useless statistics when used without weighting in other factors.

I'm not saying that you should ignore other factors - obviously they should all be included when weighing up the benefits of the scandanavian model.

In short, the market-fundamentalists have a very hard time explaining why the Nordic countries keep faring so well despite their unwillingness to embrace the formulae that have made the U.S. the apex of Western civilisation.

Sweden is hardly without its problems.


Unemployement:

It takes a few seconds to check up the American unemployment number, 5.1% in May. Not so with Sweden. Yes, there is an official number, 5.2% in May 2005. But this figure is almost compleatly worthless. The true unemployment number is in fact closer to 20%, as shown below. Sweden has several massive government programs that contain must of the unemployed, chiefly Early Retirement, Sick Leave, Labor Market Programs and Welfare. In addition, since students get a monthly stipend and loan, many unemployed continue to study when they can’t find work.​

Sick-leave and early retirement:

From a workforce of just over four million people, "we have more than 100,000 cases of people who have been on sick-leave for more than a year ... This is very expensive," Bertil Thorslund, a caseworker at Sweden's Social Insurance agency, told AFP.

In fact, the Swedish government last year paid out a total of 92.4 billion kronor (12.2 billion dollars, 9.9 billion euros) in sick-leave pay and rehabilitation costs....

"Twenty-five percent of early retirees today are under 55. This is a huge problem ... When you retire at the age of 55 that's one thing, but if you retire at 30, it's going to cost society a lot of money," Odmark said.

According to a report in Swedish daily Aftonbladet last June, a 35-year-old on early retirement can cost the state five million kronor by the time he or she reaches the official retirement age of 65.

Quoting official numbers, the paper said that 500,000 people are on early retirement in Sweden today, 68,000 of whom are between the ages of 20 and 40. By the time the entire half million early retirees turn 65, Sweden will have dished out a whopping 700 billion kronor in compensation, according to Aftonbladet calculations.​

Statist solutions to statist problems:

High unemployment in Sweden will be tackled by creating more public sector jobs, even if that means breaking the government’sspending limits. That was the message from Göran Persson, Swedish prime minister, in a speech in Björkvik on Sunday.

The fight against joblessness is the most important question for Social Democrats, Persson told his audience at his traditional summer speech in his home province of Sörmland....

Proposals that were highlighted by Persson included using the long-term unemployed to “help old people to hang curtains,” while some of the younger recruits could be employed to investigate benefits fraud.​

Mass immigration required to pay for the welfare state:

More immigrants should be allowed into Sweden in order to safeguard the welfare system. That’s the view of Pär Nuder, Sweden’s finance minister.

Speaking at a conference on demography at Statistics Sweden, Nuder argued that getting more people with a foreign background into the labour force is “totally crucial” for securing the Swedish welfare state.​

But immigration is costing Sweden billions:

Det finns flera studier som visar att arbetsmarknadsläget är väsentligt mycket bättre för den andra generationens invandrare än för den första.
Dessutom ställer inte Jansson den relevanta frågan "kostnad för vem". Läsaren kan ju få intrycket av Janssons framställning att den infödda befolkningen belastas med 267 miljarder kronor per år.

Detta är naturligtvis inte fallet redan av de skäl som nämnts men också av följande skäl: för den infödda befolkningen är den relevanta frågan i stället hur stor är skillnaden mellan vad invandrarna tar i anspråk av den offentliga sektorn och vad de bidrar med i form av direkta och indirekta skatter samt socialförsäkringsavgifter.

För närvarande är läget att invandrarna årligen tar i anspråk cirka 30 miljarder kronor mer av den offentliga sektorn än vad de bidrar med i form av direkta och indirekta skatter samt socialförsäkringsavgifter. Denna skillnad finansieras av infödda, vilket således blir kostnaden för denna grupp.​

Trouble in paradise:

Sweden has a 25% real unemployment rate. What happens if or when the Swedish welfare state collapses? Isn’t it likely that this will trigger a flood of “welfare tourists” to neighboring countries such as Norway? This question hasn’t even been asked, much less debated, by a single political leader in this country. The number of rape charges in Sweden has quadrupled in a generation, parallel with Muslim immigration. Resident aliens from Algeria, Libya, Morocco and Tunisia dominate the group of rape suspects. Lawyer Ann Christine Hjelm found that 85 per cent of the convicted rapists in one court were born on foreign soil or of foreign parents. In a new Sociological survey, the wave of robberies the city of Malmö has witnessed during this past year is part of a “war against Swedes.” This is the explanation given by young robbers with immigrant background. “When we are in the city and robbing, we are waging a war, waging a war against the Swedes.” This argument was repeated several times. “Power for me means that Swedes shall look at me, lie down on the ground and kiss my feet.” The boys explain, laughingly, that “there is a thrilling sensation in your body when you’re robbing, you feel satisfied and happy, it feels as if you’ve succeeded, it simply feels good.” “It’s so easy to rob Swedes, so easy.” “We rob every single day, as much as we want to, whenever we want to.”​

The myth of the Scandanavian model:

In 1970, Sweden’s level of prosperity was one quarter above Belgium’s. By 2003 Sweden had fallen to 14th place from 5th in the prosperity index, two places behind Belgium. According to OECD figures, Denmark was the 3rd most prosperous economy in the world in 1970, immediately behind Switzerland and the United States. In 2003, Denmark was 7th. Finland did badly as well. From 1989 to 2003, while Ireland rose from 21st to 4th place, Finland fell from 9th to 15th place.

Together with Italy, these three Scandinavian countries are the worst performing economies in the entire European Union. Rather than taking them as an example, Europe’s politicians should shun the Scandinavian recipes.

While a poorly performing economy such as Belgium’s was able to create 8% new jobs between 1981 and 2003, Sweden and Finland were unable to create any jobs at all in over two decades. Denmark did a little better because it “activated” its labour market by making it more “flexible.” It became easier for employers to fire people. For workers in the construction industry the term of notice was reduced to five days. Unemployment benefits were restricted in time, while those who had been unemployed for a long time, and young people could lose benefits if they refuse to accept jobs, including low-productivity jobs below their level of training or education. The result is that productivity growth in Denmark is lower than in Sweden and Finland.

These draconian measures reduced the unemployment rate, but did not eliminate the cause of unemployment, namely the total lack of motivation on the part of employees and employers resulting from the extremely high taxation level. Despite the painful measures, the growth of Danish productivity and prosperity has been substandard. Disappointment in Danish politicians is one of the reasons for the rise of the far right.​

Swedes are angry with their politicians:

Nearly three out of four Riksdag deputies say that they have been subjected to harassment, threats or violence because of their positions. For elected representatives in local government the figure was around one in three.​

The high taxes don’t bother people as much as you would expect, as professionals can easily find well-paid work abroad if they are so inclined. Furthermore, the university fees being fixed at about 40 dollars per semester, and every student’s being entitled to a state allowance every month equivalent to about a third of a median monthly wage, facilitate becoming an internationally competitive professional in the first place.

Well that's one possible outcome. Another might be that as life is so good for the unemployed, large numbers will simply not work.

 

[vimothy]

Borderpolice doesn't understand economic freedom (patently), so he resorts to the Marxist tactic of declaring a proposition true or false depending on who said it:

Oh the Heritage foundation says so, so it must be true.

The HF was started by ultra conservative Joseph Coors, co-owner of the Coors Brewing Company, who was IIRC in Reagan's cabinet and who was among the wealthy industrialists that benefitted most from that administration's policies. It has since received corporate backing from among others Chase Manhattan, Dow Chemicald, Ford, General Motors, GlaxoSmithKline, Mobil, and Procter & Gamble.

Coors was also involved in the Iran-Contra scandal!

So what? My point was that economically free countries are the richest in the world. You mistake large extra-lagal economies in the third world for a lack of government regulations, hence greater economic freedom. In fact, the lack of economic freedom is the reason for the large extra-legal economies.

 

[vimothy]

That's exactly my point.
You're saying that a widening gap of wealth is evidence of a meritocracy - but your definition of merit is pretty much synonymous with (or at least includes) simply having money. So under this definition it's a complete truism - the more people that have more money the more people have more money.

Synonymous with (or at least including) making money. Traditionally, wealth and status are both inherited, but capitalism allows anyone to make money (which surely lies underneath the hatred of aristocratic fascists for capitalism). Is it perfect? No, but it is the best.

(As for circularity: well, yes. Good footballers are good at football. Good capitalists are good at capitalism when they are the best (most efficient) at supplying a particular demand.)

 

[vimothy]

The market reflects the preferences of the most powerful.

the (democratic) government -- at least in theory -- represents some kind of average over the whole population.

But that's not the point. It doesn't matter if the government thinks it's acting in everyone's best interest or if it thinks it's accurately representing the aggregate opinion on what a job should be paid. The point is that the government simply decides what it thinks a particular job should be worth, just like a socialist government simply decides what the value of a particular good should be. How can that relate to reality? Only be taking into account supply and demand and estimating. Fair enough, but we already have a mechanism that is much more efficient than bureaucratic fiat: the market.

The market doesn't represent the preferences of the most powerful. Suppliers of a good (inc labour) must balance levels of demand with costs of production, such that the good is not so expensive that no one is willing to pay, and not so cheap that the suppliers are put out of business. In the private sector, people's jobs depend on the accuracy of pricing.

 

[vimothy]

So you can't think of any instances of people being reward economically by nepotism, or cronyism, or class privilege, in a capitalist, free-market system? None at all? Or wait, did those all occur because markets weren't free enough? Or does having rich parents and friends in high places count as a talent?

Of course I can, but capitalism is the only system that allows poor people to have the chance of rasing themselves up. (Think: France)

Ok so I was a bit glib back there, but I'm serious when I say it's pretty laughable to think if we lined everyone up according to how much they make, we would also have lined everyone up according to their "ability" and "talent". And please don't define "talent" as being the ability to succeed in a capitalist system, like how you've defined being "productive" as the ability to produce capital in a capitalist system. It's kinda frighteningly circular.

It's hardly my fault that you find the definition of productive circular (although you mangled it a bit by saying that it's the ability to produce capital - it's not, though it does include the ability to produce capital): good bakers bake good cakes, productive producers produce a lot of produce! Shouldn't be controversial.

Maybe if we lined evereybody up according to income we wouldn't have a definitive hierarchy of "talent". But since you haven't provided a definition and in any case there are no objective measures, I think that we can still say that we would have a rough approximation, certainly a better approximation than the "equality" of socialist state owned citizenry or fuedal slavery.

 

[IdleRich]

"Synonymous with (or at least including) making money."

Which is easiest to do if you have money which is why I said it's synonymous with that.

Traditionally, wealth and status are both inherited, but capitalism allows anyone to make money.

Well, not quite, because the more you have to start with the easier it is to make more, that's why (for the nth time) increasing disparity of wealth is not evidence of a meritocracy.
Do you not think it it easier to make money if you are born with money?

(As for circularity: well, yes. Good footballers are good at football. Good capitalists are good at capitalism when they are the best (most efficient) at supplying a particular demand.)

But the original point was not to say that good capitalists are good at capitalism. The article was seeking to expand that and say that wealth disparity was good for society.

 

[vimothy]

And in a capitalist market do you really think that wage levels bear any relation to usefulness? Highly paid people in the city don't actually produce any social utility (in terms of goods or services). It is tautological to say that wages reflect 'importance', since importance in our society is often measured in terms of wealth (i.e. they must be important because they get paid a lot).

Wages represent how difficult your job is and how many other people can do it, therefore unskilled work is paid less highly than semi-skilled and skilled work.

 

[vimothy]

Which is easiest to do if you have money

I don't think I have disagreed with that once.

Well, not quite, because the more you have to start with the easier it is to make more, that's why (for the nth time) increasing disparity of wealth is not evidence of a meritocracy.
Do you not think it it easier to make money if you are born with money?

Yes, I've already said that - it's easier to invest money if you have money in the first place, it's easier to take advantage of savings incentives if you have money, it's easier to purchase assets if you have money, it's easier to start a business if you have money, it's easier to pay for education if you have money, etc, etc...

People who are productive make money by selling a good which society demands, unproductive people sit on the dole watching Jeremy Kyle and smoking skunk.

But the original point was not to say that good capitalists are good at capitalism. The article was seeking to expand that and say that wealth disparity was good for society.

*sighs*

 

[IdleRich]

Yes, I've already said that - it's easier to invest money if you have money in the first place, it's easier to take advantage of savings incentives if you have money, it's easier to purchase assets if you have money, it's easier to start a business if you have money, it's easier to pay for education if you have money, etc, etc...

So (back to my unanswered and original question) - how does that square with a meritocracy?

*sighs*

Good answer.

 

[vimothy]

So (back to my unanswered and original question) - how does that square with a meritocracy?

All those things are good and necessary. People might not like capital markets, but they are useful. If you take some of your inherited millions and invest them wisely, making more money in the process, you have provided society with a social good, not because you've made money, but because you have supplied the capital necessary for production, or helped spread risk for business or whatever. If you make money, it means that you've done something well. Family, tribe and ethnicity are un-important next to this ability. Nobility loses to wealth.

Good answer.

It wasn't an answer - there was no question.

Really, this is silly. If the system is not meritocratic, why do skilled jobs pay more than unskilled? Why do the unemployed earn less than the employed?

 

[IdleRich]

"All those things are good and necessary. People might not like capital markets, but they are useful."

Capital markets may be useful but that does not mean that the people who invest in them automatically have the most talent does it?

"If you make money, it means that you've done something well."

Not necessarily, it might mean a pre-existing glob of income has oozed into your pockets and you've done the bare minimum with it.

"Really, this is silly. If the system is not meritocratic, why do skilled jobs pay more than unskilled? Why do the unemployed earn less than the employed?"

It may attempt to be meritocratic but it is far from a success. That is why it is stupid to say that widening wealth gap is a good thing. As we all know there are loads of people who are handsomely rewarded for doing things that do not benefit society at all. The only thing they are better at doing than someone earning less is earning more money.
Someone before jokingly described one of your points of view as "if there were no rich people who would look after all the money?" and now you're actually arguing that stance.

 

[baboon2004]

Wages represent how difficult your job is and how many other people can do it, therefore unskilled work is paid less highly than semi-skilled and skilled work.

As an extremely general statement, perhaps this works. But...

It completely ignores the fact that most people could do jobs such as accountancy/banking/most financial tasks if (1) they were given the chance, without having to fit a certain artificial set of standards; (2) they could cope with the vacuous, soul-sucking tedium of it.

Your wages represent a lot more things than just 'how difficult' your job is, not least a conscious life choice on what is important and what isn't. Ask anyone who does a public sector job.