Pros of equal income

With everyone in a community making equal salaries:

Ambition would be driven by a more honorable result than monetary gain. The job should be its own reward. It would prevent those from rising to the top whose primary motive is greed instead of a genuine will to help others.

The individuals in the community would all have more comparable financial problems. Therefore, they would all be working towards comparable financial solutions.

Money can equate to freedom. Shouldn’t we all possess the same amount of freedom?

In general, it promotes equality in more of a sense than just finance. Equality leads to unification. [equality vs. class distinction]

Since the quantity of money is finite, the more money a person or group has, the less everyone else has.

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24 thoughts on “Pros of equal income

  1. While the termination of poverty may sound like a good idea, the means of which equal income intends to do away with it may very well stifle ingenuity and imagination along with it. For example, if someone who invested 8 years of their lives and countless dollars into becoming a Doctor was paid the equivalent of a garbage man despite his expertise, what would keep someone from aiming lower rather than higher? Man’s nature to strive for something better, something superior to his present circumstances, and daily life has allowed us to evolve from simple thinkers to masters of our world.

  2. Thank you for responding to my poorly worded notes. I didn’t expect anyone to find this post, and I had mostly forgotten about it myself. Now I think I’d like to rewrite and repost it.

    I also believe in free education, so in my ideal society no one would need to invest “countless dollars” in school. Sweden pulls it off fairly well, I hear.

    Would the absence of monetary incentive really stifle ingenuity and imagination? How many artists, musicians, and poets make decent money from their work? Most make little to nothing, yet they keep at their creativity for the sake of enjoyment and self-expression. I’m one of them.

    Do you honestly think money is and should be people’s motivation for accomplishment? What about genuine ambition? What about pride and prestige? What about wanting to help people and to make the world a better place? Are these not motives all too often stifled by greed and the lack of appropriate funding and economic models that greed causes?

    As the gap between rich and poor continues to grow, it’s evident that current systems are failing the population at large. The most recent and most comprehensive study ever of the world’s distribution of wealth claims that the richest 2% own more than half of all the world’s money and assets. The more those at the top take for themselves, the less there is for everyone else. Money is a shared resource. But it’s shared with vast disproportion.

    In my opinion, the only way to conquer greed and its devastating effects on society is to eliminate it as an incentive.

  3. The New York Times published an article a few days back entitled Craigslist Meets the Capitalists, which exemplifies the socially conscious versus the money minded:

    Jim Buckmaster, the chief executive of Craigslist, caused lots of head-scratching Thursday as he tried to explain to a bunch of Wall Street types why his company is not interested in “monetizing” his ridiculously popular Web operation. Appearing at the UBS global media conference in New York, Mr. Buckmaster took questions from the bemused audience, which apparently could not get its collective mind around the notion that Craigslist exists to help Web users find jobs, cars, apartments and dates — and not so much to make money.

    Mr. Buckmaster could make an incredible amount of money from Craigslist, but he chooses not to. Imagine that. There’s someone running a successful business whose bottom line isn’t maximizing profit.

    The article continues:

    How about running AdSense ads from Google? Craigslist has considered that, Mr. Buckmaster said. They even crunched the numbers, which were “quite staggering.” But users haven’t expressed an interest in seeing ads, so it is not going to happen.

    I feel simultaneously saddened and hopeful that altruism is a revolutionary business concept.

  4. Now I’m simply leaving notes for myself before rewriting this post.

    Last month Rolling Stone published a six-page article by Paul Krugman detailing the increasing disparity between economic classes in the United States.

    Wal-Mart’s chairmain is paid over 1,250 times as much money as individual employees in the lower echelon.

    Today, Wal-Mart is America’s largest corporation, with 1.3 million employees. H. Lee Scott, its chairman, is paid almost $23 million. […] On average, Wal-Mart’s non-supervisory employees are paid $18,000 a year. […] And Wal-Mart is notorious both for how few of its workers receive health benefits and for the stinginess of those scarce benefits.

    A vivid illustration:

    The widening gulf between workers and executives is part of a stunning increase in inequality throughout the U.S. economy during the past thirty years. To get a sense of just how dramatic that shift has been, imagine a line of 1,000 people who represent the entire population of America. They are standing in ascending order of income, with the poorest person on the left and the richest person on the right. And their height is proportional to their income — the richer they are, the taller they are.

    Start with 1973. If you assume that a height of six feet represents the average income in that year, the person on the far left side of the line — representing those Americans living in extreme poverty — is only sixteen inches tall. By the time you get to the guy at the extreme right, he towers over the line at more than 113 feet.

    Now take 2005. The average height has grown from six feet to eight feet, reflecting the modest growth in average incomes over the past generation. And the poorest people on the left side of the line have grown at about the same rate as those near the middle — the gap between the middle class and the poor, in other words, hasn’t changed. But people to the right must have been taking some kind of extreme steroids: The guy at the end of the line is now 560 feet tall, almost five times taller than his 1973 counterpart.

    A “pro-greed ideology”:

    It’s no coincidence that ringing endorsements of greed began to be heard at the same time that the actual incomes of America’s rich began to soar. In part, the new pro-greed ideology was a way of rationalizing what was already happening. But it was also, to an important extent, a cause of the phenomenon. In the past thirty years, right-wing foundations have devoted enormous resources to promoting this agenda, building a far-reaching network of think tanks, media outlets and conservative scholars to legitimize higher levels of inequality. “On average, corporate America pays its most important leaders like bureaucrats,” the Harvard Business Review lamented in 1990, calling for higher pay for top executives. “Is it any wonder then that so many CEOs act like bureaucrats?”

  5. Jason, interesting post.
    I don’t think there’s much debate that an emphasis on equality can lead to incentive problems and that there might be a tradeoff here. (this is a very old debate: see Ignatieff: the needs of strangers, esp. the chapter: market vs the republic).
    Essentially: more equal but smaller pie vs larger but more unequally distributed pie. the argument that the free market would take is: even in an unequal sitaution the poor are *absolutely* better off than what they would be in the equal situation.

    anyway, I think the argument for equality is over. the left is ..sigh..finished.

    but this goes back, in some sense, to the discussion of different types of freedom. To support equality (or even fairness) of *outcomes* necessarily implies some constraints on behaviour (taxation or social norms, for example). Whereas the dominat idea of capitalism is freedom from constraints: negative liberty.
    The only freedom that is important in this case is the *process*…the freedom to choose..freedom is NOT related to what we chose (one would have to be a Thomist for that!)

    there is some interesting data on inequalities in David Harvey’s neo-liberalism if you’re interested or Ray kiely’s globalisation/anti-globalisation (both of which are accessible, non-technical books)

  6. Thank you for your comments, Khalid. This is no easy subject. But I feel optimistic that there can be a solution.

    More notes:

    The mentality of greed

    The majority (79%) of freshmen in 1970 had a personal objective of “developing a meaningful philosophy of life.” By 2005, 75% said their primary objective was “being very well off financially.”

    Source: U.S. Census Bureau’s “Statistical Abstract of the United States: 2007” (bookstore.gpo.gov)

    The role of business

    A society and its business are inextricably linked. A society cannot be truly democratic (or egalitarian for that matter) if the dominant business model isn’t also democratic. Class segregation begins at the workplace.

    See my post, A nation is not a business, for more on this topic.

    Balancing idealism and realism

    Equal income is extreme and unrealistic. Rather, a smaller gap between economic classes is desirable. This post needs to be reframed.

  7. Jason, class segregation begins with education and housing !
    work only re-inforces it. But even before that is the idea that everyhting can be measured against the standard of living…Arendt was right: if labour and consumption are two sides of the same coin then we are living in a consumer/labouring society. ..i.e we evaluate everyhting in terms of labour (even leisure is an “industry” and evaluated in terms of its opportunity cost….)

    I’m not sure if the solution is more equality…I’m much more in line with the older left tradition (in this country) ..people like Raymond Williams, E.P., William Morris.. who had much more interesting things to say. the left was co-opted when it started to argue for equal pay..this is arguing from *within* the dominant bourgeois mentality and system. The more radical approach is to question the absolute hold of market rhetoric and market practices and evaluation.

    but I agree with you on the tends…as one of your presidents once said: time is money..and Marx, prophetic as ever , would say: Man is nothing, time is everything…

  8. Class segregation might very well be a chicken and egg problem. When I said it begins at the workplace, I was referring specifically to economic classes, holding up business models as socioeconomic microcosms. Housing and education are largely matters of funding and affordability that could be salvaged by altruistic economics.

    Income, rights, etc.—they all go hand in hand. Wealthy enterprises (RIAA) can bankrupt small companies (peer-to-peer software firms) merely by suing them. Innocent or guilty, the small businesses (or individuals) don’t stand a chance because they can’t afford the legal proceedings. To an extent, money can buy freedom, rights, and justice. If one is wealthy enough, one can even have undue influence over the very definitions and executions of those principles via lobbying, campaign funding, and other political or social means. Wealth can buy effectual avenues of greed or special interest in nearly any domain.

  9. No, they don’t all go hand in hand . some of the major conflicts in philosophy and of politics are about the competing claims of them. For example, equality of income may mean taxes and a restriction on one’s freedom or basic rights to pursue one’s own interests. And the conflicts between utility and capabilities are equally profound (see Sen’s work, Ethics and Economics).

    Yep, economic classes depend on educational background and education attainment since they determine, to a large extent, job opportunities.

    “altruistic economics” ? I don’t think so. I could go on if you want..my Ph.D was in economics, but maybe another time.

    Keep well,

    K.

  10. Knowing you have a Ph.D. in economics, I’d love for you to go on. My understanding is limited to observation, selective facts, and a general comprehension of fundamentals.

    They way I see it, equal wealth means equal opportunities. Whatever the restrictions of an egalitarian society, they’re the same for everyone, and that’s preferable to financial favoritism.

    Sweden is an excellent example of a society with a relatively small class gap, from what I understand. And they’re one of only two nations (the other is Finland) that offer free higher education. (90% of Swedes are also atheists, incidentally. Sounds like an ideal research candidate for many of my interests.)

  11. Er..well..you asked for it! :)
    the work on “altruistic economics” is very recent. The fundamental problem is that economics works under the assuptions of methodological individualism: we are guided by our sel-interest (that is not the same as “selfishness”). So, “altruism” is possible, but only becuase we want to be so, only becuase it makes us happier. From this perspective, rights are a problem. Rights, too, are important because they lead to happiness.

    What I’m saying is that built into this utilitarian approach is “consequentialism”:
    1.we look at actions in terms of their consequences.
    2.We evaluate those consequences in terms of utility
    3. We add up those utiities in a particular way.
    1-3 gives us the std theoretical underpinnings of econ.

    Economics over the last 70 years has not been concerned about ethics and welfare economics -normative economics-is barely allowable . the idea being that everyone pursuing their own self -interest leads to the “best” outcome (which is called Pareto efficient). Now, here’s the thing: that sel-interst need not include altruism. Secondly, as long as the “process” is fair the std theory says nothing about the DISTRIBUTION of utilities..the share of the pie as a result of all the transactions. So, inequality is perfectly consistent with the workings of the mkst system.

    To argue for equality is to argue for REDISTRIBUTION and to do this on economic grounds requires some ADDITIONAL assumptions. One also has to add that a lot of economics is concerend about incentives and inter-temporal considerations: so redistributive policies (a concern for equality) can effect those i.e long term growth prospects. In development thinking it has been argued in the past that inequality actaully leads to igher growth (in the long run) and possibly greater equality in the long run (Kuznets) [the former point is related to savings and investment decisions and applies to advanced ecoomies as well: think Regan, think Thatcher].

    Yes, the scandanavian countries have high taxes but there are big questions about the sustainability of the welfare state in the next century. Also, there was an intriguing article by DavidGoodhart that suggests that as societies become more diverse they will be less willing to pay taxes to “others” . So, Sweden might have worked because of its homogeneity but now…

    This is backed up by some work that I’m familair with . (there’s an NBER paper on it) but also the public economics lit. talks about these isues (see Baqir and Alessina and their work on local public goods). It is also fair ot say that over the last ten years the move has been to less direct involvement in the public sector and so the “swedish model” may be on the wane.

  12. Jason, by co-incidence (if such a thing exists) I was listening to the radio and who should be on it but our man Dawkins! I’ve got to say-and maybe I’m being biased here-but apart from 2 loonies who phoned in most had very profound points .Two callers in particular-both who happened to be over 75-made good points.

    1. Just as I am ‘god’ to an ant because they have limited abilites to perceive our world might not it be possible that there are other beings that are ‘gods’ to us? Dawkins was a bit stumped by this question and rightly recognized the humility in such a perspective . No, he couldn’t rule it out, just as he couldn’t rule out pink unicorns was his reply. But here he seemed to be saying, then, that “anything is possible”.

    2. the question of experience: if someone says thay have an experience of the divine [alternatively, if people have throughout history used words and rituals to say somethigng about the divine] then why isn’t that a valid experience. Dawkins seemed (to me ) to be suggesting something that depends on the PRIOR assumption that only scientific experience is valid (earlier , he had scoffed at circular reasoning but isn’t this such an example?).

    This really goes back to Kant, I think. How can one from within the realm of appearance put limits on appearance? Surely one would have to be ‘outside’ the frame of glasses, as it were, to say so?

  13. On economics:

    I hear the gist of what you’re saying. But a lot of it’s over my head, I’m afraid. I’m not used to thinking in economic terms (though I found an extensive online primer that I plan to read this week). So let me try to simplify. What would happen if a country introduced a policy that established a maximum income. So instead of Mr. CEO making 20 million a year, he’d make $500,000 annually. The money left over would then be distributed, for the sake of argument, evenly among the remaining employees. All other things being equal, what effects would a maximum income policy have on the economy? It seems there would be greater market diversity with many people spending the money that would otherwise have been spent by only one person.

    As far as utilitarian distribution is concerned, I’m sure there’d be little disagreement that housing, education, food, and health care should be among the priorities of public welfare, and that welfare itself should be a priority. I’d call that an altruistic system because, although interests grow diverse in other areas, basic survival and well-being are universal needs. These needs aren’t being met in the system the U.S. has now. I’d pay higher taxes for a better welfare system. And I’d have more money to spend on taxes if there was a maximum income!

    It might make more sense to significantly raise taxes for wealthy businesses and individuals. Either way, I don’t see the need for anyone to make millions when there’s still so much poverty. That last statement might best exemplify the ‘altruistic’ economic attitude I hold.

    On God:

    1. Yes, anything is possible. But possibilities tell us little about reality. They can only offer questions.

    2. It’s one thing to have an experience. It’s another to interpret its meaning. I had an incredible experience on ‘magic mushrooms’ out in an Arizona desert when I was a teenager. I called the event “spiritual” at the time because I had no other word to describe it. The effects of the drug conjured ideas and sensations that went beyond physical explanation, or so I thought. I see in retrospect that my spiritual notion was merely an inner experience misinterpreted by a mind eager to find evidence of spirit (and distorted by chemicals, of course).

    How can anyone know if an experience should be attributed to God or any other spiritual idea? How does one differentiate between a true experience of God and an experience that’s erroneously attributed to God? Is it possible that thousands (millions? billions?) have claimed divine experiences because that’s how they wanted to interpret them?

  14. Jason, you make an interesting point. I think the answer to that would be:
    1. Does that effect a person’s incentives: why work so hard or invest or come up with a creative idea if you’re going to be taxed or a limit is going to be imposed.
    2. If it is the rich who have a higher propensity to save (i.e they save more out of every dollar) then limiting their income may mean that overall savings in the economy goes down (for theoretical purposes, imagine the 19, 500,000 is distrbuted so that 19 million people each get a dollar. If these poor people use that to only consume (say on food) and not save then overall savings go down.
    3. Tax revenues: some might (and have) argued that lower taxes on the rich (the CEO in this example) actually increases tax revenues.

    so, there are arguments about the ‘distortionary’ nature of taxes.

    But the neo-liberals would also say that this is a matter of a serious infingement on their freedom.

    I think you’re right…a lot of the functioning of the welfare system was down to a public spiriit ethos and ‘altruism’ but increasingly that is being dismantled under neo-liberalism.

    I hear what you’re saying but again, there are different arguments about welfare and the obligations of the state. Is it to equal rights (say, the Indian constitution guarantees the right to education); is it equal income so that everyone can afford education or is it equal opportunities (supply) in terms of actually getting an education. And what if a poor person(say) gets a lot more utility from a public service than a not-so-poor person? Should the state give more weight to the former’s utility claim? These are tricky questions. [The clearest reading on some of these issues is Sen’s Development as freedom or his chapter: Goods and People in one of his books.]. If you’r einterested in Public economics Stiglitz’s book is a std text but N. Barr, also has a good one, Welfare Economics (more in line with the British system though)

    Magic mushrooms. sounds interesting. Have you written about that experience anywhere? Huxley did some similair experiments and wrote some interesting stuff (‘Doors of perception’…from Blake)

    If what you say is possible then all I’m saying is that we have to question everything. Radical doubt leads us where?

  15. 1. This goes back to my original comment about monetary incentive being far less important (and even destructive because it caters to greed) than other incentives.

    2. I can’t say I see the benefit of wealthy individuals’ savings. It seems that a million people each spending a dollar creates a more dynamic economy than one person saving a million dollars.

    3. How would lower taxes on the rich increase tax revenues?

    There’s a lot of tricky details to sort out, I agree. Thank you for helping me gain a better understanding and pointing me in the direction of some appropriate reading material.

    I did write about my Arizona mushroom experience in an old, hand-written journal somewhere. I’ll have to find it.

    Radical doubt leads us to the answers, I’d say. It makes sense to me to begin with a blank slate and gradually add truths only after each one passes some kind of test (e.g. falsifiability). The opposite would be to consider all possibilities (which is impossible in itself—imagination poses a limit) and then subtract one at a time after each idea is ruled out, leaving the truth, of course. The latter method is unfeasible. It follows, then, that it’s better to doubt something until it’s proven true than it is to believe something until it’s proven false.

  16. Jason, i agree with you when it comes to greed. I hope you realise I’m only giving you the arguments , noyt endorsing them.

    1. someone might say that if the incentives to work are reduced there will be overall less income in the economy and though the poorer in sucha society may be relatively more equal they will be so at a lower level. This is Smith’s point: greater inequality can be consistent with the poor being absolutely better off than they would have been in an equal (but low-income) situation.

    2. Dynamic economy depends on people spending money..sure..but the real dynamism of capitalism is people saving and then investing to *expand* production. It’s like this: imagine people consuming all the food produced on the land. Well, all well and good. But , eventually, grwoth can only come if you exapmd the productive capacity of the land (through technology, say). That requires investment which requires savings.

    3. Tax revenue =tax rate X income.
    Example: tax rate =10% , income = 30; tax revenue = 3.
    It is argues that if one reduces the tax rate then people will work harder (work incentives) or savings will go up and they will invest more , so output in the next period will go up. So, sa result, income will go up.
    Say it’s :
    tax rate =5%, income =100..therefore tax revenue = %
    is. tax revenues have gone up even though the tax rate has gone down. It’s called the Laffer curve and was very popular with trickle-down conomists and people liek reagana ndThatcher

    Phew! Now, where are my mushrooms?:)

  17. “I hope you realise I’m only giving you the arguments, not endorsing them”

    I do. You’re a great devil’s advocate ;) I’m going to let your points sink in for a while before I get back to this. I started watching the documentary, WAL-MART: The High Cost of Low Price, last night. Wal-mart’s a perfect example of everything that’s wrong on the business side of the economy.

    I also want to research Scandinavian economies, since it seems to me that they’re doing something right. You mentioned their sustainability being questionable, but isn’t the sustainability of most economies equally questionable?

  18. I don’t think i said their economies were unsustainable (if I did, then I was wrong). I said that increasingly there is a growing consensus that the old type of welfare state is not possible (partly bcause of demographics, but partly because there are concernes about the homogeneity of the population: why should I pay *my* taxes if a lebanese immigrant is going to get the benefits). On the ground , I think there is a lot of growing resentment against ‘the other’ because of issues such as these: i.e housing, welfare benefits etc.
    Thirdly, there has been a move in thinking from the state actually supplying the public good (health etc) to people having a diverse range of options.

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  20. The problem with income equality is it would kill the desire to work to your highest potential because if there are two people doing a job and they both know that no matter how much effort they put in they’ll both be paid the same ammount then why work hard when just doing the pay will still be ths same. In short everyone will do just the minimum amount necessary to get by and nothing more. In an income equal society there would be no Edisons, Teslas, Steve Jobs or Bill Gates..no benefit to creating those wonderful inventions because no profit to be made. Everyone should have an equal opportunity to rise as high as one can based on their merit and willingness to work hard but outcome should be entirely based on level of effort and merit.

  21. Jonathan, you’re assuming that the primary motive behind working is personal profit. You’re also assuming that “everyone will do just the minimum amount necessary to get by and nothing more.” I see no evidence for your claims. Einstein did his best work as a meager patent clerk because he was driven by passion, not by personal gain. I prefer a system where people choose their careers based on what’s meaningful and important to them, not based on what’s profitable.

  22. Equality is the fundamental principle of democracy. Unequal income flouts that principle in a very obvious, tangible way. Equal income is a necessary condition of true democracy.

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