Let the Good Times Roll! Or, Tonight We're Gonna Party Like It's 1929

[Dauphin]

Hmmm, I think the argument he is trying to use is akin to saying that farmers are going out of business not because the sales price of foods are low but because costs of production are high, and saying this is why so many western farms are unviable without subsidies.

The distorting effects of government tariffs and subsidies therefore also needs to be considered in any argument about poverty and the ability to buy food for the poorest in society.

[Kidlicious]

What a mess. I think he's talking about a situation where there is a shortage. The price would increase to what the last marginal good could be sold for. If most people are poor the price wouldn't increase. There would just be shortages. If most people were rich then poor people would not be able to afford food in a shortage situation.

[Kidlicious]

Regarding the issue of whether someone elses wealth makes you poorer, this is the case with rent in some places. That's because there is housing shortages in some places and there are plenty of people to pay higher rents because they have more income. The economy as a whole doesn't function like that though.

[Kuciwalker]

Originally posted by Rufus T. Firefly
Actually, we don't define it as the bottom X% at all. We define it as the inability to afford a certain bundle of basic goods. That's why the percentage of people living below the poverty line can change.

And we change that bundle of goods as general wealth increases, so that in effect it's always the bottom 10%. When poverty means that you can't afford a PS3, I don't see it as a terribly bad thing.

[Kidlicious]

Originally posted by Kuciwalker


And we change that bundle of goods as general wealth increases, so that in effect it's always the bottom 10%. When poverty means that you can't afford a PS3, I don't see it as a terribly bad thing.

I don't think PS3 is included, but some entertainment expenses are, and should be.

[Vanguard]

I apologize for the slight editing error in my previous post. I have changed a portion of the post to read (changes in bold):

"So in a high inequality economy, the price of a month's food will rise until it is equal to the price a rich person will pay for another ivory back scratcher. The more inequality there is in the economy, the higher this price becomes, until eventually the bottom X% can no longer afford food."




Now replying:

You've taken a loaded word, poverty, defined it to mean "inequal distribution of wealth," then used that as evidence that inequal distribution of wealth is bad. Your entire argument is circular.

In general macroeconomic terms, inequal distribution of wealth is the cause of poverty. The argument is not circular.

When people become rich they control a larger share of the economy. Which mean that more of the economy turns to serve the needs of the rich and less of the economy serves the needs of the poor. So more of the limited economic resources go into making luxury goods and services and less go into basic goods.

Your computation must be slightly corrected (independently of the 1000 times increase of the economic pie that I do not discuss):
The population in 1776 was estimated to 2.5 millions. It has increased to 301 millions in 2006.
Therefore the individual share of the economic pie has increased 8.33 times and not 1000 times, which means that “the poorest person in America should now earn at least” $3,000 a year and not $365,000 worth of stuff. I suppose that there is no doubt that even the poorest American has a standard of living exceeding $3000.

Annual real growth is what I specified. Or if you prefer, Growth per person after accounting for inflation.

Of course, the actual calculation is meaningless. Clearly we have not experienced actual growth of 2% for the past 200+ years. If we had, then no one would be poor.

But that's my point really. Arguments that we should be "increasing the size of the pie" to help the poor are false. Growth at the cost of increasing inequality simply results in an economy which expends a lot of resources on ivory back scratchers.

Or, for those of you who have trouble understanding that "ivory back scratcher" is merely a placeholder for "anything bought by the rich", let's state more explicitly that increasing inequality results in an economy that expends most of its resources on things like spa treatments or elective rhinoplasty or BMW 740s or McMansions.

That being said, you're right to note that an increase in wealth for the top stratum of society does not necessarily create more poverty, obviously.

Well, not necessarily immediately, I suppose. But as a general rule, yes. Eventually an increase in wealth for the top stratum does result in more real poverty, except in a few extreme scenarios.

[Kuciwalker]

In general macroeconomic terms, inequal distribution of wealth i the cause of poverty. The argument is not circular.

When people become rich they control a larger share of the economy. Which mean that more of the economy turns to serve the needs of the rich and less of the economy serves the needs of the poor. So more of the limited economic resources go into making luxury goods and services and less go into basic goods.

Free market economics is not a zero-sum game.

And the definition is circular. As long as you continue to change the definition of poverty to mean "doesn't have everything most people have" you will have "poverty," even if every lives like Bill Gates, just some don't have their own spaceship.

[LordShiva]

Originally posted by Vanguard
When people become rich they control a larger share of the economy.

The size of the economy is not a constant.

[Kuciwalker]

Of course, the actual calculation is meaningless. Clearly we have not experienced actual growth of 2% for the past 200+ years. If we had, then no one would be poor.

The "poor" today live better than 19th century kings.

[Kuciwalker]

If KH invents a nuclear fusion reactor that provides cheap, environmentally friendly electricity, and becomes a multibillionaire off of it, am I worse off?

[Last Conformist]

Originally posted by Kuciwalker
If KH invents a nuclear fusion reactor that provides cheap, environmentally friendly electricity, and becomes a multibillionaire off of it, am I worse off?

Yes; 'Polytubbies will mock you for having pretended to be half as smart as he is. :sadnod:

[DAVOUT]

Well, not necessarily immediately, I suppose. But as a general rule, yes. Eventually an increase in wealth for the top stratum does result in more real poverty, except in a few extreme scenarios.

If you are right, wealthy people are the enemies of the poors. As they generally refuse to give up their unjust fortune, they must be eliminated, physically eliminated by killing, goulag or banishment. The beauty of this perfect solution to reach the end of poverty is that it would last at least one generation before the next round.

[LordShiva]

Originally posted by DAVOUT
If you are right, wealthy people are the enemies of the poors. As they generally refuse to give up their unjust fortune, they must be eliminated, physically eliminated by killing, goulag or banishment.

QFT.

Pol Pot showed us the way to Teh Egalitarian Utopia

[DrSpike]

Originally posted by Vanguard
I apologize for the slight editing error in my previous post. I have changed a portion of the post to read (changes in bold):

"So in a high inequality economy, the price of a month's food will rise until it is equal to the price a rich person will pay for another ivory back scratcher. The more inequality there is in the economy, the higher this price becomes, until eventually the bottom X% can no longer afford food."




Now replying:

You've taken a loaded word, poverty, defined it to mean "inequal distribution of wealth," then used that as evidence that inequal distribution of wealth is bad. Your entire argument is circular.

In general macroeconomic terms, inequal distribution of wealth is the cause of poverty. The argument is not circular.

When people become rich they control a larger share of the economy. Which mean that more of the economy turns to serve the needs of the rich and less of the economy serves the needs of the poor. So more of the limited economic resources go into making luxury goods and services and less go into basic goods.

Your computation must be slightly corrected (independently of the 1000 times increase of the economic pie that I do not discuss):
The population in 1776 was estimated to 2.5 millions. It has increased to 301 millions in 2006.
Therefore the individual share of the economic pie has increased 8.33 times and not 1000 times, which means that “the poorest person in America should now earn at least” $3,000 a year and not $365,000 worth of stuff. I suppose that there is no doubt that even the poorest American has a standard of living exceeding $3000.

Annual real growth is what I specified. Or if you prefer, Growth per person after accounting for inflation.

Of course, the actual calculation is meaningless. Clearly we have not experienced actual growth of 2% for the past 200+ years. If we had, then no one would be poor.

But that's my point really. Arguments that we should be "increasing the size of the pie" to help the poor are false. Growth at the cost of increasing inequality simply results in an economy which expends a lot of resources on ivory back scratchers.

Or, for those of you who have trouble understanding that "ivory back scratcher" is merely a placeholder for "anything bought by the rich", let's state more explicitly that increasing inequality results in an economy that expends most of its resources on things like spa treatments or elective rhinoplasty or BMW 740s or McMansions.

That being said, you're right to note that an increase in wealth for the top stratum of society does not necessarily create more poverty, obviously.

Well, not necessarily immediately, I suppose. But as a general rule, yes. Eventually an increase in wealth for the top stratum does result in more real poverty, except in a few extreme scenarios.

Oh dear.

[pchang]

I would like to start a petition for Vanguard to change his username. It is too jarring for me to see his posts when I associate the name with John Bogle (www.vanguard.com).