Consider a society without a state and without aggression. What factors would determine the ratio between the income level of the highest-earning quintile and the income level of the lowest-earning quintile?
Or to put it another way. If there were two societies, both stateless and free from coercion, one with a ratio of 2:1 and the other with a ratio of 10:1, what other characteristics would we expect to see in those societies?
I’m sorry but why does this matter? Who cares how much income inequality there would or would not be?
Just trying to further my understanding of economics.
Many statists.
Productivity.
Considering the massive chunk of GDP that has been attributable to the finance industry over the past several decades we know a priori that income inequality would drop in a stateless society. Take away the gravy train (the Fed front-running banker cartel) and suddenly you have to actually create something to accumulate wealth! Far more challenging than simply applying more leverage to your position.
Right. The relative productivity of the most productive compared to the least productive. So what factors would cause the top 20% to be ten times as productive as the bottom 20%, as opposed to two times?
I suppose we can consider a society of five individuals. They will not have equal incomes because of the diversity of human beings and the environment. I imagine the richest individual could be vastly richer than the poorest individual if he has an unusual skill/knowledge that is in high demand, like being the only doctor, or if he has unusually favorable environmental conditions, like sitting on a gold mine.
So would it be correct to say that the answer to my question is: the amount of diversity of the environment and the amount of diversity between human beings?
I’m sure it would drop in a stateless society, but I don’t think we can say this is a priori. If I am right that income inequality is determined by diversity, we would have to show/argue that the actual amount of diversity in the world is less then x, where x is that amount of diversity which would make a stateless society just as unequal as our state society is now.
I’m not saying this is a difficult argument to make, only that it must be made for you or I to claim that in a stateless society incomes would be more equal.
Obviously, which individuals comprise the top 20% would change drastically in a stateless society, but that’s not what this discussion is about.
I’m sorry but why does this matter? Who cares how much income inequality there would or would not be?–autolykos
of course, egalitarianism matters.
it has been the misguided rationale for numerous societies throughout history.
In sum, income inequality matters to the majority of global citizens irrespective of the fringe opinion of anachro-capitalists.
Considering the massive chunk of GDP that has been attributable to the finance industry over the past several decades we know a priori that income inequality would drop in a stateless society. Take away the gravy train (the Fed front-running banker cartel) and suddenly you have to actually create something to accumulate wealth! Far more challenging than simply applying more leverage to your position.–threetrees
what is the specific a priori that states income inequality will drop in a stateless society ?!
while ancap society would be economically more productive and profit driven then statist societies doesnt mean that it would be more egalitarian.
I think that’s probably right.
Could you give a representative list thereof?
Sorry but what is there to sum in your post?
Does inequality matter to “the majority of global citizens” inherently? If so, why?
As far as I can tell, you’ve failed to explain anything and are just making bare assertions.
trulib,
i would assert that economies of scale would lead to an increase in the Gini index for a particular society.
Indeed, the nation-states that have the least government or that have seen a decrease in government manipulation in the economy have seen a corresponding increase in both productivity AND inequality.
"The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries. " – Winston Churchill
Could you give a representative list thereof?–autolykos
every socialist nation that ever existed was founded primarily on redistribution of wealth.
Sorry but what is there to sum in your post?–auto
the “sum” is that the majority of the world’s occupants are preoccupied with equality – particularily economic equality.
Does inequality matter to “the majority of global citizens” inherently? If so, why?–auto
jealousy, envy, greed, misguided sense of fairness, et al.
As far as I can tell, you’ve failed to explain anything and are just making bare assertions.–auto
“as far as I can tell” is a bare assertion.
Not only has liberty nothing to do with any other sort of equality, but it is even bound to produce inequality in many respects. – Hayek
rettoper,
I agree with you that income inequality is important to people. I believe the reasons for this are found in evolutionary psychology.
Can you explain what you mean by this a bit more? Leave government out of the picture. What is it about having economies of scale that would cause greater inequality?
Where is the data for the second claim here?
@trulib
In a stateless society, the fact of rigorous competition will mitigate the income potential of the higher earners over time. Yes, they may earn outstanding profits for some X period of time, but not in perpetuity.
Currently, the highest and lowest earners strongly tend to remain members of their particular income groups, likely due in no small measure to government playing favorites and codifying its unequal choices in the law, and also to other government-created barriers to market entry.
In short, the constituency of “the top 20%” would likely be much more dynamic than we see today, imo. (edit: Thus, the notion of who comprises the top 20% AT ANY GIVEN TIME becomes something more important to consider.)
The intuitive argument would be that since the government most often redistributes wealth from the richest to the poorest, a stateless society would have less redistribution and greater inequality of incomes.
However, I would look to the Law of Rent. The lowest incomes in my ideal society would be determined by the profit made by working marginal land with very little investment. That would set an effective wage floor. The upper bound of income would be very high, and the distribution of income would be the product of land value and labor skill. With no redistribution, inequality of incomes would be very large. Additionally, I would expect the inequality to rise as the population rises. Cities multiply the inequality of land value, and rising populations push down the quality of marginal land.
In short, land scarcity increases the inequality of income in a free society.
For example if everyone lives on farmland of equal desirability, they will all make about the same living. If only one person owns a gold mine, he will earn the most. If one person owns a swamp, he will earn the least.
what is the specific a priori that states income inequality will drop in a stateless society ?
The fact that there would no longer be a federal reserve inflating away the purchasing power of the lower and middle-class while the banker class with the first access to newly printed money (which they can spend before its inflationary effects manifest in prices) and accumulating more and more “capital” at the expense of everyone else’s purchasing power? The point is that with sound money (a prerequisite for statelessness) the bankers can’t make the morbid profits they do under today’s regime.
Put another way: it would cut out a big chunk of the population making up the right tail of the bell curve, knowwhatI’msayin?
Don’t get me wrong, I don’t begrudge anybody their profits when they exploit opportunities and I don’t buy into the quasi-Marxist class distinctions people spit vehemently at the moneychangers, I’m just making an observation that the finance sector would shrink, HAS to shrink, under a gold standard, cutting into the earnings of the top payed individuals in our society.
Most big corporations nowadays can only be this big because they are being subsidized and bribe governments for special priviliges, be it intellectual property, laws that hurt smaller businesses et cetera. In a stateless society those option are no longer given and smaller businesses can strive for growth and bigger businesses have to compete with their own and no stolen money. Since personal income is tied to business income I think a stateless society would have more equal income distribution. Another question is if the distribution is still a Pareto distribution.
Can you explain what you mean by this a bit more? Leave government out of the picture. What is it about having economies of scale that would cause greater inequality?–trulib
Despite diseconomies of scale, larger investors, firms, and societies would increase market share irrespective of whether a smaller competitor had a higher growth rate.
A real world example would be Wal-mart and costco. Despite the fact that costco is growing at a faster rate, its net worth is decreasing relative to Wal-mart.
Wal-mart netted $15 billion last year with a 3% growth rate. IN contrast, nearest competitor Costco earned $1.5 billion with a growth rate four times as high – yet this trend will insure that Wal-mart increased its economic strength relative to Costco an average of over $250 million per year.
Where is the data for the second claim here?–trulib
The nation-states with the highest gini index (economic inequality) are among the fastest growing
Note that the BRICs all are growing at faster rates than socialist egalitarian redistributive states in Europe. Take Brazil out of the equation and the graph line is nearly 45 degrees.
in sum, the welfare state that seeks to redistribute resources for motives other than profit (egalitarianism) is unsustainable in competition with profit driven nation-states.
The fact that there would no longer be a federal reserve inflating away the purchasing power of the lower and middle-class while the banker class with the first access to newly printed money (which they can spend before its inflationary effects manifest in prices) and accumulating more and more “capital” at the expense of everyone else’s purchasing power? The point is that with sound money (a prerequisite for statelessness) the bankers can’t make the morbid profits they do under today’s regime.
Put another way: it would cut out a big chunk of the population making up the right tail of the bell curve, knowwhatI’msayin? – threetrees
I agree with you on this strawman argument, however you still havent answered my question of “what a priori states that income inequality will drop within a stateless society?”
while I agree that statist monetary policies may create economic inequalities – doesnt confirm your assertion that profit driven policies will foster economic equality
I’m just making an observation that the finance sector would shrink, HAS to shrink, under a gold standard, cutting into the earnings of the top payed individuals in our society.–threetrees
maybe so, however this assertion in a single sector doesnt guarantee that inequalities will be present or enhanced in other sectors of anarchic society. hence, still no a priori to support your argument.