When the Rich Get Even Richer
A series of letters written in response to the "Why Decry Wealth" article published in the NYT two days ago: January 26, 2000 When the Rich Get Even Richer __ To the Editor: W. Michael Cox and Richard Alm ask, "Why Decry the Wealth Gap?" (Op-Ed, Jan. 24). First, inequality is correlated with political instability, one of the strongest findings of cross-national research. Second, inequality is correlated with violent crime. Third, economic inequality is correlated with reduced life expectancy, shown by a large and growing body of public health research. A fourth reason? Simple justice. There is no moral justification for chief executives' being paid hundreds of times more than ordinary employees. Social policies that reduce inequality, like progressive taxation and living wages, should be strengthened and expanded for the health and well-being of those not at the top of the pyramid. RICHARD HUTCHINSON Ogden, Utah, Jan. 24, 2000 The writer is an assistant professor of sociology, Weber State University. * To the Editor: Re "Why Decry the Wealth Gap?" (Op-Ed, Jan. 24): Americans need to make a public choice about the standard of living that we believe the least among us should enjoy. We should be able to reach a consensus -- rough and fractious, to be sure -- on minimal acceptable levels for housing, nutrition, health care, education and other essentials. Most of us will live well above those basic standards, and that likely reflects personal qualities and good fortune rather than injustice. We can also pursue voluntary actions and public policies to make sure that our neighbors remain part of the community by not dropping below those minimal levels. NEIL J. SULLIVAN New York, Jan. 24, 2000 The writer is a professor of public affairs at Baruch College, CUNY. * To the Editor: W. Michael Cox and Richard Alm (Op-Ed, Jan. 24) assert that artificial efforts to curb inequality do more harm than good and that Americans ought to care more about growth than inequality. But this overlooks the fact that people of wealth and privilege are in a position to pass great advantages on to their children, while the children of the poor, lacking in resources, fall further behind. Would Mr. Cox and Mr. Alm consider Social Security an "artificial" attempt to curb inequality? It is one of America's most successful and popular programs. Do they think more good would be done by eliminating it? One by-product of economic inequality is its debilitating effect on social cohesion. Studies show that states and nations with great inequality often have reduced levels of social involvement and trust. These, in turn, are correlated with higher rates of illness and death. GERALD KLOBY Upper Montclair, N.J., Jan. 24, 2000 The writer is coordinator of the Institute for Community Studies, Montclair State University. _ Home | Site Index | Site Search | Forums | Archives | Marketplace Quick News | Page One Plus | International | National/N.Y. | Business | Technology | Science | Sports | Weather | Editorial | Op-Ed | Arts | Automobiles | Books | Diversions | Job Market | Real Estate | Travel Help/Feedback | Classifieds | Services | New York Today Copyright 2000 The New York Times Company [pixel.gif] [pixel.gif]
Re: When the Rich Get Even Richer
If anyone has any references on the relationship between inequality and 'social dysfunction' in the USA (and Australia?), I would be most grateful. Also the dynamic relationship between inequality and growth. I know the list has touched on the latter before, but my filing system is not the best! In case you haven't guessed, it is research grant application time here Down Under! Thanks in anticipation. Martin Watts Stephen E Philion wrote: A series of letters written in response to the "Why Decry Wealth" article published in the NYT two days ago: January 26, 2000 When the Rich Get Even Richer __ To the Editor: W. Michael Cox and Richard Alm ask, "Why Decry the Wealth Gap?" (Op-Ed, Jan. 24). First, inequality is correlated with political instability, one of the strongest findings of cross-national research. Second, inequality is correlated with violent crime. Third, economic inequality is correlated with reduced life expectancy, shown by a large and growing body of public health research. A fourth reason? Simple justice. There is no moral justification for chief executives' being paid hundreds of times more than ordinary employees. Social policies that reduce inequality, like progressive taxation and living wages, should be strengthened and expanded for the health and well-being of those not at the top of the pyramid. RICHARD HUTCHINSON Ogden, Utah, Jan. 24, 2000 The writer is an assistant professor of sociology, Weber State University. * To the Editor: Re "Why Decry the Wealth Gap?" (Op-Ed, Jan. 24): Americans need to make a public choice about the standard of living that we believe the least among us should enjoy. We should be able to reach a consensus -- rough and fractious, to be sure -- on minimal acceptable levels for housing, nutrition, health care, education and other essentials. Most of us will live well above those basic standards, and that likely reflects personal qualities and good fortune rather than injustice. We can also pursue voluntary actions and public policies to make sure that our neighbors remain part of the community by not dropping below those minimal levels. NEIL J. SULLIVAN New York, Jan. 24, 2000 The writer is a professor of public affairs at Baruch College, CUNY. * To the Editor: W. Michael Cox and Richard Alm (Op-Ed, Jan. 24) assert that artificial efforts to curb inequality do more harm than good and that Americans ought to care more about growth than inequality. But this overlooks the fact that people of wealth and privilege are in a position to pass great advantages on to their children, while the children of the poor, lacking in resources, fall further behind. Would Mr. Cox and Mr. Alm consider Social Security an "artificial" attempt to curb inequality? It is one of America's most successful and popular programs. Do they think more good would be done by eliminating it? One by-product of economic inequality is its debilitating effect on social cohesion. Studies show that states and nations with great inequality often have reduced levels of social involvement and trust. These, in turn, are correlated with higher rates of illness and death. GERALD KLOBY Upper Montclair, N.J., Jan. 24, 2000 The writer is coordinator of the Institute for Community Studies, Montclair State University. _ Home | Site Index | Site Search | Forums | Archives | Marketplace Quick News | Page One Plus | International | National/N.Y. | Business | Technology | Science | Sports | Weather | Editorial | Op-Ed | Arts | Automobiles | Books | Diversions | Job Market | Real Estate | Travel Help/Feedback | Classifieds | Services | New York Today Copyright 2000 The New York Times Company [pixel.gif] [pixel.gif] -- Martin Watts Centre of Full Employment and Equity (CofFEE) Department of Economics University of Newcastle New South Wales 2308 Australia Email: [EMAIL PROTECTED] Office: (61) 2 4921-5069 (Phone) Office: (61) 2 4921-6919 (Fax) Home: (61) 2 4981-8124 (Fax) Home: (61) 2 4982-9158 (Phone)
Re: Re: Re: When the Rich Get Even Richer
Michael, Many thanks. Martin Michael Perelman wrote: Martin, here are a couple of sections from my new book Transcending the Economy: On the Potential of Passionate Labor the Wastes of the Market, which is supposed to appear in a couple of months. == Inequality and Growth The study of Alesina and Perotti, covering a sample of 71 countries for the period 1960-85 confirms the negative association between inequality and economic growth (Alesina and Perotti 1996). Derek Bok, who should know about such matters from the vantage point of his previous experience as president of Harvard University, observed: ##The ultimate reason why we cannot ignore unjustified wealth is that it weakens the public's faith in the fairness of the economic system. Such faith is essential if we are to maintain support for the social order and inspire individuals to observe the laws, undertake the duties of citizenship, and extend the minimum of trust toward institutions necessary for communities to prosper. [Bok 1993, p. 231] Samuel Bowles and Herbert Gintis, two prolific graduates of Harvard's doctoral program in economics, offered a few examples of how inequality makes society work less well, noting: ##Inequality fosters conflicts ranging from lack of trust in exchange relationships and incentive problems in the workplace to class warfare and regional clashes. These conflicts are costly to police. Also, they often preclude the cooperation needed for low-cost solutions to coordination problems. Since states in highly unequal societies are often incapable of or have little incentive to solve coordination problems, the result is not only the proliferation of market failures in the private economy, but a reduced capacity to attenuate these failures through public policy. [Bowles and Gintis 1995, p. 409] Bowles and Gintis expanded their analysis of the costs of inequality even further, writing: ##Enforcement activities in the private sector may also be counted as costs of reproducing unequal institutions. Enforcement costs of inequality may thus take the form of high levels of expenditure on work supervision, security personnel, police, prison guards, and the like. Indeed, one might count unemployment itself as one of the enforcement costs of inequality, since the threat of job loss may be necessary to discipline labor in a low-wage economy In the United States in 1987, for example, the above categories of "guard labor" constituted over a quarter of the labor force, and the rate of growth of guard labor substantially outstripped the rate of growth of the labor force in the previous two decades. [Bowles and Gintis 1995, p. 410] A host of recent studies has borne out Tawney's assertion that a more unequal distribution of income causes the economy to grow more slowly (Alesina and Rodrik 1994, p. 485; Alesina and Perotti 1996; Persson and Tabellini 1994). One study estimated that a reduction in inequality from one standard deviation above the mean to one standard deviation below the mean would increase the long-term growth rate by approximately 1.3 percent per annum; however, the measure may be biased toward zero. Using a different technique, the increase would be 2.5 percent (Clarke 1995, p. 423). While a change of a little over a percentage point might not seem very significant, such differences in growth rates compounded over a couple of decades result in a gap in the level of incomes. For example, if in 1960 the Republic of Korea had Brazil's level of inequality, Korean per-capita income in 1985 would have been 15 percent lower, representing a loss of about two years' growth (Birdsall, Ross, and Sabot 1995, p. 496). To my knowledge, the existence of this weak spot in the theory of trickle-down economics has not entered into public debates about inequality. Instead, the bulk of the economics profession echoes the virtues of trickle-down economics, adding that the inordinate rewards that the fortunate few can enjoy will spur the rest to emulate them. For example, Finis Welch, who gave the prestigious Richard T. Ely lecture at the 1999 meeting of the American Economic Association entitled his talk, "In Defense of Inequality." Welch proclaimed: ##I believe inequality is an economic "good" that has received too much bad press Wages play many roles in our economy; along with time worked, they determine labor income, but they also signal relative scarcity and abundance, and with malleable skills, wages provide incentives to render the services that are most highly valued Increasing dispersion can offer increased opportunities for specialization and increased opportunities to mesh skills and activities. [Welch 1999, pp. 1 and 15] == Social Problems as Symptoms of Inequality Earlier, I discussed the inordinate magnitude of the economic losses due to crime, especially to drugs. At the present time, cocaine seems
Re: Re: Re: When the Rich Get Even Richer
Michael, if it is not too inconvenient,please would you send me the full references for those publications. Thanks. Martin Michael Perelman wrote: Martin, here are a couple of sections from my new book Transcending the Economy: On the Potential of Passionate Labor the Wastes of the Market, which is supposed to appear in a couple of months. == Inequality and Growth The study of Alesina and Perotti, covering a sample of 71 countries for the period 1960-85 confirms the negative association between inequality and economic growth (Alesina and Perotti 1996). Derek Bok, who should know about such matters from the vantage point of his previous experience as president of Harvard University, observed: ##The ultimate reason why we cannot ignore unjustified wealth is that it weakens the public's faith in the fairness of the economic system. Such faith is essential if we are to maintain support for the social order and inspire individuals to observe the laws, undertake the duties of citizenship, and extend the minimum of trust toward institutions necessary for communities to prosper. [Bok 1993, p. 231] Samuel Bowles and Herbert Gintis, two prolific graduates of Harvard's doctoral program in economics, offered a few examples of how inequality makes society work less well, noting: ##Inequality fosters conflicts ranging from lack of trust in exchange relationships and incentive problems in the workplace to class warfare and regional clashes. These conflicts are costly to police. Also, they often preclude the cooperation needed for low-cost solutions to coordination problems. Since states in highly unequal societies are often incapable of or have little incentive to solve coordination problems, the result is not only the proliferation of market failures in the private economy, but a reduced capacity to attenuate these failures through public policy. [Bowles and Gintis 1995, p. 409] Bowles and Gintis expanded their analysis of the costs of inequality even further, writing: ##Enforcement activities in the private sector may also be counted as costs of reproducing unequal institutions. Enforcement costs of inequality may thus take the form of high levels of expenditure on work supervision, security personnel, police, prison guards, and the like. Indeed, one might count unemployment itself as one of the enforcement costs of inequality, since the threat of job loss may be necessary to discipline labor in a low-wage economy In the United States in 1987, for example, the above categories of "guard labor" constituted over a quarter of the labor force, and the rate of growth of guard labor substantially outstripped the rate of growth of the labor force in the previous two decades. [Bowles and Gintis 1995, p. 410] A host of recent studies has borne out Tawney's assertion that a more unequal distribution of income causes the economy to grow more slowly (Alesina and Rodrik 1994, p. 485; Alesina and Perotti 1996; Persson and Tabellini 1994). One study estimated that a reduction in inequality from one standard deviation above the mean to one standard deviation below the mean would increase the long-term growth rate by approximately 1.3 percent per annum; however, the measure may be biased toward zero. Using a different technique, the increase would be 2.5 percent (Clarke 1995, p. 423). While a change of a little over a percentage point might not seem very significant, such differences in growth rates compounded over a couple of decades result in a gap in the level of incomes. For example, if in 1960 the Republic of Korea had Brazil's level of inequality, Korean per-capita income in 1985 would have been 15 percent lower, representing a loss of about two years' growth (Birdsall, Ross, and Sabot 1995, p. 496). To my knowledge, the existence of this weak spot in the theory of trickle-down economics has not entered into public debates about inequality. Instead, the bulk of the economics profession echoes the virtues of trickle-down economics, adding that the inordinate rewards that the fortunate few can enjoy will spur the rest to emulate them. For example, Finis Welch, who gave the prestigious Richard T. Ely lecture at the 1999 meeting of the American Economic Association entitled his talk, "In Defense of Inequality." Welch proclaimed: ##I believe inequality is an economic "good" that has received too much bad press Wages play many roles in our economy; along with time worked, they determine labor income, but they also signal relative scarcity and abundance, and with malleable skills, wages provide incentives to render the services that are most highly valued Increasing dispersion can offer increased opportunities for specialization and increased opportunities to mesh skills and activities. [Welch 1999, pp. 1 and 15] == Social Problems as Symptoms of Inequality Earlier, I discussed the inordinate magnitude
Re: Re: When the Rich Get Even Richer
Martin: There is certainly material in the health inequality literature. You might take a look at a look at several articles on the subject in The American Journal of Public Health, September 1997 (Vol 87.#9), especially the article by Ichiro Kawachi et al, on "Social Capital, Income Inequality, and Mortality." Good luck. Joel Blau Martin Watts wrote: If anyone has any references on the relationship between inequality and 'social dysfunction' in the USA (and Australia?), I would be most grateful. Also the dynamic relationship between inequality and growth. I know the list has touched on the latter before, but my filing system is not the best! In case you haven't guessed, it is research grant application time here Down Under! Thanks in anticipation. Martin Watts
Re: Re: Re: When the Rich Get Even Richer
Here is the abstract of the article. Also, be sure to check out Richard Wilkenson's book. Abstracts of Journal Articles Social Capital, Income Inequality,and Mortality I. Kawachi, B.P. Kennedy, K. Lochener, D. Prothrow-Stith American Journal of Public Health,Vol. 87. No. 9:1491-1498, September 1997 Objectives. Recent studies have demonstrated that income inequality is related to mortality rates. It was hypothesized, in this study, that income inequality is related to reduction in social cohesion and that disinvestment in social capital is in turn associated with increased mortality. Methods. In this cross-sectional ecologic study based on data from 39 states, social capital was measured by weighted responses to two items from the General Social Survey: per capita density of membership in voluntary groups in each state and level of social trust, as gauged by the proportion of respondents in each state who believed that people could be trusted. Age-standardized total and cause-specific mortality ram in 1990 were for each state. Results. Income inequality was strongly correlated with both per capita group membership (r = -.46) and lack of social trust (r = .76). In turn, both social trust and group membership were associated with total mortality, as well as rates of death from coronary heart disease, malignant neoplasms, and infant mortality. Conclusions. These data support the notion that income inequality leads to in mortality via disinvestment in social capital. Publications List: Ichiro Kawachi, M.D., Ph.D. and Bruce Kennedy, Ed.D. Joel Blau wrote: Martin: There is certainly material in the health inequality literature. You might take a look at a look at several articles on the subject in The American Journal of Public Health, September 1997 (Vol 87.#9), especially the article by Ichiro Kawachi et al, on "Social Capital, Income Inequality, and Mortality." Good luck. Joel Blau Martin Watts wrote: If anyone has any references on the relationship between inequality and 'social dysfunction' in the USA (and Australia?), I would be most grateful. Also the dynamic relationship between inequality and growth. I know the list has touched on the latter before, but my filing system is not the best! In case you haven't guessed, it is research grant application time here Down Under! Thanks in anticipation. Martin Watts -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
