Families and Inequality

If economic growth and entreprenurship are culturally driven rather than fiscal policy driven, what implications does that have for tax policy?

Specifically, let's say we "solve" the Socialist Insecurity problem by removing the SS tax cap. Would that have as large a negative impact to entrepreneurship under the Kling hypothesis of entrepreneurship as under, say, the Laffer Curve?

Some very good ideas here.

Worrying about inequality is, I believe, a natural (instinctual) consequence of our primate heritage. But nonetheless, trying to fix inequality is a mistake in modern societies - here is yet another reason why...

Envy is spontaneous - but an undesirable gut feeling we have to learn to over-ride through education. Just like we (rightly) learn to over-ride our natural, spontaneous and instinctive revulsion for people with skin disease and other deformities.

Eventually we will learn to despise politicians who whip-up envy-based class (and race) resentment the same way we now despise politicians who whip-up up other types of hatred.

Why does Kling even bother to discuss problems in detail. His solution is always the same: "There is no solution, anything we do will always make things worse." How completely boring. Not to mention simple-minded.

Kling has no right to criticize government action or any other sort of action until he has something constructive to say.

Kling has no right to criticize government action or any other sort of action until he has something constructive to say.

Saying that government action will make things worse is something constructive, if it's true. Does being "boring" or "simple-minded" to you automatically make something not true? Do you want to turn back women's progress, or make the poor worse off, simply because it's more "exciting."

Don't just do something, stand there.

I only started my own business because my wife was too sick to work a 9-to-5 job reliably (she could put in 8 hours per day, but not the same 8 hours each day).

Without her support and project management, the company would not have had a chance. It helped that her father was a lawyer with his own practice, and she was used to the concept of being in business for yourself. Culture counted.

Taxman, appropriate handle ^_^

I do find it amusing that so many people have trouble with the concept that sometimes the best action to take is no action at all. This is a good choice more often than may seem obvious.

Unfortunately, this whole "doesn't matter what, just do SOMETHING" mentality is still getting us in a lot of trouble.

Your article has been thought provoking for me. It is appears that one of the causes of income disparity (i.e. creating and maintaining strong families) benefits not only the individuals involved, but society as a whole. For example, strong families create an external benefit of providing a good environment for raising productive children. Many other causes of income disparity also benefit not only the individual involved, but society as a whole. (e.g. obtaining the best education one can acquire, working hard, saving for the future.) If this is the case, is it possible to reduce income disparity without also reducing the rewards for engaging in behavior that benefits society and reducing the penalties for engaging in behavior that hurts society? I don't think so, but I would be interested to hear what others think.

I looked for a long term measure of income disparity in a readable form, no such luck.

There are a couple of things going on over the last 25 years, including a continual budget defecit under Republicans, with a conccurent trade deficit and a continual growth in the burden of government under Republican tax and spending policies, not to mention LBJ.

Then there is globalization, but that by itself, according to trade theory should not be a cause of income disparity.

I just do not believe that automation, Kling's basic thesis, can be the most important cause of disparity.

I would be much more inclined to fall back on the old favorite of mine: In the post war period, the private sector, mostly the richest part of it, has continually transferred expenses to government, a sort of welfare for the rich.

We do tend to gravitate toward like minded individuals. That is not going to change. Assuming that our economy continues to be service and knowledge based the divide will continue to grow. The government can and should provide educational opportunity but the choice to take advantage is a personal one that is difficult to influence. If the horse doesn’t see the benefit of taking a drink what more can you do?

Matt wrote: "I would be much more inclined to fall back on the old favorite of mine: In the post war period, the private sector, mostly the richest part of it, has continually transferred expenses to government, a sort of welfare for the rich."

Could you provide some examples of the types of transfers of expenses from the private sector to the government to which you are referring? It seems unlikely to me that any such transfers could come close to the magnitude of the federal tax burden paid by the most rich portion of the private sector.

I first noticed the assortive mating effect on income 20 some years ago when I was in med school. People tend to marry within social class and income level. Female doctors tended to marry male doctors, etc. This tended to concentrate high paying jobs within families. The guy who got outcompeted by a woman for med school did something less lucrative and probably his wife too-hence income stratification. Then there's the poor guy trying to make it on one income. What's interesting to me is that when I pointed this out to two income couples who were friends, they couldn't see it. The income disparity/stratification was all Reagan's fault.

Hey Arnold! Could you suggest that the government automatically index retirement age to life expectancy (similar to the COLA for inflation)as a way to bail out Social Security and Meidcare? Maybe someone will listen to you. Regards,

Bill Hocter, MD

To answer PaulD: Many government works that "help everyone" benefit the rich more.

Public schools are sold as "providing an educated workforce." The owners of big employers benefit because they do not have to educate their workforce. Football coaches really benefit. The owners of the construction companies that build and maintain schools benefit.

Interstate highways are there to "benefit everyone", but the owner of a trucking firm benefits more than the guy that has a car that barely runs. The owner of the concrete plant benefits even more.

Need I mention Amtrac? National Forests?

If this is the case, is it possible to reduce income disparity without also reducing the rewards for engaging in behavior that benefits society and reducing the penalties for engaging in behavior that hurts society? I don't think so, but I would be interested to hear what others think.

High wage earners earn wages well beyond the point of diminishing returns for consumption-derived happiness; rather, they are gaining status-derived happiness, and self-select themselves as people who respond strongly to status as an incentive.

It does not follow to me that taxing high wage earners more heavily will be a dinincentive to their attempt to achieve higher status than other high wage earners.

I wonder what the the effect of a longer life span has on income inequality. Considesider the income inequality that an individul experiences accross thier own life. There is now a longer phase of education where income is minimal, followed by a longer working life where income tends to grow at a compounded rate, followed by a ever increasing retirement where income plumets. If you were to cut ones working life in half one would expect to never reach the higher levels of income, this results in a more even equal income across ones life...but is that desirable?