Consumption vs income inequality - Politics Forum.org | PoFo

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#14837996
Came across an interesting argument today.

http://econlog.econlib.org/archives/201 ... is_al.html

Income inequality is the most commonly cited measure, primarily because the data on it is the most comprehensive. However, for the purpose of measuring how inequality affects a community it is also probably the least interesting yardstick of the three.
Consumption inequality, though harder to measure, provides a better proxy of social welfare. This is because people's living standards depend on the amount of goods and services they consume, rather than the number of dollars in their wage packet.


The rest of the piece goes off with policy proscriptions I don't particularly agree with from there but I found the fundamental idea of consumption inequality, the actual material outcomes of people, to be a far more important thing to look at than income inequality. I also found a progressive consumption tax an interesting idea.

Personally I would still pair it with a tax on idle money and income streams but I can see the value in looking at inequality in terms of consumption and not just raw money totals.

Another argument he makes, one I'm less certain of, is that it's not necessarily very wealthy individuals that are a danger in terms of political influence but interest groups who are constrained by their desires to maintain a certain level of consumption for that group that are the most powerful in political influence terms. The very wealthy can better afford to give up some of the income they aren't using for idealistic causes while upper middle class interest groups are more likely to outright wreck parts of the economy and political system to maintain their current material positions.
#14838093
Income inequality is not inherently interesting in itself (as long as the mass of citizens feel secure to some degree). What is interesting is the degree to which income inequality fosters political instability. A controlled degree of instability is positive, stimulating slow change and adaptation. An excessive degree of political instability, however, forms a negative feedback loop in a political system. Negative feedback loops of this type will either stimulate capitalism to mutate and adapt to crisis or, alternatively, to fail.

The genius of the New Deal and subsequent programs was to provide automatic stabilizers to lessen the impact of periodic crises. This adaptation never set well with the elite. The history of the post-Reagan era is essentially one of rolling back the adaptive strategies of the New Deal.

The decades of increasing stress on the so-called middle class are a predictable result of the economic policies we have followed. They are not primarily a response to exogenous factors, but rather a deliberate strategy engineered by the elite of liberal capital.

It would be actually quite easy to engineer a stable capitalist system, with most of the economic benefits accruing to a tiny minority (as opposed to the unstable one we now have). It is the self-destructive short term mindset of the elite that prevents this from happening. Now, as always, the elites are their own worst enemy.
#14841641
Imagine two households consuming the same. One has a single breadwinner with a secure job, regular hours, benefits, a pension and enough income to save for a comfortable retirement. The other needs two breadwinners, at least one of whom has two insecure, zero hours contract "jobs" with long commutes, missed parenting (if the marriage survives the strain) and chronic debt (negative savings) in order to maintain the same consumption as the other household.

Do they have the same living standards - the same "actual material outcomes"? No, they're worlds apart.

This is just a rather transparent apologetic for all the crap neoliberalism has brought us. And, oh look, it's written by a professional neoliberal apologist for a right wing think tank.
Last edited by SueDeNîmes on 07 Sep 2017 22:19, edited 1 time in total.
#14841648
I wasn't suggesting that we should ignore income inequality or overall standard of living. Simply that consumption inequality is something that also deserves being considered.

You made a transparently ridiculous extreme argument to suggest otherwise.

Inequalities in consumption obviously happen in our society, and are extremely important. Food consumption inequality for instance, leading to food insecurity, is a serious issue.

I could make up an equally pointless extreme story about any particular way you would measure inequality and it would be equally accurate and fair. There is no reason not to use consumption inequality in our analytic tool belt along with stuff like income inequality or some very difficult to accurately measure thing like standard of living.

We are faced with a problem when trying to measure these issues on a societal level. We can only look at things that we can quantify. I can quantify a persons income and a persons purchases and other simple measures. I cannot measure their quality of life directly. Using multiple tools we can start to get towards figuring out what the real living standard inequalities are of people in our economy.

Simply posting some attack job on one of those tools because you didn't like it isn't helpful. It's just ideological bias against measuring consumption for whatever reason you have to rage against the idea.

Obviously when measuring consumption in a vacuum without other considerations it can lead to erroneous conclusions, but so can considering income disparities without taking in other considerations like cost of living in various areas.

You have failed to add anything to the discussion by just rage posting nonsense attacking a straw-man as if I was suggesting we should take a naive approach to looking at consumption and ignore all else.
#14841656
No one my age would dismiss her comments let alone do it with the venom you did. Some of us actually lived through these changes and have first hand knowledge of what has happened. To dismiss that insight for your math symbols is ignorant.

Edit: What she described is what actually happened. It was not some fantasy she made up.
#14841663
You did an excellent job of missing my fundamental criticism, that no one argued that consumption inequality is the only thing we should consider and that no other considerations should inform our view.

Cry about my "venom" to someone who actually cares. :roll:
#14841665
mikema63 wrote:You did an excellent job of missing my fundamental criticism, that no one argued that consumption inequality is the only thing we should consider and that no other considerations should inform our view.

Cry about my "venom" to someone who actually cares. :roll:


I did not miss your criticism, and it was valid. Your venom detracted from it's importance. Do your guidelines take into consideration that it takes two people to provide the income when it only took one before? What value do consumption figures have without this tidbit. I therefore, considered her criticism as essential as yours.
I was angered by your dismissal. Admittedly more so than I normally would be. ;)
#14841666
Your venom detracted from it's importance.


Heavens, I do declare I never meant to be so rude as to be slightly annoyed!

Do your guidelines take into consideration that it takes two people to provide the income when it only took one before?


In the context of this thread where I tried to start a discussion about the value of measuring consumption inequality? It never got to that point because no one seemed to care enough to discuss it.

However, yes, there are many different ways to break up consumption and income factors per person and per household.

What value do consumption figures have without this tidbit.


No single data point have value when decontextualized. Which is why I never suggested doing so and don't appreciate it being suggested that I'm spewing some evil idea that we should do so and ignore the real suffering of people.

I therefore, considered her criticism as essential as yours.


Strawmanning me is not an essential criticism.

I was angered by your dismissal. Admittedly more so than I normally would be.


Feel free to feel enraged that I generally dismiss all of your posts as vacuous. SueDeNîmes however is an adult that can defend themselves and doesn't need a nazi apologist to ride in and do it for them.
#14841682
:lol: I prefer to reserve vacuous for those with knowledge, but no wisdom. It is commonly applied to those in college who think they have the answers, but have not experienced enough life to understand how to apply that knowledge. Did you ever wonder why you can't be president at your age, no matter how much education you have? ;)
#14841689
@ mikema63

1) Do calm down.

2) I'm not making a "transparently ridiculous extreme" anything, I'm talking about widespread changes wrought by neoliberalism. If you think not, I'm happy to leave your contention standing on its merits.

3) I'm addressing the author's contention that "Consumption inequality, though harder to measure, provides a better proxy of social welfare. This is because people’s living standards depend on the amount of goods and services they consume" etc.

No. What we must do all day in order to consume a given amount of goods and services is just as important a component of social welfare or living standards. And since that is what has substantially changed, then amount consumed is not "a better proxy" of social welfare or living standards, but a misleading one.

Other than that, the rest of what you've written has too little relevance to anything I've said.
#14841694
Do calm down.


You may find fault with the author of the piece I posted, I do as well, but your post pretty obviously accuses me of pushing something designed to hide facts and hurt people. I do not appreciate it.

What would make me calm is a discussion of why you think looking at consumption inequalities is unhelpful. Not an accusatory rant about neoliberalism.

I'm not making a "transparently ridiculous extreme" anything, I'm talking about widespread changes wrought by neoliberalism. If you think not, I'm happy to leave your contention standing on its merits.


You created a scenario that was purposefully extreme to highlight why consumption inequality, considered out of context with nothing else, would be erroneous.

A claim I did not make.

I'm addressing the author's contention that "Consumption inequality, though harder to measure, provides a better proxy of social welfare. This is because people’s living standards depend on the amount of goods and services they consume" etc.


You did not quote the author of the piece I linked. Nor did you say that is what you were addressing. You merely attacked the idea of consumption inequality generally. Which considering it was my OP starting a discussion about consumption inequality read as an attack on my position and accusations about my positions. Not the author of the blog that gave me the idea to bring it up.

No. What we must do all day in order to consume a given amount of goods and services is just as important a component of social welfare or living standards. And since that is what has substantially changed, then amount consumed is not "a better proxy" of social welfare or living standards, but a misleading one.


I never said otherwise. And instead of attacking the author without saying that was what you were doing. It might be more productive to discuss the topic with me so that I don't assume you didn't pop in to throw a random attack at me.

Other than that, the rest of what you've written has too little relevance to anything I've said.


Look, do you think it's helpful to consider consumption inequality or not? If I'm so irrelavent that you can't be bothered to address my position so you can instead attack a random blogger why even post in the thread?

What possible value is there at vaugly and confusingly attacking someone not part of the discussion instead of talking to someone actually here posting about it?
#14841732
OK you've gone full on weird now. I've no idea why you think I'm attacking you or accusing you of "pushing something designed to hide facts and hurt people." I couldn't even say what your position is since you've done little more than link to an article quoting another article re the consumption thing. I've addressed that and have nothing to add unless you proffer some counterargument which isn't about you.
#14842070
Consumption also misses one of the other big issues with inequality : the rich increasingly buy power and influence rather than goods. After all, there's only so much you can physically consume and the marginal utility of a third or fourth swimming pool is nothing compared to statutes which entrench your wealth. Unsurprisingly, they tend to like stuff like financial deregulation, labour market deregulation, tax cuts, rules that make union organising difficult and wage differentials confidential etc. And, of course, umpteen think tanks which try to persuade everyone else that it's all in their interests too.

Which is a big part of why working/middle class living standards have declined in ways which consumption metrics miss.
#14842618
I'm addressing the author's contention that "Consumption inequality, though harder to measure, provides a better proxy of social welfare. This is because people’s living standards depend on the amount of goods and services they consume" etc.

No. What we must do all day in order to consume a given amount of goods and services is just as important a component of social welfare or living standards. And since that is what has substantially changed, then amount consumed is not "a better proxy" of social welfare or living standards, but a misleading one.
#14842651
And thus we shouldn't use consumption metrics?

Are you making the case that consumption metrics are useless or that they cannot be used alone?


Saying the author is using them misleadingly doesn't answer either of those questions. Are they misleading and should never be used or are they misleading in this context and should be used with other tools?
#14843095
Indeed, I'm addressing the author's contention that "Consumption inequality, though harder to measure, provides a better proxy of social welfare. This is because people’s living standards depend on the amount of goods and services they consume" etc.

No. What we must do all day in order to consume a given amount of goods and services is just as important a component of social welfare or living standards. And since that is what has substantially changed, then amount consumed is not "a better proxy" of social welfare or living standards, but a misleading one.
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