It was designed and supported by economic theory that said high growth comes from higher inequality.

My understanding of US economic development was that the increase in middle class incomes resulted in increased demand for goods and services and it was this general equality of incomes that was America's strength. Even as far back as Jeffersonian democracy each citizen was to own their own means of production, the farm, and therefore have a stake in the decisions of the state.

The show will go up at Global Public Media soon (I hope).

We cover the reasons why Extreme inequality is a bad thing. Nations that manage inequality to make sure it doesn't get out of hand do much better in terms of quality of life, subjective well being, etc. than those who don't. Some reasons: Political power gets concentrated in the rich, which makes the not-so-rich feel bad. A strong and stable society requires that most people believe in the system, that they have a voice and a stake in the commons. Poor people are socially expensive. They put off investment in their health and education and do stuff that isn't so good, like go to emergency rooms for the flu, buy cheap and non-nutritious food, are less productive members of society and may even get mad and desperate and rebel. The wealthy then have to pay for the damages done after wards. The very rich are sickened by excess. They fight to maintain status, worry about loss, don't trust people who aren't as financially wealth as they are, are stressed by managing so many possessions, etc.

This has nothing to do with differences in innate talents or hard work. But every billionaire gets rich from the talents and hard work of thousands (millions?) of others. What is fair and just allocation of the fruits of labor and the use (abuse?) of the commons--air, water, forests, markets, currencies, etc.

Inequality in a society occurs for many reasons. Differing abilities is only one source of inequality of resource distribution. Much inequality has had to do with social rank (nobility), luck, the ability of some to write the rules of economic transactions so that they are most favored, inheritance, and the ability of others to obtain wealth by criminal means. Extreme inequality in a society is undesirable for a number of reasons. As those at the bottom see a few for whom the rule of law does not apply, they become resentful. Societies with extreme inequalities require repressive measures to prevent or quell rebellion among those who have less. Those at the bottom are less able to afford goods produced by the most wealthy. An unhappy society is generally less productive. A certain level of inequality is quite well tolerated by most of any society's population as long there is at least the appearance of justice. If the CEO who embezzles $7 million dollars is punished less than the man who steals a pittance from the grocery, rule of law is undermined, destabilizing the society.

Jon, considering our converging crises -- especially the net energy cliff -- wouldn't this be an excellent time to asking some fundamental questions like "What is the purpose of the economy?".

Might it be possible to satisfy some basic market goals (e.g., shelter, food, water, health care) by some other than the market mechanism (e.g., government rationing)?

Are there any groups asking these questions?

The economic growth path that the U.S. has been on over the last 30 to 40 years has lead to greater inequality and less well-being. This was not by accident. It was designed and supported by economic theory that said high growth comes from higher inequality. This path is biophysically bankrupt and socially undesirable.

GM and Segway unveil new two-wheeled urban vehicle.

Link

Not sure if I should laugh or cry when I read stuff like this. Though I'm sure that ideas like this can only exacerbate the current trend towards ever greater inequality. GM and Segway?! The world is truly doomed. Have these idiots ever heard of this thing called a bicycle? You can get a really good one for a couple hundred bucks.

From Siegfried J. Schmidt professor at the University of Muenster:

"Money simply has no semantics, so human performance, talents, and goods could be calculated accordingly for their exchange values. This is the fundamental principle of capitalism: semantics out, numerics in! The cost determines the value. Society, consequently, implemented precisely this mechanism in the domain of culture -- namely, the calculation of all socially relevant goods by means of a neutral measuring unit. Culture came to be conceptualised in the semantically neutral terms of law, which were no longer founded on transcendence (by a divine order), on history (by recourse to tradition), and natural law (by invocation of the nature of human beings)."

These days, I seem so incapable of offering distinctions that I generate. Yet so much is being said and offered by so many that I validate because I find harmony and pleasure in these.

Doble M

See Prof. Paul Krugman's take on the inequality issue at: http://krugman.blogs.nytimes.com/2009/04/07/the-financial-factor/

I think the proof is in this pudding. Our high-growth rates came at the expense of massive borrowing. I doubt we would have been able to achieve the rates of growth we had if foreigners weren't able and willing to loan us huge sums of cash to keep our financial markets flush with capital to lend and consumers with a steady supply of easily accessible, cheap, money. To put some numbers to it, some major corporations were making 30% of their income from financial tools, while the finance markets only accounted for 5% of total GDP.

The unspoken realities of our current economic malaise is that this isn't just some sort of market disruption. It represents a real shift in how we must conduct business in the future. I frankly don't think we'll have the option of a high-growth economy; particularly as global wages continue to rise and US companies exhaust their options for cheap labor, it will be more difficult to find the sort of cheap resources necessary for US consumers to maintain their rates of consumption. In short, the more money people make in China, Latin America, India, and Africa, the more expensive their goods will become and the less 'stuff' Americans will buy. There may also be fewer countries to import from as rising wages abroad mean greater consumption abroad, thereby making cheap imported goods harder to obtain. All this will mandate companies to squeeze their margins to stay competitive, perhaps even to relocate manufacturing closer to their target markets to avoid import/export duties, reduce shipping costs, and allow for better quality control. In short, we'll have to make do with less and make it all last longer (but that's what we used to do, anyway). The side effect of this may be we'll have to deal with a lot fewer retail outlets as retailers dependent on cheap imports fail, but being a life-long hater of the strip mall and the credit card, I don't see this as a bad thing.

Furthermore, these developing countries won't be as keen to lend us so much money in the future, having been burned by our current financial crisis and facing rising profit opportunities at home as their economies continue to explode, albeit at a lower rate. Even first-world lenders will find a world with greater opportunity: as the Eurozone continues to strengthen its economic power and the developing world presents them with greater, more stable income opportunities, the world won't have to depend so much on the US as a safe and reliable haven for investments, a view already tarnished by our inability (or refusal) to properly regulate our financial system.

Finally, as is the whole point of the oil drum, we're beginning to run up against real material limitations in energy, raw materials, and foodstuffs. Localized, tailored production is ecologically preferable and materially sustainable to large scale mass production. This may be a moot point, however, as the falling tide of credit in the US and rising income abroad may make more localized production an economic necessity. This isn't a reverse globalization, it's just a rewriting of it. I don't think the world's decision makers will abandon free trade, but it will cease to produce the cheap goods for first world consumers and the income opportunities for the developing world if wage increases and falling credit make the costs of manufacturing anywhere comparable to anywhere else.

I think we have some time till we reach that point, but the rising strength of China and India imply that they, too, will begin to seek cheaper markets as well. It's a matter of time before the US and European driven growth in Asia becomes US, Asian, and European driven growth in Africa. Indeed, Africa will probably develop even faster than China and India are, having the benefit of their pick of economic suitors and of fierce competition between the established First World and the rising economic powers seeking increasingly rarer opportunities for rapid growth.

To bring this full-circle, the US enjoyed its high-growth because of its economic primacy. People wanted to invest in the US and we were all too happy to leverage those investments to buy their goods. As the world presents more opportunity outside of the states, I think we'll see a natural slowdown and a growing middle class as the global economy naturally matures (indeed, we were already seeing this in Asia pre-recession). Rising competition will limit the opportunities for American CEOs to make quite so much money as they did in the past as the economic axes tilt towards Beijing and Mumbai at the expense of New York and London, though I suspect attempts by the US to better regulate its financial system will have a greater short-term impact.

I hope this gave everyone some food for thought. I don't think we should think of income equality as a moral issue or how desirable it is for a first-world, capitalist democracy to function properly, though I feel its of the utmost importance. We should consider what the implications of our current global economic model are in terms of how it promotes greater economic equality (albeit inefficiently) through development.

As pointed out by others, inequality is but one outcome of a rotten system - a dangerous symptom at that. In itself, inequality is not positive or detrimental, all societies, including hunter-gatherers and human tribes in the Paleolithic (if I may go so far back) as well a groups of social mammals have a hypothetical Gini coefficient which is not zero (perfect equality.) Some might like to call this ‘natural’ - part of human ‘nature’ or ‘in the genes’ which is laughable, but one can agree that for humans a rigid caste system (see bees) is out of style; yet that all human groups tend to favor ‘leaders’ - some central decision making and planning, no matter how catastrophic, arises in groups that have enough to eat. This is part of specialization - not everyone can do everything, perform all tasks, and some central power or organizational hub becomes a necessity - the ‘leader(s)’, those who mold the culture, fix the priorities and attribute social roles gain great power and can garner much tribute.

The trick is to conserve sheeple behavior - as without it society breaks down - but to curb and limit the power of those at the top, specially in conditions of plenty, of endless resources, such as the Oil Age. Democracy was the Greek answer, though collective decision making has a long history; the Greeks, who were Social Engineering Geeks (and had slaves), formalized it for us. It has been subverted and bastardized, this is particularly clear in the US. It has failed, spectacularly. I suppose the facade will be maintained for many a long year...

One can see the financial melt down as an attempt to keep up ‘growth’ which is essential to upward social mobility, to conserve a simulacrum of ‘equality’ with the mantra of ‘opportunity’ .. The financial accounting as a backdrop, back office, for societies, nations, that can and do move forward, that is produce more, distribute more, consume more, always allowing the elites to take a skim off the top. The time lag between ‘financial growth’ and ‘real growth’, pushed forward by a ginormous debt bubble has now imploded.