Is it possible to have an equal society with economic liberty?

Denerick

This is probably a stupid question coming from a complete economics illiterate but I'd like to know what the resident boffins think about this. Is it possible to have an equal society (As in, close to zero poverty with an inconsequential gap between rich and poor) as well as a reasonable degree of economic liberty (Property rights, entrepreneurship etc.)

I've always assumed that for better or worse, society is and should remain inequal as this is the major driving force behind economic growth... However, this also leads to all kinds of social problems and the only real way to tackle inequality is to go down a socialist path - and I find it impossible to intellectually reconcile a world with no private property with individual liberty.

So is there any hope that the twain might meet or should we just do the best we can within the stagnant welfare state system?

Joe1919

I remember reading the Philosophy of Isaiah Berlin and he states that there is always a trade-off between equality and liberty. http://www.age-of-the-sage.org/history/historian/Isaiah_Berlin.html

In a way, this is fairly obvious. The reason why half the population of Ireland buy lottery tickets is that the want to be 'more than equal'. I suppose we all think of ourselves as special. In this respect, we are not equal, we give ourselves special treatment and we all want to get ahead. This is what motivates us.

The idea that 'equality' and 'liberty' have some kind of reality is as such, a myth, as 'difference' exists as much as 'equality' does in nature and no-one is truly free. But equality and liberty do exist as an 'ideal', as important concepts thought up by men.

I am inclined to think then that it is a great mistake to see values such a 'equality' or 'liberty' as absolute. They are not. These values come at a cost.
To enforce equality on someone that does not want to be equal is to take from his liberty, from his desire to be more than equal, his desire to work hard and get ahead. Equality comes at a cost and there has to be limits placed on this idea.

Flamed Diving

If I knew the answer to this, I would be polishing my Nobel Prize now.

nesf

It depends on a large number of factors and how you view them. If people have a right to a substantial amount of private property and they have a right to be paid based on their skills and the work they do (i.e. not everyone gets the same wage) then you will inevitably have a substantial increase in inequality even if you start off everyone on the same amount of wealth to begin with.

Effectively we're born different to others. We may be more or less healthy, more or less intelligent, we may have an innate gift for an artisian trade etc. All these things form the basis of "edges" we have on others and allow us to on average earn more or less than them. Not everyone could be a doctor and we want our doctors to come from among our best and brightest so we'll tend to willing to pay them substantially more than we'd pay a street sweeper for the same number of hours worked.


The major issue comes from a conflict between redistributive taxation and allowing people to keep what they earn. Is it right to tax very heavily those who work hard and put a substantial amount of effort into training themselves so that others who don't work hard and who didn't put in much effort gaining skills can earn similar amounts? What incentive would there be for anyone to work hard if they wouldn't see any reward for doing so? Why would anyone put in the colossal work involved in becoming a doctor if it paid the same as street sweeping?

Inequality in many ways is fair which is initially counter-intuitive. Those who work hard at very technical and specialised jobs should be paid more than those who work at jobs where little training or skill is involved no? Some degree of redistribution is necessary, one could hardly sanction the starvation of those genuinely unable to work due to illness or disability but equally it's hard to sanction extreme levels of taxation because discouraging people from going to the trouble of developing highly specialised skillsets is not good for the economy and the people in it.

In short, the idea I've arrived at is that it really doesn't matter how stupidly rich the top 1% are if the bottom 10% are all clothed, fed and have adequate shelter.

Hasschu

There are two ends of the spectrum. 1) Collective effort, no liberty. The rapid industrial development of Russia from feudalism in 1917 to a mighty mechanised society that chased the unbeatable German armed forces at up to 120 miles per day across the Northern European plains right into the heart of Berlin. Contrary to what the US thinks this society self imploded in 1989.

2) The Western Democracies which are a mixed bunch replete with myths about equality and liberty. The US is now a highly stratified society run by a financial oligarchy with illusions of grandeur as great as any held by the Kings and Princes of old. Yet, the average American still clings to the idea that all men are equeal and that intelligence and hard work will be rewarded in this world. The country with the most people imprisoned on a per capita basis uses the word liberty freely as in give me liberty or give me death. Then we have the Scandinavian countries along with Germany and France, Canada and Japan where there is a much greater degree of upward mobility than in the US. They also have high marginal tax rates and a good deal of social cohesion.

It boils down to degrees of liberty and equality. For example we often hear Americans referring to European socialists in a disparaging manner. The reality is that the "socialist" states of Europe have a total tax rate that is approx 6% higher than the US tax rate. My personal preference would be to pay the 6% extra and live in a civilized society. On the other hand when I was young and carefree I lived in countries with no taxes, that ended when I got married. Marriage is a very sobering experience, exceeded only by having children.

Eliot Rosewater

"Equal" is really a political buzzword in the sense that it objectivly means nothing. Social welfare is to many people a type of equality as those who earn less are brought up to the standard of those who earn more. But to others it is an inequality as those who earn less are being positively discriminated against by the government, that is to say, the government isnt treating everyone equally.

The fundamental problem with basing your definition of equality on economic liberty (and its something I do) is, as nesf touched upon, that we are born differently and that in a totally libertarian world some people will have more opportunities than others. This will, in my opinion, be mostly based on the quality of your parents. Irresponsible parents will be less inclined to save for their children's education, so the child does not have the opportunity to go to Uni. Due to the repetitive way in which the poverty cycle seems to operate this would not be desirous.

In effect it is a discussion on personal responsibility and how responsible will parents be. The key part is the "will." You see you cannot simply point your finger at irresponsible parents nowadays and say "liberalism is trash, how will their kids be without State funding?" The error here is that their irresponsibility is interlinked with this State funding. The decision to have a child is skewed by the monetary advantages it entails and thus parents who would ordinarily not have kids decide to. In my opinion these parents are predominately irresponsible, as the responsible parents will be more than willing to use their own earned money to pay for their children.

If we were to take this question to the scary real world, my suggestion would be to introduce incremental decreases in social welfare and to see how these impact upon society. Does the average Uni uptake increase? Does the percentage in poverty decrease? Things like that.

Its really about finding a balance between the current bloated situation and a free-for-all Darwinian libertarianism. I know for certain that the answer doesn't lie near the current situation at all, but I cant really gauge how it fairs towards the other limit.

Finally, who has the balls to try it out. Not any of out current "leaders" for sure.

nesf

Eliot Rosewater wrote: »

I know for certain that the answer doesn't lie near the current situation at all, but I cant really gauge how it fairs towards the other limit.

America made a good effort at extreme economic libertarianism in the late 19th century/early 20th century. It works but the social costs of leaving those unable/unwilling to work penniless is hard to justify.

That said, in Britian at least in the mid to late 19th century private forms of social welfare, i.e. friendly societies, seemed to work quite well versus the modern State run efforts.

Denerick

nesf wrote: »

America made a good effort at extreme economic libertarianism in the late 19th century/early 20th century. It works but the social costs of leaving those unable/unwilling to work penniless is hard to justify.

That said, in Britian at least in the mid to late 19th century private forms of social welfare, i.e. friendly societies, seemed to work quite well versus the modern State run efforts.

Gilded Age America was more like a kind of corrupted corporationism (As in, the rise of the great commodity magnates, such as the steel barons, the oil barons, banking barons etc.) Government policy was accordingly tilted in their favour.

I don't think we've ever seen a proper kind of Libertarianism in the modern world. Even Britain, with her laissez faire economics and free trade before the first world war saw its industrial leaders courted by the governing class (Indeed the transition from aristocratic leadership to plutocratic leadership necessitated this political transformation, but I do disagree with the hypothesis that the pre world war anglo speaking world was in any meaningful sense, a 'libertarian' world...

Eliot Rosewater

Indeed one of the headaches for Libertarians is how we are all intertwined and that our fates depend on each other to a certain extent. It is not desirous for me if no one has the opportunity to go to Uni as the general population will be less educated and my chances of finding an educated job in Ireland will decrease.

By the way, may I say than in terms of economic liberalization in Ireland it is, in my opinion, only necessary to talk about social welfare. The other 64% of government spending such as on buses could easily be brought under an economic liberally framework. Social welfare is not the same because the problems facing its liberalization are cultural as opposed to organizational. Cultures are a lot harder to change. Which is what nesf touched upon in his second paragraph.

When I worked as a charity worker one of the common excuses I heard for not signing onto Barnados was that "the government sorted it out." Clearly many people feel they do not need to help their fellow man directly. The culture is that the government deals with it. The problem with this setup is that firstly the government is generally an inefficient institution, and that also people do not have the choice as to whether they want to fund large dole payments.

In an ideal world there are multiple charities and the ones that operate best are funded most. If it is seen that Charity A gives out far too much money to undeserving recipients and only serves to promote scrounging then donations will trail off. Perfect rationality, as it were. However, how do you change the culture? Do you say to people from the first of January there is no social welfare, full stop? You cant really. Its just wouldn't work.

Ok I think Im rambling now. As a final point, perhaps a solution might be to make paying for social welfare partly voluntary.

Denerick

Private charity? I think that warrants a thread of its own my friend. But I can kind of see what you mean.

I would disagree with the idea that privitised charity led to an increase in the general welfare of the working population. The Victorian working men's clubs were intriguing institutions, but there is little doubt that the standard of living of the average working person grew dramatically as a result of government legislation and direct intervention via labour laws and industrial regulation. The market value which dictates the cost of someone's labour usually leads to a subsistence level been met when the supply of labour is plentiful... I can't see it working to be honest. I don't even consider myself center left or anything, but I'm extremely skeptical about the ramifications of the dissolution of the welfare state. (As my first post alluded to)

nesf

Denerick wrote: »

The Victorian working men's clubs were intriguing institutions, but there is little doubt that the standard of living of the average working person grew dramatically as a result of government legislation and direct intervention via labour laws and industrial regulation.

Was it Government intervention though or was it generally increasing living standards through technological improvements? Just curious if there's evidence to back this up or whether it's an assertion.

There's an awful lot claimed about why living standards improved but little of it is actually backed up. Similar to how everyone claimed something they were responsible for was the cause of the Celtic Tiger during the good years.

silverharp

nesf wrote: »

Was it Government intervention though or was it generally increasing living standards through technological improvements? Just curious if there's evidence to back this up or whether it's an assertion.

There's an awful lot claimed about why living standards improved but little of it is actually backed up. Similar to how everyone claimed something they were responsible for was the cause of the Celtic Tiger during the good years.

Spot on, if you think about the productivity impovements in agriculture and manufacturing from 1900 to 1940, this alone would explain most of the welfare improvements. For the first time working class people had access to mass produced furniture etc which a generation before would have been high priced artisan products.

nesf

nesf wrote: »

Was it Government intervention though or was it generally increasing living standards through technological improvements? Just curious if there's evidence to back this up or whether it's an assertion.

There's an awful lot claimed about why living standards improved but little of it is actually backed up. Similar to how everyone claimed something they were responsible for was the cause of the Celtic Tiger during the good years.

I think, and I'll check, that 'The Economy of Ireland' deals with this topic.
Its a collection of policy essays edited by two lecturers in Trinity.

Denerick

nesf wrote: »

Was it Government intervention though or was it generally increasing living standards through technological improvements? Just curious if there's evidence to back this up or whether it's an assertion.

There's an awful lot claimed about why living standards improved but little of it is actually backed up. Similar to how everyone claimed something they were responsible for was the cause of the Celtic Tiger during the good years.

I'm not so much talking about direct material improvement, but working standards, child labour, worker's rights etc. The market has and will determine that certain unskilled working class jobs can be paid very little and used like machinery. Government legislation alone has the authority to fix this.

ulysses32

Denerick wrote: »

I'm not so much talking about direct material improvement, but working standards, child labour, worker's rights etc. The market has and will determine that certain unskilled working class jobs can be paid very little and used like machinery. Government legislation alone has the authority to fix this.

And there was me thinking that the CT meant that unskilled wc jobs became better paid than many traditional mc careers. e.g. builder V teacher. factory worker v nurse!

Valmont

nesf wrote: »

...it really doesn't matter how stupidly rich the top 1% are if the bottom 10% are all clothed, fed and have adequate shelter.

Or in the case of Ireland's welfare system:

"It doesn't matter how stupidly rich the top 1% are if the bottom 10% are all going on two week holidays to Santa Ponsa, playing their xbox 360s on a Tuesday morning and buying ugg boots."

Gary L

Valmont wrote: »

Or in the case of Ireland's welfare system:

"It doesn't matter how stupidly rich the top 1% are if the bottom 10% are all going on two week holidays to Santa Ponsa, playing their xbox 360s on a Tuesday morning and buying ugg boots."

I agree with you for once. The question I have is, in a globalized economy are national boundaries essentially blocking us from taking care of the bottom 10%? Please no flaming I know my type aren't welcome.

Gary L

Gary L wrote: »

I agree with you for once. The question I have is, in a globalized economy are national boundaries essentially blocking us from taking care of the bottom 10%? Please no flaming I know my type aren't welcome.

I don't get your question. Are you referring to aspects of the EU such as free movement of labour?

nesf

Deleted User wrote: »

I don't get your question. Are you referring to aspects of the EU such as free movement of labour?

I imagine he's referring to Sub-Saharan Africa and the like.

Gary L

Yeah we don't like thinking about that end of the workforce do we boys.

nesf

Gary L wrote: »

Yeah we don't like thinking about that end of the workforce do we boys.

It's an interesting question. I don't have time to go into detail right now but consider the sovereignty problem: Do we (the developed world) have the right to invade and take over a country and rework it's institutions so that aid we send to said country ends up benefiting said people rather than being funnelled off into the private accounts of those running the country? Or more broadly do we have the right to force decisions on a people so as to increase their standard of living or should we be mere bystanders trying to help but proscribed from intervening directly?

Gary L

I cant claim to be too well versed in this area but isn't it true that we are quite involved in the affairs of poor countries already? Economic restructuring in the area of privatization and trade liberalization
doesn't seem to happen without a bit of pushing and shoving from the IMF. Effectively what I was getting at on the national boundaries comment, was that the workers involved in making many of the products we enjoy don't have the legal protection that they would enjoy if they lived in our country.
Is it sensible that our societal values have so little influence in this area?

nesf

Gary L wrote: »

Is it sensible that our societal values have so little influence in this area?

Is it sensible for us to force our social values on other countries? There's a very thin line here between well meaning neighbours and colonialism by other means.

Gary L

Gary L wrote: »

I cant claim to be too well versed in this area but isn't it true that we are quite involved in the affairs of poor countries already? Economic restructuring in the area of privatization and trade liberalization
doesn't seem to happen without a bit of pushing and shoving from the IMF. Effectively what I was getting at on the national boundaries comment, was that the workers involved in making many of the products we enjoy don't have the legal protection that they would enjoy if they lived in our country.
Is it sensible that our societal values have so little influence in this area?

Why should they? Our society, our rules. Their society, their rules.

Don't fall into the trap of evaluating this is in a partial equilibrium way - for example, there were many complaints about Nike and its sweat shops (still are). However, when some were closed down the children working in them went from paid labour to prostitution and crime. There were no other jobs for them and our 'outrage' of these awful conditions meant that we stopped the one source of legit employment that many people have.

I'm not justifying child slavery - I'm just saying view the problem relative to local conditions, not our remote ones.

Gary L

Wow looking at it now that came out all wrong sorry. I just mean that national boundaries stop us from considering the rights of other people. The poorest countries have to compete with each other so they cant enact proper workers rights.Basically my point is that companies work people like dogs if they don't have proper legal restraints. It would be nice if we could impose some kind of financial sanction at our end and make them act decently. There is a kind of race to the bottom with wages in the poorest countries in the world and it seriously goes against what we cherish as our human rights.

nesf

Gary L wrote: »

Wow looking at it now that came out all wrong sorry. I just mean that national boundaries stop us from considering the rights of other people. The poorest countries have to compete with each other so they cant enact proper workers rights.Basically my point is that companies work people like dogs if they don't have proper legal restraints. It would be nice if we could impose some kind of financial sanction at our end and make them act decently. There is a kind of race to the bottom with wages in the poorest countries in the world and it seriously goes against what we cherish as our human rights.

Is there a race to the bottom? I mean, looking at Korea and much of South East Asia and China, sure initially it starts off with sweat shops and low level manufacturing but it doesn't necessarily stay that way for very long and these countries use trade to drag themselves up to much higher standards of living over the span of a single generation.

Surely the real question isn't about a race to the bottom but why some countries can drag themselves up and others seem to be stuck in reverse?

Gary L

I don't think privatization works to the benefit of poor countries. The coffee industry in the west sends very little of its huge profits back to its base countries. That industry alone could help them hugely if they had their own domestic companies. What chance do they have against multi nationals in an open market? Protectionism is seen as almost morally wrong these days but it is needed to get industry off the ground.
Of course if theres a good minimum wage FDI is hugely beneficial but again workers rights are difficult to establish in the current environment. It's food for thought anyway.

nesf

Gary L wrote: »

I don't think privatization works to the benefit of poor countries. The coffee industry in the west sends very little of its huge profits back to its base countries. That industry alone could help them hugely if they had their own domestic companies. What chance do they have against multi nationals in an open market? Protectionism is seen as almost morally wrong these days but it is needed to get industry off the ground.
Of course if theres a good minimum wage FDI is hugely beneficial but again workers rights are difficult to establish in the current environment. It's food for thought anyway.

Eh, history begs to differ somewhat. Some developing countries get caught in the cash crop trap that you mention, others develop world beating companies like Samsung etc. The "free market only suppresses poor countries" doesn't really happen. Explaining why there is such disparity in country "performance" is pretty much an entire sub-field of economics with many different theories as to why some countries grow and prosper like South Korea etc and some seem to be stuck forever in the doldrums, Haiti being a topical example.

Paul Collier's book "The Bottom Billion" might be of interest to you, it's specifically about why the poorest billion stay so poor when other developing countries have pulled themselves up to almost (or equivalent to) developed country standards of living.

WalterMitty

It could be argued that all humans should have an equal right to the resources of the earth. When humans form societies with economies they sacrifice some freedoms like the freedom to go out and cut down trees for building a home and lighting a fire, the freedom to catch and kill any wild animals etc is also lost. In return for losing these human economic freedoms the government of said society should ensure a certain minimum income or allocation of resources . Minimum levels of resoruces/income can co exist with well regulated free markets.

I beleive the people of the poorer countries have just as much rights to the resources of the world as you and i in ireland. We are just lucky and benefit from the legacy of colonial oppresion and exploitation in the past. In an ideal world a baby born in an african slum should be born with a certain minimum level of resources as one born in Ireland, but humans errect borders and institutions and laws to protect themselves from sharing resources with everyone. It's difficult for people alive today to realise that countries are a relatively recent creation and the greater human family has existed for millions of years . In time "Ireland" will cease to exist.
Maybe in the future every 50 years the entire "wealth" of the earth will be redistributed equally to everyone and then let them do what they want with it. those who are particularly entrpreneurial or wealth orientated will accumulate more through economic transactions with others, some will have problems and waste away their resources.
Eh , too tired to go on here, i think people get the jist from my ramblings.

silverharp

WalterMitty wrote: »

It could be argued that all humans should have an equal right to the resources of the earth.............

As an economic idea its a nonsense. I would stop working if I was taxed at 98% as your idea would hint at.

WalterMitty

Silverharp2 wrote: »

As an economic idea its a nonsense. I would stop working if I was taxed at 98% as your idea would hint at.

Im not saying that. Just enough paid by rich western nations to bring the poorest countries up to a certain minimum standard where starvation and death from easily cured diseases is a thing of the past. The global economic system where people in west spend so much on unessential crap while millions doe every year from starvation and simpily cured disease is a damning indictment on the human race.

Hasschu

This presentation by a Swedish Professor gives a very good over view of living conditions around the world. We have a lot of preconceived notions that are not based on reality. It is not Celto centric but we are magnanimous enough to overlook that.

http://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen.html

WalterMitty

WalterMitty wrote: »

Im not saying that. Just enough paid by rich western nations to bring the poorest countries up to a certain minimum standard where starvation and death from easily cured diseases is a thing of the past. The global economic system where people in west spend so much on unessential crap while millions doe every year from starvation and simpily cured disease is a damning indictment on the human race.

This might interest you. Not the best of track records though.

WalterMitty

Deleted User wrote: »

This might interest you. Not the best of track records though.

Yes because everything in the world is either/or , black/white

:rolleyes:

Gary L

I don't think Economics is an objective science. There I said it. It's far too concerned with the monetary system. It supposed to be about logically handling resources and living standards. Capitalism has flaws, big ones. Its not acceptable to me that academics could be so close minded to alternative solutions.

Économiste Monétaire

Gary L wrote: »

I don't think Economics is an objective science. There I said it. It's far too concerned with the monetary system. It supposed to be about logically handling resources and living standards. Capitalism has flaws, big ones. Its not acceptable to me that academics could be so close minded to alternative solutions.

To what level have you studied economics?

Joe1919

Gary L wrote: »

I don't think Economics is an objective science. There I said it. It's far too concerned with the monetary system. It supposed to be about logically handling resources and living standards. Capitalism has flaws, big ones. Its not acceptable to me that academics could be so close minded to alternative solutions.

" Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities'.

John M Keynes, The General Theory of Employment, Interest and Money,

Akerlof has an interesting book that I just finished reading.
http://blogs.ft.com/crookblog/2009/02/book-review-animal-spirits-by-akerlof-and-shiller/

Gary L

I don't mean to insult economists, I honestly don't doubt the desire to help people. It's just that as a field of study, it holds the current system as reality rather than as an idea for how to run society. Many social habits of people that are inspired by the system are said to justify the system; Materialism, greed, corruption, class.

These realities of human life mean we couldn't ever have an egalitarian society? No, they are by-products of the systems damaging every man for himself philosophy.You have to admit we've all been living in capitalism since day 1 so there's a natural bias towards other ideas. You'd expect academics to look at the flaws of the greater system rather than rearranging deck chairs.

Time Magazine

Gary, to what level have you studied economics?

I really don't mean to be the arrogant hand-waving type, but I'm pretty sure you don't know what you're talking about.

A lot of people, and I mean a lot of people, assume that economics is the academic wing of Thatcherism. It's not.

Gary L

Studied it in secondary school and in college while I was there, had an active interest ever since. I'm not offended thats a fair question. Look I'm not aggressive about my ideas if I'm wrong I'd love to hear it. I'm not suggesting that there is a political drive in Economics, I'm saying that it isn't objective. The arguments I heard against Socialism in school don't hold up against the theory.
I honestly think Democratic Socialism is a theoretical system of societal organization that makes perfect sense. Please if you honestly understand the theory explain why it wouldn't work. Not Stalin or Mao, the theory of Democratic Socialism. No hostility, just think about it.

http://video.google.com/videoplay?docid=-1471875736746417530&ei=ZgxtS8XLJ9TF-AaiiYzJBg&q=what+is+socialism&hl=en#
Interview with John Peterson, National Secretary of the Workers International League and editor of Socialist Appeal Magazine





Filmmaker Michael Moore on Capitalism: A Love Story

dentaku2

Gary, when you say you have an 'active interest' in economics, what does that entail? What sources of information do you consult?