Trickle Down Economics is Misunderstood and Straw-Manned

[SigmatheZeta]

Look, my gripes about land-hoarding are not related to something I read in an economics journal, but it's a serious pet peeve that I have developed due to the people that actually do this tending to be, in my experience, objectively useless, intensely disagreeable individuals.

 

[bilby]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory.

That doesn't make it not trickledown. It strips out the demand-side logic of Keynes and retains all the "micro-founded" bits of neoclassical with supply-side logic baked in.

The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

Like what?

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy,

New Keynesianism has not "energised" the economy. Growth rates have fallen. Housing bubbles and the stock market are not the economy.

that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do.

They actually don't.

*wing-shrugs* Even if you were correct to entirely dismiss the neoclassical components of New Keynesian theory, which I am not sure about but not really interested in making a bone of contention, I think my core argument is still valid.

I mean seriously, can we get away from whether or not the neoclassical components of New Keynesianism are valid? I am glad to let you have that point if we can just get away from it. If you want it, have it. I need to try to get you on my side when we are discussing issues that I think are more important. I tend to trust the opinions of highly educated scientists, but I acknowledge the possibility that the popularity of New Keynesianism, among highly educated scientists that study the economy, could be politically motivated. I don't know it, but it's within the realm of possibility. It's not important to me, and I am willing to let it go. The fact that I misled you into thinking this was important to me was an accident. I am not really interested in dying on that hill.

My core argument is that inequality is probably substantially more harmful in underdeveloped areas, and I think that I have more than adequate evidence for this position.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

This study might be from back in 2006, but I believe that the 2015 University of Wuerzburg study makes a similar argument:

Abstract: The inequality-economic growth debate remains unsettled. For instance, classical theories
point to the importance of incentives in increasing growth, but recent theories stress social and political
disruptions as causal factors in inhibiting growth. Conflicting empirical evidence has not helped, with
contradictory findings arising when employing different samples and alternative econometric techniques.
This study re-examines the linkage by contending that it is not surprising that past research uncovered
conflicting findings. For example, the transmission mechanism through which inequality/economic
incentives influence economic growth can be affected by factors such as urbanization and social cohesion.
Using U.S. county data over the 1990s, the empirical results suggest that the econometric results are
unstable when considering weighted regressions over the entire sample. Yet, consistent with our
hypothesized relationships, when separately considering metropolitan and nonmetropolitan samples, there
is a positive inequality-growth link in the urban sample, with the opposite holding in the nonmetro case.
Implications for both the inequality-growth literature and for public policy are discussed.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

I came from a rural area, and that rural area could have genuinely benefited from redistribution.

What I would do would be to instate a high state tax on rural property that is not currently being used for agriculture, but I would combine that with bills that provide education opportunities and housing assistance for the poorest people in those areas. This would have the effect of income redistribution.

I am tired of seeing rural land barons clinging to gigantic tracts of land that they are not using. That land belongs in the hands of families in the same area that are struggling to survive.

The idea that land should always be economically productive is a bizarre and obscene concept that I thought had died in the middle of the twentieth century.

We shouldn't ever be thinking about what we can do to improve the economy. We need to think about how we make the economy improve things for us - all of us.

It's far from sufficient that an economic theory works. Nuclear weapons work, but that's not an argument for using them.

Someone needs a house large enough to raise a family in, maybe a yard large enough to keep a dog in, and MAYBE enough room for a mini-horse or a well-behaved pony. They do not need several acres of disused land that they are clinging to just in order to sell it for a higher price at a later date.

I completely agree.

But that doesn't imply that land (or, indeed people) should always be as economically productive as possible.

The economy should work for us - and by 'us' I mean in the broadest and most long term sense.

If we are working for the economy, we're doing it wrong. A cart isn't supposed to pull a horse.

 

[SigmatheZeta]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory.

That doesn't make it not trickledown. It strips out the demand-side logic of Keynes and retains all the "micro-founded" bits of neoclassical with supply-side logic baked in.

The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

Like what?

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy,

New Keynesianism has not "energised" the economy. Growth rates have fallen. Housing bubbles and the stock market are not the economy.

that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do.

They actually don't.

*wing-shrugs* Even if you were correct to entirely dismiss the neoclassical components of New Keynesian theory, which I am not sure about but not really interested in making a bone of contention, I think my core argument is still valid.

I mean seriously, can we get away from whether or not the neoclassical components of New Keynesianism are valid? I am glad to let you have that point if we can just get away from it. If you want it, have it. I need to try to get you on my side when we are discussing issues that I think are more important. I tend to trust the opinions of highly educated scientists, but I acknowledge the possibility that the popularity of New Keynesianism, among highly educated scientists that study the economy, could be politically motivated. I don't know it, but it's within the realm of possibility. It's not important to me, and I am willing to let it go. The fact that I misled you into thinking this was important to me was an accident. I am not really interested in dying on that hill.

My core argument is that inequality is probably substantially more harmful in underdeveloped areas, and I think that I have more than adequate evidence for this position.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

This study might be from back in 2006, but I believe that the 2015 University of Wuerzburg study makes a similar argument:

Abstract: The inequality-economic growth debate remains unsettled. For instance, classical theories
point to the importance of incentives in increasing growth, but recent theories stress social and political
disruptions as causal factors in inhibiting growth. Conflicting empirical evidence has not helped, with
contradictory findings arising when employing different samples and alternative econometric techniques.
This study re-examines the linkage by contending that it is not surprising that past research uncovered
conflicting findings. For example, the transmission mechanism through which inequality/economic
incentives influence economic growth can be affected by factors such as urbanization and social cohesion.
Using U.S. county data over the 1990s, the empirical results suggest that the econometric results are
unstable when considering weighted regressions over the entire sample. Yet, consistent with our
hypothesized relationships, when separately considering metropolitan and nonmetropolitan samples, there
is a positive inequality-growth link in the urban sample, with the opposite holding in the nonmetro case.
Implications for both the inequality-growth literature and for public policy are discussed.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

I came from a rural area, and that rural area could have genuinely benefited from redistribution.

What I would do would be to instate a high state tax on rural property that is not currently being used for agriculture, but I would combine that with bills that provide education opportunities and housing assistance for the poorest people in those areas. This would have the effect of income redistribution.

I am tired of seeing rural land barons clinging to gigantic tracts of land that they are not using. That land belongs in the hands of families in the same area that are struggling to survive.

The idea that land should always be economically productive is a bizarre and obscene concept that I thought had died in the middle of the twentieth century.

We shouldn't ever be thinking about what we can do to improve the economy. We need to think about how we make the economy improve things for us - all of us.

It's far from sufficient that an economic theory works. Nuclear weapons work, but that's not an argument for using them.

Someone needs a house large enough to raise a family in, maybe a yard large enough to keep a dog in, and MAYBE enough room for a mini-horse or a well-behaved pony. They do not need several acres of disused land that they are clinging to just in order to sell it for a higher price at a later date.

I completely agree.

But that doesn't imply that land (or, indeed people) should always be as economically productive as possible.

The economy should work for us - and by 'us' I mean in the broadest and most long term sense.

If we are working for the economy, we're doing it wrong. A cart isn't supposed to pull a horse.

I am a dragon. I eat horses. Allow me to amend that: I have relatives that do. I really prefer fish, and I quite frankly would truly be loathe to ever harm a horse, pig, cow, or other hoofed animal. I consider myself to be on reasonably peaceful terms with most of the hooved animals that I have ever known. That is with the exception of Oscar. He ate my apple. I never quite forgave him for that. It was a good apple. I did not even eat him. I just thought about it fondly, and I am not really proud of that.

Instead of taking one side or the other of a fallacy, I am just going to call out a fallacy. "The economy" is just certain stuff we do. While it is sometimes useful to engage in the rhetorical reification where we regard "the economy" as if it were a thing separate from ourselves, it really is not. To regard it as truly separate from our own everyday affairs constitutes hypostatization.

However, I also deny that the economy is really segregated, in realistic terms, from other aspects of society, and since "the economy" is only a term that refers to certain aspects of my everyday affairs, I would say that how much I earn at my job is only one thing that I care about. I need to be physically and mentally healthy, too. Furthermore, it is meaningful to me whether or not I like my job.

I do like my job. Being a dragon is extremely entertaining.

However, it is also meaningful whether or not I can feel that I am making a positive difference in society. I think that it is substantially more important for people to want to make a positive difference in society than it is for them to earn a high income. It matters to me if people have a strong emotional investment in their people. "Their people" includes dragons, or I hope that you think it includes dragons.

Once in a while, I run into one of those people that are all anti-dragon, and the conversation is a total loss. If I were going to roast them to a crisp, then I would just do so, not argue with them. There is so much prejudice against dragons, and it makes me feel sad. I cannot just buy away those kinds of problems. It is something that I will have to work on. Those problems would be substantially easier to work on if the people were more prepared to open their eyes and see me as a person. I am part of a highly vulnerable minority group. People's readiness to accept each other is substantially more important to me than how much money people are making.

This is why I believe that it would be a cool idea to actually unify the formulas for political science, sociology, and economics. I think that starting to form a new synthesis that harmonizes the interacting factors of all of these sub-disciplines could help us to form a more complete concept of eudaimonia.

 

[Swammerdami]

^https://www.econstor.eu/bitstream/10419/114736/1/833477102.pdf

Read and understand at least the abstract, and do not speak to me again until you have done so.

Why should I read it? From what you're quoting it utterly does not address my point. Showing that inequality is a problem says nothing about the cause of inequality.

Wealth inequality is caused by the same two things that bring wealth:
(a) Inheritance
(b) High earnings
Note that parents' wealth or inherited wealth can provide the education or other opportunities that lead to high earnings.

Despite the rags-to-riches^* stories of Bill Gates, Steve Jobs, Elon Musk etc. it is Inheritance that has been and remains the driver behind increasing wealth inequality. Paul Krugman once said he was surprised to learn this, but he could not argue with the data in Piketty's work that demonstrates it. (* - Gates et al aren't really "rags-to-riches" exceptions; they're more like Levi's-to-Versace.)

And of course part of the growing inequality in the U.S. is simply due to tax policies deliberately designed to make the rich richer.

I'd be a hypocrite to recommend the interesting Gründler-Scheuermeyer paper. I've got it in a tab and have been skimming it, but it's rather dense and my to-do list is long and ever-growing.

 

[Trausti]

it is Inheritance that has been and remains the driver behind increasing wealth inequality

This is true. IQ and other behaviors associated with wealth and income are highly heritable.

 

[Trausti]

Look, my gripes about land-hoarding are not related to something I read in an economics journal, but it's a serious pet peeve that I have developed due to the people that actually do this tending to be, in my experience, objectively useless, intensely disagreeable individuals.

Fucking Kulaks.

 

[Canard DuJour]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory.

That doesn't make it not trickledown. It strips out the demand-side logic of Keynes and retains all the "micro-founded" bits of neoclassical with supply-side logic baked in.

The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

Like what?

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy,

New Keynesianism has not "energised" the economy. Growth rates have fallen. Housing bubbles and the stock market are not the economy.

that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do.

They actually don't.

*wing-shrugs* Even if you were correct to entirely dismiss the neoclassical components of New Keynesian theory, which I am not sure about but not really interested in making a bone of contention, I think my core argument is still valid.

I mean seriously, can we get away from whether or not the neoclassical components of New Keynesianism are valid? I am glad to let you have that point if we can just get away from it. If you want it, have it. I need to try to get you on my side when we are discussing issues that I think are more important. I tend to trust the opinions of highly educated scientists, but I acknowledge the possibility that the popularity of New Keynesianism, among highly educated scientists that study the economy, could be politically motivated. I don't know it, but it's within the realm of possibility. It's not important to me, and I am willing to let it go. The fact that I misled you into thinking this was important to me was an accident. I am not really interested in dying on that hill.

Then perhaps you aren't all that interested in the thread topic.

My core argument is that inequality is probably substantially more harmful in underdeveloped areas, and I think that I have more than adequate evidence for this position.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

This study might be from back in 2006, but I believe that the 2015 University of Wuerzburg study makes a similar argument:

Abstract: The inequality-economic growth debate remains unsettled. For instance, classical theories
point to the importance of incentives in increasing growth, but recent theories stress social and political
disruptions as causal factors in inhibiting growth. Conflicting empirical evidence has not helped, with
contradictory findings arising when employing different samples and alternative econometric techniques.
This study re-examines the linkage by contending that it is not surprising that past research uncovered
conflicting findings. For example, the transmission mechanism through which inequality/economic
incentives influence economic growth can be affected by factors such as urbanization and social cohesion.
Using U.S. county data over the 1990s, the empirical results suggest that the econometric results are
unstable when considering weighted regressions over the entire sample. Yet, consistent with our
hypothesized relationships, when separately considering metropolitan and nonmetropolitan samples, there
is a positive inequality-growth link in the urban sample, with the opposite holding in the nonmetro case.
Implications for both the inequality-growth literature and for public policy are discussed.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

The consensus is, if anything, the opposite re developed vs developing economies - which doesn't mean the same thing as urban vs rural, which I don't think is particularly relevant. Within-country urban vs rural differentials would apply before and after the supply-side reforms which have seen lower growth rates than the preceding Keynesian era. Productivity growth was decisively stronger when policy was aimed at demand and the income distribution was flatter.

I came from a rural area, and that rural area could have genuinely benefited from redistribution.

What I would do would be to instate a high state tax on rural property that is not currently being used for agriculture, but I would combine that with bills that provide education opportunities and housing assistance for the poorest people in those areas. This would have the effect of income redistribution.

I am tired of seeing rural land barons clinging to gigantic tracts of land that they are not using. That land belongs in the hands of families in the same area that are struggling to survive.

Fine, but that's a million miles from the claim that "supply-side economics actually do work but only in advanced economies"

 

[Patooka]

Democrat shills like Comey

Do I really need to add to this?

 

[Canard DuJour]

 

[SigmatheZeta]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory.

That doesn't make it not trickledown. It strips out the demand-side logic of Keynes and retains all the "micro-founded" bits of neoclassical with supply-side logic baked in.

The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

Like what?

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy,

New Keynesianism has not "energised" the economy. Growth rates have fallen. Housing bubbles and the stock market are not the economy.

that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do.

They actually don't.

*wing-shrugs* Even if you were correct to entirely dismiss the neoclassical components of New Keynesian theory, which I am not sure about but not really interested in making a bone of contention, I think my core argument is still valid.

I mean seriously, can we get away from whether or not the neoclassical components of New Keynesianism are valid? I am glad to let you have that point if we can just get away from it. If you want it, have it. I need to try to get you on my side when we are discussing issues that I think are more important. I tend to trust the opinions of highly educated scientists, but I acknowledge the possibility that the popularity of New Keynesianism, among highly educated scientists that study the economy, could be politically motivated. I don't know it, but it's within the realm of possibility. It's not important to me, and I am willing to let it go. The fact that I misled you into thinking this was important to me was an accident. I am not really interested in dying on that hill.

Then perhaps you aren't all that interested in the thread topic.

I usually don't break up people's posts because I find that annoying, but...huh?

My core argument is that inequality is probably substantially more harmful in underdeveloped areas, and I think that I have more than adequate evidence for this position.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

This study might be from back in 2006, but I believe that the 2015 University of Wuerzburg study makes a similar argument:

Abstract: The inequality-economic growth debate remains unsettled. For instance, classical theories
point to the importance of incentives in increasing growth, but recent theories stress social and political
disruptions as causal factors in inhibiting growth. Conflicting empirical evidence has not helped, with
contradictory findings arising when employing different samples and alternative econometric techniques.
This study re-examines the linkage by contending that it is not surprising that past research uncovered
conflicting findings. For example, the transmission mechanism through which inequality/economic
incentives influence economic growth can be affected by factors such as urbanization and social cohesion.
Using U.S. county data over the 1990s, the empirical results suggest that the econometric results are
unstable when considering weighted regressions over the entire sample. Yet, consistent with our
hypothesized relationships, when separately considering metropolitan and nonmetropolitan samples, there
is a positive inequality-growth link in the urban sample, with the opposite holding in the nonmetro case.
Implications for both the inequality-growth literature and for public policy are discussed.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

The consensus is, if anything, the opposite re developed vs developing economies - which doesn't mean the same thing as urban vs rural, which I don't think is particularly relevant. Within-country urban vs rural differentials would apply before and after the supply-side reforms which have seen lower growth rates than the preceding Keynesian era. Productivity growth was decisively stronger when policy was aimed at demand and the income distribution was flatter.

I came from a rural area, and that rural area could have genuinely benefited from redistribution.

What I would do would be to instate a high state tax on rural property that is not currently being used for agriculture, but I would combine that with bills that provide education opportunities and housing assistance for the poorest people in those areas. This would have the effect of income redistribution.

I am tired of seeing rural land barons clinging to gigantic tracts of land that they are not using. That land belongs in the hands of families in the same area that are struggling to survive.

Fine, but that's a million miles from the claim that "supply-side economics actually do work but only in advanced economies"

I think it would thereby be justification to focus redistribution on the parts of the United states, for example, that have had the slowest economic development. One solution that I have proposed has been the idea of using a progressive property tax combined with a budget for rural education reforms that are commensurate with the estimated impact of the tax. I have not gone far in exploring the feasibility of the idea, but it has personal appeal to me.

 

[Canard DuJour]

By all means (re)direct resources to areas of greatest need, rural or urban. Urban areas, however, will still be more "developed" simply because they're hubs of economic activity. Not really anything to do with whether trickledown works though.

 

[Harry Bosch]

it is Inheritance that has been and remains the driver behind increasing wealth inequality

This is true. IQ and other behaviors associated with wealth and income are highly heritable.

And yet, 85% of all family businesses that are inherited by the third generation fail; over 95% after that. I love competitors who have had everything handed to them and are entitled. They are easy to compete in the business world.

 

[SigmatheZeta]

it is Inheritance that has been and remains the driver behind increasing wealth inequality

This is true. IQ and other behaviors associated with wealth and income are highly heritable.

Some genetic contributors to potential "high IQ" are highly temperamental insofar as what they actually do. I am not actually trying to dismiss the view that intelligence has a hereditary component. However, giftedness is a type of neurodivergence, and it is possible that some people with those genetics could suffer in certain types of environments.

This is similar to saying that a high performance engine needs fuel that has a higher octane rating.

There is actually a link between bipolar disorder and high intelligence, for example.

Schizophrenia (SCZ) and bipolar disorder (BD) are severe mental disorders associated with cognitive impairment, which is considered a major determinant of functional outcome. Despite this, the etiology of the cognitive impairment is poorly understood, and no satisfactory cognitive treatments exist. Increasing evidence indicates that genetic risk for SCZ may contribute to cognitive impairment, while the genetic relationship between BD and cognitive function remains unclear. Here, we combined large genome-wide association study data on SCZ (n=82,315), BD (n=51,710) and general intelligence (n=269,867) to investigate overlap in common genetic variants using conditional false discovery rate (condFDR) analysis. We observed substantial genetic enrichment in both SCZ and BD conditional on associations with intelligence indicating polygenic overlap. Using condFDR analysis, we leveraged this enrichment to increase statistical power and identified 75 distinct genomic loci associated with both SCZ and intelligence, and 12 loci associated with both BD and intelligence at conjunctional FDR<0.01. Among these loci, 20 are novel for SCZ, and four are novel for BD. Most SCZ risk alleles (61 of 75, 81%) were associated with poorer cognitive performance, whereas most BD risk alleles (9 of 12, 75%) were associated with better cognitive performance. A gene-set analysis of the loci shared between SCZ and intelligence implicated biological processes related to neurodevelopment, synaptic integrity and neurotransmission; the same analysis for BD was underpowered. Altogether, the study demonstrates that both SCZ and BD share genetic influences with intelligence, albeit in a different manner, providing new insights into their genetic architectures.

Smeland, O. B., Bahrami, S., Frei, O., Shadrin, A., O'Connell, K., Savage, J., Watanabe, K., Krull, F., Bettella, F., Steen, N. E., Ueland, T., Posthuma, D., Djurovic, S., Dale, A. M., & Andreassen, O. A. (2020). Genome-wide analysis reveals extensive genetic overlap between schizophrenia, bipolar disorder, and intelligence. Molecular psychiatry, 25(4), 844–853. https://doi.org/10.1038/s41380-018-0332-x

I think that there could be a link between bipolar disorder and being a dragon, but I am not sure because I have not been cycling very much in the past few years. I might have been having symptoms more akin to cPTSD with the not unusual mixture of progress and setbacks, which can imitate the cycling that is also commonplace in bipolar disorder. I'm not sure how smart a dragon my size could possibly be, though. My head is about the size of a small tangerine if that.

The trouble is that these genetics do not have to manifest as mental illnesses. With the right cultivation and a calm, nurturing environment, a person with the same genetics that would otherwise result in them requiring in-patient care could turn out to be a highly talented individual, and that person could contribute things to our society that nobody else really could.

However, intelligence is really less of a defining factor in your income than conscientiousness. Apparently, the personality trait of conscientiousness has the most consistent link with lifelong income of all personal characteristics.

The reason why is probably more closely linked with the fact that people with high conscientiousness tend to have more serious drops in life satisfaction related to their income. There is actually a dark side to the trait, weirdly enough.

Conscientious individuals tend to achieve more and have higher well-being. This has led to a view that conscientiousness is always positive for well-being. We hypothesize that conscientiousness could be detrimental to well-being when failure is experienced, such as when individuals become unemployed. In a 4-year longitudinal study of 9570 individuals interviewed yearly we show that the drop in an individual’s life satisfaction following unemployment is significantly moderated by their conscientiousness. After 3 years of unemployment individuals high in conscientiousness (i.e. one standard deviation above the mean) experience a 120% higher decrease in life satisfaction than those at low levels. Thus the positive relationship typically seen between conscientiousness and well-being is reversed: conscientiousness is therefore not always good for well-being.

Martina Luchetti, James M. Barkley, Yannick Stephan, Antonio Terracciano, Angelina R. Sutin
Five-factor model personality traits and inflammatory markers: New data and a meta-analysis
Psychoneuroendocrinology, Volume 50, 2014, pp. 181-193

The dark side of conscientiousness: Conscientious people experience greater drops in life satisfaction following unemployment

Conscientious individuals tend to achieve more and have higher well-being. This has led to a view that conscientiousness is always positive for well-b…

www.sciencedirect.com

Whereas I am a miniature dragon: I do not even require clothes. Feed me a little bit of sushi or some nova lox, and I am good to go. I make a very inexpensive pet, and I am extremely useful as a therapy animal.

While it is true that there are genetic contributors to very high intelligence, you cannot force a highly gifted individual to care about the same things that you care about. That person might not care about money at all. In fact, that person might become fixated on a cause that most people regard as unhinged and wacky, and they might be near the end of their lives before their efforts are widely accepted by most people. Frank Kameny was undeniably one of the most gifted individuals in history, but by the time the majority of people would have accepted that Frank Kameny is a true historical hero rather than either a madman or a villain, he had one foot in the grave.

This is one of the reasons why I think that my tovarish @bilby had a very solid point when they pointed out that it would be misguided to make "the economy" the only measurement we made regarding the health of our society. It constitutes putting the cart before the horse. I do not eat in order to work, but I work in order to eat. I do not live in order to eat, but I eat in order to live.

Regardless of whether @Canard DuJour understands my admittedly bizarre way of thinking or not, I really agree with them that "trickle-down" thinking is cancer. Even though we might be able to generate a large quantity of wealth by ignoring the inequality between the richest and poorest Americans, the richest and most powerful Americans ultimately end up abusing that wealth and power. Ignoring the wealth gap results in corroding our democratic institutions. Feeding that kind of system is like feeding a cancer.

Feeding a cancer makes it grow, but that does not mean that the cancer is good for you. As long as there are extremely powerful individuals in this country that do not honor our democratic institutions, they are cancer, and the only way that you can fight cancer is to starve it.

I do not really care so much that Elon Musk is a billionaire. If I really believed he were an ally to the cause of democracy, then I would support giving him a noble title and a few horses if he wanted them. The most egalitarian countries in the world still have de jure nobility. Canada is substantially more egalitarian than the United States, and they technically have a queen. Elon Musk is not true aristocracy, though. He only thinks about himself and his own pet projects. He is willing to sit idly by and watch our democratic institutions die. The fact that he is a billionaire is not the problem. The problem is that he could help protect our democratic institutions, but he won't.

Fighting cancer might cause us to suffer, in the short-term, but tough. Chemotherapy kills healthy cells as well as cancerous ones.

You cannot measure a society's health based only on the size of its collective bank account.

 

[funinspace]

A minor nitpick: It is my impression that most people consider the Golden Age of Capitalism came to a close with the 1973 recession in the US; and after a quick check, a couple years prior for the UK. So I'm not sure why 1980 is in that GIF...

 

[SigmatheZeta]

Reagan was the arsonist that framed the fireman.

 

[SigmatheZeta]

By all means (re)direct resources to areas of greatest need, rural or urban. Urban areas, however, will still be more "developed" simply because they're hubs of economic activity. Not really anything to do with whether trickledown works though.

The reasons why rural areas are not hubs for economic activity is that we that their societies are effectively stranded in the dark ages. They are effectively failed economies. The place where I came from has a tremendous abundance of natural resources, and they have failed to grow. In fact, their population has contracted in spite of an above average fertility rate. There are literally more people in my condominium complex than there are in the town that I grew up in, and I trust the HOA here better than I trust their government. I left because it was a loo. People just get tired of it. I got tired of it.

The worst part, though, is that there is a huge "arsonist that framed the fireman" phenomenon that goes on in those kinds of areas.

And they are hideously abusive toward dragons. Look, just because I am a dragon does not mean that I set fire to economies. They don't taste good burned, and besides, I am a pescetarian. I do not even eat dairy products very often, except this really hard to turn down pizza in downtown Raleigh. It is super-cheesy, and it has shiitake mushrooms. I have talked to them about the possibility of getting vegetarian alternative cheeses. I would be willing to pay them more. I just worry about the way that dairy cows are sometimes treated. They smile and tell me, "That is a very good idea!" Riiiiight. So they have the single best mushroom pizza in town, and all they have to do to get me to come every single week is to keep some vegetarian cheeses in the fridge. I would gladly pay the mark-up.

Look, dragons live in caves. We have a thing for shrooms.

Somehow, we need to chart a course toward breaking down the corrupted power structures that retard the growth of areas like the place where I grew up. It is not enough just to give those areas money. As long as those dysfunctional power-structures are present, they will retard growth. They don't just need money, but they need comprehensive social change. We need to shatter the stranglehold of the establishment in those areas.

*breathes a gout of flame* It enrages me. They don't even develop their own land. The most they do to develop it is to occasionally call in International Paper to harvest the trees there in exchange for what amounts to a pittance for what it is really worth. They watch pine trees grow, drink themselves stupid, and murder non-humans in the area for entertainment. We could probably fix most of society's ills by making it a crime to murder non-humans unnecessarily.

It's not enough to just fund their education systems, but we need to impose new laws that make it harder for them to maintain a cultural hegemony in those areas. We need to disincentivize land-hoarding, and we need to incentivize the development of new public parks and recreational areas and publicly funded art galleries and public theaters and sheltered marketplaces where small businesses can grow. We need to take away the incentives for corruption and instill new incentive structures that reward creativity.

While they might try to go to war in order to stop you, a bank robber shoots at the cops that come to take away their loot.

Those corrupted power structures need to be strangled.

 

[Harry Bosch]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory.

That doesn't make it not trickledown. It strips out the demand-side logic of Keynes and retains all the "micro-founded" bits of neoclassical with supply-side logic baked in.

The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

Like what?

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy,

New Keynesianism has not "energised" the economy. Growth rates have fallen. Housing bubbles and the stock market are not the economy.

that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do.

They actually don't.

*wing-shrugs* Even if you were correct to entirely dismiss the neoclassical components of New Keynesian theory, which I am not sure about but not really interested in making a bone of contention, I think my core argument is still valid.

I mean seriously, can we get away from whether or not the neoclassical components of New Keynesianism are valid? I am glad to let you have that point if we can just get away from it. If you want it, have it. I need to try to get you on my side when we are discussing issues that I think are more important. I tend to trust the opinions of highly educated scientists, but I acknowledge the possibility that the popularity of New Keynesianism, among highly educated scientists that study the economy, could be politically motivated. I don't know it, but it's within the realm of possibility. It's not important to me, and I am willing to let it go. The fact that I misled you into thinking this was important to me was an accident. I am not really interested in dying on that hill.

My core argument is that inequality is probably substantially more harmful in underdeveloped areas, and I think that I have more than adequate evidence for this position.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

This study might be from back in 2006, but I believe that the 2015 University of Wuerzburg study makes a similar argument:

Abstract: The inequality-economic growth debate remains unsettled. For instance, classical theories
point to the importance of incentives in increasing growth, but recent theories stress social and political
disruptions as causal factors in inhibiting growth. Conflicting empirical evidence has not helped, with
contradictory findings arising when employing different samples and alternative econometric techniques.
This study re-examines the linkage by contending that it is not surprising that past research uncovered
conflicting findings. For example, the transmission mechanism through which inequality/economic
incentives influence economic growth can be affected by factors such as urbanization and social cohesion.
Using U.S. county data over the 1990s, the empirical results suggest that the econometric results are
unstable when considering weighted regressions over the entire sample. Yet, consistent with our
hypothesized relationships, when separately considering metropolitan and nonmetropolitan samples, there
is a positive inequality-growth link in the urban sample, with the opposite holding in the nonmetro case.
Implications for both the inequality-growth literature and for public policy are discussed.

https://www.researchgate.net/profile/Mark-Partridge/publication/24053757_The_Elusive_Inequality-Economic_Growth_Relationship_Are_There_Differences_between_Cities_and_the_Countryside/links/561bbb3508aea80367242c95/The-Elusive-Inequality-Economic-Growth-Relationship-Are-There-Differences-between-Cities-and-the-Countryside.pdf

I came from a rural area, and that rural area could have genuinely benefited from redistribution.

What I would do would be to instate a high state tax on rural property that is not currently being used for agriculture, but I would combine that with bills that provide education opportunities and housing assistance for the poorest people in those areas. This would have the effect of income redistribution.

I am tired of seeing rural land barons clinging to gigantic tracts of land that they are not using. That land belongs in the hands of families in the same area that are struggling to survive.

The idea that land should always be economically productive is a bizarre and obscene concept that I thought had died in the middle of the twentieth century.

We shouldn't ever be thinking about what we can do to improve the economy. We need to think about how we make the economy improve things for us - all of us.

It's far from sufficient that an economic theory works. Nuclear weapons work, but that's not an argument for using them.

Someone needs a house large enough to raise a family in, maybe a yard large enough to keep a dog in, and MAYBE enough room for a mini-horse or a well-behaved pony. They do not need several acres of disused land that they are clinging to just in order to sell it for a higher price at a later date.

I disagree. We have 10 acres. About 1/2 is wetlands that isn't developable. It's an incredible wildlife area. Secondly, the area we live in is eligible to be subdivided. We wanted the excess land for wildlife. After my wife and I are dead, the land will be converted to a preserved space.

 

[Elixir]

I’m with Harry.
I may have to break off a few acres and sell it for development, but most of our acreage is going to end up belonging to a conservancy when we’re gone. There are only some 750 feet of river frontage accessible to wildlife where there was almost a mile when we built, and all 750 feet is on our property. It is VERY well tread by a full menagerie of characters who lived here before we did, and I hope they’ll be here for the long term.

I was told that the river frontage is worth 3k per foot. The conservancy might give us a tenth of that.

 

[Elixir]

Also, FWIW, trickle down economics was, and remains, a scam. Pure evil foisted off on an ignorant public by the shamefully well-heeled.
But you knew that (if you’re not G55).

 

[SigmatheZeta]

@Elixir

In the area where I grew up, they are not really keeping that land "pristine," but they just periodically have International Paper come in with their logging trucks. Personally, I am a supporter of parks and nature preserves. I believe that Theodore Roosevelt had it right. Ecologically unique areas belong to everybody. I believe they belong to the people.