Income inequality

It seems that an underlying driver in the dissatisfaction that the Occupy movement has stems from a certain level of inequality in regards to income and wealth. Hence the resentment towards the top 1% (which in the US nowadays means a yearly income of roughly 300-400k or total assets of 5-10M dollars).  There is actually a fairly interesting podcast which was published recently by EconTalk on the inequality and the top 1%, although one should bear in mind potentially biases considering its a fairly libertarian publication.

But that got me thinking in a tongue-in-cheek fashion. I was recently lectured to by some people who wished to save the world that inequalities are bad and they showed some very convincing-looking diagrams which apparently prove that social problems stem from financial inequality. Or at least that there is a significant correlation if not a causality link. Can't really argue with the data, but I think there may be more going on than a single snapshot in time can capture.

Anyway, if we accept at face value that inequality is bad per se, then obviously we should try to decrease inequality. I'm always slightly hesitant of taxing the hell out of people since that gives the politicians too much money to do silly things with. So if there is a natural way of decreasing inequality, it would be nice. And it turns out that there is. It's called the recession. We now have data from the last credit crunch and the years following which shows that inequality has decreased, which must be good. And apparently the recession and all the fuss is driving it. The conclusion then must be that to make the world a better place for everyone (by making it a more equal place), we must create a sustained state of recession whereby the financial inequality would sort itself out.

Now, the sharper sticks in the crowd will no doubt already start thinking about different types of scarcity effects which may emerge as well as innovation and its links to crisis situations. And of course there is a very real risk that something very innovative might come out of this. Unfortunately, however, innovations tend to get productized and someone may get very wealthy from creating something useful. This in turn will widen the gap between the haves and the have-nots, and this time the recession might have created this. So what the politicians could do is ensure that none of these heroes who might innovate themselves out of the recession can actually do so. And considering the track record of politicians in general, I feel very confident that they would be able to kill off all innovation.

So, there we go. Instead of worrying too much about reducing GDP numbers, prolonged recession or the fall of the euro, we should instead embrace all the chaos as it will reduce inequality and let's face it, inequality is supposedly the result of all evil. Ergo, the world will become a better place.

Tongue still in cheek.