In any kind of non-uniform distribution of any good, the top x % will always own a disproportionate (wrt to headcount) amount of it (In economic systems, this mathematical fact is further amplified by other factors such as financial literacy and leverage).
What's always missing to me in these types of discussions is what this value should be at, and what the distribution should look like qualitatively (i.e. what should the ideal Lorenz curve look like).
Is there any discussion/research/case study analysis where this is explored? I.e. overall citizen satisfaction/economic productivity and how it relates to wealth distribution?
I personally think we should resist the temptation to separate out values from the discussion. Like, even if it was the case that some extremely high-level of inequality turned out to be "optimal" in some GDP-maximizing way, the question still ought to hinge on some notion of fairness or justice (in my view).
(Although, I guess if your metric is "citizen satisfaction" maybe that's not as terrible).
In any case, there are lots of case studies showing what happens at the extreme inequality end of the spectrum. As I mentioned in another comment, my favorites come from Piketty "Capital in the 21st Century" and Acemoglu & Robinson "Why Nations Fail".
In the latter, the case study on the rise and fall of Venice is particularly fascinating - huge economic growth due to inclusive economic institutions that promoted social mobility, followed by a downturn once the aristocracy moved to entrench their own interests at society's expense. This seems to be the central thesis of the book, although I'm only a few chapters in.
The parallels with modern US politics are pretty hard to ignore though.
I haven't read the examples you mentioned, do they point toward the source of the instability being extreme inequality, or the lower (economic) classes being unable to survive in dignified conditions? (read: can we tolerate great inequality if it comes with increased standards of living for everyone?)
I mean, it seems possible that with greater absolute wealth people might tolerate greater relative inequality but like … why run the experiment?
Anyway, that’s the path we are on - Piketty doesn’t hazard a guess about if/when society collapse, IIRC the point is just that things will only continue to get more unequal unless there’s a major crisis or some political intervention (e.g wealth or inheritance taxes - imagine trying to get the US to agree to that lol).
Also you can’t ignore relative inequality because wealth is strongly coupled to political power/influence.
Look at the head of DOGE - he spent $300m to get himself a top gov role, in charge of regulating his own business and restructuring US gov spending to suit his own whims.
In terms of percentages / orders of magnitude it’d be like your avg citizen spending $100 for a top gov role.
>In any kind of non-uniform distribution of any good
Not in any kind. It is absolutely the case, if there's mostly untaxed generational wealth transfer.
Imagine this - you are born in this world with nothing. And every parcel of land and property is owned by somebody - somebody who with high likelihood inherited it or hundreds of millions or billions of assets on spawn.
Now obviously, you can inherit all sorts of other factors too - like very valuable social networks and a set of trade skills carefully passed down and tought. But even neglecting those, the largely untaxed generational wealth transfer would naturally lead to massive inequalities and disproportionate amounts of wealth concentrated in few families.
That statement had nothing to do with taxes or inheritance (or any specific financial process in fact). It was simply a (admittedly rather reductive) mathematical statement, which remains true independently of the nature of the underlying good.
My point was that pointing out "Top x% own Top x+y% of good z" doesn't say anything meaningful without contextualizing why (if) this is a bad thing, and what x and y should be for a given z.
Saying "non-uniform distribution" doesn't actually purvey any insight or mathematical "truth" and reveals almost nothing about the actual distribution - other than stating that it's non-uniform (well, duh!).
What you are doing - in essence - is making it sound like gigantic economic inequalities and wealth concentrations in hands of few families are some underlying, unavoidable fact of universe.
While in reality they are - largely - a result of unlimited, largely untaxed generational wealth transfer. And outcomes of other similar policies.
>My point was that pointing out "Top x% own Top x+y% of good z" doesn't say anything meaningful
No, it does. It shows just how grossly wealth is increasingly captured by a small amount of people.
Depending on what those x, y and z, you can gauge the actual shape of the "non-uniform distribution" and how it changes over time. Which is exactly the point.
> Saying "non-uniform distribution" doesn't actually purvey any insight or mathematical "truth" and reveals almost nothing about the actual distribution - other than stating that it's non-uniform (well, duh!).
I'm not sure if you're aware, but you're arguing my point. Without contextualizing the numbers, the headline tells us only that not everybody has the same amount of X.
> It shows just how grossly wealth is increasingly captured by a small amount of people.
The sloganeering and lack of explaining which numbers qualify as "gross" and which as acceptible and worth striving for under headlines like this is precisely what I'm criticizing.
Is it still gross inequality if the top 10% own 60% of wealth? 50%? 20%?
The most in-depth historical and empirical analysis of wealth inequality that I know of was done by Picketty et al. He is quite famous, so you can easily google his main research findings.
The upshot is that wealth inequality is above or close to historical high points and that it has actual and severe real world negative consequences.
I think we can start with the work of Gary Stevenson. He made a few points on why inequality is bad.
When there’s massive inequality in the system, the super rich will compete with you for resources. Resources can include:
- Housing, of which fewer and fewer people could afford owning at the median income level
- Education, think buying access to spots at top schools and the ability to afford the fees/debt
- Political power, think Elon Musk in the western world
- Media/consensus, think Jeff Bezos, and think blaming of immigrants for house prices
- In the current tax system, the super rich could inherit wealth while paying very little tax, and they can borrow money at very low rates collaterized with the massive amounts of assets their own: meanwhile some of us pay a 30-50% tax on our income and are struggling to save for a downpayment or retirement.
With the massive financial power of the super rich, it’s not so much that this is bad in an “evil” way. Rather, it’s bad for the rest of us because the super rich are indifferent to us in pursuit of their own agendas in the “cosmic indifference” kind of way. Just as how we humans destroy anthills with an indifference if they get in the way of road constructions, the super rich would “run over” us if it benefits them.
> What's always missing to me in these types of discussions is what this value should be at, and what the distribution should look like qualitatively (i.e. what should the ideal Lorenz curve look like).
Just looking "more uniform" would be a great starting point. The optimal distribution is left as an open question for future research.
Not having the perfect solution upfront should not block incremental improvements, which is more or less what is happening ATM. E.g. people argue we cannot have free healthcare because the proverbial "welfare queen" will also receive it.
> The optimal distribution is left as an open question for future research.
What makes you think the optimal distribution is "more uniform" rather than less?
I'm not taking sides in this question, simply pointing out that the headline is rather meaningless without context
I doubt you can put a number on what the optimal distribution should look like without making some overly simplified model that necessarily ignores something important.
At the same time, one could imagine a situation where wealth is so abundant that even the lowest 1% could afford any modern luxury. In that case it probably wouldn't be so bad if the top few wealthiest individuals had enough money to buy and own whole planets. They would likely use their wealth to make life worse for others, as they tend to, but that's out of the scope of this model.
Is there any discussion/research/case study analysis where this is explored? I.e. overall citizen satisfaction/economic productivity and how it relates to wealth distribution?