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Does Income Inequality Matter?

Cliff posted more than 7 years ago | from the an-issue-worth-discussing dept.

United States 1186

theodp is concerned about the following: "Alarmed by Goldman Sachs CEO Lloyd Blankfein's record-setting $53M bonus, Charles Wheelan (aka The Naked Economist) argues that income inequality matters. Wheelan notes that the Gini Coefficient (a measure of income inequality) for the U.S. has been moving away from countries like Japan and Sweden and closer to that of Brazil, where the murder rate is 5X that of NYC and crime is materially impacting GDP."

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Correlation... causation (0, Flamebait)

nacturation (646836) | more than 7 years ago | (#17574652)

Wheelan notes that the Gini Coefficient (a measure of income inequality) for the U.S. has been moving away from countries like Japan and Sweden and closer to that of Brazil, where the murder rate is 5X that of NYC and crime is materially impacting GDP.
So the bonus pay for a corporate executive somehow directly correlates with an increased crime rate?
 

Re:Correlation... causation (5, Interesting)

spun (1352) | more than 7 years ago | (#17574726)

Income inequality drives crime. When everyone is poor, no one steals from each other. When everyone is rich, everyone steals from each other, but there are rules. When some people are very, very rich and some are poor, the poor feel justified in evening out the unfairness through direct action. If everyone had their basic needs met, I don't think income inequality would matter as much. But as long as some people are desperare and feel they are being screwed, and they can find an easy target in a rich person, there will be crime.

Re:Correlation... causation (5, Funny)

Wandering Wombat (531833) | more than 7 years ago | (#17574870)

What the hell are you doing posting on Slashdot? You're obviously WAY too smart for that.

Mod parent up, big time.

Re:Correlation... causation (2, Informative)

Anonymous Coward | more than 7 years ago | (#17574986)

Well, it is hard to directly pinpoint cause and effect, but violent crime is on the rise in the US. Many experts are predicting that there will be a major crime wave in US over the next few years. See this story from NPR [npr.org]

Re:Correlation... causation (5, Insightful)

flynt (248848) | more than 7 years ago | (#17575040)

If everyone had their basic needs met, I don't think income inequality would matter as much.

Possibly, but as the article points out, happiness and contentment is not so much our absolute wealth, but our relative wealth. Many have their basic needs met, but still feel obligated to put in long hours to increase their relative wealth. The Economist's holiday issue had a nice article on this research.

Re:Correlation... causation (5, Insightful)

iPaul (559200) | more than 7 years ago | (#17575046)

Bingo - that's it on the nose. It's not that my stack of little green slips of paper is not as tall as you stack. It's that my child dies of leukemia because I don't have enough money to see a doctor, while you child goes to the best hospitals on the planet for a mild thyroid condition. It's about access to health care, education, nutrition, and in some sense luxuries. Imagine how it galls some people in brazil that a group of Porsche driving Yuppie kids spend more money in one night on dinner than they make in a year.

Re:Correlation... causation (-1, Troll)

m0rph3us0 (549631) | more than 7 years ago | (#17575358)

Yuppie kids or their parents also produce more in a day than people in Brazil produce in a year. Hence, they get paid more. Brazil's economic woes are due to a) their economic policy and b) the fact that their people produce less than the western setup. If everyone in Brazil made the same amount of money they'd still be poor. Being poor is a result of being a thief and not the other way around. Everyone steals and destroys in Brazil rather than producing.

People don't realize that profit is a COST of efficiency, if you don't pay for it you don't get it. By allocating capital to where it is best used Goldman Sachs produces huge wealth for everyone. If you can do a better job than Goldman, the market WILL pay you more than Goldman, just look at how much wealth Buffet has made by allocating capital.

Re:Correlation... causation (3, Insightful)

ChibiOne (716763) | more than 7 years ago | (#17575052)

If everyone had their basic needs met, I don't think income inequality would matter as much...
I understand your argument. But an armed robbery or a burglar sneaking into someone's house are totally different things from an organized kiddnapping, a serious problem in some Latin American countries. Those bastards don't feel desperate and they don't feel they are being screwed. They have their basic needs more than met to begin with. And yet, there you have them: terrorizing families, demanding monstruous ransoms and mutilating, even killing their victims even after getting their "pay".

Re:Correlation... causation (5, Insightful)

spun (1352) | more than 7 years ago | (#17575248)

It is important to remember that no matter how horrific the crime, it happens for a reason. Those reasons are only rarely completely internal to the criminal. Calling somone a bastard, while a reasonable response to such horrors, isn't helpful. It amounts to throwing up one's hands and saying, 'the devil made him do it.' It's not an explanation, but an expression of emotion. In order to come to grips with crime, we must put aside emotion and analyze the root causes dispationately. I say this as a victim of violent crime who was permaently handicapped in an attack.

Re:Correlation... causation (2, Insightful)

Anonymous Coward | more than 7 years ago | (#17575092)

When everyone is poor, no one steals from each other.

This statement is simply wrong. Poor people who steal, steal from their neighbors. They don't go into the nice neighborhoods to do it.

Re:Correlation... causation (1, Troll)

spun (1352) | more than 7 years ago | (#17575330)

This is true, in America and other places with high income inequality. It doesn't seem to be true in really poor countries, where even starving people seem to stick together. Why do you suppose that is?

Re:Correlation... causation (3, Interesting)

Archangel Michael (180766) | more than 7 years ago | (#17575180)

"But as long as some people are desperare and feel they are being screwed, and they can find an easy target in a rich person, there will be crime."

PS3, XBox360, Wii, Nike Shoes .....

People have been Killed, robbed, beatened, and otherwise harmed by people's greed to acquire these products. Yet, none of these are items that are within the definition of "basic needs". Nobody "needs" these.

The "poor" Americans are some of the richest people in the world, just look at the obesity levels. Truly "poor" people are literally dying of starvation, worry about their next meal, wonder where they will sleep tonight.

I am SICK of the poverty pimps of America describing the "plight" of the American poor. With very little effort, and one can get a job, find a place to stay, and have a life, as evidenced by the MILLIONS of Latinos streaming across the boarder to take jobs that no American wants.

I know, I've been "poor". I've also know what its like to have to get up off my ass and get a job, and do crappy work for a living. If one works hard, is honest and never stops learning, one can end up in IT, with a decent wage. But it does require SOME effort, and not quitting ... EVER.

Americans are a bunch of whiney wimps who would rather get rich quick, while being poor, than work hard.

Re:Correlation... causation (3, Insightful)

LordPhantom (763327) | more than 7 years ago | (#17575354)

Americans are a bunch of whiney wimps who would rather get rich quick, while being poor, than work hard

Ok, I'll bite. You had me up until that statement. You, sir, apparently like to make sweeping generalizations about a group of people you obviously understand little about.

I'll put this in a bite-sized mental morsel for you: There are -some- poor folks who live off the charity of others, and there are -some- rich people who live off their connections. Just like every other country in the world. But that doesen't apply to everyone, there is an extremely large group of hard working middle class folks propping up the economy here, if you really worked hard and came from the background you say you did, you would know that.

Re:Correlation... causation (1)

ROU Nuisance Value (253171) | more than 7 years ago | (#17575224)

Folks, if you bother to look at statistics, NEARLY ALL street crimes involving theft or some other form of pecuniary gain (like burglary, robbery, and the related murders) are committed BY poor people ON poor people, not by poor people on the rich. That's true in the US, and around the world. What most of the comfortable idiots in the US are terrified of is that poor people will finally wake up to the sources of their situation and do precisely what parent assumes is already occurring. Laughable; they've never done it before, why should they start now?

Re:Correlation... causation (0)

ArcherB (796902) | more than 7 years ago | (#17575244)

Income inequality drives crime. When everyone is poor, no one steals from each other.
You mean there is no crime in Communist countries where everyone gets the same check? Is there no crime in poor neighborhoods?

When everyone is rich, everyone steals from each other, but there are rules.
Everyone is rich in America, compared to most of the world. Are we all stealing from each other?

When some people are very, very rich and some are poor, the poor feel justified in evening out the unfairness through direct action.
This may only true if there is no opportunity for the poor to pick themselves up. I would point out a caste system as an example, but I don't know what the crime rates are in India. According the the Gini numbers mentioned in TFA, this would mean that the US has one of the highest crime rates in the world! I don't think that is the case.

If everyone had their basic needs met, I don't think income inequality would matter as much.
Here in America, there is no reason for anyone to starve or have their basic needs met. In communist countries, basic needs are met by the gov't. Is there no crime in America or communist countries?

But as long as some people are desperare and feel they are being screwed, and they can find an easy target in a rich person, there will be crime.
People feel they are getting screwed because they are told they are getting screwed. This class-warfare bullshit is getting really old, really fast. The poorest in America live better than the vast majority of the world, but they are not shown that. They are shown how the "rich and famous" live on TV and they think that they are getting screwed because they don't live like that. If they showed starving kids instead, they might feel pretty good about the four walls on their trailer-house.

It's class division that makes people steal, it's a lack of morals. Granted, if I'm starving, I will steal a loaf of bread to feed my family, but that's not what we are talking about here. My father lives in a 1970's built trailer house in East Texas. He is what most people in the US would call "dirt poor". He refuses help and doesn't steal, or cheat or really commit any other crimes with the exception public intoxication. He works hard for what he has building "chicken houses" for those in the area with more money and land than he has. He lives the way he does because he has social issues and he's not comfortable in places with other people. Still, he's happy with what he has and has no problems with his lifestyle. But by your post, he should one of the biggest outlaws in Texas because he's poor and there are others around him who are rich.

   

Re:Correlation... causation (1)

JavaLord (680960) | more than 7 years ago | (#17575256)

income inequality drives crime.

Not really, the type of income inequality drives crime. Consider this...If the lower/middle class in the US made 100,000 while the upper class made an average of 10 million a year, you wouldn't see much crime.

When everyone is poor, no one steals from each other.

This isn't true, see Africa, or any ghetto in the US. It isn't income inequality that contributes to it as much as lack of income. A person who makes $0 will steal from someone who makes $15k, but we don't consider 15k to be anywhere near rich.

When everyone is rich, everyone steals from each other, but there are rules.

Not really, but I'm sure that will appeal to the marxist crowd.

When some people are very, very rich and some are poor, the poor feel justified in evening out the unfairness through direct action. If everyone had their basic needs met, I don't think income inequality would matter as much.

There will always be crime of some type, but yes poverty does fuel it. It doesn't matter that others are rich, so much as that you are poor and have nothing to lose. If you have stuff to lose (ie a middle class living, a family, your freedom) then crime isn't as 'worth it'. That doesn't eliminate crime, there are people who make a decent living who still steal or cheat, they just have less motivation to do so.

But as long as some people are desperare and feel they are being screwed, and they can find an easy target in a rich person, there will be crime.

'Rich' people aren't always easy targets, and there are a lot more factors that go into crime than just economics. To name a few: Race, Religion, Gender, Boredom, Drugs, Mental state, etc.

Re:Correlation... causation (0)

Anonymous Coward | more than 7 years ago | (#17575276)

"When everyone is poor, no one steals from each other."

It's obvious that you are not only not poor, but you've had very little contact with the poor. What's one the main complaints the homeless have about homeless shelters? - their stuff gets stolen.

You'd get closer to the truth with a statement like 'when everyon is poor, everyone steals from each other, but there are no rules'.

Re:Correlation... causation (3, Insightful)

eln (21727) | more than 7 years ago | (#17574792)

Obviously that very narrow event does not cause greater violence, but it can certainly be argued that larger income disparity results in greater civil unrest, which will often manifest as violence and other criminal activity (looting, etc).
   

Re:Correlation... causation (5, Insightful)

246o1 (914193) | more than 7 years ago | (#17574830)

There is a limited amount of wealth in our society. It is not an entirely zero-sum game, but it is true that the more wealth the richest have, the less the rest of us have. If you were to take half the money of the richest 10% of Americans and spread it out among the poorest 40%, you'd probably take one of the biggest steps in history towards eliminating poverty.

Not only does America have greater income inequality, but it matters more in America. There's no universal health care, social security is dependent upon you paying into it (something many people forget), single parents are expected to work full-time from the time their child is about 2 months old, etc. Basic benefits that everyone shares equally reduce effective income inequality, and there is a well-known link between desparate poverty and crime.

Furthermore, think of the social problems associated with income inequality. The rich can basically buy and sell poor people, you can see this with many of the semi-rich sex tourists in SE Asia, but the same kind of things are possible in America. The poor have no reason to trust people who run a society that is blatantly rigged against them. Et cetera et cetera

Re:Correlation... causation (3, Interesting)

pipatron (966506) | more than 7 years ago | (#17575106)

Not only does America have greater income inequality, but it matters more in America. There's no universal health care, social security is dependent upon you paying into it (something many people forget), single parents are expected to work full-time from the time their child is about 2 months old, etc.

The reason it matters more in America is because of the greater income inequality. In Sweden (good example since I live here.. :P), the higher taxation and minimum wages, and also a non-linear taxation where people who earn more will not only pay a higher tax but even a bigger share of their income, results in a smaller income inequality. This money goes into public healthcare and social security, in order to basically make sure that even if you're the lowest drug-addict scum on earth, you don't have to steal anything, but can just show up at the social security office and get more than enough money to buy everything they need (except, unfortunately for them, the drugs).

This does not stop all crime, of course, since the drug addicts prefer to buy drugs and alcohol for the money and then live on the streets, and there are always a lot of people that still aren't happy with what they got but rather want to have more. There are also the people that are here illegally, which means that they can't get any help from the government.

It does, however, help a great deal.

What BS (3, Insightful)

XanC (644172) | more than 7 years ago | (#17575302)

Wealth couldn't be less of a zero-sum game. And I guarantee that if we tried your crazy plan of taking half the rich people's money and giving it away, within a year we'd be right back where we started. Why? Because the rich keep on making the decisions that made them rich, and the poor keep on making the decisions that made them poor*.

*Note: I don't believe anyone in America is truly "poor", except by choice.

Typical straw man (5, Interesting)

Flying pig (925874) | more than 7 years ago | (#17574836)

Nobody said that - you are just creating a straw man to knock down. Correlation is correlation, it cannot be direct or indirect. Either variable a has a positive or negative correlation with respect to variable b, with an given level of significance, or it does not. There is no "direct or indirect" about it.

Causality is different, of course, though "indirect cause" is a very medieval concept.

I don't think anybody would suggest that paying a banker a lot of money will suddenly cause someone to become a street robber. But if there is a correlation become income inequality and crime, and given the high cost of crime, there is a case for investigating the nature of any relationship.

As an example, it is known that high incomes in the City of London are associated with cocaine use. This inevitably brings rich people into contact with drug dealers. Given the profits to be made, it might be that the existence of a rich and rather well protected class of drug users made them a very attractive target for drug dealers, causing increased competition for access to this market. Since drug dealing is an illegal, unregulated market, this might cause more turf wars and therefore more visible drug-related crime. That is a possible chain of causation which, if correct, could have implications for policy on drugs (e.g. toleration and a legalised market.)

The US has, I believe, nearly 2 000 000 people in prison. This is a big enougfh cost item that it needs proper study.

Re:Typical straw man (4, Interesting)

Rob the Bold (788862) | more than 7 years ago | (#17575324)

The US has, I believe, nearly 2 000 000 people in prison. This is a big enougfh cost item that it needs proper study.

A little over a decade ago, I was asked to do a little research. I worked at a company that put phones in jails for prisoners to call their moms, wives and girlfriends (collect). Boss wanted to find proof that this was a growth industry. I was the only engineer there, so math-related problem came to me. A little digging at the library showed that the population of at federal, state, county and local detention facilities was roughly doubling every 10 years.

Good news for the company: customer base was growing faster than US population at large. Bad news for everyone else: if trend continued everyone would be in jail sometime around 2070. I assumed (to myself) that this trend couldn't coninue for that long . . .

I hadn't checked the numbers lately, but in the mid 90s the population was about 1 million. So if your 2 million figure is right, we're still on track.

Re:Correlation... causation (1)

photozz (168291) | more than 7 years ago | (#17574874)

I would tend to agree. I would attribute it more to ineffective police and court systems and massive corruption as opposed to an income disparity.

Re:Correlation... causation (3, Insightful)

BeBoxer (14448) | more than 7 years ago | (#17575060)

I would attribute it more to ineffective police and court systems and massive corruption as opposed to an income disparity.

Because clearly, there is no relationship between these three. How could there possibly be a relationship between having lots of desparately poor people and an overworked/ineffective court system? Or between having obscenely rich folks and corruption?

This is /. (1, Funny)

blueZ3 (744446) | more than 7 years ago | (#17574878)

Anyone who makes more than you is an evil overlord whose moral turpitude threatens the very fabric of our free society.

Re:This is /. (1)

bdonalds (989355) | more than 7 years ago | (#17575182)

This is /. Anyone who makes more than you is an evil overlord

Wait...I thought we for one welcomed them...Did I miss a memo?

Re:Correlation... causation (0)

Anonymous Coward | more than 7 years ago | (#17574920)

So the bonus pay for a corporate executive somehow directly correlates with an increased crime rate?

Short answer: yes.
This can be seen in South Africa in the last 20 years after segregation ended - putting haves right next to have nots pushes up the crime rate.

Re:Correlation... causation (4, Insightful)

WhiplashII (542766) | more than 7 years ago | (#17575088)

The other crazy thing he says is that based on the data element:

a majority of Americans would prefer to earn $100,000 while everyone else earns $85,000, rather than earning $110,000 while everyone else earns $200,000.

he concludes:

that a nation may be collectively better off (using some abstract measure of well-being) with a smaller, more evenly divided pie than with a larger pie that's sliced less equitably

Didn't we just establish that people are unhappy unless they make more than their neighbor? Equivalence is not enough - just ask your neighbor! So the real result of this is that we should never publish who received the salary, so that you can assume that you are still the highest paid among your peers.

And that, I think are the key words: your peers. None of us aspire to being Trump - not with that hair. But we want to make more than our peers do - that's a common enough aspiration.

Re:Correlation... causation (1)

Bob9113 (14996) | more than 7 years ago | (#17575164)

So the bonus pay for a corporate executive somehow directly correlates with an increased crime rate?

Excellent summary of the linked article. That is precisely the question that the author of the article poses. He also offers a brief analysis of the pros and cons of inequal income distribution, and some research that facilitates pondering the question.

Or were you hoping that there would be some polemic pre-digested answer so you could rant one way or the other? Alas, the article is an invitation to cogitate, not to vent one's spleen.

Economic pyramids.... (4, Insightful)

BWJones (18351) | more than 7 years ago | (#17574658)

It certainly can be argued that there are a number of factors contributing to higher rates of violence in cultures including steeper economic pyramids, loss of access to human services and disenfranchisement. For instance, in cultures that have a relatively high average wage and flatter economic pyramid, combined with services including universal health care, countries such as New Zealand, Australia, Sweden, Switzerland, Japan, Norway, the Netherlands, and Canada among many others, there is a significantly lower rate of violence. Granted in all of those countries there are poor and those with fantastically extensive portfolios, but the statistical disparity is not as extensive as it is among countries like Brazil and the US.

Re:Economic pyramids.... (1)

Dragon Bait (997809) | more than 7 years ago | (#17574796)

New Zealand, Australia, Sweden, Switzerland, Japan, Norway, the Netherlands, and Canada

What's the ethnic and cultural diversity within each of these countries? I know Sweden, Switzerland, Japan, Norway, and Netherlands are relatively homogenous.

Re:Economic pyramids.... (1)

dago (25724) | more than 7 years ago | (#17575054)

"I know [...], Switzerland,[...] relatively homogenous.

Are your sure you know ?

25% of people living in Switzerland aren't Swiss - up to 40-50% in big cities.
That's about 3 times more than most EU countries and 10% more than the USA.

Re:Economic pyramids.... (1)

kannibal_klown (531544) | more than 7 years ago | (#17575294)

Interesting. However (not to nitpickhow diverse are the non-Swiss inhabitants? For example, I do a lot of work with a Swiss company and talk to my collegues often. Interestingly enough, about 1/4 of the people I speak to at the Swiss office, about half (or a third) are either German or French because the office is so close to both borders. Kind of like how our sharing a border with Mexico means we have a lot of Mexicans.

So is it just those nationalities that are pumping up the diversity ratio? Or are they substantial percentages from across the board?

I'm not trying to poke holes in your stats or anything, I'm just wondering.

Re:Economic pyramids.... (0)

Anonymous Coward | more than 7 years ago | (#17575100)

Australia is extremely heterogeneous, particularly in urban areas. Multiculturalism is government policy (although less so now with our conservative government). Each major city has pockets of ethnic diversity - and diversity is celebrated by most australians (but deplored by a racist minority). We have all kinds of people here - aboriginals, anglo/celts, greeks, italians, chinese, vietnamese, lebanese... just about every nationality you can think of. And for the most part, it's been a very successful social experiment (with some minor hiccups).

Inequality matters - and it's usually good (1, Insightful)

Salvance (1014001) | more than 7 years ago | (#17574804)

Income inequality is a fact of life in a capitalistic society, and should be embraced, not scowled upon. The biggest problem facing the U.S. isn't the wage gap, but the surge of regulations that prevent the poor from becoming rich (and prevents small companies from becoming large one).

Regulatory reform (healthcare, business, education, legal, etc. etc.), and the return of governing powers to the states, is what we need to ensure the U.S. doesn't become a bankrupt ex-super giant on par with Brazil ... enacting Japanese or Swedish social reforms will just put more strain on our economy as more people jump on the dole.

Sure, there wouldn't be an income gap with such a system, but I'd rather have the opportunity to work hard and become wealthy than coast through life with a lower-middle class income after taxes.

Re:Inequality matters - and it's usually good (1)

Overzeetop (214511) | more than 7 years ago | (#17575010)

As with all things, there are limits beyond which the inequality becomes a negative factor. In this case the CEO:FMW annual salary is 5300:1, give or take a bit.

I'm no champion of socialist programs, but the scales seem to be a bit tipped these days when annual health insurance for the biggest group in the country (FEHB) costs more than a year's salary at FMW (family plan).

Re:Inequality matters - and it's usually good (4, Insightful)

BWJones (18351) | more than 7 years ago | (#17575056)

I agree with you completely with respect to capitalism as a model and am in no way against capitalism. However, in the US, while there are possibilities for many to achieve great economic prosperity, there is also the possibility of losing *everything* including health care coverage and the roof over your head and this in many cases drives desperation. I would argue further that endemic violence arises more from a sense of desperation than anything else and in more and more cultures exposed to banal media that glorifies prosperity above all else, a sense of artificial desperation drives violent acts and petty crime.

What are the solutions? Social engineering arising out of more education and a focus on education at all levels from grade school to graduate school is certainly a major component to help drive priorities combined with some reform of systems to provide a fundamental level of health care coverage combined with more resources geared towards public housing and support of small to mid-size business. Other than that, I'd like to see less government in our lives with respect to politically and religiously motivated agendas.

Re:Inequality matters - and it's usually good (2, Interesting)

Viper Daimao (911947) | more than 7 years ago | (#17575076)

Exactly. I suspect that most of the income inequality of the US comes from the fact that the richest people in the world live and make their money here. Our poor, are materially richer than many other country's middle class.

Re:Inequality matters - and it's usually good (1, Insightful)

BWJones (18351) | more than 7 years ago | (#17575214)

Our poor, are materially richer than many other country's middle class.

Holy $#!^ dude...... Have you ever spent any time in a major urban center? Have you ever worked in a soup kitchen or helped provide services to the poor and indigent? Comments like this are born out of a fundamental ignorance of reality brought on by steep economic pyramids that encourage cultural isolation.

Re:Inequality matters - and it's usually good (1)

argoff (142580) | more than 7 years ago | (#17575192)

Income inequality is a fact of life in a capitalistic society, and should be embraced, not scowled upon. ....

Well normally this is true, but this income inequality happens not because of true market forces but because the nature of the US fiat banking system and their cozy relation with major financial institutions. The fact is that we are forced to use USD notes no matter how many they print up, or how many they loan out. Now society is over satureated in debt and prices are going up everywhere, and these guys get to rake the cream off the top. In a healty economy, investment money would come from savers - not from central bankers who print it up and loan it out thru major financial institutions.

Re:Inequality matters - and it's usually good (0)

Anonymous Coward | more than 7 years ago | (#17575356)

Yes. Those who can reap the rewards of credit-based monetary inflation by playing games with interest rate spreads, issuing yourself stock, pumping then dumping, etc. will prosper while the rest of us without access to the money presses foot the bill in the form of higher costs for everything that can't be outsourced to a foreign country with cheap labor like education, healthcare... plumbers :-)

Re:Inequality matters - and it's usually bad (3, Insightful)

A nonymous Coward (7548) | more than 7 years ago | (#17575348)

Seems to me that the difference is who decides where the money is spent. If one person decides where to spend $100 million, maybe he will buy a yacht, fancy cars, fine art, expensive condos ... the yacht and cars generate jobs, but the condos and fine art simply go into some other rich person's investment accounts. No one directly benefits. Plus there's not much variety there.

Whereas if 100 people spend $1 million apiece, there's more variety, more spent on manufactured goods which generate jobs, less spent on trading museum pieces around the shuffle board.

And in one million people spend $100 apiece, most of it is spent on food, booze, ciggies. Certainly generates jobs, but not good jobs, and no real opportunity to trigger investments.

The idea that a fired CEO deserves a $240 million golden parachute is just ludicrous.

I know it impacts worker performance... (4, Insightful)

PFI_Optix (936301) | more than 7 years ago | (#17574722)

When the peons who live paycheck to paycheck while being the backbone for a company see executives get yearly salaries totalling more than they'll make in a year, do you REALLY expect them to work hard? For the average corporate employee, the most they can hope for is a middle management position where they take blame for others' mistakes while their bosses take the credit for anything good that happens.

Companies need to remember that even a genius CEO is worthless without the underlings who follow his successful plans. Imagine if that $53,000,000 had been distributed among the employees as a company-wide bonus.

Re:I know it impacts worker performance... (1, Insightful)

ryturner (87582) | more than 7 years ago | (#17574790)

$9.5 Billion in bonuses were distributed to employes of the company. That is an average of $370,000 each. The CEO is getting a lot, but the "peons" you talk about are still getting a huge bonus.

Re:I know it impacts worker performance... (5, Insightful)

lawpoop (604919) | more than 7 years ago | (#17574936)

"That is an average of $370,000 each. The CEO is getting a lot, but the "peons" you talk about are still getting a huge bonus."

You're telling me that the janitors making $30k a year are getting a bonus of $370,000? I can't believe you let that bullshit fly.

The bonuses aren't evenly distributed throughout the company. You cite an average, which is a figure not worth looking at. You are trying to confuse the issue, making it sound like receptionists and janitors are getting almost half-a-million at Christmastime. A more enlightening number would be the median bonus. I'll bet that there are a very few executives and managers that are getting bonuses in the millions, which make up the bulwark of the $9.5 billion. Which just contributes to the income inequality, which is what we are talking about.

Re:I know it impacts worker performance... (1)

PFI_Optix (936301) | more than 7 years ago | (#17574938)

From the CNN article:

"Lloyd Blankfein's bonus reflects earnings performance of Goldman, which earned $9.5 billion this year."

They gave away all their earnings in the form of bonuses? how generous of them.

Do your maths (0)

Anonymous Coward | more than 7 years ago | (#17574950)

Have a look at that figure. Are the workers getting 1/3M? No, not even close. So where is the lions' share of that bonus going to, to make the average up?

Yup. CEO.

Despite the fact that you could sack 100% of your CEO and work happily for YEARS before you noticed.

Re:I know it impacts worker performance... (4, Informative)

mehtajr (718558) | more than 7 years ago | (#17575038)

Try reading that again.

"His bonus reflected the performance of Goldman Sachs (Charts), which reported record net earnings of $9.5 billion, or $370,000 per employee at the world's largest investment bank."

Re:I know it impacts worker performance... (0)

Anonymous Coward | more than 7 years ago | (#17575066)

So, if your other shoe is size 12, and the other shoe is 70, on average your shoes are exactly your size, 42. Isn't that nice? If I give you 0 and keep my $150000 for myself, on average you got $75000. How are you going to spend it?

"On average" distorts.

Re:I know it impacts worker performance... (0)

Anonymous Coward | more than 7 years ago | (#17574816)

Workers are cogs and are fungible. If the workers truly had the vision and the skills that C level citizens have then they would BE C level citizens.

Don't let yourself fill up with hate and envy.

Re:I know it impacts worker performance... (4, Insightful)

Tablizer (95088) | more than 7 years ago | (#17575018)

Workers are cogs and are fungible. If the workers truly had the vision and the skills that C level citizens have then they would BE C level citizens.

You make the corporate world sound like a meritocracy. The higher you go up, the less it is about raw merit and more about about power grabs and politics. Not everybody wants to play those ugly games and is one reason why heavy capitalism is rejected by much of the world. The best CEO's have had "mild" thoughtful personalities similar to those of Abraham Lincoln and Tim Duncan. The personality traits of good CEO's is already well-studied and tested. However, pushy egomaniacs end up in the position instead, and they tend to get paid even if they F up.
         

Re:I know it impacts worker performance... (2, Interesting)

fistfullast33l (819270) | more than 7 years ago | (#17574866)

Imagine if that $53,000,000 had been distributed among the employees as a company-wide bonus.

Goldman handed out $16.5 billion [forbes.com] in total compensation to 22,000 employees worldwide. I'm pretty sure that while no one would turn down an extra $2400 (about $1500 after taxes), it's not going to matter much to them either way.

Re:I know it impacts worker performance... (1)

Col. Klink (retired) (11632) | more than 7 years ago | (#17574978)

...get yearly salaries totalling more than they'll make in a year...


People are surprised that their bosses annual salary is more than their own annual salary?

Re:I know it impacts worker performance... (0)

Anonymous Coward | more than 7 years ago | (#17574994)

"Imagine if the $53,000,000 were distributed amoung the employees as a bonus."

That's a good question, you do see the downside don't you?

Re:I know it impacts worker performance... (1)

Weston O'Reilly (1008937) | more than 7 years ago | (#17575050)

A small point on working "paycheck to paycheck" - If you're in this situation, you are living beyond your means. No one likes to admit that they don't spend their money with the greatest efficiency possible, but nearly everyone can save money. If people would save more, they would build more wealth. Instead, they rely on social services to care for them in their old age - funded, of course, by the wages of others.

they'll never understand (1, Insightful)

Anonymous Coward | more than 7 years ago | (#17574746)

it is opportunity inequality that matters.

Yes, and no... (2, Insightful)

Bullfish (858648) | more than 7 years ago | (#17574776)

Does some CEO grabbing obscene bonuses (deserved or not) fuel social unrest? Historically, the answer is yes, but only if the bulk of the population is suffering. Then such things become flashpoints, ie "let them eat cake". However, that is not really the case for the bulk of the US population. Most people have plenty to eat, have their gadgets etc... Are there poor in the US? Yes, but there are poor everywhere, and not all necessarily the result of oppression. People with full bellies are likely to be pissed off at excesses, but not to the point of rioting in the streets. Brasil has huge problems with social inequality far beyond what is happening in the US.

Re:Yes, and no... (1)

Rob the Bold (788862) | more than 7 years ago | (#17574952)

Does some CEO grabbing obscene bonuses (deserved or not) fuel social unrest? Historically, the answer is yes, but only if the bulk of the population is suffering.

So it's probably a good idea to talk about it now. TFA shows the US "Gini" index increasing substatially from 1970 to 2005 (in small part due to change in computation).

Brasil has huge problems with social inequality far beyond what is happening in the US.

So our Gini is increasing, and countries (or at least one country) with higher Gini have serious problems with crime to the point that it affects their overall economy. It would be a good idea to try to understand the causal relationship JIC it turns out to be "high Gini => high crime => lower GDP".

Conversation goes nowhere (5, Insightful)

lawpoop (604919) | more than 7 years ago | (#17574786)

If all comes down to what you believe about human nature. Roughly speaking, some people believe that poor people are poor because they are lazy and violent, while others believe that people are poor because they don't have opportunities available to them, so they turn to violence as an effective, but not ideal, way of problem solving in their miserable lives.

People on either side have fundamentally different views about reality and human nature, and thus there is no common ground in which to have a productive discussion.

Re:Conversation goes nowhere (2, Insightful)

Dragon Bait (997809) | more than 7 years ago | (#17575044)

If all comes down to what you believe about human nature. Roughly speaking, some people believe that poor people are poor because they are lazy and violent, while others believe that people are poor because they don't have opportunities available to them, so they turn to violence as an effective, but not ideal, way of problem solving in their miserable lives.

Doing this sort of binary divide of world views is almost too simplistic. In California (USA), one can flip burgers at McDonalds and support oneself through a community college education. There is no reason that someone in the United States cannot better their lot in life.

However, hard working, enterprising people in Mexico do not have the same level of opportunity - to the point that they will risk the hazards of the desert and coyotes in order to get a shot at the opportunities in the United States.

Re:Conversation goes nowhere (1)

jomama717 (779243) | more than 7 years ago | (#17575272)

If we as a society/government do not provide for an equal shot at the lowest level of education, i.e. public schooling, then it seems that we are taking for granted your first reason for poor people being poor. How would we know what effect giving all children equal opportunity for education would have?

Brazil (0)

Anonymous Coward | more than 7 years ago | (#17574812)

... Brazil, where the murder rate is 5X that of NYC and crime is materially impacting GDP.


It's all Daniella Cicarelli's fault. That bitch.

My thoughts (4, Insightful)

east coast (590680) | more than 7 years ago | (#17574820)

I don't have as much of a problem with the pay gap as with the same people making these large sums not being serious stock holders in their company. Their paycheck is not directly related to company performance in many cases today.

It's unbelievable to me how easy it is for someone to work their way to the top of a company without having a serious amount of their personal wealth invested into the company and that this lack of investment is a safeguard against them not having to be overly concerned in the companies well being.

I know it's a simplistic way of looking at it but it's what makes sense to me.

Re:My thoughts (1)

ryturner (87582) | more than 7 years ago | (#17574860)

From the article: "Blankfein earned a cash bonus of $27.3 million, $10.5 million in options and the rest in restricted stock."

Half of his bonus was in stock and options, so he has a lot invested in the company.

Re:My thoughts (1)

bloobloo (957543) | more than 7 years ago | (#17574916)

The problem with that theory in a quoted company is that it then becomes in the executive's interest to do whatever they can to push the share price up, a la Enron.

Power law curves (2, Insightful)

Omnifarious (11933) | more than 7 years ago | (#17574824)

After reading Linked [barnesandnoble.com] I've come to the conclusion that having a power law curve (the thing that gives you the 80-20 rule) is inevitable in any economy. There are only two questions to be answered.

First, how steep is that curve? Do you have excessive centralization. I think, but do not know, that the US's curve has been getting steeper over the years. This is likely not good.

Secondly, how easy is it to begin acquiring links because you're more attractive for whatever reason? This is where things that make it expensive for small businesses to start, compete or generally raise barriers to entry come in.

Personally, I think we ought to revisit a lot of laws we have concerning monopolistic behavior and financial transactions and tweak them using insights from that book. That book demonstrates through numerous examples that there are a set of powerful laws governing almost all networks that grow organically. Even the network of which molecules interact with which molecules in cells has characteristics that are similar to the network of hypertext links on webpages, which has characteristics that are similar to the food web.

Re:Power law curves (1)

91degrees (207121) | more than 7 years ago | (#17574996)

First, how steep is that curve? Do you have excessive centralization. I think, but do not know, that the US's curve has been getting steeper over the years. This is likely not good.

I think this is by far the most important factor. Too shallow and the risk/reward relationship weighs too far into the risk side of the equation. Too steep mmeans large parts of society are not benefitting from the capitalism, which calls into question the entire justification of the economic system.

The "L" Curve (1)

StressGuy (472374) | more than 7 years ago | (#17575332)

I think you might find this interesting:

http://www.lcurve.org/ [lcurve.org]

If only it was a good as 80-20

I was recently mugged by a CEO... (1, Funny)

Anonymous Coward | more than 7 years ago | (#17574832)

...because he only got a $10 million dollar bonus. Made me withdraw money from my MAC at gunpoint and requested notes no lower than $1000 dollar bills.

News For Nerds??!! (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#17574850)

What the hell does this have to do with news for nerds?? Are there any real economists reading this site? I predict all the comments will come from whiny teenagers and college students complaining how much money some people make and determine what it should be. Like they have any real clue.

I like how any offtopic slashdot stories always revolve around left-wing babble. This has really turned into slashkos.

IQ and the wealth of Nations (0)

Anonymous Coward | more than 7 years ago | (#17574854)

As long as there is a discrepancy between the average intelligence of nations there will always be economic inequality.

There is a correlation between

http://en.wikipedia.org/wiki/IQ_and_the_Wealth_of_ Nations [wikipedia.org] IQ and the wealth of a nation.

Does IQ matter that much? Well provided a country doesn't have any natural resources a country needs skilled/creative workers to produce novel goods and services. And skilled workers are more prevalent in high IQ nations.

Average IQ isn't going to change over night (barring brain augmentation technology. So expect the inequalities to remain static. (Apart from the exceptions, like China, due to it's poor choice of governance.)

Poor Brazil! (1)

Otter (3800) | more than 7 years ago | (#17574856)

What's up with all the anti-Brazil stuff here lately? I understand it with the YouTube thing -- Slashbots would denounce their grandmother if she somehow came into conflict with Google -- but what's the rest of it over? They're pro-Linux and they're still pretending they're buying millions of OLPCs.

It's stupid is what it is (-1, Flamebait)

TheWoozle (984500) | more than 7 years ago | (#17574882)

Ok, so all the worshippers at the altar of Capitalism will say nasty things to me, but I don't care. The bonuses, stock options, etc. that all these highly paid executives get is stupid. There is a point past which any more money you earn is something you'll never really need, it's just a pointless dick-measuring contest to see how high you can go on a pompous list in Forbes magazine.

And yes, this directly correlates to increased violence from people who struggle to afford things like medical insurance. That guy the CEO's limousine splashed with mud on the street this morning just lost his job last week from that factory the CEO "downsized" (to increase the price of stock $0.50 a share so he could cash out). Is it any wonder the downtrodden guy went apeshit and blew away half of a McDonald's when he learned that the CEO got 50 million richer *because* 1500 people got "downsized"?

I think Bob Marley said it best... (0)

Anonymous Coward | more than 7 years ago | (#17574928)

"A hungry mob is an angry mob"

This has some merit (4, Insightful)

MonGuSE (798397) | more than 7 years ago | (#17574896)

I'm sure that our billionaires skew the stats a little bit. However its not coincidence that successful companies have CEO's that know they have enough money and that their underlings need to feel appreciated. Google, Apple, Wegmans, etc... A good CEO in my opinion is one that recognizes that the excessive payment that he may get from the board will do more harm to his company than good and should therefore decline most if not all of it and redirect it to the employees. No one is worth 2000% more than another individual regardless of how good you are at your job.

Re:This has some merit (2, Insightful)

avalys (221114) | more than 7 years ago | (#17574992)

No one is worth 2000% more than another individual regardless of how good you are at your job.

Why not? Let's say Person A is a salesman who brings a company twenty million dollars in business in a year. Person B is a salesman who manages only one million dollars. Sounds to me that Person A is worth twenty times Person B.

moD uP (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#17574908)

has been my only Sales and so on, ago, many of you aashole about.' One

Income equality doesn't matter, but ... (1, Interesting)

argoff (142580) | more than 7 years ago | (#17574918)

... having a fiat monetary system does. In a gold based system there are natural limits on the amount of money so that naturally limits the amount of debt and stabilizes prices over time. In a fiat system there are no natural limits on debt or money, so the economy tends to become over saturated in debt and prices tend to rise over time. However, fiat money systems fail for the same reason that any state central planed economy fails. In a gold system, if someone wants a loan or an investment - they can't print it up so they must get it from savers. In a fiat system, savers have no say and saving is punished because all loaned out money comes from the central bank. That takes investment power away from the people and puts it into the hands of central bankers (think central planners) and their friends causing all sorts of excesses - especially in the pay and bonuses of high level investment bankers who have close ties to the Federal Reserve.

The rise of the American aristocracy (5, Insightful)

iPaul (559200) | more than 7 years ago | (#17574942)

The reason the US founding fathers put in taxes on inheritance is that the sucess of one generation shouldn't create subsequent generations already ensconced in privalege. In a way this is unavoidable, but if the future generations aren't people of merit, they will eventually loose wealth. Now we're hitting a period in American history where ridiculous wealth is tied to a strong push to eliminate inheritance taxes. Already a number of families are bastions of old money and privilege, but watch as their wealth becomes a trivial matter of their heridity. The one thing the American founding father thought was odious about Monarchies - that mediocre men ruled the world because their great-great-great grandfather was a great man - is now becoming part of American society.

There will always be the good, the bad, and the ug (1)

Dr Reducto (665121) | more than 7 years ago | (#17574972)

No matter what you do, society will always seem to end up like this. Some people are inherently better at acquiring wealth than others, some people are smarter than others, some people are stronger and have talents others don't have.

These differences usually aggregate over the course of time, to the point where you get rich/poor. Even if you evened everyone out....it wouldn't stay that way for long. And if you force on making everyone equal, as the article mentions, you make everyone equally poor, since measures to make everyone equal by law usually end up cutting output signifigantly, meaning that instead of an inequal distribution of a large pie, you get equal distribution of a small pie (in Soviet Russia, crop production when Stalin came to power was 5% of pre-revolution levels). Also, with the current "knowledge economy" the gains in productivity are essentially "found money", since there is no way to "force" a knowledge worker to produce at full output, or to do much of anything.

So it really boils down to allowing inequality, but providing class mobility (as the article mentioned). In the US, we have attempted that, but a lot of the measures backfire, such as subsidized student loans at low interest rates (free money essentially created price insensitivity and is largely responsible for the rapid rise in college costs ironically enough). And additionally, it is all relative. If everyone gets a college education, SOMEONE has to scrub toilets and work at McDonalds. So giving out college educations doesn't really help.

It's a very complex issue, and im sure the socialists will square off with the libertarians quite well over this issue

It matters to you depending on where you are (1)

192939495969798999 (58312) | more than 7 years ago | (#17574974)

If you're at the top of the scale, it doesn't matter to you. You can get insurance, bodyguards, etc. to protect you from crime. if you're at the bottom, it doesn't matter to you, because you have nothing, no one's interested in robbing you. If you're in the disappearing middle section, you're being victimized both by the lower end which steals from you, and by the top end, by virtue of not being able to afford the insurance/bodyguards the top end affords.

Red Herring (1, Insightful)

Anonymous Coward | more than 7 years ago | (#17575004)

Things like the GINI coefficient are red herrings. One statistic rarely shows anything, and GINI shows even less. See Russel Roberts post on the top 1% of income at http://cafehayek.typepad.com/hayek/2007/01/the_top _1_is_a_.html [typepad.com] to see why. The USA is the fastest growing industrial economy in the world; the CEO's of these companies produce more wealth than many countries. If they are compensated what the market will bear, who am I to complain? Besides, they are only going to invest most of that wealth back into the economy making it easer to get my next new car by funding both the auto manufacturer and the loan company.

What About the Wealth Gap? (1)

andrewd18 (989408) | more than 7 years ago | (#17575062)

What about the wealth gap? That's more what I'm worried about. Two people who make the exact same amount of money but aren't given the same options for saving it will have much less wealth to pass on to their children later in life. This perpetuates a cycle of slow growth for the non-wealthy and a cycle of faster growth for the already wealthy. Take housing, for example... the average house in a mostly Caucasian neighborhood appreciates much faster than the average house in a mostly non-Caucasian neighborhood. When you can sell your house later for $50,000 more than you bought it for, you've gained a measure of wealth that others don't necessarily have access to.

Don't be stupid with money. (4, Interesting)

lpangelrob (714473) | more than 7 years ago | (#17575102)

Things people that want money should do:

1.) Limit your liabilities; pay off your debts as fast as you can, especially credit card debt.
2.) Stop using credit cards. Seriously.
3.) Stop trying to hit it rich by playing the lottery, unless you find that particularly entertaining.
4.) Keep an emergency fund of some sort so you can stop using credit cards.
5.) Don't co-sign loans, ever.
6.) Spend less than what you make.
7.) Don't lease a car.

This list is based on what people do to get in financial trouble:

1.) People get in credit cards and pay more interest to Visa and MasterCard over years that they could have saved.
2.) People, especially poor minorities (see the statistics) try to win millions when the odds of being struck by lightning are less.
3.) People don't have money saved aside so they don't use credit cards, so they pay Visa and MasterCard interest instead of having money.
4.) People co-sign for other peoples things, they don't pay, so they're stuck with the bill.
5.) People pay ridiculous amounts of their income to car bills.
6.) People use credit to look wealthier than they really are.

The reasons for this are social ("use debt as a tool!"), cultural ("I need more stuff to impress people!"), patently unfair (the less educated are far more likely to be paid less, and so get into trouble more easily; medical problems), and selfish ("I 'need' this! I 'need' that!"), and could be a thesis, but they're hard to argue, and the concepts don't require an economics degree.

I think I've been listening to Dave Ramsey a little too much. :-p

Yes, It Does (4, Interesting)

p0tat03 (985078) | more than 7 years ago | (#17575108)

I've lived in Canada for many years now, but before then I came from Taiwan, which as a country is really not as poor as it gets in southeast Asia. I can tell you that the wealth gap certainly does matter.

Fellow Taiwanese feel free to disagree - but as a child over there I was constantly being protected, my father having worked for one of the larger multi-nationals with an Asian presence in the 80s. Daily you would hear news of kidnappings, children being snatched on their way to their fancy private schools; chauffeurs, butlers, maids, and servants selling out their employers and helping in kidnappings, extortions, and other crimes.

I went to a fairly exclusive private school that taught mostly the children of foreign execs stationed in the country, and also the high-level Chinese that worked under them. All of our parents were paranoid about our security to the extreme. At many points it wasn't a matter of *if* someone makes an attempt to kidnap your child, but *when*. It wasn't the greatest of times to be a wealthy parent, though as a kid I never really felt threatened - I was probably too young to understand.

Then I came to Canada and that turned upside down. I can't remember the last time a kidnapping happened in Canada that was driven by the ransom - usually it's some sick f--- getting his jones on molesting little girls, not an organized group out to steal from the rich.

The difference? Canada has well-established social security. The average income is extremely high compared to most Asian countries, there is health care and welfare. In Taiwan (at the time) there was no health coverage *at all* for those who were not privately insured, almost no social assistance at all, and the wealth difference between the majority, still toiling for pennies in unsafe factories, vs. the newly-minted elite that was being quickly created by American investment, was massive.

America isn't quite at that point, but I get the distinct impression that the gap is widening. If it continues, we will reach a point where the majority of the country is unable to afford the necessities of life. Then the violence will start.

Inequality is actually good (5, Interesting)

dmeranda (120061) | more than 7 years ago | (#17575144)

Perhaps a link to Paul Graham's Mind the Gap [paulgraham.com] essay would be worth reading as well.

There's at least four fundamental errors that are made or implied by the Inequality Matters argument:

  1. Money is not zero-sum, just because some CEO gets a lot of money doesn't mean I get less.
  2. If there were perfect equality then there would be no incentive for anybody to make any progress at all.
  3. Correlations don't prove cause-effect relations.
  4. The results are highly selective and not an indicator of good/bad on a whole. Even if more crime does result, many other good things may also result as well.

Clarification (3, Insightful)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#17575148)

The summary mentions income disparity, but that statistic is only used because it is easy to measure. Sociologists modeling this issue actually find that wealth disparity, not income disparity has the closest correlation to violent crime of any observed factor. Another thing to be kept in mind is that "correlation does not necessarily imply a specific causation." This quote is often mangled by people with agendas. Correlation frequently does imply some causation, whether that causation is direct in either direction or both items are caused by another factor. Probably half of all science is finding correlations and testing for causations.

Finally, I'd like to address where the research on this subject has gone in the last few decades. The correlation between wealth disparity and violent crime fits neatly with research into motivation and de-motivation for criminal behavior. In the 80's and 90's corporations funded a lot of research into how to stop employee theft. At the same time a few other studies also tackled the same issue from a less mercenary perspective. The results of all this research led to some surprising changes in the way most sociologists think about crime. While threat of punishment is a deterrent to crime, it is nowhere near as important a deterrent in most cases as was previously assumed. In fact, the strongest motivation for not commit crime was moral, but in a rather unfocused way. In some instances a sign that says please don't steal (maybe Apple wasn't nuts) proved more effective at deterring crime than a security camera. Treating employees well and building up loyalty to the company is one of the most cost effective ways to reduce theft. Business schools in the US are just in the last 5 years starting to teach this, so it may take a while for it to worm its way into corporate culture.

By now you're probably wondering, how this fits in with wealth disparity. Wealth disparity allows people to justify their crimes, removing the moral motivation to not commit crimes. If one man is born with nothing and has to go into debt simply to get started and remains in debt for years while working hard and making good decisions, and another person is born wealthy, never has to work a day in their life and is an idiot, and makes 1000 times what the first person does simply by investing in firms that loan money to the first person and people like him and collect interest, it is easy to see that life has not treated the two people fairly. The smart and hard worker makes little and struggles while the lazy idiot gets a free ride. The more common and drastic this seems to our first person, the more likely they are to commit violent crimes and robberies. They can justify those crimes to themselves by looking at the inherent unfairness they have been subjected to. Now here's where it gets interesting. Remember where I mentioned earlier that the motivation was unfocused? While the potential criminal may have justified their actions via the unfairness, they commit their violence and crime based upon opportunity. That means they are no more likely to rob the rich than to rob other poor people.

So where does that leave us? It leaves us with a hypothetical causation between wealth disparity and crime, that is somewhat supported by statistical evidence. It also gives us clues to potential ways to reduce violent crime by addressing the motivations for crime. If we implement more progressive inheritance or wealth taxes and apply that money to socialist programs aimed at the very poor, will crime be reduced? I think it will, and that seems to be the case in other countries, but no one knows for certain. I also think rather than a dole for the poor we'd do better to address the culture of drug prohibition via decriminalization, set up addiction treatment and management programs, and address the healthcare crisis that exemplifies the percieved wealth disparity issue, if not the actual differentiation.

A Qualified Yes (2, Insightful)

mpapet (761907) | more than 7 years ago | (#17575156)

History shows again and again, a politically and socially stable country tends to have either
a) large and stable "middle class." Another way to describe it is good income distribution and consumption by a large number of people in the country/empire in question. More recently, that also includes political participation by all citizens.
b) Despots running the show.

In more recent times, Detroit as described in the part-documentary Roger & Me has excellent examples of the phenomena at a city-scale.

Is there a direct causal relationship that can be expressed in an equation that would satisfy a ./er? No. In that way, reality definitely has a liberal bias. (to borrow a quote)

Its all about production and value (1)

Shadow Wrought (586631) | more than 7 years ago | (#17575158)

As long as Lloyd Blankenstein continues to bat .325 with 120+ RBI's and his usual 30+ HR, than I think he's well worth the $53mil. I mean this is a Championship they're buying, right?

Income Equality.... (1)

m0rph3us0 (549631) | more than 7 years ago | (#17575168)

Income equality means almost nothing statistically...

What really matters is purchasing power, I was recently reading an economics text that dealt with this subject so I'll paraphrase as best I can and give the stats to the best of my recollection. Look at a country like Russia during communism or India pre-1990, income equality was much more even but people had much less purchasing power. Or for example compare 1970 and 2000 in terms of purchasing power, in 2000 the purchasing power of a person in the bottom 20% was higher than than that of the 50th percentile in 1970. Income equality doesn't put food on the table purchasing power does.

Also if you look at who comprises the bottom 20% and the top 20% you'll find that the young comprise the bottom and those in their 40s comprise the top. Generally a person at different points in their life are in different quintiles of earning. The percentage of people who stay poor or stay rich throughout their lives are very very small. 4/5ths of millionaires in the United States held a minimum wage job.

People with experience SHOULD earn more than people with out those skills, it is the differentiation in prices that allocates scarce resources to where they can best be used. Income inequality is a reflection of reality and not the other way around, you can get rid of income inequality but it means that resources will be poorly allocated. In a free market a company cannot pay their CEO substantially more than they produce or they will eventually go out of business. If a CEO is the only person that can find the 1% of the budget to shave on a 9 billion dollar a year business then they really are worth 50 million dollars, if they are not a companies will be driven to people who can do the job for less money.

Picking on New York? (3, Interesting)

OhHellWithIt (756826) | more than 7 years ago | (#17575170)

From TFA:
Overall, the murder rate in Brazil is five times that of New York City. As in the United States, much of that violence is poor-on-poor, although the toll redounds everywhere. The New York Times reported recently on a World Bank study concluding that if Brazil had the much lower homicide rate of Costa Rica, Brazil's GDP would have been three to eight percent higher in the 1990s.

I'm no fan of New York City, but he's definitely using a bogeyman here. In 2002, the murder rate in Washington, DC, was six times [infoplease.com] that of the Big Apple. New Orleans was nearly eight times more deadly, and that was before Katrina. The state of my birth, South Carolina, which is relatively rural, has a murder rate of around the same magnitude of New York City.

FWIW, I agree with the general thrust of the article, that such large wealth and income inequities are not a good thing.

Great ... (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#17575172)

Another slashdot excuse for opinionated ignorami to spout their prejudices. I estimate the probability of any real facts showing up in this thread as roughtly 1.72e-5%.

the article (1)

flynt (248848) | more than 7 years ago | (#17575190)

I read this article yesterday, I don't think the submitter understood the point of it. I could be wrong. The point of the article isn't so much that income inequality is going to cause more crime in the US.

"Is this violence a direct result of income inequality? Almost certainly not. Brazil has a history of slavery and colonization that was far more brutal than the U.S. It would require a team of sociologists, historians, economists, and criminologists to explain the roots of violence in Brazil. Based on my knowledge of academics, I don't think they would come to a conclusion anyway."

I think the main point of the article is something "The Economist" talked about in last weeks issue. It's that even though the economies he discusses are doing tremendously well on average, the income gap still makes people unhappy and not content. The point is, it's not peoples absolute wealth that determines happiness, but their relative wealth.

From the article "In other words, we care less about how much money we have than we do about how much money we have relative to everyone else. In a fascinating survey, Cornell economist Robert Frank found that a majority of Americans would prefer to earn $100,000 while everyone else earns $85,000, rather than earning $110,000 while everyone else earns $200,000."

That's the upshot of this article, which I find quite interesting!

Hell Ya (1)

COMON$ (806135) | more than 7 years ago | (#17575202)

See that is what gets me. I am a person who isnt striving for a huge paycheck in life, just a fun job that pays the bills, supports my hobbies, and family. But this enormous gap in salaries is disturbing. It has nothing to do with job difficulty or stress, it is all about power. Bigger paycheck means more power, when was the last time you saw a supervisor make less than the engineer who's work the company relies upon. You have CEOs making millions upon millions a year, increasing the class gap, and benefits for their employees have not changed in 30 years. I would like to see someone draw up a fair model for salaries without destroying capitalism. Because if this class gap keeps increasing, soon we will be in a dangerous place as a republic.

Of course it matters (1)

CmdrGravy (645153) | more than 7 years ago | (#17575212)

I think it matters, anywhere which develops a large enough gulf between the rich people and the ordinary people is likely to set its self up for trouble.

The first problem is that the rich people will most likely be the ones running the country and they will most likely tend to be running it more for their benefit than for the benefit of the ordinary person.

The second problem is when the ordinary people cannot see anyway to become as rich as the rich people or cannot see why they should have so much money whilst they don't. Especially if the off-spring of the rich people apparently do nothing but waste their lives in an orgy of pointless frivolity right in the publics face.

Ordinarily in these situations the ordinary people would get together and force changes on the way things are ran so they get more of a share in the wealth they are working to create but where the rich people have managed to put enough systems in place to prevent that happening successfully then they just give up and resort to crime since it is the only option left which is widely available and holds out the promise of great riches.

Offtopic. (0, Offtopic)

clintp (5169) | more than 7 years ago | (#17575264)

When did the financial pundits spewing pseudofacts about income inequity become "News for nerds. Stuff that matters."?

Why comparing Brazilian murder rate to NYC? (1)

knightmad (931578) | more than 7 years ago | (#17575304)

Why comparing Brazilian murder rate to NYC instead of Baltimore? Accordingly with this wikipedia article [wikipedia.org] , "murder rate per 100,000 of all U.S. cities of 250,000 or more population", being "six times the rate of New York City" and hence, bigger than Brazilian stated murder rate on the summary. I agree with that other poster, why the brazilian bashing on Slashdot recently? Got tired of bashing the usual suspects (China, Iran, North Korea) and need someone else for the axis of evil?

Anyway, at the rate things are getting better in Brasil (couldn't get any worse until we got rid of the U.S. backed dictatorship we had in the 70's and 80's), we are not that far away from U.S. anymore. The one thing we have to solve (and I agree wholeheartedly with the studies) is exactly Income Inequality. It means nothing to be the 10th GDP in the world if 50% of the population is below the poverty line. Poor people doesn't buy, poor people doesn't have motivation to excel, poor people doesn't have opportunity to improve the condition of their own homes, not to say the whole country.

The real question (4, Insightful)

pair-a-noyd (594371) | more than 7 years ago | (#17575346)

"Does Income Inequality Matter?"

To the people at the bottom of the food chain, yes, it does.
To the carnivorous top feeders, no, it doesn't matter at all.
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