The Dim-Post

September 16, 2016

A heretical question about inequality

Filed under: Uncategorized — danylmc @ 4:52 am

Newshub had a story last night about the booming economy:

International economist Ann Pettifor says New Zealand’s economy is “hugely imbalanced”.

“But what’s interesting about New Zealand is that inequality rose in this country more than in any other developed country in the world between 1980 and the 2000s – that’s extraordinary.”

She says those levels of inequality lead to political instability which has led to the rise of the likes of Donald Trump and “fascists in Europe”.

The idea that inequality = political instability is canonical on the left and I’d always just agreed with it and assumed it was true. But because this time it was an economist making the assertion, it made me wonder if it was false. And given that we did have the fastest rise in inequality yet have such an extraordinary degree of political stability that it frustrates the hell out of the left, doesn’t this seem like a false claim?

66 Comments »

  1. Clearly, many of the great political upheavals of history are at least in part a response to inequality – but these tumults can be a long time in coming – decades at least – rather than immediately following the stimulus?

    A.

    Comment by Antoine — September 16, 2016 @ 5:03 am

  2. Also is modern day NZ actually that unequal, compared to other times and other places?

    A.

    Comment by Antoine — September 16, 2016 @ 5:10 am

  3. Google says we are pretty similar in gini coefficient to most oecd countries…

    A.

    Comment by Antoine — September 16, 2016 @ 5:24 am

  4. Social change comes from multiple causes that are difficult to untangle. This is why social science is so frustrating. You do a whole lot of research and then end up with a heavily hedged conclusion that hardly says anything. I can think of several reasons why NZ’s inequality has grown since the 1980s without any social upheaval:
    – John Key
    – New Zealanders’ preference for pragmatism over ideology
    – Insularity from the rest of the world
    – Pacific Island culture
    – Weak public sphere (probably related to insularity) so neoliberal hegemony doesn’t get challenged

    It reminds me of the Syrian civil war. I’ve read several articles about it’s “true” cause. The common factor is the background of the writer. If they are writing about climate change, climate change was the cause. If they hate the West, the West is the cause. If they hate Russia, Russia is the cause. Confirmation bias, except that they’re all right (to some extent).

    Comment by Seb Rattansen — September 16, 2016 @ 5:52 am

  5. So the answer to rectify this inequality is? Sick of experts coming in telling us we have a problem but short on answers on what to do about it. Judging by the company she keeps (economic adviser to Jeremy Corbyn) one can assume that nothing short of a 100% state owned command economy will cure the ills that inequality brings.

    Will she preach the NZL Labour message (do they even have a message)? And will the voters listen?

    Comment by Gerrit — September 16, 2016 @ 6:04 am

  6. @Seb

    Bit rough blaming John Key – Gini analysis shows that inequality has not changed significantly in NZ since the mid 1990s.

    Blame instead Douglas, Prebble and Richardson perhaps?

    A.

    Comment by Antoine — September 16, 2016 @ 6:08 am

  7. I like the reasoning that if an economist says it, it must be wrong. There’s a Phd in this for someone, somewhere. Similar to the old joke that if you put all the economists end to end and stretched them around the planet, they still couldn’t reach a conclusion.
    @5 The answer won’t be found until we actually recognise we have a problem with inequality. It didn’t use to be that way and it need not in the future either if we think it’s important enough to tackle it head on.
    @6 I don’t think he’s blaming JK – he’s saying JK is one reason we haven’t yet had massive social unrest. We can all picture ourselves at the barbie with him and we don’t like seeing him upset.

    Comment by McNulty — September 16, 2016 @ 6:49 am

  8. @Antoine

    I wasn’t blaming him, but my post didn’t elaborate. I mentioned him because he’s effective at keeping serious issues off the public agenda (inequality, child poverty, climate change, etc).

    Comment by Seb Rattansen — September 16, 2016 @ 7:08 am

  9. Tick tick tick…

    Comment by Mr Tank — September 16, 2016 @ 7:17 am

  10. And given that we did have the fastest rise in inequality yet have such an extraordinary degree of political stability

    Well, if you are in the business of asking heretical questions, then you could also ask whether the assumption that we have “the fastest rise in inequality” is, in fact, a given.

    Especially since that statement is also coming from an economist.

    Comment by eszett — September 16, 2016 @ 7:21 am

  11. At the time when New Zealand’s inequality was rising highest – e.g. the mid 80s-early 90s – we had significant political instability, not least the “Year of three Emperors”.

    I actually agree that inequality’s effects on ‘stability’* are likely to be long term, but if you wanted a soundbite-esque justification for the “inequality=instability” factoid, the political history of NZ from 85-92 would be a pretty compelling case study.

    *itself a fairly contested term

    Comment by Ortvin Sarapuu — September 16, 2016 @ 7:35 am

  12. False consciousness. It’s all because of false consciousness.

    Comment by Flashing Light — September 16, 2016 @ 7:39 am

  13. Running with Paul Quinn’s spreadsheet theory, inequality as often discussed makes for great papers and academic discussions but work actually outrages people is material hardship in the face of great wealth. You can see how the current housing shortage is getting people exercised in a way decades of discussions of gini coefficients doesn’t. My reckon on the inequality debate is that it’s switched off a lot of voters sympathetic to addressing dictionary definition poverty by focusing on the relative poverty of folk with Sky TV and two cars.

    Comment by Richard — September 16, 2016 @ 7:51 am

  14. There’s relative inequality and absolute inequality . By that I mean New Zealand started from a position where society was more equal than in most countries. Maybe the place where it ended wasn’t beyond the tipping point where everything takes off?

    Comment by Bill Bennett — September 16, 2016 @ 7:56 am

  15. @Richard – I reckon you nailed it

    Comment by Antoine — September 16, 2016 @ 7:58 am

  16. There’s also the problem of before tax and after tax/redistribution income. Those show quite different curves in inequality – as you might expect, given that our tax and transfer system is intended to be heavily progressive and at least partly ameliorate income inequality. I think one of the problems of the left at the moment is the assumption that inequality trends in the US and UK automatically translate to NZ, when the data says they don’t really. Which means that political approaches that are working well in the US and UK won’t necessarily work here.

    I note that Ann Pettifor’s bio (https://en.wikipedia.org/wiki/Ann_Pettifor) includes stints advising Ken Livingstone, a Labour MP, co-wrote the Green New Deal, and stood for parliament as a Labour MP, before acting as an advisor to Jeremy Corbyn. So I’d take her economic views with a grain of salt, they might be somewhat to the left. A right wing economist’s view, specific to NZ, would be that (other than housing cost) wealth inequality basically hasn’t changed in NZ since the 80s/90s. http://offsettingbehaviour.blogspot.com/2016/09/get-moving-already.html. It also points to some interesting analysis on world inequality http://offsettingbehaviour.blogspot.com/2016/09/elephant-curves.html.

    Bottom line, in the new world, facts are no longer impartial, and in fact both sides of policies do appear to have their own facts. And you have to look closely and question the source of those “facts” and whether they’re really true, otherwise you’re running off with a story that half the population don’t believe to start with. Even worse, the facts that are real and impartial of often disbelieved because people are becoming so used to facts being partisan.

    Comment by PaulL — September 16, 2016 @ 8:08 am

  17. She says those levels of inequality lead to political instability which has led to the rise of the likes of Donald Trump and “fascists in Europe”.

    The rise of the far right has much more to do with immigration/xenophobia than income distribution.

    That’s the main battleground. The far Right like to dress that up in economic terms – stealing our jobs etc – but that’s a convinient veneer for a more basic motivation.

    Comment by NeilM — September 16, 2016 @ 8:21 am

  18. “…The idea that inequality = political instability is canonical on the left…”

    Nice straw man Danyl. Most on the left talk about social and political instability, and also I guess it hinges on how you define instability. It seems Danyl thinks political instability isn’t a thing until he notices the cadaver of the VUW university chancellor twisting slowly from a lamp post in a smokey Wellington breeze ona burnt-out Kelburn parade. Isn’t the rise of the surveillance state an acknowledgment by the elites in the west of the hightened risk of political instability due to inequality? Trump and UKIP, BREXIT, the UK labour schism, the collapse of social democratic establishment parties across Europe and the rise of far right political movements, PODEMOS, the brutal imperialist crushing of Syriza and Greece, the Arab Spring, and the rise of Islamic domestic terrorism in Western Europe are all actual examples of political instabilty driven by, or partly driven by, inequality.

    In this country National, for all it’s hegemonic appearance, only hangs on to power on the back of massive corporate media support and an electoral gerrymander with two of it’s three support partners being fake parties. And anyway the socio-political history of New Zealand seems to show a pattern of cycles of social and political upheaval/violence occuring on a three to four decade cycle, and as Gramsci said revolutions seem impossible until they are inevitable. In any country political circumstances can change very rapidly, just ask Tsar Nicholas II!

    Real political instability requires a number of factors which are not present at the moment in New Zealand, but which could emerge rapidly here – or in any country, really. Both the French and Russian revolutions were enabled by an enfeebled monarchy that had lost the support of it’s supporting ruling classes, and it was that loss of support that enabled an agency for organising the masses to then emerge and successfully revolt against the remnant impotent and discredited state. In NZ, that would require for a start the collapse of support for the status quo amongst the Pakeha middle class. Also, for real political instabilty that really threatens the established capitalist classes you require an organising agency. As I said, the nascent police state is constantly being boosted to prevent the emergence of just such agency, and the fear of just such a mass based change organisation emerging in the UK in the form of 660,000 plus member UK Labour party is what drives the hysterical establishment response to Corbyn in the UK.

    For revolution to occur, you need the central state to be discredited and lose support amongst both its ruling class and the masses, for their to be an agency for formenting revolution (in Russia, the Bolsheviks), an intellectual environment that encourages revolt (the Enligtenment in 1765 and 1789, Communism in 1917), and an immediate crisis to provide the spark – taxation, famine or military defeat. In lieu of those factors, political instabilty that threatens the establishment can largely be suppressed by an increasingly lawless police state (manifested in anything from the police murder squads in Honduras to the outrageous lawlessness of the London Met) and draconian laws designed to keep the poor atomised and apathetic, but of course that can only postpone the inevitable.

    Comment by Sanctuary — September 16, 2016 @ 8:25 am

  19. And given that we did have the fastest rise in inequality yet have such an extraordinary degree of political stability that it frustrates the hell out of the left, doesn’t this seem like a false claim?

    What we have seen is bleeding across to Labour of Winston’s xenophobia. Robertson on Nat Rad once again blaming immigrants and giving no details on what he would do differently.

    Comment by NeilM — September 16, 2016 @ 8:31 am

  20. @Sanctuary: Just for the record, “it’s” is short for “it is”. The possessive form is “its”.

    To go more in depth into your analysis, what was the organising agency in France in 1789? As you’ve established it as a necessary condition, I’m assuming there must be one. Bearing in mind, of course, that the Jacobin club was formed after the revolution had already begun.

    Comment by Ortvin Sarapuu — September 16, 2016 @ 8:31 am

  21. @Sanctuary: if you’re seeing any of those elements in NZ (such as draconian laws and an increasing police state) I think you might need to get out and around the world some more to get perspective. Maybe Venezuela would be a place to visit to see what a police state looks like. Or maybe the Philippines.

    I see no evidence that the revolution is coming to NZ any time soon. And yes, I did see the line in your comment “which are not present at the moment in New Zealand, but which could emerge rapidly here.” But that’s really just a way to white wash your contention that NZ is in trouble – you’re basically saying “there’s no evidence of it here, but it could emerge really quickly, so I’m right.” Logically no evidence of it here could also mean it’s not happening here, in fact, that’d be the more likely case unless you’re a conspiracy theorist that thinks no evidence is itself evidence.

    Comment by PaulL — September 16, 2016 @ 8:53 am

  22. Thanks for the grammar lesson.

    “…To go more in depth into your analysis, what was the organising agency in France in 1789..?

    I don’t know enough about the organisation of the Paris mob to answer that. But it seems to me it must have had some sort of structure. How else could “it” have decided to storm the Bastille, or “the mob” return to the Hôtel de Ville to decry and decapitate the mayor? There was the Paris Commune in the 1871, so perhaps Paris always had some sort of nascent social organisation to act as a revolutionary agent. Now I’ll have to go and find out, dammit.

    Comment by Sanctuary — September 16, 2016 @ 8:55 am

  23. Most conservatives would reject the idea that inequality is some sort of aberration. They would argue that a degree of inequality is really the natural order of things. That doesn’t make it good or desirable, or provide an excuse for refusing to tackle it. But it is only a cause of instability when it becomes intolerable for those at the bottom. The problem in NZ is that the left has been banging on about inequality for as long as National has been in Government. The electorate has long factored this into its voting behaviour and moved on. A bit like the housing crisis – it is a problem but not a political game changer because it basically runs along existing fault lines in society. It increases polarization but doesn’t shift votes.

    Campaigning on onequality is a canard of the left but it has become an example of doing the same thing and expecting a different outcome. I don’t know what would need to happen for inequality to become a game changer. Something pretty horrible, more horrible than anything we have seen to date with housing etc. Obviously, or the Government wouldn’t still be sitting at 48% in the polls.

    Comment by Nick R — September 16, 2016 @ 9:08 am

  24. Part of the problem with tackling inequality in NZ might be that the traditional approach to reducing poverty would be to elect a leftist (Labour) government who enact a series of serious economic and tax reforms. Except the last time NZ did this we got the Labour governments of the 80’s whose policies caused massive social disruption and were followed by a rise in inequality (I’ll leave aside the question of whether the reforms were necessary or whether they worked).
    If 9 years of pragmatic centrist Clark Labour followed by 8+ years of pragmatic centrist Key National tells us anything its that the 80’s and 90’s cured NZers of any interest in politicians promising radical economic reform.
    Various Labourites struggle to understand how Cunliffe did so badly when he actually had strategic vision and spoke about fighting neoliberalism and tackling inequality. The best polling recent Labour leader was David Shearer, best known ideologically for a kind of inarticulate, centrist, National Lite, ‘more of the same’ Labour. The depressing reality is that is what the electorate wants…

    Comment by Richard29 — September 16, 2016 @ 9:18 am

  25. The fundamental point of individual choice is that it leads to inequality – people are never exactly equal. One person has no children, works 60 hours a week, and lots of income. Another person has 3 children, works 30 hours a week, and spends that spare time with their children. They’re not equal, but that’s not necessarily a problem because they’ve chosen to organise their lives that way.

    It’s not the government’s job to overturn decisions people have made. If I’ve chosen to be a hippie living off the land with little income, it’s not the government’s job to try to equalise my income with a yuppie living in Auckland. They’re different lifestyles.

    Further, there’s an inherent intergenerational inequality – older people tend to be wealthier and have more income. There’s no sense in the govt trying to equalise incomes between a 23 year old in their first job and a 45 year old who is in middle or upper management.

    There is a set of inequality that is a problem, but it’s that inequality that wasn’t a choice, and isn’t a result of a natural distribution of talent or experience. When people use inequality as a measure of the problem, many on the right just don’t engage – because they don’t see why we’d need to fix the 23 year old getting paid less than the 45 year old, nor the hippie getting paid less than the yuppie. Focusing on actual deprivation or unfair discrimination is much more useful.

    Comment by PaulL — September 16, 2016 @ 9:23 am

  26. I don’t think there is much doubt that inequality causes instability, unless deeply unequal societies such as North Korea and Saudi Arabia crack down strongly on any hint of dissent. Evidence is that, overall, the world is the most stable it has ever been, coinciding with the greatest decline in global inequality in history since China and India adopted market-based reforms.

    Comment by Matthew Hooton — September 16, 2016 @ 9:24 am

  27. “But it seems to me it must have had some sort of structure. How else could “it” have decided to storm the Bastille”

    Isn’t this just tautological? An organised group is required to create revolution, and we can assume the existence of an organised group because a revolution happened?

    I don’t want to discourage you from doing your own reading but I will be very surprised if you find any form of organised structure beyond that innate to any large, long-lived urban area. And if that alone is considered enough to meet the “organised group” precondition then the precondition has almost zero weight analytically.

    Comment by Ortvin Sarapuu — September 16, 2016 @ 9:30 am

  28. “…If 9 years of pragmatic centrist Clark Labour followed by 8+ years of pragmatic centrist Key National tells us anything its that the 80’s and 90’s cured NZers of any interest in politicians promising radical economic reform….

    This is interesting, because dismay at vanguard cadres driving radical top down reform with the barest of mandates is largely why we dumped FPP and adopted MMP, a system expressly designed to prevent all but incremental change. MMP is still much more strongly championed by the left than the right, but when you think about it, MMP is the enemy of anyone who wants radical reform imposed from above.

    One of histories little ironies is we adopted MMP after Boxer had left the stable, and it has largely been used to help redecorate Napoleon’s sty.

    Comment by Sanctuary — September 16, 2016 @ 9:32 am

  29. “Elites” is another currently popular rhetorical device that masks a lot if reality.

    The Elites conspired to deprive Sanders of the nomination – despite him clearly being the only one capable of defeating Trump – instead gifting it to the most unpopular, corrupt and dishonest politician in US history.

    And so the Elites are responsible for a White Supremist getting close to the White House.

    It’s such mishmash of stupidity it’s impossible to argue against. Given it’s being put forward by quite a range of pundits from a range of demographics it’s hard to see it as some sort of reaction to inequality. It seems more personality driven.

    Comment by NeilM — September 16, 2016 @ 9:34 am

  30. @Ortvin Sarapuu – check this extract from the journal of Adrien Duquesnoy in October 1789 (four months after the Bastille, which he helped organise)

    http://historum.com/european-history/59179-role-paris-mob-french-revoloution.html

    So here in this extract we have the “control of the mob” finger pointed firmly at the National Guard under the somewhat wobbly leadership of America’s great war hero, Lafayette.

    Comment by Sanctuary — September 16, 2016 @ 9:36 am

  31. I think the storming of the Bastille was a bit of an accident and wasn’t much of a storming.

    Comment by NeilM — September 16, 2016 @ 9:36 am

  32. “…I think the storming of the Bastille was a bit of an accident and wasn’t much of a storming…”

    Chou En Lai was reportedly once asked what he thought was the historic impact of the French Revolution. After considering the question for a moment he replied:

    “too soon to tell.”

    Think about that NeilM.

    Comment by Sanctuary — September 16, 2016 @ 9:41 am

  33. …until he notices the cadaver of the VUW university chancellor twisting slowly from a lamp post in a smokey Wellington breeze on a burnt-out Kelburn parade.

    This is fantastic, poetic stuff. I imagine Sanctuary lovingly stroking the words on the screen with one hand before pressing the Enter key.

    Reminds me of Walter White looking over his lab equipment.

    Comment by Tom Hunter — September 16, 2016 @ 9:46 am

  34. Chou En Lai was obviously no idiot. I’d argue that you could use that response to deflect any fool on any subject under the sun.
    But of course, it’s too soon to tell.

    Comment by leeharmanclark — September 16, 2016 @ 9:51 am

  35. Even presuming the claim “inequality rose in this country more than in any other developed country in the world between 1980 and the 2000s” is true, a fast *ride* in income inequality doesn’t apply that our *level* of income inequality is particularly high. It isn’t; we’re very much in the middle of the range globally, and in the OECD: https://en.wikipedia.org/wiki/List_of_countries_by_income_equality

    Comment by Matt — September 16, 2016 @ 9:56 am

  36. @ sanc

    Actually it was a punctuation lesson not a grammar one…

    There has been a fair bit of social agitation and social change beyond the fourth labour government. There was the foreshore and seabed protests, supreme court was created, nationalised airline, kiwibank, anti smacking bill and protests, enough is enough, extension of marriage to all sorts, decriminalisation of prostitution, urewera terroirs, tpp, soe sales, rma introduction,unfccc ratification, mmp introduction, china fta.

    That’s a reasonable body of transformational work which moves and eases social tension, something which might be missed by a foreign economist flown in to pontificate about how unhappy and angry we should be because a single ratio doesn’t conform to what she thinks it should be.

    And there lies the ongoing issue for the people that write at the standard and policy for the greens; the big issues that they get excited and angry about are increasingly marginal for the majority, which leads to silly exaggerations to get traction – eg 40,000 homeless, children dying in cold damp homes (that strangely were built by labour and only a few short years ago were raising generations of nzers and considered a centerpiece in labours trophy room). Until they acknowledge that nz is not a hellhole in the Pacific, they will continue to face a middle nz shrug

    Comment by insider — September 16, 2016 @ 10:08 am

  37. “too soon to tell.”
    Sure, always loved that quote, but in the context of the whole Q&A, he may well have been talking about the recent, violent French protests of 1968.

    In any case, the whole theory of poor people rising up to violently grab power because they’ve been crushed down so badly seems mythical when each revolution is looked at closely – starting with the original “Peasents Revolt” in England, which did not arise out of some London shithole but in the wealthier parts of the country, and did not consist of peasants with pitchforks but people who thought of themselves as up-and-comers and had something to lose to taxing fanatics in Parliament – which reminds me more of “Waitakere Man” than anything else in our modern NZ scene,

    Comment by Tom Hunter — September 16, 2016 @ 10:12 am

  38. @ tom hunter

    Wait till he gets onto the plight of Hawkes Bay freezing workers and wharfies…

    Comment by insider — September 16, 2016 @ 10:15 am

  39. “…the big issues that they get excited and angry about are increasingly marginal for the majority…”

    The counter argument to that is this simply evidence of an increasingly polarised society. Visit any third world country and the middle class there behave like the poor don’t exist as well. Eventually, it spurns opposition from those who literally do having nothing to lose. We have a welfare state, which in the case of the poor is engineered to offer the least possible assistance commensurate with keeping the poor docile.

    Comment by Sanctuary — September 16, 2016 @ 10:26 am

  40. I’m not quite sure to what extent all this is helping Danyl

    A.

    Comment by Antoine — September 16, 2016 @ 10:29 am

  41. @Nick R “…They would argue that a degree of inequality is really the natural order of things…”

    They didn’t when they were shitting themselves over their fear of the USSR, hence the great equalising of wealth post war.

    Comment by Sanctuary — September 16, 2016 @ 10:33 am

  42. @Sanc: Yeah I’m award of DeQuesnoy but he’s not generally considered reliable. The idea that the Revolution was a conspiracy to put Lafayette on the throne has little historical evidence and seems to come from attempts by legitimists to delegitimise its popular component. There are similar ‘theories’ that the Duc d’Orleans was actually pulling all the strings. Little evidence of that, either.

    Lafayette and the National Guard were involved with some of the revolution’s early events but they did not provide some kind of organisational capacity that guided, or even attempted to guide, the course of events. Lafayette was playing catch up as much as anybody else. Significantly moreso than many, in fact.

    @Tom: Alexis de Tocqueville said that the most dangerous time for a regime is not when things have got intolerably bad but when they’re starting to improve. It’s certainly the case in France, which was in the middle of an economic upswing during the latter part of the 18th century (although perversely this coincided with a state bankruptcy, but that’s more due to extreme short term profligacy than any fundamental weakness to the economy). However it’s debatable whether this rule can be generalised.

    It’s also axiomatic that the middle class plays an extremely significant role in any revolution, but this isn’t really a weakness in revolutionary thought – it’s both expected and accounted for in pretty much every theory of the revolution, going right back to Marx.

    Comment by Ortvin Sarapuu — September 16, 2016 @ 10:34 am

  43. PS: It’s possible to believe that Chou was right, that the French revolution was an enormously significant event that shaped global history in ways that are still playing out, while -also- believing that the storming of the Bastille wasn’t very significant.

    Most historians of the French revolution view the storming as of little importance. It’s only viewed as central to the revolution for symbolic reasons, because that’s the date that the French have chosen to commemorate. (Although interestingly, the French don’t call it “Jour de Bastille”). The really significant event in 1789, if we’re ruling out legislative/declaratory acts like the Tennis Court Oath, is the March on Versailles.

    Comment by Ortvin Sarapuu — September 16, 2016 @ 10:39 am

  44. As an ex-English teacher I would like to commend those contributors to this thread on the very public-spirited way they have tackled Sanctuary’s punctuation/spelling/grammar/whatever. Unlike Tom @33 I think his images are outstanding, though we all know the Chancellor at VUW would actually be rattling horizontally in that smoky Wellington “breeze”. I particularly enjoyed the Boxer/Napoleon/redecorating the sty image and feel obliged to repeat the suggestion made in another thread that Sanctuary is actually one of Danyl’s characters and that he will make an appearance in an upcoming novel.
    If so, count me in for one signed copy, please!

    Comment by McNulty — September 16, 2016 @ 11:49 am

  45. @ #40: “The idea that inequality = political instability is canonical on the left and I’d always just agreed with it and assumed it was true. But because this time it was an economist making the assertion, it made me wonder if it was false. And given that we did have the fastest rise in inequality yet have such an extraordinary degree of political stability that it frustrates the hell out of the left, doesn’t this seem like a false claim?” Yes. It does.

    Remember that the left identify with a belief system created in the 19th century. Now their creed has an addendum: identity politics. In identity politics, it is essential for joiners to identify with the group, and that is primarily achieved via indoctrination with the group belief system. The group then reinforces conformity by polarising against any convenient other group.

    Us against them. Historically, the primary political polarity is the people against their rulers. Inequality is merely the consequence of exploitation (plus as other commentators have noted, lack of innate abilities or will to succeed in some) so political instability only escalates when enough people figure out that they are being exploited and get angry about it. The political left tries to persuade people into grievance mode but a guy with a flatscreen, sky tv & a car who sends his kids to school without breakfast isn’t likely to listen to them. He’ll vote for that cool dude instead.

    Comment by Dennis Frank — September 16, 2016 @ 11:50 am

  46. A lesson for those seeking revolution is that once the revolution is won the new leaders, once in the driving seat, will weed out the radicals very quickly. The french revolution a prime example. The first radical to be executed was the master designer of the Reign of Terror, Maximilien Robespierre,

    https://learnodo-newtonic.com/reign-of-terror-facts

    In the Russian revolution the original revolutionists in Pertrograd led a February 1917 revolution only to be emancipated by the Bolshevik October revolution.

    http://www.history.com/topics/russian-revolution

    Those wanting revolution might not get what they desire, counter revolutionists are lining up after the hard work is done.

    Comment by Gerrit — September 16, 2016 @ 1:01 pm

  47. “Remember that the left identify with a belief system created in the 19th century.”

    which isnt that far off the mark when applied to the right either.

    its more that the sales pitch has changed, and the right are better at it (which makes sense – modern marketing/advertising is all about the self)

    Comment by framu — September 16, 2016 @ 2:27 pm

  48. I wouldn’t say that inequality = instability, nothing does exactly, but there’s definitely a link. This NASA study points out the long history of inequality, alongside resource degradation, causing societies to collapse: https://www.theguardian.com/environment/earth-insight/2014/mar/14/nasa-civilisation-irreversible-collapse-study-scientists. Some IMF researchers have a plausible argument about inequality causing the GFC, in a broad sense: https://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf. And the idea that inequality slows economic growth by causing instability is pretty widely accepted.

    Comment by Max Rashbrooke — September 16, 2016 @ 2:29 pm

  49. >> “Remember that the left identify with a belief system created in the 19th century.”
    > which isnt that far off the mark when applied to the right either.

    I assumed that was contrasting it with the right’s love of feudalism and Christianity, both of which were old before the 19th century.

    Comment by Moz in Oz — September 16, 2016 @ 3:04 pm

  50. “Some IMF researchers have a plausible argument about inequality causing the GFC”
    And many commentators “have a plausible argument about” the SOLUTION to “inequality causing the GFC”, i.e. The Community Reinvestment Act, Fannie Mae, Freddie Mac.

    “which isnt that far off the mark when applied to the right either.”
    True, but the premise underlying the invisible hand continues to amaze us with what it achieves. Whereas all evidence thrown up by the experiments in central planning confirmed: it doesn’t work.

    Comment by Clunking Fist — September 16, 2016 @ 4:24 pm

  51. At the risk of incurring the wrath of those who hate digressions, consider the real-life dichotomy between Adam Smith’s preaching and his practice, which I was amused to learn about via the post-capitalism book I’m currently reading. He lived with his mother. She cooked his meals – for free. I’m puzzled he didn’t generalise a principle from this life-practice of his: “I envisage a nanny-state, which will look after us.”

    I bet she darned his socks too. Washed his clothes, after chopping the wood to light the fire to boil the water. Hung them out to dry, then ironed them for him. “In this nanny-state, the government will do all our chores for free.” In the Age of Reason, rationality prevailed. Such inductive reasoning would have made him more famous than his mythical invisible hand – all males had females who worked for them for free, and that status quo persisted till the end of the 1960s – so everyone would have known he had identified a fundamental principle that was obvious in everyone’s daily life.

    But Adam Smith knew that hypocrisy had long been normalised by the christians, folks would be ostracised if they pointed it out publicly, so he could get away with it easily, and did.

    Comment by Dennis Frank — September 16, 2016 @ 5:36 pm

  52. The inequality cake isn’t fully baked yet. The wealth of the baby boomers, combined with relatively free health care and Working For Families subsidising flat wages…… Takes some of the sting out.

    Comment by truthseekernz — September 16, 2016 @ 7:17 pm

  53. “hypocrisy”
    What’s hypocritical about it? He cast around for the cheapest way to feed himself, and found it was cheaper to have his mum cook for him than spend a lot of money going through ritualised courting to attract a high-maintenance wife. Simples. And children, pffft: a money pit. Or perhaps he was simply gay?

    When do you become a homophobe?

    Comment by Clunking Fist — September 17, 2016 @ 12:39 pm

  54. “consider the real-life dichotomy between Adam Smith’s preaching and his practice”

    It would be good to hear what preaching contradicted the bonds of familial love.

    Socialists sending their children to private schools. Now THAT would be hypocracy.

    Comment by Clunking Fist — September 17, 2016 @ 12:42 pm

  55. Wikipedia [reliably, pfft] informs us:
    “Smith was described by several of his contemporaries and biographers as comically absent-minded, with peculiar habits of speech and gait, and a smile of “inexpressible benignity”. DEFINITELY GAY!

    “He was known to talk to himself,[47] a habit that began during his childhood when he would smile in rapt conversation with invisible companions.[54]
    He also had occasional spells of imaginary illness,[47] and he is reported to have had books and papers placed in tall stacks in his study.[54] According to one story, Smith took Charles Townshend on a tour of a tanning factory, and while discussing free trade, Smith walked into a huge tanning pit from which he needed help to escape.[55] He is also said to have put bread and butter into a teapot, drunk the concoction, and declared it to be the worst cup of tea he ever had. According to another account, Smith distractedly went out walking in his nightgown and ended up 15 miles (24 km) outside of town, before nearby church bells brought him back to reality.”
    DEFINITELY MARRIAGE MATERIAL… NOT.

    What were your sources?
    “which I was amused to learn about via the post-capitalism book I’m currently reading” Oh, a completely unbiased source, then.

    Comment by Clunking Fist — September 17, 2016 @ 12:47 pm

  56. Actually, CF, the author is relatively unbiased, inasmuch as he’s exploring the conceptual terrain from the perspective of those of us who’d rather not be shackled with the obvious inadequacies of the left/right belief systems.

    I enjoyed those glimpses into the nature of Adam Smith you reproduced from Wikipedia, thanks. : )

    The hypocrisy evident to me when you consider that he created an ideology for operating the economy deriving from the provision of goods & services that others value sufficiently to pay for, yet he didn’t live according to his own doctrine. You could critique this by citing any money he made from being an author, couldn’t you? But you didn’t.

    Anyway I read those Ayn Rand novels mid-’70s & realised why I hadn’t swallowed the New Left line at university, so I’m not an opponent of enterprise (I’ve noticed you have an unfortunate tendency to assume those who disagree with you are leftists, just like Muldoon). The thrust of Danyl’s question is the amount of political pressure applied to (western) governments by extreme inequality, and the tipping point that generates political instability, and seems to me the answer lies in mass psychology. The masses act like sheep, so they only get spooked if a wolf shows up. If the grass stops growing they’re incapable of even wondering why, let alone doing something about it…

    Comment by Dennis Frank — September 17, 2016 @ 7:35 pm

  57. The masses act like sheep, so they only get spooked if a wolf shows up. If the grass stops growing they’re incapable of even wondering why, let alone doing something about it…

    So true, except in practice and most theory. I’d also recommend reading what Adam Smith actually said in the Wealth of Nations, but such an action might not be very post-capitalism.

    Comment by Richard — September 17, 2016 @ 8:01 pm

  58. Good response, Richard, but looks like the masses are busy proving you wrong. I thought the reappraisal by PJ O’Rorke was surprisingly good.

    Comment by Dennis Frank — September 17, 2016 @ 8:15 pm

  59. “The masses act like sheep, so they only get spooked if a wolf shows up. If the grass stops growing they’re incapable of even wondering why, let alone doing something about it…”

    Thank god you and your friends aren’t members of the masses, eh Dennis?

    Comment by Ortvin Sarapuu — September 17, 2016 @ 9:13 pm

  60. @Gerrit #5, she’s a Keynesian not a Marxist, so not, she doesn’t want the state to own 100% of everything. (Nice try.) Oh, and just because she is an advisor to the UK Labour Party doesn’t mean they are listening.

    Comment by MeToo — September 18, 2016 @ 5:37 pm

  61. Re economists ever getting things right: yes, lottsa truth in that. The old joke is economists have predicted 9 out of 5 of the last recessions.

    Ann Pettifor is a sovereign debt expert and monetary theorist who worked with the IMF and African governments helping restructure and write-off government debt, and was a key player in the Jubilee 2000 campaign. After that she looked at the West and was horrified to see the amount of government and private debt that was accumulating, and in 2006 predicted it would all come crashing down. But it took longer than she thought because those with the most to loose from a collapse did what they could to prevent it; since then governments in Europe and the US have pumped liquidity into the banking system every time it looks like the edifice might fall over again.

    So she predicts another financial crisis but is not prepared to speculate on the timing.

    She gave an interesting talk in Auckland last Thursday and I hear ads for a Kathryn Ryan interview on National Radio this week. Her comments on Brexit were that globalisation has left people behind and they are angry about that; in the UK under FPP politicians only ever looked to a few marginal seats and ignored the concerns of the rest of the country. With the Brexit the referendum every vote counted the same and they were shocked at the result. She cited Polanyi’s idea that people who have been left out will gravitate towards “strongmen” rulers and fascists who promise to protect them, not more ‘progressive’ forces. So her inequality comments need to be viewed in this context; she is not an expert in NZ.

    Comment by MeToo — September 18, 2016 @ 5:53 pm

  62. “in the UK under FPP politicians only ever looked to a few marginal seats and ignored the concerns of the rest of the country. With the Brexit the referendum every vote counted the same and they were shocked at the result”

    Interesting point about the way FPP politics left people feeling left out. Maybe that’s a strong contributing factor to NZ’s recent relative stability. Whether you agree or disagree with the result, you know that your vote counts.

    Comment by HelenK — September 19, 2016 @ 9:38 am

  63. If it’s canonical that inequality=instability then it’s a very poor canon, since most of human history has been a long tale of inequality. I’d have though that the opposite was true, that inequality is one of the most stable systems, a consequence of the Iron Law of Oligarchy, and that equality, where-ever it has briefly occurred, has not lasted long at all. These periodic setting-to-rights that happen for whatever reason soon start to fray as power agglomerates. Equals fight like billy-oh, whereas master-slave situations are very stable indeed. You can only have a serious conflict when two groups of comparable strength are pitted against each other. Otherwise it’s just called oppression and it’s extremely straightforward to manage.

    Perhaps sometimes the fight between equals lasts a long time. But outside of sportsfields, where rivals are picked because of the comparable strength, fights are mostly one-sided, with one side bringing overwhelming force. This is as true of economic war is it is of military war. It’s only the intervention of a state that even gives small players a chance at all. But most of them go to the wall, except where they have some little niche that it suits big players to distance themselves from and operating via subcontracting that pushes all the risk onto the little guys. That’s what operating in a free market is like. Unless there is a massive undersupply of your business, operating independently is pretty much a recipe for impoverishment.

    It might be true that the “Left” sees inequality as driving instability. I don’t really know since there’s such vague terms used in that statement. Unstable what? Unequal what? Who is this Left and where did they say this?

    Obviously there are going to be plenty of clear examples where it’s a true statement. A maximally unequal system, in which one person has everything, and all the rest have nothing, is going to be pretty unstable, sure. But a small minority owing almost everything which is well organized in a society that has long been this way can be very stable. In fact, long-being-that-way is pretty much what stable means. I’d think that if you plotted Gini vs Stability, you’d get a curve that maximized stability somewhere in the middle, rather than at the ends, but there could be multiple local maxima along the way, various sticking points. Depending how you defined stability, of course. But the ends (Gini=0 or Gini=1) would be local minima, I’d imagine. Where’s the true maximum? I don’t know, but would not be surprised to find it somewhere nearer 0 than 1.

    Which does not mean that any such stable point is therefore a good thing. A stable situation of widespread mass slavery is not good for most people.

    But “reasonable” inequality is only one measure of a good functioning society. Clearly absolute levels of economic wealth are important, not just relative ones. Some kind of subsistence hunter-fisher society could have high Gini, and yet still be a miserable struggle for everyone in it during adverse times, at which point the one person who hoarded supplies or built a shelter might be a savior to the rest. It would flip to extremely low Gini under that circumstance – but this volatility is due to the tiny amount of wealth that the society even has to share. This setup would be extremely unstable unless the preparer had also prepared a monopoly on violence somehow. I’d expect, however, that whoever did have a monopoly on violence would be able to keep this situation in place quite effectively. I’d guess there’s very, very long periods in our pre-history like this. Probably longer than all of history, even.

    Comment by Ben Wilson — September 19, 2016 @ 1:09 pm

  64. “he created an ideology for operating the economy”
    See, this is where folk go wrong, particularly those on the left… or post-capitalists, whatever they are. He did no such thing, he merely observed the natural order of things.

    Comment by Clunking Fist — September 19, 2016 @ 4:33 pm

  65. Lefts (and post capitalists) are the economic equivalents of folk who believe in intelligent design. Whereas economies are really proof of evolution. Peacocks don’t NEED those tails, just as we don’t NEED SUVs.

    Comment by Clunking Fist — September 19, 2016 @ 4:36 pm

  66. “at which point the one person who hoarded supplies or built a shelter might be a savior to the rest”
    They were a saviour to their family. Everyone else starved. Pre-industrialisation, life was pretty grim.

    Comment by Clunking Fist — September 19, 2016 @ 4:39 pm


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: