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Lumifer comments on Open Thread March 7 - March 13, 2016 - Less Wrong
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Responding to a point about the rise of absolute wealth since 1916, this article makes (not very well) a point about the importance of relative wealth.
I've had a short discussion about this earlier, and find it very interesting.
In particular, I sincerely do not care about my relative wealth. I used to think that was universal, then found out I was wrong. But is it typical? To me it has profound implications about what kind of economic world we should strive for -- if most folks are like me, the current system is fine. If they are like some people I have met, a flatter real wealth distribution, even at the price of a much, much lower mean, could be preferable.
I'm interested in any thoughts you all might have on the topic :)
Similarly to you, unless the rich people use their money to abuse me, I care more about my absolute than relative wealth. My struggles are not with comparing myself to other people, but with getting what I want. Give me everything I want, and I won't care if you give other people 10 times more.
If you took the wealth existing today and distributed it more flatly, many people would have higher absolute wealth. So I don't see how caring about absolute wealth makes current system fine.
We do have the data point that a capitalist economy provides higher average wealth than a communist one. But that doesn't imply that e.g. a capitalist economy with basic income couldn't provide even more. (Maybe the problem with communism was lack of competition and the micromanagement of everything by political nitwits, not the flatter distribution of wealth per se.)
In capitalist economies scarce resources are effectively auctioned off to the highest bidder. If you're noticeably poorer than people around you, you will likely be unable to get to these resources. A simple example: buying a house.
At one level, no, it doesn't. But at the same level it also doesn't imply that a capitalist economy with X (where X can be anything) couldn't provide even more as well.
At another level yes, it does, because there are reasons why a capitalist economy works and a command economy doesn't. These reasons are relevant to evaluating whether a basic income is a good idea.
Could you expand on this?
Consider incentives. Under capitalism one incentive is the possibility of becoming rich, but another, more basic one, is the desire not to starve. Under a command economy you won't usually starve (because you're a useful labour unit), at least in a situation where you can do something about it. You still might starve because of incompetence or a political decision.
A large number of people do not enjoy their jobs and, given the opportunity, would... take early retirement, let's put it this way. That's a problem. Command economies solve it by command (recall that being unemployed was a criminal offense in the Soviet Union). Capitalist economies solve it by saying "OK, I'll wait till you get hungry".
A livable basic income would make that incentive disappear. Yes, some people would be happy. The consequences for society, though, are debatable :-/