[PEN-L:217] RE: the growth of global

[Max Sawicky]

>[EMAIL PROTECTED] wrote:
>
>>so if the bottom 80% ends up with 'more'  (even though it's a smaller
portion of the total ) , it's a worse situation?>

Doug H.:
>People judge their welfare in large part against their peers, not some
absolute transhistorical standard. So if the rich get way richer, and
visibly so, and everyone else gets a smidgen richer, then, yes, most people
would feel poorer. Even Adam Smith agreed.>

Bigwayne asks an important question.

I doubt that many working people would
prefer a decrease in a high income to
increases in both theirs and the high
income, where their own increase was
disproportionately low.  Or more simply,
who would not prefer Doug's scenario
to a status quo?  My impression is that
we've had elections about this in the
U.S. and the 'relative' position has
lost, big-time.  But if people prefer
higher income with lower relative income,
and this also makes them feel "poorer,"
to what is the meaning of "poor" reduced?

I don't doubt that relative incomes
are more important than economists
make out, but how is not so obvious
to me.

The relativist standard can easily be
taken to a logical, absurd conclusion:

Suppose Devine secretly owns orange groves,
like the John Huston character in 'Chinatown,'
and makes ten million bucks a year, and Doug
is some cheesy securities trader in penny
stocks who fleeces people and makes $100 grand.
Jim's income is 100 times Doug's.  Now suppose
Louis leads an uprising, smashes the state,
and taxes Doug down to $25K and Jim down to
$1 million, so his income is 'only' 40 times
Doug's.  By the relativist standard he ought
to feel richer.  But I'm quite sure he wouldn't,
even after listening to LP's six hour state of
the union address.

>From a practical political standpoint,
concentrated wealth is a problem, but there
has to be some point where feelings about
relative differences are superceded by
absolute differences in income, where
a better income is simply more, not more
in relative terms.  Growth and redistribution
directed at low incomes are then somewhat
more important than obsessing on high incomes,
from an economic standpoint.

MBS