Corpania Ideas

CAVEAT! I'm an amateur philosopher and idea-generator. I am NOT an investment professional. Don't take any of my advice before consulting with an attorney and also a duly licensed authority on finance. Seriously, this my personal blog of random ideas only for entertainment purposes. Don't be an idiot.

Monday, December 25, 2006

"Forget 'inequality'. The problem is 'Extremity' in economic distribution."

Some inequality is necessary in economic systems. Even if communists could get their way and everyone was at the same economic level it wouldn't commensurately increase happiness or productivity. Research on lottery winners and victims of crippling accidents shows that after one year nearly all return to their previous happiness set-point. Humans have chemically set happiness equilibriums. Where more money makes a lasting difference on happiness is in bringing people out of poverty. Being in poverty depresses happiness well beyond individual set-points. Consequently, capitalism's "inequality problem" is only a material issue when there is poverty that can be alleviated without having a noticeable effect on the wealthy that can relieve that poverty. My thought is that we should forget talk about "wealth disparity" or "wealth inequality". Those terms evoke unappealing visions of communism. The problem is extreme wealth disparity or what I like to call "Extremity". Pharoahs, Kings, Czars; this kind of disparity is ripe for revolution. Regular old inequality is not only acceptable but necessary to create incentives for hard work and innovation. Extremity is what is dangerous.

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