Is Rising Inequality Inevitable?

By C.P. Chandrasekhar, Professor of Economics, Jawaharlal Nehru University, New Delhi and Jayati Ghosh, Professor of Economics and Chairperson at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Originally published at The Business Line

Rising inequality is now a concern on everyone’s minds, even amongst the rich. Unequal societies are actually more unpleasant and dangerous for everyone, not just for those deprived by the system. High and rising inequality can be dysfunctional for the economy: for example, many now argue that growing inequality and the suppression of wage incomes combined with the effects of financial deregulation to generate the Global Financial Crisis of 2008, and that the subsequent poor performance of most economies is related to the slow and limited recovery of labour incomes. Policy makers seem to recognise that addressing inequalities is important not only for justice and social cohesion, but also for continued material progress.

This may partly explain the recent proliferation of academic studies on global and national inequalities, as well as the numerous reports on the subject that have come from UN organisations and other multilateral organisations. The huge media attention devoted to one academic study—Thomas Piketty’s Capital in the 21st Century—is a sign of the times. The spotlight that is shone on the rising share of incomes of the rich and the substantial empirical data that have been brought to bear on establishing this are indeed welcome.

But that book, like many other recent analyses of inequality, tends to ascribe some sort of inevitability to the process, as the result of the working of some inexorable economic forces. Piketty, for example, argues that there is a general tendency for wealth and income inequalities to increase because the rate of return on capital tends to exceed the rate of growth of the economy. There are various analytical concerns with this formulation, which relies on assumptions of full employment over the process of economic expansion and returns to factors like capital being determined by their marginal productivity (itself a problematic concept that is also impossible to measure).

The general increase in inequality in most countries over the past two decades—as indicated in Chart 1 that covers both developed and developing countries—can clearly be related to declining shares of wages in national income. (The data for the charts and table are taken from the UNDP Report Humanity Divided: Confronting inequality in developing countries, UN New York 2014.)

Various analysts have attributed this trend of falling wage shares to the impact of labour-saving technological change, as well as the globalisation of trade and production, both of which have dramatically reduced the bargaining power of labour relative to capital. Technological change has also increased wage dispersion in many instances, thereby generating more wage inequalities as well. Some observers have pointed to the effects of financialisation in increasing the share of rentier incomes and enabling policies that serve financial interests rather than those of society at large.

Chart 1


income inequality gini coefficient over time

However, these shifts cannot be ascribed purely to economic forces, since domestic social and political forces and policies also play important roles. Indeed, the last point highlights the important role of policy and the political economy that determines policies that affect income and asset distribution.

In the developed countries, the declining emphasis on welfare states has been associated with the weakening of institutions and regulations that could protect workers and therefore the labour share of incomes. In developing countries, the perceived need to provide incentives to large private capital for generating investment and thereby growth, as well as drives for fiscal stabilisation, have also operated in the same way.

But the important point is that not all countries show the same trends and not all governments have behaved the same way. Chart 2 shows that the aggregate measure of inequality the Gini index has moved in different ways in the various major regions of the developing world. In two major regions – Africa and Latin America and the Caribbean – the recent period has in fact witnessed a significant decline in inequality, though it is to be noted that these were already the regions with higher inequality to start with. By contrast, there have been very significant increases in inequality in the transition economies of Europe as well as in Asia.

Chart 2


gini coefficient by region income inequality

Even looking at regions is obviously too broad given the huge diversity within these large geographical spaces. Table 1 provides a further disaggregation, indicating the number of countries where inequality has increased or decreased and the average rate of change across these.

Yves here. In the wake of increased debates over rising inequality, particularly income inequality, many economists take the point of view that high levels of disparity are a state of nature. But that’s a terribly uninformed way to look at the question. Economies of any complexity are not natural; even modern capitalism comes in many forms. This post looks at developing economies that have done a better job of dampening inequality to see what they have in common.

changes in inequality

It is evident that Latin America particularly stands out in terms of number of countries experiencing significant reduction of inequality. Some of the policies followed in countries of Latin America (and now some in Africa as well) are therefore worth noting.

Fiscal policies operated to reduce inequality through progressive income taxation and highly redistributive social transfers targeting education and health spending as well as public child and old-age benefits. There were increases in formal employment, led by significant increases in public employment, through the expansion of and improvement of quality in public services in areas such as health and education, as well as through “in-sourcing” activities that were earlier outsourced to private companies by governments. Wage gaps between skilled and unskilled workers were reduced by increases in educational access and enrolment, and this contributed to the recent drop in income inequality. Legal minimum wages rose through most of the 2000s, and in some countries like Brazil they more than doubled in real terms. Incidentally this also reduced gender wage gaps, since women workers tend to be clustered in the lower end of the wage distribution, at and around the minimum wage.

Reviving institutions and regulations such as labour unions, employment protection, minimum wages, unemployment benefits and regulation with respect to firing played an important role in moderating wage inequalities and improving wage shares of national income. So even in heavily “globalised” economies operating broadly within market capitalism, domestic policies can still be effective in shaping patterns of inequality and causing some declines. Rising inequality is therefore not inevitable — it is a political choice.

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  1. diptherio

    COPY EDIT ALERT (burn after reading)

    This graph:

    Yves here. In the wake of increased debates over rising inequality, particularly income inequality, many economists take the point of view that high levels of disparity are a state of nature. But that’s a terribly uninformed way to look at the question. Economies of any complexity are not natural; even modern capitalism comes in many forms. This post looks at developing economies that have done a better job of dampening inequality to see what they have in common.

    ended up in the middle of the piece. Obviously goes at the head.

  2. just bill

    Capital today has no value, as anyone knows who has a savings account. These days income is absorbed by rent and looting. Henry George offered the best answer to this in 1876. Read his Progress and Poverty.

    1. Bobbo

      I will go one step further and say that “rent and looting” are facilitated by increased centralization, and increased centralization always promotes more “rent and looting” in a nasty feedback loop. Now in theory — yes, theory — it is possible to use all of that centralized authority for good, and to use the political process to make sure that all that centralized power is not abused. But it’s not to happen in practice, not in this environment. The psychopaths will just laugh and say “Show me more centralization and I show you an opportunity for rent and looting.” The voters are too disengaged to understand, too distracted to notice. It is naive to think that we can “revive institutions like labor unions” and “revive (centralized) regulations” to save us. It’s way too late for that. The only solution is to fight the root cause, which is centralization itself.

  3. Some Guy

    Take a lesson from the MSM, the headline is as important or more than the article, this one should be headed, “Rising Inequality is Not Inevitable”, or better, “Proof that the Right Policies can Lower Inequality”, or, for maximum clicks, “The 7 simple things other countries are doing that could make Americans wealthier if we tried it here”

  4. MikeNY

    Absolutely, inequality is a choice. It is a choice we, collectively, make about what kind of a society we want to live in. As Gandhi said, there is enough in the world for the need of every man, but not for the greed of every man. Since the greed of a single man can be infinite, that is patently true.

    A living wage, redistribution, progressive taxation, a BIG: there are many ways to ‘skin the cat’. I leave that to policy wonks, for the most part. First we have to recognize the injustice of the status quo.

  5. Banger

    I think, aside from the very rich trying to game and con the system, there is an ideological component to this that we must face. Most people, even those who are struggling (in the US), believe that income provides a ready measure of worth since all others are in question; it is an open question, for example, of what a good Christian or good citizen is. But net worth, or income, or public displays of wealth provide an unambiguous picture–so it’s very tempting to use that measure even for people who are not naturally materialistic.

    1. Lottery hopeful

      Inequality, wealth, and poverty have social and symbolic sides to them – no surprise. Wealth is a visible display of God’s favors – your poverty says that you don’t have God on your side. Your poverty also tells me that you aren’t as skillful, talented, etc as I am. Therefore I’m better than you are.

      Also, the presence of very wealthy people in our fair country tells me that though I am now poor, someday I may become rich. Therefore I will resist legislation that taxes the wealthy or will not support politicians who do. This is The Sweepstakes Aspiration. Black people, however. have successfully resisted buying into this.

      Poverty, wealth, and inequality have many other sides – which explain why poverty and inequality are, and have been, very popular. But other people can do a much better job than me in detailing them.

      Gotta run – buy my lottery tickets at the local C-store.

    2. Sweepstakes Hopeful

      Yes, wealth – or lack of it – tells others whether you are favored by God or have superior skills, talents, etc, among other things. It’s very handy for quick social pidgeon-holeing.

      Wealth, and its cousin inequality, will also be defended by many Americans because of The Great Sweepstakes Hope — I refuse to block anything, including higher taxes on wealth and income, that may affect me when I hit the big time – even though I’m poor now.

  6. frosty zoom

    inequality will always rise until it is unrisen once again.

    most people aren’t really very greedy. but alas, there are “those” people, the sociopathic bowerbirds. so, you gotta put in place rules of conduct to try to constrain the 3%*. of course the 3 will oppose any attempts at constraint by the 97, using their (the 3) magic “money” thing to buy, create, steal or fake a government(s).

    so the 97 try to unsqueeze themselves which works for a while but alas, the wheels on the bus never cease to go ’round and the terms of praise which the 97 used to describe their gains slowly devolve into slurs used by the 3 for their selfish wants.

    rinse and repeat.

    *perhaps a more useful number the the “1%” because we have the aforementioned 1% plus the other 2% who are trying real, real hard to be the 1%, often causing more damage.

      1. MyLessThanPrimeBeef

        That will not work.

        A lot of people are against gun ownership. So, we will have to shoot them with something else…maybe toy guns (exempt from the ban).

  7. Brian

    Charles Hugh Smith wrote yesterday about an aspect that is rarely discussed. Waste, and its share of GDP. If we are talking about inequality, then what does wasting human talent do to the stability of our systems? We wasted oceans, states, people, mountains and ecosystems, and often for the purpose of easy plunder of the resources.
    If we leave this to the perpetrators, we will see it rise in an attempt to make things look A-OK.
    Illusion and delusion are important to our status quo, for it appears to be the basis for their psycopathy.
    Are we as the collective humanity more aware than a pig that eats and defecates on its source of nourishment?

    1. Mark P.

      “If we are talking about inequality, then what does wasting human talent do to the stability of our systems?'”

      ‘That is why no amount of cajolery, and no attempts at ethical or social seduction, can eradicate from my heart a deep burning hatred for the Tory Party that inflicted those bitter experiences on me. So far as I am concerned they are lower than vermin. They condemned millions of first-class people to semi-starvation.

      ‘Now the Tories are pouring out money in propaganda of all sorts and are hoping by this … to eradicate from our minds all memory of what we went through. But, I warn you … they have not changed, or if they have they are slightly worse than they were.’

      – Aneurin Bevin, Minister of Health, Speech on 3 July 1948 at the Bellevue Hotel, as the UK National Health Service was initiated.

      1. larry

        Mark P: According to the Socialist Health Association, Bevan gave this speech at a Manchester Labour rally on 4 July. Thanks for reminding us of a great man. He thought successful Toryism and an intelligent electorate were contradictory. I wonder what he would think now.

  8. Denis Drew

    In the United States Piketty’s grim future can be (easily) fended off by adopting the labor market system promoted by the US’s most successful union, the Teamsters with their National Master Freight Agreement, and the world’s most successful economy, Germany, with their most systematically worked out version of legally mandated, centralized bargaining (similar employees negotiate a single contract with all firms — no more race-to-the-bottom).

    Rebuilding unionization (by law; just have to talk it up enough; no scab/labor riots involved :-]) automatically reconstitutes legislatures filled with (the same?) legislators (now) waiting on what labor (the average person) wants as to reining in private equity looting and too big to fail speculating and ridiculous health system, etc.

    Just have to talk it up to make it happen — or we can go on bemoaning for the rest of our lives why the present system is getting worse and worse. (Rehabilitating might be a better word since the current state of unionization can only be described as pathological.)

    Card check kind of stuff: race-to-bottom will result in same end as supermarket, now so-called, contracts ended thanks to Walmart: where the most that most can aspire to is $400 a week.

    PS. Practical applications from just last week. New Yorker article tells of fasts food employee putting 60 hours at _three_ different outlets of the same company — no overtime. And of how difficult it could be to organized fast food companies if they have to organized at tens of thousands of individual franchisees. Centralized bargaining: problem solved.

    New York state passed a law specifically designed to allow 3,500 Fed-X drivers to negotiate with the company as employees — not private contractors. Law added same coverage to 29,000 other New York commercial drivers but Fed-X morphed itself into a company that sells routes to companies that lease trucks to drivers — and slipped out from under. Centralized bargaining: problem solves.

    Why run from symptom to symptom; why not reform America’s labor market and political forum with one easy step? Don’t hide this modality under a bushel basket; shout it from the rooftops!

    1. Denis Drew

      Yesterday I was very unpleasantly surprised to discover that the amazing cafeteria at Chicago’s Northwestern Hospital has been permanently closed — replaced by a string of small shops that pay minimum wage instead of union (SEIU) wages and pay the hospital rent to be there. Nothing — nothing — is safe in this country is safe from the (presently) bean omnipotent bean counters anymore. (Get me Jimmy Hoffa.)

      1. PopeRatzo

        That’s awful When I worked at the RIC, I used to eat at that cafeteria all the time. What a shame.

        I’m telling you, our economic overlords aren’t going to be happy until we are all at subsistence level, living 10 to a flat and buying from the company store.

        I come from a union family. Railroad, Teamsters, Electricians. My grandad had a scar on the side of his head where he got beaten by a hired railroad “security consultant” trying to break the union. I can’t believe my generation, that came of age during Ronald Reagan’s regime, let this happen.

      2. Jack King

        Businesses close down all the time. It is generally because they cannot hang with the surrounding competition.

    2. Banger

      I agree but unions are unpopular particularly in the more working class population. Even though many of them complain about bad working conditions the idea of questioning the bosses seems inconceivable to many of them. I think mainly they like the idea of someone else organizing the workplace an making decisions as long as they can be left alone to cocoon when they are not at work.

  9. Jack King

    Yes, Africa and Latin America may be doing better in recent years, but they are still profoundly unequal. The highest gini is in Nelson Mandela’s South Africa. This is followed by Brazil. As regions go, sub Sahara Africa and Latin America are doing very poorly, if equality is the yardstick.

  10. timbers

    “Is Rising Inequality Inevitable?”

    No, but there will be no progress reversing it’s rise as long as Obama is President.

  11. jgordon

    Just because no one else has pointed this out yet, John Michael Greer, The Archdruid, addressed this very topic a few days ago, and was even linked to by NC in the links section.

    Anyway, to sum up the Archdruid’s analysis of what’s likely going to come about in America:

    In general, everyone’s standard of living will go down (as it has been going down), and if we lived in a more equitable society then certainly the elites would happily see their living standards drop in solidarity with the peons. Though far more likely the elites will manage to stave off suffering the pains of that overall standard of living drop by pushing it off onto the poorest and weakest through a mixture of willful ignorance and police-state style repression. As time goes on and we continue to get poorer the elites will start squeezing those higher up the totem pole. Then at some point the peons/former middle class will become so annoyed with the whole affair that they’ll say “to hell with it” and then something very unpleasant will happen to the elites. For an illustrative example, look to the French Revolution.

    Of course America also has a very expansive and expensive police state apparatus to keep the unruly elements in check through the judicial use of violence and other unpleasantries, but very unfortunately that kind operation is itself a huge resource drain, and it only therefore hastens the end whenever it’s tried.

    Eventually however, those of us who have managed to survive will all be very poor and therefore very equal. So good news: we surely will be more equitable again!

    1. Brooklin Bridge

      Of course America also has a very expansive and expensive police state apparatus to keep the unruly elements in check through the judicial use of violence and other unpleasantries, but very unfortunately that kind operation is itself a huge resource drain, and it only therefore hastens the end whenever it’s tried.

      You sum that up very nicely and the implicit snark in your last paragraph indicates you are as aware as anyone that the real issue is all the needless and therefore monstrous suffering and death that occurs in the meantime.

  12. Chauncey Gardiner

    Interesting that this summary is by two Indian economists who evidently neglected to include either their own nation or the U.S. in their analysis. Must be something in the water. That said, the GINI coefficient is reflective of a political choice by a singularly unimpressive group of policy makers and individuals who corrupt and influence them. Their political choice is exploitation of others and the environment, both domestically and globally.

  13. Ed

    You can either kill the goose and cook it and eat it, or you can keep the goose alive and take the eggs.

    Usually the choice is to keep the goose alive and take the eggs, but sometimes the goose is killed. This happens when the farmer is about to lose the goose, either because the goose is dying, or the farmer is dying, or is in bad straights and has to sell the farm anyway.

    The American middle class goose is has been fattened and is now getting slaughtered. Alot of people make this more complicated than it is.

    1. James Levy

      You’re missing the point: the geese have organized and are eating the food you give them plus their own eggs while you go hungry. Or don’t you understand that the rich have gotten considerably richer since they crashed the economy in 2007-9 while most Americans have gotten poorer or barely kept up? If you check out the stats on males with high school diplomas, they haven’t seen their wages rise since 1968. Before you go all “but college” on me, only 24% of Americans over the age of 25 have 4 year college degrees. This number seems to be incomprehensible, staggering, to the average educated American, but it is, nonetheless, true, and therefore we have to plan things without the miracle of a college degree in mind.

  14. impermanence

    All systems work the same way. They are organized by the few for their own benefit. If the person doing the work is not receiving just compensation, inequality exists. Redistribution is what keeps the sheep sedated.

  15. kevinearick

    Privacy, Preemption & Fatigue

    Going to government for your rights is like going to a used car salesman for your car. Projecting a profile for government consumption requires no more than 10% of your time.

    Regardless of ism or government definition, the majority has been breeding slavery, an extension of gravity, on a ladder of masters followed by slaves, repeating the stack, to nowhere, trading busy-work for toys, for its entire history.

    All they want to know is whether you are a master or a slave, relative to their position, and, in any case, their operation is the same. They see a game of finite outcomes and compete for a tile, first by eliminating you from the competition, which is why they all lose.

    Empire is a simple stupid gravitational system, with increasingly arbitrary and complex dresses, as you would expect from such a system, which is why the automatons are so enthralled with dc automation. Set them in front of the boob tube and be on your way.

    There would be no ‘banksters’ if the majority did not consistently vote for ‘free’ money, their own slavery to scarcity, but seven years on and they are still demanding the heads of banks, to be replaced by the next scapegoats, through a revolving door, finding fewer and fewer takers. Andrew Jackson made the mistake of taking the majority seriously, but he liked poking eyeballs out just for the fun of it.

    No matter where you go, you see demographic bust, but the UN forecasts boom, to justify printing more money for climate change. The majority’s irrational import/export infrastructure is strangling it, but the capitalist corporations demand more, knowing that the socialist corporations will employ it, to maintain the global city at all cost, increasing rent on increasing vacancies.

    Privacy is a matter between you and your spouse, and fails in most cases, because under the specter of probability in the perception of a closed system, the outcome is a self-fulfilling prophesy. If you want to accomplish anything, you have to leave the majority behind, which, in most cases, includes your parents and children, who will, sooner or later, succumb to gravity.

    Some families do breed freedom consistently, but you will not find them in the majority, as basic common sense and rudimentary mathematics will tell you.

    Why do you suppose California has more prisoners than college students, one of the lowest HS graduation rates, and the highest divorce rate, yet can print and launder money at will, distributing lost purchasing power across the globe, with the least among us in the Middle East bearing the brunt of the resulting war?

    Given the choice between dealing with a capitalist and a socialist, the capitalist is far more efficient, but they are all buying time, to do nothing, but their part in the machine. The paradox of empire is that it can only eliminate freedom by habit, but must have freedom to exist.

    FDR garnered four terms from the majority, a de facto king supplying the Nazis, granting free money with abundant natural resources as collateral, and surprise, surprise, the New Deal comes unglued as the consumers consume everything, and get their wish, birth controlled by scientists, to consume the rest. Nothing is free, especially markets and their foundation, individual liberty to participate, or not.

    The best defense of liberty is not a good offense. History tells you that, but nothing more. All empires and their participants act preemptively, employing the outcomes of the last preemption as an excuse for the next, due to density anxiety.

    Sticks, stones, and name-calling, the tools of the majority, get you nowhere. Tell your children that, if you want them to have equal opportunity, and to play football on their knees, to make a game of it.

    Why do you suppose Cameron was so eager to gossip with Bloomberg, and how is that different from what you see every day, from critters hiding in cubicles, with the patience of knats?

    I had the good fortune of coming from the Breadbasket, English tobacco and German engineering, to California, when I was seven, already having done more homework than they do here from kindergarten to university. Having been up and down that ladder fifty times, and done everything I ever set out to do, I’m just telling you the easiest way to do it.

    I am always surrounded by cave people, who think they are going to stop me with preemption. There are thousands of readers, but among the comment the majority is sticks, stones, name-calling and tl:dr, surprise, surprise, entitlement jobbers pleading diatribe upon demand of equal rights…crack me up.

    Experience varies by frame of reference, but mine is that humans are quite far down on the evolutionary ladder. Do you really think Putin fears the politically manufactured majority in America, or Europe? Have you taken a look at the standardized tests?

    If it seems like you are doing everyone else’s job for the same pay and less, you probably are, caught in the gravity of false assumptions, along with all the rest. What is new about aspiring to status, demanding equality, and expecting money to be the answer?

    1. Min

      “Going to government for your rights is like going to a used car salesman for your car.”

      How far we have fallen in 70 years!

  16. fresnodan

    A week or so ago I posted this link:

    And to me the most interesting tidbit is this:
    “China’s extraordinarily high savings rate is almost wholly explained by the transfer mechanisms that subsidized rapid growth over the past two decades, leaving Chinese households with the lowest share of GDP in the world, and perhaps the lowest ever recorded for a large economy. Arithmetic, not to mention historical precedents, can easily explain why these transfers, which during this century amounted to as much as 5-8 percent of GDP annually, would drive down the household consumption share of GDP by driving down the household income share, and of course high savings are simply the obverse of low consumption”
    So “China” made a decision to become richer – not the Chinese people, but “China.”
    Interestingly, China’s elite in screwing the vast majority of their own people got help from……….wait for it……..US elites who also for some reason believe that screwing the vast majority of their own people is a good thing. Well, at least the elites are color blind, and judge people without regard to race, creed, or nationality – as long as your rich, your a good person!!!

    It seems to me the US made a decision to become richer as well (I note the reference in a comment above to the CHS blog on GDP) – I note that GDP has been rising for many quarters. Indeed, the recession was what? – only two quarters of negative growth? But I have also posted this:

    That is, the economy is growing. But the wages of the “working class” is not (indeed, most wage earners are not seeing any increases). That is a policy decision. It seems to have the policy now for years

    Who pays taxes, and at what rate. Who gets benefits and who doesn’t. What anti trust laws are ignored. Who gets bailed out and who gets tossed overboard.
    And all the obscure, invisible rules, regulations, etcetera that are never covered in the MSM, and never, ever from the standpoint of who benefits and who is harmed….
    Inequality is rising because the rich have managed to convince people that God and the natural order is tha twhen the village catches or grows food, or makes something, that the “chief” should get 95% of the proceeds due to the chief’s leadership, or entrepreneur ship. or other such bullsh*t phrase.

    1. MyLessThanPrimeBeef

      Gotta go out and kill more whales because the chief took 95% of the last salmon catch (can he eat all that?).

      “I beg you, no more GDP growth. No more village infrastructure projects to build more whaling boats. I don’t care if the chief can print as much sovereign money as he wants. Just give us some of that salmon catch already before they start to rot”

    2. Min

      No, high savings are not simply the obverse of low consumption. Just because I am starving does not mean that I have a full pantry.

  17. nohomehere

    Is rising inequality inevitable duh yeah! sorry! Like when congressmen were only paid for attending and now paid world class hunting trips by lobby’s Or do you mean between the 20 percentile and the 80 percentile or the 10 percentile an the 90 percentile or just the average 1 percent and the 99 % below ? I don’t get the question! Oh! maybe the working percent and the ….nah! It’s thoses earning remembi’s versus SDR basket of world currencies, yes? No the southern europeans and the northern europeans (germans ) ? wait wait I got it . it’s the european unemployed 60 % of youth the “Lost Generation” and the Brussels Belgium bureaucrats ! YES! I’m sure that’s It. final answer! Who comes up with these questions?

  18. gordon

    I’m not arguing against Yves when she refers to “Reviving institutions and regulations such as labour unions, employment protection, minimum wages, unemployment benefits and regulation with respect to firing…”, and I support Denis Drew’s suggestions about unions upthread. But why does Government ownership of parts of the economy – natural monopolies are the obvious parts – always get forgotten in discussions like this?

  19. Jay M

    the thing is:
    we have bases all over the frigging place
    fossil fuel dependent is our name

    algae blooms with cocolithates may be cool

  20. TarheelDem

    The tendency toward inequality is likely a communications network phenomenon. The larger and more widely spread the communications network, the more intensely the pressure toward extreme inequality. Conceptualizing and intending a global society, polity, and economy pushes this tendency towards maximum inequality. It starts out as decisions to minimize choices because one’s attention bandwidth is not unlimited. As these networks change from all-communicating-to-all to preferences of nodes, those nodes gain power over the network and have increased resource requirements (which can then be exaggerated to gain more power). Stories develop to provide legitimacy to the growing inequality. Increased resources permit systems of increased wealth, more concentrated living arrangements (to reduce costs of coordinating social activities), and development of aggressive political power. And religious obligations like gifts and debt and taxes. All of which rigidified in formal bureaucracies and hereditary offices.

    Likely the tendency to inequality is inevitable because of network effects of all sorts. And the translatability of power from social to cultural to economic to political acts to concentrate power and inequality that much faster. Meanwhile environments of scare resources relative to populations, in the absence of any checking myths, policies, or norms accelerate the concentration of power and the actual inequality.

    The Enlightenment idea of natural equilibria under freedom of action likely is a delusion. Freedom and equality must be created by political decisions and maintained by political decisions. The failure (or self-interested blindness) in considering hierarchical network tendencies has made Google rich beyond 19th century belief in how one earned wealth and made issues like copyright and net neutrality hot issues of freedom and equality. And likewise for connectivitiy in transportation and communication networks, education access, health care access, and the division between financial success, social contribution, and political power.

    Attention spans and the limitations of human energy are the scarce resources that create this tendency IMO.

  21. Communal

    I am lobbying President Obama to direct New Delhi regime to create separate states for Dalit/Muslim/Sikh/Christian/Parsi/Buddhist/Jain communities as per 2nd Round Table Conference Resolution.

    Please consider donating your bitcoins to: 18A5He5QooTfyG1sFGq3qFndiBkojBvmm8

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