The main problem of shifting towards a more capitalist society is that inequality increases but freedom and living standards increase for everyone.

Also, keep in mind some of the reasons that the (measured) income inequality in the US has increased:

1. We take a tremendous amount of immigrants that start off at the bottom of the income ladder. They make much more than they did in their home country, but they're still poor by our standards. As a thought experiment, imagine what would happen to inequality in a country of 1M if you added 100K people who had incomes in the (previous) bottom quintile. Obviously, measured inequality would go up, but when you look behind the data you realize no one was getting rich at the expense of anyone else.

2. Women used to be "barefoot and pregnant." They didn't get college degrees and they didn't work. These days, that's no longer the case. Since, "birds of a feather flock together," men and women with similar education backgrounds and incomes (or expected incomes when young) often marry one another. That is, highly educated and productive people tend to marry one another, further increasing the gap between rich and poor.

Below are some other random thoughts on the topic:

1. Inequality says nothing about mobility. Maybe there's a certain gap between rich and poor, but people move along quintiles a lot. And maybe there is a relationship (positive or negative) between inequality and mobility. In other words, even if measured income inequality has increased, you actually can't draw the conclusion that "the rich are getting richer." Check the Economics Group income inequality post, I put up a video that explains this point. (Statistical groups are not flesh and blood human beings that remain fixed/constant over time, and should not be treated as such.)

2. Sometimes the studies look at household income inequality, without controlling for household size and the fact that family size among various groups has changed over time. So, maybe in 1950 the bottom quintile and top quintile both had the same average number of children. And maybe today, the bottom quintile has a lower number of people on average. Maybe it turns out that "rich families" are rich because they are often comprised of two working parents. And poor families are more likely to be comprised of single, recent college grads, or households with only one working parent due to divorce.

3. Is "correcting" income inequality (even to a modest degree) achievable? And if so, what sorts of unintended consequences will result?

What's my point? You can't just look at some statistical artifact and draw a lot of conclusions that people try to draw. Data and the studies that analyze them are complicated, sometimes confusing, and often leave a lot to be desired.

I agree that we need to look beyond the raw statistics. Nevertheless, I've seen in various places that the top 400 earners in the U.S. together earned more than the bottom 50% combined. You don't need to look too much into those numbers to come up with some hard conclusions. Obviously this is happening for a reason, but we should not dismiss it out of hand like so many libertarians and conservatives do.

So, why does it matter if the top 400 earners are wealthier than the bottom 50% combined? Also, that wouldn't even necessarily mean income inequality has increased, since that's just some small percentage of the population.

I think we take different views on how to analyze this issue. It seems that you really don't care about the causes and/or consequences of this inequality from an economics and/or political perspective. If one guy owns 99% of all wealth in a country you really have zero problem with that. Am I understanding you correctly?

All I am saying is that we need to look deep into the numbers and figure out whether we are seeing this large income disparity because those at the top are just killing it or because those at the bottom are falling seriously behind. If those at the top are killing it then I really have no issues with it. If it's because those at the bottom are falling seriously behind then we need to figure out why that is. Is it because our public schools are severely underperforming and not giving kids a fair shot at making it? Or is it because we have other severe social problems that are making an aggregate impact on some kinds of people?

From my perspective, it is worth looking into this. From your perspective, it doesn't matter.

I will tell you that I am originally from a country that doesn't care about this stuff and income inequality there is belligerently high (higher than the U.S.). The result is strong political polarization, high crime, and really a lack of a merit based system, since only those with money can ever really afford a good enough education to get the good jobs, produce, etc. Now, I am not comparing the U.S. to my native country, but I would hate to see this country move in that direction.

You keep on harping on coercion. I haven't advocated higher taxes anywhere. Rather, I prefer to increase investments designed to make those at the bottom more competitive if that is the cause of higher inequality. To pay for this, I advocate lower spending elsewhere, such as the military. If higher inequality is a result of the top doing better and not because those in the bottom half are doing poorly, I have zero problem with inequality.

QE2 allows the rich to benefit at the expense of the poor. 92% of financial wealth in this country is owned by the top 20% of earners. QE2's stated aim is to keep equity prices higher (see Bernanke on 60 minutes or read the Fed's press releases). Meanwhile, CPI (with Food and Energy) will be increasing as this new money finds itself in commodity funds, pushing up prices on gas and food. Thus, in a way, QE2 increases the cost of living for the poor, and increases the value of equity holdings for the rich, making it an enormous transfer of wealth.

The rest of the above topic was discussed at length about a month ago.

You want to have a society where no one pays any taxes and we have no government. Anything the government does to you is coercive (which is true, as Mr. Leviathan says hello, creates order, and makes sure some neanderthal doesn't just walk into your house, kills you and your children, and takes your wife and gets away with it). Let's get back to the real world and discuss things that can actually occur. Robert Nozick's Anarchy, State, and Utopia is a nice read and I agree with many things in there, but it will never be reality in a modern country. Milton Friedman's Capitalism and Freedom is also incredible, but some of the stuff in there is just impractical. Theory is nice and all, but it's not reality.

I bet you are against any and all kinds of taxes. Puts you at the extreme. Even Milton Friedman was okay with certain taxes, such as the carbon tax.

I never said I want zero taxes. What I'm saying, and what I believe, is that all forms of taxation are coercive. Maybe it's a necessary evil, so we should keep it at bay and allow the government to do a limited number of functions. Friedman lays out his view on what they should be at the beginning of Capitalism and Freedom and I wouldn't call that an impractical list, at all. You could also take it in another direction, such as that laid out by Frederic Bastiat in "The Law." Basically, Bastiat says that human beings are born with certain inalienable rights and have the right to protect those rights via force. Furthermore, since people have the right to use force to protect certain rights, they can also allow the government to protect those rights. Another distinction that is often made, is that of negative vs. positive rights. I imagine you're already aware of this distinction, but I'll state it briefly, in case you aren't. There's a fundamental difference between saying that nobody has the right to take someone else's life, and saying that some people have the right to take the money/property of others because they're significantly wealthier.

Also econ, I like the talk. Thanks!

im using some of this in my paper ty op

As for the educational costs question, at the undergraduate level the best universities provide incredibly good financial aid for students from low income families. At Princeton (and I know at other similar schools) a poor kid basically gets to go for free and doesn't need to get any loans. I know of several examples of this. In fact, I know the university goes out of its way to ensure that no one doesn't choose not to attend on account of money.

The biggest challenge to low income students, IMO, is getting a good enough education at the pre-university level to compete effectively. If they manage to do it and get into a top school, money should never be an issue.

You have an interesting definition of voluntary. Voluntarily accepting lower wages so you can eat and voluntarily being crushed into debt by rising prices doesn't seem so voluntary to me when that's your only option.

Please try and keep the proper dichotomy in mind.

And you've entirely missed mine. If a man is dying of thirst in the desert he'll do anything for a sip of water. Such is the condition of many of today's working class - it has nothing to do with a "voluntary" transaction.

Rights have got nothing to do with it. If enough people are starving then they'll rise up and take your food from you. Sure you might not want your property stripped from you as people ransack your home or kidnap your children (as they do in countries with very high income inequality, countries that the US is currently trying to emulate). But I guess that's just too bad isn't it?

I take it my far subtler point wasn't made in my last point, but using lots of words with italics in them doesn't help to make your point, but it sure does prove how much of a pedantic jackass you are.

Inequality has nothing do to with dying of thirst. The poor in the US are far from dying of hunger and thirst. The poor in the US are among the richest people in the world. You should keep in mind the difference between inequality and poverty. Even in your statement of "countries the US is trying to emulate" you should realize that you might not be controlling for wealth, i.e., the fact that people are robbing others for food is more a function of poverty than inequality (or in other cases, a failed legal system which secures the rights I'm referring to). Maybe even more importantly, is how that inequality comes about, whether it's through coercion or voluntary exchange. Richard Epstein discusses this eloquently here: http://www.econtalk.org/archives/2008/11/richard_epstein.html

Lastly, you shouldn't dismiss the rights issue, as few issues are as important. The moment you allow too much coercion and encourage people to benefit themselves at the expense of others, as opposed to appealing to them in a voluntary manner, you will crush a lot of the wealth that was created in the first place -- potentially giving you a great deal of equality, in the form of everyone being pretty poor. Epstein also discusses this issue quite eloquently in the podcast above.

P.S. Yeah, you might as well call me a jackass because you're failing at arguing against any of my points. I guess you might as well reduce yourself to name calling when you can't win via logic and argumentation...

Significantly changed your tune in the last few months Monkeysama

Also I can't stand this Randian nonsense - that people can sneer at those who are less fortunate than them and point to how all their gains are through their hard work and personal brilliance is simply astounding given the last 2 years.

99 percent of the people who've made it got lucky. Not saying hard work wasn't involved, but people don't know how easy it is to fall from their pedestal.

That's irrelevant for the conversation at hand, as far as I'm concerned. We'll never know how much it is luck, skill, or anything else. More importantly, it doesn't matter in my opinion -- even if it is luck, why does that give someone the right to forcefully take someone else's property?

There is no difference between being forced to play in a rigged labor market and "involuntary". Bribing the government with money and lobbyists to change the rules of the market is only different from a military state by degree but not by kind.

Why do you keep assuming I am for bribing the government with money/lobbyists? I've said a million times in this thread that I don't agree with that use of force/government, neither for corporations, nor for anyone else. Nice attempt at a strawman though...

How is the game already set up so that "they" lose? Also, who is the "they" you're referring to here?

And, why don't we just stop letting "them" rig the game, instead of trying to allow other people to rig it too?

http://www.youtube.com/watch?v=fbGkxcY7YFU

I do not assume that coercion can only be accomplished through government. People are raped, robbed, and killed by individuals daily. We should not allow people to do this to one another, and we should not allow the government to do it either.

I could easily get more practical, but we're still debating the elementary points, so it's not an issue yet.

Don't play stupid. It's beneath you. The "they" in this case are the less fortunate and the "them" in this case are moneyed interests, which is clear if you review the thread. If you want hard numbers how about we take the "they" to be anyone who is making less than 99 percent of the population and the "them" as the richest 1 percent.

Also, should the government protect us against coercion?