Was life better in the 1970s?

People from my generation often complain that their parents were better off. They are often quick to dismiss the Internet and smart phones as irrelevant to their well-being.

Were they better off?

  1. Though it has recently peaked, the number of cars per person is higher than it was in the seventies. Current cars are much safer than there were.
  2. In percentage, home ownership was no higher in the seventies, and lower in the sixties than it is today. Pre-1945, hardly anyone in a city owned his home.
  3. Average retirement age was higher in the 1970s than it is today. That is despite the fact that we have since made forced retirement illegal, and despite the fact that there are far fewer physically demanding jobs. Of course, pre-1945 few people retired and life expectancy was often lower than 65 years.
  4. Air quality has gotten better. Gazoline no longer contains lead.
  5. Far more people attend college, far more people have a college degree than in the 1970s.
  6. Though it has fluctuated quite a bit, unemployment rates in the 1970s and 1980s were not smaller.
  7. Violent crime has greatly diminished. Car accidents have become less frequent and less fatal.

I could go on… On almost every measure that I can imagine, people are better off.

I have not even gotten started with the developing world… In the 1970s, all of China was starving. Today, young people in China proudly carry smartphones.

I also disagree strongly that the Internet and modern computer technology is an irrelevance. As a kid, I had access to a handful of science books. Today, kids the same age have an almost embarrassing wealth of choices. As a kid, I watched whatever was on television… Today, I watch Dr. Who together with my boys, at a time of our choosing.

Would I go back to live in the 1970s? I would not. Why would you?

There is one thing that people are sure to bring up: inequality. Though the poor have gotten richer, the rich have supposedly gotten richer even faster. I say “supposedly” because people spend little time thinking about wealth is. It is typically left undefined. We use various proxies, but it is hard to grasp what this means in reality. For example, is your health and your education part of your wealth? Are your skills a form of wealth?

If you are gay, a woman or a minority, you were more likely to be discriminated against in the 1970s. How do you factor this into your measure of wealth?

I would argue that most of our wealth is intangible. It is not cars and buildings that make us wealthy… You could destroy every building in the US… and though it would be tragic and create much misery, within twenty years, the country would have recovered much of the lost wealth. We know this from experience: Germany was entirely destroyed following the second world war. Its loss was almost incomprehensible. The country was broken in two. Yet within 15 years, West Germans recovered fully.

In any case, it is undeniable that while technology makes us richer, it also allows one individual to have much greater impact. Without electronic recording, Céline Dion would not be known in every corner of the world. This cut both ways… if you live in a remote location, you are made richer by your access to Céline Dion, but Céline Dion can also benefit from this greater reach. The same logic applies to CEOs.

So it is the case that a great professional singer can earn a lot more than an average one today… whereas the gap was much smaller in the middle ages. Should you be annoyed? You should not since both singers are now better off… (trust me, you do not want to go back to the middle ages)

If you set aside the neo-Marxist terminology (e.g., inequality), what is hidden is an age-old vice: envy.

We hate it when we meet people who are better off than we are. We get distressed when we hear that they might be getting even better off. Some people would give up all of the gains we have made since the 1970s if they could be certain that nobody is richer than they are.

I know that some people would do it because they did. The last century was a massive experiment where half the world adopted socialism: the idea that everyone has to be equal, whatever the cost. It culminated in the Berlin wall: some people sought to escape socialism, and so the defenders of socialism had them shot. Entire families were killed just because they tried to escape.

If you base your entire society on envy, it will be morally crippled.

I submit to you that the same holds at the individual level… if envy is what is driving you… you are morally bankrupt.

Here is a test: if you meet someone you went to school with… and this person has a much nicer car and much nicer house than you do… how do you feel? If you feel bad… is the problem with you or with capitalism?

Further reading: 26 charts and maps that show the world is getting much, much better.

Further thoughts: If you know that many people feel bad when you show up your big house or expensive sport car… and clearly, many people do… then why do it? It is fair enough to buy expensive shoes to pick up girls, but is it wise to buy the most expensive luxury car just because you can? Why are you posting a picture of your BMW on your Facebook page?

58 thoughts on “Was life better in the 1970s?”

  1. Not envy, but injustice. If some CEO ruins a company, then gets a $50 million golden parachute, people are not outraged because of envy. It’s because something’s wrong with capitalism if such immense failures are rewarded with the equivalent of 100 years of a normal person’s wages.

  2. @Derek

    People in Mexico earn much less than Americans. Simply by letting them cross the border, we drastically reduce the income gap. As was demonstrated several times, this comes for free: existing Americans are not made poorer due to immigration.

    So preventing people from immigrating to richer countries is a great injustice that we could easily fix.

    In contrast, if you were to redistribute all the golden parachutes of the world, most people would not even notice.

  3. Good points. But:

    Wealth of choice has downsides too, you can’t read/see everything. What to pick then ?

    I wasn’t born in the 80s, but today’s food is bad. Most fruits are bad, processed food is bad, really bad. Vegetables are formated, an don’t taste the same.

    Music is easier to access and produce, but there’s not more quality. The 70s might be a peak here.

  4. Adding…

    The Draft forced unwilling young men of my generation (and before) to serve in the Vietnam war.

    Smog in the Los Angeles area was horrible. Most of you have no idea. Pollution control worked, as smog is now practically nonexistent, despite a larger population and a lot more cars.

    On the other hand, supporting a family on a single income was still possible, if less so than the prior generations. Much more difficult now.

  5. While I do agree that there are many good things to say for what technology has done for us, there are also some downsides that aren’t mentioned here. One example that stands out is our attachment to our phones (amongst other devices) making us less prone to directly converse with one another. We probably do “interact” more through social media, etc. but standing face to face having a conversation is not something most young people today want to do. I do believe there is something to be said for the “simple life”.

  6. I don’t know where you’re getting your reading material, but you’ve been the source of some stereotypical neocon arguments recently. This is one of them.

    The argument is this: because the middle and lower classes are better off now than they were in the past, their criticisms of rising inequality are based not on principles of injustice, but on envy.

    The argument fails because it commits a simple fallacy, the supposition that ‘better’ entails ‘good’. Of course, any such inference is invalid. Being better off today does not in any way entail that living conditions are good today.

    And therein lies the problem. It’s pretty easy to sell the idea that better = good to people who actually have it good, which includes more white male North Americans (and especially computer programmers). But for most of the world, better still means bone-crunching poverty, disease and oppression, malnutrition and early death.

    As for the hackneyed argument against socialism: it is well-known, and has been long argued, that better examples of socialism exist than Soviet Russia and China, both of which functioned as dictatorships. You may as well criticize capitalism by pointing to Hitler; the argument has the same relevance.

    Socialist governments have existed for generations in very enviable societies like Sweden and Denmark. Even in Germany, the economic recovery alluded to in the post was accomplished through a large number of Social Democratic Party majorities in the 60s and 70s (the right in Germany did not really become dominant until after reunification).

  7. @Stephen

    People were starving, literally starving, in China 25 years ago. Much of the world is visibly richer, starting with India, China… even Africa is doing better.

    We evidently live in a fairer, gentler world.

    Of course, white men in Western countries were not always the primary beneficiaries of this progress. For example, it is maybe troubling to see the previously-poor South Koreans providing cars and smart phones while enjoying the same high wealth that was previously reserved for Westerners.

    Is that an example of more or less justice?

    Even so, you Stephen, can broadcast to the whole world cheaply. Do you know how many people could broadcast their talks worldwide in 1970s? You had to be a billionaire.

    Sweden is a very interesting country with an open market and a strong industry (Ikea), school choice (vouchers)… like Germany, it has no minimum wage… It also has high taxes.

    I am not personally opposed to high taxes. I do not believe that they are necessarily harmful.

  8. To some extent it does seem like globalization has widened inequality in the US while regressing to the (improving) mean for the rest of the world.

  9. > People were starving, literally starving, in China 25 years ago.

    Yes. And people are still starving today. Some in China, some in India, some in Africa. Yes, fewer than 25 years ago. Yet, given that we’ve had 25 years, and more wealth in all of human history, how can it be considered remotely satisfactory that *anyone* is starving today? We half the world’s wealth is in the hands of a few dozen people, our current situation is not good enough. Not nearly!

    > We evidently live in a fairer, gentler world.

    Yes – fairER and gentlER – but not in any sense fair or gentle. It’s an unfair and mean world for the majority of the human population.

    And let me be clear – I am not asking for any more for *myself*. I’m fine. So it is ipso facto not *envy* that motivates me here. It’s horror that the half of human wealth that could be used to alleviate starvation is frittering away doing nothing (literally nothing – it’s not even being invested).

    > it is maybe troubling to see the previously-poor South Koreans providing cars and smart phones while enjoying the same high wealth that was previously reserved for Westerners.

    I love that Koreans can have smart phones and K-pop and all the rest of it. South Koreans, anyways. Let’s understand though that a population of 50 million in a world of 7 billion is not really statistically significant.

    > Is that an example of more or less justice?

    It’s an example of more justice. For 50 million people. But it is not an example of justice per se.

    > Even so, you Stephen, can broadcast to the whole world cheaply.

    Actually my reach today is about what it was 25 years ago, in terms of time, effort and resources invested. It may be global, but the absolute number is the same, maybe smaller, because people competing with me in the idea space have much greater means of reaching eyeballs than I do.

  10. @Stephen

    how can it be considered remotely satisfactory that *anyone* is starving today?

    What is satisfactory is the progress we have made. We have basically reduced poverty worldwide by a factor of 10. The percentage of starving people has come down by an order of magnitude.

    This is even more remarkable given that we have more than doubled the population. You should remember that many respected people predicted mass starvation based on predicted population increases.

    Not only did we increase our population without causing mass starvation, but we drastically reduced starvation.

    I’d be fine with people chanting “we have come a long way, but we can do even better”… but that is not what they are chanting… people keep repeating that things are getting worse. They are not getting worse. It is a lie.

    It’s horror that the half of human wealth that could be used to alleviate starvation is frittering away doing nothing (literally nothing – it’s not even being invested).

    As long as we confine people within borders, it will be very difficult to get rid of serious poverty.

    A lot of poverty is caused by bad politics and people being unable to escape it.

  11. A few counter points to your arguments:

    1) Most of the things you point out as being better 1970 to now also got better from 1945 to 1970. However, income inequality decreased from during that time: (http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States). This implies that improvements in the quality of life don’t necessarily mean increased income inequality.

    2) We can use productivity as a broad proxy for the effectiveness of technology for making money. Worker’s wages generally tracked productivity from 1948 until 1970. After that they became unlinked (hhttp://www.epi.org/publication/ib330-productivity-vs-compensation/). That implies that technology improvements don’t have to lead to the rich getting richer.

    It seems to me that increasing income inequality is a choice we’ve made as a society rather than a direct result of improvements in technology. We can choose to do things differently without going backwards in technology.

  12. It seems to me that the most important factor missing from your sweeping cultural critique is security. I won’t try to go into details, but my strong sense is that 40 years ago most North Americans had a fairly stable sense of what to expect from life. Now not so much. I think this is the major source of dissatisfaction in that part of the world.

  13. @Ben

    It seems to me that the most important factor missing from your sweeping cultural critique is security. I won’t try to go into details, but my strong sense is that 40 years ago most North Americans had a fairly stable sense of what to expect from life. Now not so much.

    I am not sure what you mean by security.

    Crime rate is way down. Rapes and murders are much less frequent (per capita).

    The cold war is over, and has been won. Nobody worries about Russia bombing North America today.

    Poverty has greatly diminished. The remaining poor people are massively better than the poor people from 40 years ago.

    There hasn’t been a conscription in quite a long time. Young men do not have to worry about being sent to some random war anymore (unless they choose to enrol).

    Minorities and women are much less likely to be discriminated against in the job market, and when they are, the discrimination is much less harmful. (Hint: there is a black president in the white house… this would have been unthinkable 40 years ago.)

  14. @George

    This implies that improvements in the quality of life don’t necessarily mean increased income inequality.

    That is a straw man as nobody claims any such thing.

    Maybe what you want to state is that pursuing better income equality does not come at the detriment of economic progress.

    There are serious reasons to doubt this statement, as the socialist regimes of the last century provide counterexamples.

    But why do you seek income equality in the first place? Because you do not want others to have better cars… because of envy…?

    You are morally bankrupt if you go down this path.

    2) We can use productivity as a broad proxy for the effectiveness of technology for making money. Worker’s wages generally tracked productivity from 1948 until 1970. After that they became unlinked (hhttp://www.epi.org/publication/ib330-productivity-vs-compensation/).

    By the narrative set forth by the essay you link to, workers have basically stagnated from 1970 to today. That does not pass my bull shit test… we are massively richer than we were in 1970.

    That implies that technology improvements don’t have to lead to the rich getting richer.

    There is of course no such implication… as communists regimes saw reduced technological progress while most people failed to get significantly richer.

    So it is fairly easy to keep the rich from getting richer. We know how to do this. It has also the funny effect of keeping everyone down too.

    It seems to me that increasing income inequality is a choice we’ve made as a society rather than a direct result of improvements in technology. We can choose to do things differently without going backwards in technology.

    Who is this “we” you speak off?

    I mean, when you benefit from a technology more than others, you can decide to give back the money to others. That would be a choice you make. If many people made this choice, you could say that “we are making this choice”.

    But I do not think that it is what you mean. I think that you mean that you want to force others to do as you think is morally right, using the might of the state.

    And what happens to the entrepreneur who disagrees? Well. We are going to confiscate his belongings by force if we have to. He has *no choice*.

    So this “we” is not “everybody”. You do not mean that everyone will make this choice. You mean that some will impose their will on others.

    And for what? Because they are envious.

  15. It’s funny how everything is allowed to improve (health, technology, crime) however one thing that must not but touched is wages. Why not? We are human beings, we can control our economic system. The economy is our constructino, not a force of nature like earthquakes or hurricanes. We can compress our wages, and increase taxation on the rich. Look up “The Great Compression” and upper tax rates in the 1950’s (it was 94% if I recall correctly).

    No, it’s not about envy. If you want to hear envy, listen to conservatives talk about postal workers and school teachers. “OMG posties get paid to walk around all day, and teachers get paid for summer vacations, THE OUTRAGE.”

    It’s about justice! If people were paid on merit, you wouldn’t have absurd variations in income.

  16. @Derek

    It’s funny how everything is allowed to improve (health, technology, crime) however one thing that must not but touched is wages. Why not?

    Our wages go up all the time both in nominal and real terms. Worldwide, there has probably never been as much wage increases as in the last 20 years.

    It’s about justice! If people were paid on merit, you wouldn’t have absurd variations in income.

    You look like a white man, probably from a wealthy country.

    The average pay worldwide is maybe $4 per hour, if that.

    I sure hope that you have not, at any time, enjoyed a salary that was, say, 10x as much as the average worldwide salary. I mean… you do not mean to imply that you have 10x the merit of the average human being, do you?

  17. Hiya Daniel,

    Most of the data in your posts appears to have been made up (often, actual figures and domains (eg., US-wide, worldwide) are not provided). Examples:

    – “We have basically reduced poverty worldwide by a factor of 10”
    – “percentage of starving people has come down by an order of magnitude”
    – “Crime rate is way down. Rapes and murders are much less frequent (per capita).”
    – “people keep repeating that things are getting worse. ”
    – “The remaining poor people are massively better than the poor people from 40 years ago.”
    – There hasn’t been a conscription in quite a long time. (this would be news to many people worldwide!)
    – “Minorities and women are much less likely to be discriminated against in the job market”
    – “we are massively richer than we were in 1970. ”
    – “communists regimes saw reduced technological progress”
    – “Worldwide, there has probably never been as much wage increases as in the last 20 years.”
    – “The average pay worldwide is maybe $4 per hour, if that. ”

    Many of the causal statement you make are equally suspect (and most certainly unsubstantiated):
    – ” It has also the funny effect of keeping everyone down too.”

    There is a lack of rigor in your presentation that you would fail a student for, yet it permeates your discussion here. It’s like some kind of fake unreasonable Daniel Lemire has taken over for the normally rational Daniel Lemire. It’s hard to fathom.

  18. @Stephen

    Sure, I could write a book about this topic, with all the proper references, but these books have already been written. See for example “the Rational Optimist” which I have covered before on this blog. This being said, most of the fact checking is a simple matter of using Google or Wikipedia.

    In fact, I would argue that it is a lot better if you just look it up yourself.

    How many people died of starvation in 1970 and how many in 2010. Look it up Stephen. Do not trust me.

    If you have contrary numbers, please share them.

    There hasn’t been a conscription in quite a long time. (this would be news to many people worldwide!)

    In context I was referring to the US. (Note that this was not part of my blog post.)

    Many of the causal statement you make are equally suspect (and most certainly unsubstantiated):
    – ” It has also the funny effect of keeping everyone down too.”

    Again, this was not part of my blog post… but do you know many places where the rich have not gotten richer, but the rest of the population has?

    There is a lack of rigor in your presentation that you would fail a student for

    It is only a blog post. My goal is only to question the obvious fact that things were better in the 1970s. If I get you to think about it, to question the dogma that things were so much better in 1970… then that is all I ask.

    But believe me, things were not better under Nixon except maybe the part about going to the Moon. That was cool. But people were nevertheless poorer than today.

  19. No Daniel, you don’t get to make up data and then say ‘go read this book’ or ‘look up counterexamples yourself’. You are making assertions here, it is not up to me to disprove them, it is up to you to prove them.

    > My goal is only to question the obvious fact that things were better in the 1970s.

    Fair enough. But you must know that “better” is a relative term. It is not an abstract noun. Many things were demonstrably ‘better’ in 1975:
    – most of the Amazon rainforest still existed
    – human population was only 3 billion
    – there was a cod fishing industry off the east coast, and there were still cod
    – I was 40 years younger (!)
    – no AIDS epidemic
    – the world was 2 degrees cooler

    etc.

    Your point is, of course, that *on the whole* it is better now. That is far from proven. And the data you’ve offered (in addition to being questionable) falls far short of proving it.

    A lot of people point to increased income inequality as evidence that things today aren’t better. You’re reply is:
    – to cite some things that are better today than in 1975
    – to accuse people of addressing income inequality of being envious

    If you reflect for a moment you’ll realize why this is a bad argument. First, because as I suggest, the examples you adduce in no way show we are on the whole better (it’s as though you’re saying “it’s better because we’re going much faster now!” just before we hit the ground). And second, the accusations of envy are pure ad hominem, and irrelevant to the discussion (in addition, again, to being false).

  20. I can find pages of stats contrary to your opinion. This is an example: http://www.thesimpledollar.com/a-dose-of-financial-reality/
    People can make the stats say what they want. I truly believe the average US Citizen is much worse off than a comparable match to them from 1970. Many new homes were built in the late 60’s and early 70’s and sold for less than $15,000. The people that bought them enjoyed higher and higher income over the years while the mortgage payment stayed the same. They added a second income to the household and still had the same mortgages. They thrived generally. Many had pensions and retired early in 20 to 30 years then collected Social Security for the rest of their lives commonly on top of pension income. All of those options are extremely rare today and there is no income earner to add. There isn’t any more overhead to squeeze out. For those not having income issues, the reality is very hard to see.

  21. @Stephen

    And second, the accusations of envy are pure ad hominem, and irrelevant to the discussion (in addition, again, to being false).

    If you play a zero-sum game and your neighbour wins, it is bad news for you.

    Thankfully, we do not live in a zero-sum world. We live in a world where when John wins, Jill is equally or even more likely to win too. If you get much richer tomorrow, it is not likely to harm me, it is much more likely to benefit me.

    You take as an axiom that I should accept that inequality of wealth is bad. You want me to accept a zero-sum view.

    Moreover, you seem to be very confident about what wealth is and how to measure it.

    My argument has several elements in it.

    One is that measuring wealth is tricky. The West Germans at the end of WW2 had cities in rumbles, no job, no food, their young men had been decimated… On the books, they were poorer than many developing countries… They were not very different from Haiti from an accounting point of view. And then they rose up massively in no time.

    I submit to you that you could take all of Canada, cram us in Haiti without our possessions, and move the Haitians to Canada… and within a few years, Haiti would be a wealthy country, comparable to Canada.

    Clearly there is wealth that is not material… that you cannot count. I submit to you that this is the wealth that matters the most.

    What is it? I think that education (and not schooling!) is a big part of it. There is also a lot of wealth in culture. Relationships. And so on.

    For an individual, this matters a whole lot than paper money. I can take your job away from you and all your belongings and you now what? You would recover quickly. You may need to take a few jobs you do not like, but you would be back on your feet. That is because much of your wealth, and you are very wealthy, is not in the books of your accountant.

    On paper, Bill Gates is much richer than you. Even if I were to dose him up with lead so that he becomes nearly brain dead… he would still be, on paper, much wealthier than you… would he be though?

    So I am not sure that Bill Gates is all that much wealthier than you are. I do not trust accountants to do an exhaustive job. Ultimately, you will both die. It would be arrogant to claim that one is worth 1000x the other.

    There is more than money.

    Haiti is not poor because of a lack of money. They lack money because they are poor.

    The other part of my argument is that you should not care about how much wealth others have.

    You take as an axiom that inequality of wealth has been correctly measured over time, that is, it has increased… and you conclude that it is “bad”.

    Why?

    Let us first consider a hypothetical world where I have invented a device that makes learning super easy. Students plug in and they just learn much faster than is otherwise possible.

    However, my device works much better on some students. So much so that some students end up learning 10x faster.

    My device will clearly increase inequality.

    Should I bury it?

    I say no: let us use it. What matters is that everyone wins.

    This is the core of the matter. We have a tool called capitalism. It has the effect of making everyone better off… but some *might* profit more than others. Why is that a defect?

    Now, you can argue that, maybe, capitalism makes some people worse off. Fine. Argue that instead… not that the problem is inequality.

  22. @Daniel. I bet we can’t find good stats, but I bet the pension collection age and number of pension benefactors, and number of jobs offering pensions are different by orders of magnitude.
    As a Canadian you don’t have the added burden of annual medical cost differences. The difference between 2000 and now is enormous in the US.

  23. You should take an evidence based approach to equality. There are a lot of countries in the world, with all sorts of political systems and inequality levels. Just run through the list, and judge which countries are better places to live. That will at least give you an empirical basis to your decision.

  24. @Daniel, Here is a good article describing the pension plan decline in the US: http://www.bls.gov/mlr/1991/12/art3full.pdf
    Now a large portion of pay has to be funneled into the 401k which skews the family income numbers. Also families of that time that did save money were rewarded greatly from average gains that are unheard of in today’s financial climate.

  25. > we do not live in a zero-sum world

    It depends on what we’re talking about. In many ways, we *do* live in a zero-sum world. Some examples:

    – land. The land available for homesteading is virtually zero. So now, for every new piece of land a person acquires, someone else must lost it.

    – water. Until and unless effective desalination becomes available, if one part of the world gets water, another part loses it.

    – gold. The days of the gold rush are over. To obtain gold from yourself, someone else must lose it.

    – emissions. We’ve reached the global limit on emissions. If you increase emissions, someone else pays the cost.

    Until recently many of these resources appeared to be limitless. We could always farm more land, mine more gold, fish more fish. A lot of the ‘new wealth’ being touted over the last 25 years has resulted from the rapid conversion of the remaining reserved.

    > measuring wealth is tricky… there is wealth that is not material…

    Here I think the case you’re making is a lot harder to make than even the one where wealth was based on income and possessions.

    One the one hand – it is true that there is no effective zero sum on things like culture, education, happiness, and the like. But…

    On the other hand – it is arguable that over the last 40 years there has been a global destruction of individual happiness, culture and possibly even education (depending on what you thing education is).

    Many of the numbers support this contention. Biodiversity is dramatically down. The number of speakers of different languages is diminishing. Entire cultures are being lost. People the world over are being ‘westernized’ – which means that while once they were happy even while in poverty, today they are unhappy, even though their material conditions may be (slightly) better.

    > Haiti is not poor because of a lack of money. They lack money because they are poor.

    Perhaps you are familiar with the Marshall Plan (perhaps not, given that you have used West Germany as an example several times). It was a massive ($13 billion in 1945 dollars) rebuilding plan to restore Europe. *That* is what rebuilt Germany. http://en.wikipedia.org/wiki/Marshall_Plan

    In Haiti, their need would be greater because they are starting with less. Germany had the benefit of having had money before 1939, hand having had a functioning infrastructure. Haiti has never had that. *But* if we made the sort of financial investment in Haiti that we made in Europe, they would be significantly better off. Better like Germany.

    Better like Japan. Better like South Korea. Because socialism – and make no mistake, this is socialism – works. These rebuilding programs work.

    So why won’t we make the investment? Because just two or three of the world’s super-wealthy would rather keep the money it would take in their bank accounts, doing nothing, instead of spending it on Haiti. And so people in Haiti starve.

    > We have a tool called capitalism. It has the effect of making everyone better off…

    The argument against capitalism isn’t simply that it makes some people more rich than others. The argument against capitalism is that it is inherently unstable, that it is – in effect – a Ponzi scheme, that has the *appearance* of making people better off, but at the cost of hidden debits that don’t come to light until the luck few have siphoned all the wealth and the rest are left in the lurch.

    That you don’t *see* that it’s a Ponzi scheme I attribute to your unwillingness to look, because it is readily apparent to all who do.

  26. > By a wide margin, people move to the USA in greater numbers than to any other country.

    That simply tells us that the United SDtates is big. Proportionately, several other countries (Australia, Switzerland, Canada, etc) are much more attractive than the United States. http://www.oecd.org/publications/factbook/38336539.pdf

    Or, if you think that it does represent attractiveness, it is worth nothing that a Philippine emigrant, deciding where to go, is equally likely to choose either the United States or Saudi Arabia.

  27. @Daniel, Ah, but the question was regarding our lives being better? For any population you can likely find someone worse off. My contention is that for a working family of 3 or more, life is tougher in today’s climate than it has been since at least the 50’s. Those on disability or welfare programs or in industries where they trade or take money under the table, or even in minimum wage jobs are likely much better off.

  28. @Stephen

    Wealth produced from education far outweigh wealth from land, gold or water. And education scales up with population… the more people, the more brains, the more skills… the more discoveries, the more books, the more blogs, the more ideas…

    I find it distressing that you take it as a negative that we have an extra 4 billion people since 1970. It is an amazing wealth gain in itself.

    I know about the Marshall plan, and no, it is not what made West Germany rich… or, at least, it is not the money that did it… the UK got a lot more and ended up bankrupt… and, yes, Haiti got far more in foreign help per capita than West Germany.

    The problem with Haiti is the people, the culture, the relationships, the politics… It is not that they lack factories, schools, books and buildings… these can be constructed or reconstructed… it is the easy part. What is hard is to change how people act, talk and behave. That is where the real wealth is.

    Almost all our wealth is in people’s head. The size of your house, the brand of your car… that is not wealth. Or it is only a small part of it.

    And moral bankruptcy is, in a tangible sense, a real bankruptcy.

  29. @Daniel

    1) I did not think I was creating my own strawman. Your article has two sections: one on how things have gotten much better since 1970 and then another defending income inequality. The juxtaposition implies to me that tour argument is that income inequality is an inevitable consequence of the process which improves the quality of life.

    2) If you don’t like those numbers on productivity vs. wages, take a look at the Heritage Foundations numbers: http://www.heritage.org/research/reports/2013/07/productivity-and-compensation-growing-together. They spend a lot of time massaging the data and still can’t close the gap.

    3) I find it interesting that any suggestion of fixing income inequality means adopting Leninism/Stalinism/Maoism. Instead I’m mostly looking for what Europe has: higher taxes on the rich and a better social safety net. I think that would ameliorate most of the problems of income inequality.

    I wonder if part of the disagreement comes from the fact that you live in Canada and I’m in the US. Canada has a GINI of 32.1 which isn’t too different from the UK (32.3), France (30.6) and Germany (27). The US has a whopping 45 (https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html).

  30. @George

    The juxtaposition implies to me that tour argument is that income inequality is an inevitable consequence of the process which improves the quality of life.

    Some inequality typically results from technology. If we are all cavemen, then it is very hard for anyone to be 1000x more popular than the others… since there are only 12 people in the tribe.

    I dispute however the claim that inequality is rising on several principles. One of them is that much of our wealth is in people. You could ship containers of BMWs to Haiti, it would not make them rich. That wealth is not measured by people who set forth to demonstrate rising inequality. They also typically show that real wages have stayed unchanged for 30 years. This does not pass my bullshit test.

    Then I say that even if we have rising inequality, it is not per se a problem. That Céline Dion can earn a lot more than the average professional singer is not something to lose sleep over since we do not live in a zero-sum world. When Céline Dion gets richer, other people do not get poorer. Quite the opposite: Céline Dion made several people richer through her music.

    There is also another issue… people who claim rising inequality often do it on a per country basis. But you do not get to choose where you are born… so if you care about “justice”, whatever that means here, you should look at global inequality… and there, the picture is interesting… you have hundreds of millions of families that were pulled out of misery in the last 30 years.

    Why should we focus on what happened to white men of Christian faith living in the richest country in the world, if we want to study justice?

    Wouldn’t justice call for redistributing the wealth of white men living the US to the rest of the world?

    Frankly, it is a bit indecent to earn 40k$ a year when families in India live on less than half that. They should, out of their will, give away half of their 40k$ income…

    I mean… I sure hope that you are not keeping for yourself more than the average worldwide age?

    If you are, aren’t you committing an injustice?

    If you don’t like those numbers on productivity vs. wages, take a look at the Heritage Foundations numbers

    Have you read your reference? It states: “An apples-to-apples comparison shows that employee compensation continues to closely follow productivity. American workers continue to earn more as they become more productive.”

    But I do not care about this study since I do not think that your income reflects your wealth. And even if it did, I do not think you can reliably correct income for inflation because I do not think that we have one agreed upon concept of inflation that can hold for 30 years.

    That is, the problem is ill-defined.

    We could ask easier questions… how many minutes had a work to work to buy a Big Mac in 1970 vs. 2015.

    I think that would ameliorate most of the problems of income inequality.

    1. You are suggesting that income inequality is a problem. Why is that exactly?

    What do I care if my neighbour is richer than I am?

    And why the fixation on income? Why aren’t you worried that Céline Dion has far more popularity than others… Or that Obama is far better known that most other people in the USA.

    Aren’t you worried that some people are taller, sexier than others? Isn’t that unfair?

    2. I do not mind high taxes too much… and we know that the US once had a very high tax rate for the very rich. Sure. Go ahead. The problem, of course, is that people like Steve Jobs do not pay taxes.

    In fact, the people you hit most with high taxes are people like surgeons… hard working folks who can’t avoid paying taxes.

    But, yeah, sure, let us tax the rich like crazy. My income is quite average, so I am not going to protest…

    I fail to see how it is intrinsically a good thing however.

    3. Having a low gini is not a sign of a healthy and prosperous society. Among the countries with a very low gini coefficient, I find Afghanistan, Ukraine, and so on.

  31. Steve Jobs pays no taxes, because he died in 2011.

    You’re really talking out of both sides of your mouth. “Money means nothing” and then “we must let the rich keep their money.”

    Why can’t the rich also take solace in the wealth of their minds, after their physical money has been taxed?

    Also, Celine Dion has arguably earned her wealth. Now look up Gregg Steinhafel. Why did he get $61 million for being fired? Did he earn that by being fired with amazing effectiveness, or did he game the system and get something that he didn’t deserve?

  32. @Derek

    Steve Jobs pays no taxes, because he died in 2011.

    People respond to incentives. If you take away much of their money when they get an income, they will make sure to minimize their income. It is that simple.

    I do not think that Steve Jobs paid much in taxes when he was alive. Remember that Steve Jobs’ salary was $1 a year as is common. According to this CNBC article…

    http://www.cnbc.com/id/46236916

    Zuckerberg is probably eligible for government aid, as he has a low income.

    In case you are curious, if ever own a large sum, there is a very easy way to keep your income to zero, or even negative, and still pay for everything you need… Just borrow what you need. If you own 20% of Facebook, you can just go to the bank and ask for a $1M loan, and they will be happy to oblige.

    See, no income, so no income tax.

    Sure, you will pay interests, but who cares? It is much less than 50% in taxes…

    That is just one of many brilliant ways to get around paying taxes.

    Of course, the medical doctor who will save your life won’t be able to pull this kind of stunt.

    You’re really talking out of both sides of your mouth. “Money means nothing” and then “we must let the rich keep their money.”

    I stated neither. I specifically wrote that I am not opposed to high taxes per se.

    As for money, I just do not think it is “all that”. That is why I do not have a lot of it.

    But I would not say that money means nothing. I like to have money.

    Why can’t the rich also take solace in the wealth of their minds, after their physical money has been taxed?

    Sure, but why exactly do you feel the urge to take their money in the first place?

    Shouldn’t people in poorer countries also come and take your money? Wouldn’t that be fair too?

    In fact, shouldn’t starving families worldwide be entitled to your bank account?

    Also, Celine Dion has arguably earned her wealth. Now look up Gregg Steinhafel. Why did he get $61 million for being fired? Did he earn that by being fired with amazing effectiveness, or did he game the system and get something that he didn’t deserve?

    If you own a significant share of Target, you might be angry at his management and remuneration. But then you chose, or someone you entrusted with your interests, chose to invest in Target knowingly. In business, sometimes you trust the wrong people and lose…

    If, on the other hand, you are not a share owner of Target, then what is it to you? This was not paid out of your own money.

  33. Hi Daniel,

    I am very disappointed. I believe one should write publicly on issues he fully understands, and especially must not make numbers up or be careful on selecting the sources.

    Stephen’s comments only scratches the surface. Your argument is both weak and immoral which simply amounts to asserting that it is OK that big guys seize most of our wealth (which is certainly generated collectively by all of us) since some crumbles would eventually fall for the others, and hey that is progress. Shame on you

    Kemal

    Kemal

  34. @Kemal

    First, I have repeatedly stated, here and elsewhere, that I have nothing against high taxes. I just do not think it does what people think it does… They mostly penalize the hard-working middle class, bring it down, while the 0.1% mostly avoid the tax burden…

    So even if “equality” is your goal, a high tax rate might not achieve it, and is just counterproductive in some cases.

    Take someone who inherited valuable property from his parents. Maybe he rents out apartment. He does not work, he just collects the rent and pay for repairs. By carefully reinvesting his rents, he can end up with a modest income, say 100k$.

    Meanwhile, take the hard-working Google engineer who works 60 hours a week and makes 200k$. You are going to tax the hell out of him… much more than your rentier.

    The net result of a high tax system is that people who work for a living are not inclined to do the extra effort needed to double or triple their salary. That is fine, mostly.

    People point out that Sweden has high taxes and high equality… But Sweden has also a nobility that owns much of the wealth of the country and pays little taxes.

    Still, I do not mind high taxes because there is strong evidence that you can have high taxes and a prosperous country… so I am fine with it. I am not sure high taxes *cause* prosperity… I think not… so I do not fight for high taxes, I just think it is ok.

    But let us talk about morality some more.

    Planet-wise, most people in North America are in the top 1%. (Update: or at least in the top 5%.)

    To be fair, we should tax all of North America and redistribute the wealth to Africa, India and so on.

    Clearly, we must have seized most of their wealth to begin with since you identify “wealth seizing” as the mechanism by which inequality grows…

    Or do you just want to redistribute wealth within countries. Why? What is so magical about existing borders… morally speaking?

  35. > Planet-wise, most people in North American are in the top 1%.

    The population of the world is 7 billion. The population of North America is 565 million.

    The smallest number “most” of North America could be is 50% + 1, or about 282.5 million.

    1% of 7 billion is 70 million.

    Ergo, according to you, 70 million > 282.5 million.

    Daniel, with all due respect, you don’t know what you’re talking about in this thread.

  36. @kemal

    I’d be curious to see where Daniel claims that its ok for big people to seize people’s money (aside possibly from his indifference towards high taxes).

    The argument is just that most people would probably prefer to live now rather than in the 70s if given the option.

    As a person of color if I had to rebuild myself from scratch in the 70s I would find it much more difficult than, say, building myself up from scratch right now. I also wouldn’t have the wealth of job-training or welfare programs available now (in many western countries). The cities were much more dangerous and it was very hard to get around in places that weren’t cities (due to how expensive cars were and how difficult gasoline was to get).

    I submit that people who believe they would have been better of in the 1970s
    are likely suffering from white privilege.

  37. @Anonymous

    You are nitpicking instead of answering my question.

    Why is it necessary to forcefully redistribute wealth equally within one country, but not necessary to redistribute wealth between countries.

  38. @Mark

    I’d be curious to see where Daniel claims that its ok for big people to seize people’s money

    I make no such claim, except, as you point out, except that I think high taxes are ok.

    As you point out, taxes are a process whereas powerful people, often very rich themselves, take people’s money to use it in their name. It is not an ideal process morally speaking.

    In practice, it seems to work well enough. There are plenty of countries with very high taxes where people do ok.

    I think it works this way: when taxes are very high, people demand a lot from the government… the government is held accountable somehow.

    Of course, for high taxes to work well, you need to make sure that the government is held accountable. If you have a broken democracy or corruption… then I would say that high taxes are a bad idea.

  39. Canada sends $24 billion per in remittances to other countries. So a lot of people are voluntarily implementing your idea of global wealth distribution on a personal basis.

    The Canadian government also sends about $5 billion in foreign aid.

    Canadian consumers send $150 billion per year to Asia/Oceana and Latin America, but in exchange for goods. Which might not fit your definition, but still Canadian money is reaching lesser developed countries.

    However one thing I don’t like about your argument is that it sounds like an “all or nothing” argument. If Canadians sent half their money abroad, they would be impoverished. Half of Canadians live from paycheck to paycheck and don’t have any excess money to give away.

  40. @Derek

    Canada sends $24 billion per in remittances to other countries. So a lot of people are voluntarily implementing your idea of global wealth distribution on a personal basis.

    A lot of people are giving money to charity. I took Celine Dion as an example, and she seems reasonably generous:

    https://www.looktothestars.org/celebrity/celine-dion

    She is hardly alone. It seems that Mark Zuckerberg, who avoids paying taxes by giving himself a low income, gave away half a billion dollars to charity.

    I am sure that on a per capita basis, billionaires give out a lot more than average folks.

    Canadian consumers send $150 billion per year to Asia/Oceana and Latin America, but in exchange for goods. Which might not fit your definition, but still Canadian money is reaching lesser developed countries.

    Rich people like Celine Dion have to spend their money on something. When she buys a house, people get hired to build it. If she buys a gigantic boat, workers get to keep their job.

    Even rich people who do spend much of themselves, tend to do something with their money, such as building new businesses… these activities involve hiring people.

    The bulk of our economy is a service economy which means that when you are rich, you get to hire lots of people to help… guess who gets your money then?

    And that is precisely why we do not live in a zero-sum world… when some people get richer, they tend to make people around them richer because they buy their services.

    China got rich by selling stuff to the West… it is because the West was rich that China was able to get richer so fast.

    If Canadians sent half their money abroad, they would be impoverished. Half of Canadians live from paycheck to paycheck and don’t have any excess money to give away.

    Evidently, anyone in Canada who is poor by international standards would get to keep his money, but anyone substantially richer than the worldwide average *should* be forced to give away his money to poorer folks.

    Or maybe you mean that Canadians should be allowed to be richer than Indians because… what… they are more deserving? Why?

    What justifies that the average Canadian should be richer than the average Indian… how is that fair?

    If you do not want to invest in foreign aid at the tune of 100s of billions, fine… I have a much cheaper solution… Make it so that tomorrow anybody, no matter where they were born, can come to Canada and become a citizen. No question asked.

    100 million indians want to come over? Let them come.

    Now, that would make a dent in income inequality. It would truly share the wealth.

    What is fair about discrimination people on the basis of where they were born?

    Do not want to have to deal with all these new citizens?

    Ok. Here is something cheaper. Tomorrow, make it so that anyone in the world can be recruited by any Canadian company as if he were a Canadian. He can come to Canada, or stay where he is… he is not a citizen… doesn’t get welfare, but he can work freely for Canadian companies… he can also start a Canadian company.

    All these proposals would greatly increase worldwide equality.

    In fact, with its relatively liberal approach to immigration, including a tolerance for illegal immigrants, the US has probably done more than any country to reduce wealth inequality worldwide.

    A rich welfare state with a restrictive immigration policy probably contributes to increasing inequality worldwide.

    All I am saying is that if you want to require that people richer than you give you some of their money, in all fairness, you should turn around a look at the rest of the world and be forced to give them your money…

  41. Those are pie-in-the-sky fantasies. There’s no way any government would tax Canadians at $10,000 per head to send to foreign countries, or to open the floodgates and permit 100e6 immigrants to enter. Even if it’s “the right thing to do.”

    You might as well try to repeal the law of gravity while you’re at it.

    Taxing the rich, one the other hand, is happening today (progressive taxation), and has happened to greater extremes, in the past in Canada, with no real economic problems.

  42. @daniel

    By seizing, I mean taking more than what you contribute. Clearly taxing is one way of dealing with this problem. But, it has apparent problems as you have also suggested. A simpler and more direct (and moral in a sense that everyone gets their fair share) way would be to increase the wages.

    This is precisely the 1% does not want as they have already figured out how to avoid taxes once they get a hold on the money. Increase in wages does not leave them any room for doing that.

    Consider also the global exploitation of natural resources and arable land. Just like wage earners getting a little of what they actually generate, resource rich poor countries are also given a pittance in comparison to the actual value (in real terms) of their crops or minerals. The poor countries are exploited just like wage earners.

    This is the immoral part where you treat every sort of income as equal and earned, while most of high income is immoral, clearly obtained by oppression (and outright occupation in some cases)

    Kemal

  43. @Derek

    But why is it pie-in-the-sky?

    Immigration was far more open up in the US up until the 1920s where it was first restricted on the false belief that immigration increases unemployment (something that any economist will tell you is false) and related fears. Similarly, Canada had a relatively open border which it closed based on similar unfounded concerns.

    Canada took in more immigrants in 1910 (about 400,000 people a year) than today (about 250,000 people a year), which is absurd if you consider how small the world was then (about 5 times smaller).

    You can get the numbers on this anti-immigration site:

    http://www.immigrationwatchcanada.org/

    Even if you accept that only the southern part of Canada can be populated, the population density is still ridiculous low.

    By the way, you should really, really get offended by anti-immigration sites: what it says is that you should keep on discriminating people on the basis of where they were born.

    Why on Earth can’t we accept the same number of immigrants per year we did in 1910? Accounting for the how the population has grown, which should actually accept 5 times the number from 1910, so we should let 2 million people in a year.

    Of course, it is a bit annoying to white men… they’d have to watch an influx of non-white people who come and build different businesses and so on.

    Though annoying, we know that existing Canadians would not be worse off overall… it is a win-win… The only reason we restrict immigration is because we want to protect our privilege.

    In any case, you want a measure that will actually make a dent in inequality? That is it.

    Opening borders would do far more than high taxes would.

    Maybe it is a bit much for you? Ok. The next one, and this one pays for itself, is free trade. It is the next best thing… let us lift all tarifs and protectionists measures (like subsidized agriculture). This will allow businesses from poor countries to have access to the Canadian market… thus raising their income and the income of their workers…

    In any case, all these measures are far more potent than the tax rate to reduce inequality… so why exactly are you shy about them?

    There are far more people below you than above you… if you care about inequality, you should clear be focused on the people below you…

  44. Here’s a link:

    http://www.dailymail.co.uk/news/article-2919540/Oxfam-report-finds-80-world-s-richest-billionaires-wealth-bottom-50-percent-global-population-3-5-BILLION-people.html

    “The combined wealth of the 80 richest billionaires is the same amount as that of the bottom 50% of the Earth’s population, Oxfam said in a new report”

    Which means that 80 people in the world (a small group, they could fit in a double decker bus), could DOUBLE the wealth of the poorest 50% of the population!

    If you want to look for an efficient way to decrease inequality, there it is.

  45. @kemal

    A simpler and more direct (and moral in a sense that everyone gets their fair share) way would be to increase the wages.

    This is precisely the 1% does not want as they have already figured out how to avoid taxes once they get a hold on the money. Increase in wages does not leave them any room for doing that.

    If you think that employees produce a lot more value than they are paid for… then why don’t employees get together and create communal companies. If the CEO just steals their wealth anyhow, as you seem to imply… do away with the CEO. The people save up and own their own employer.

    If CEOs are useless thieves… let us stop working for them. We can become our own bosses and pay ourselves more!!!

    This is not pie-in-the-sky… if you live in North America, you can do this tomorrow… create your own business, work for yourself… join up with others if necessary.

  46. @Derek

    I think we will find that a lot of these billionaires are from the West, and a lot of the bottom 50% is not from the West.

    But let us do exactly as you propose. We confiscate the financial wealth of the top 80 billionaires and give it to the bottom 50%. That sounds fair.

    Then why do you stop at the 80 richest persons? What about the next guy and the one after that? Because if you keep going until you hit the median wealth, you will have reached equality.

    Note: I do not believe we account for wealth in a proper way. Lots of people on Earth have no bank account and own no land. By standard accounting, their worth is zero or just the cash that they have in hand. Much of our wealth is in people, their relationship and culture.

  47. @Derek

    Note that we have switched from income to total wealth. These are very different things… Income taxes bear on income, not total wealth. You can have a very high total wealth and have no income.

    But let us say we play the wealth confiscation game where we send people with guns to the billionaires houses to take away everything they own, and we redistribute it.

    According to Wikipedia, the total combined wealth of all the billionaires is $7 trillions. (That is not the top 80… it is all of them combined.)

    https://en.wikipedia.org/wiki/The_World%27s_Billionaires#2015

    The total estimated world net worth is something like $240 trillions.

    http://waitbutwhy.com/2014/03/combined-wealth-world.html

    So the billionaires own about 3% of our total wealth… No more.

    Redistributing 3% of our wealth would be traumatic, but it would still be only 3%.

    That is assuming that you agree that accounting wealth is done sensibly, which I do not. I think that most people would not say that a young boy who owns nothing is worth $0. But whatever…

    I think that focusing on money is short sighted.

  48. If you think that employees produce a lot more value than they are paid for… then why don’t employees get together and create communal companies. If the CEO just steals their wealth anyhow, as you seem to imply… do away with the CEO. The people save up and own their own employer.

    If CEOs are useless thieves… let us stop working for them. We can become our own bosses and pay ourselves more!!!

    This is not pie-in-the-sky… if you live in North America, you can do this tomorrow… create your own business, work for yourself… join up with others if necessary.

    Well, Daniel,

    I’ll certainly pass your advice to my pals who work for Wal-Mart and cleaning ladies who work for Hilton.

    I am sure they will kick themselves why they were not able to think this themselves. They will pause for a moment where they will get the initial capital, or the fact that it is extremely hard to enter into a saturated market even if you have billions. But…

    Anyhow, after your last comment I concluded that you are either extremely naive or ignore the facts of life willfully. Either way, I will not post any more comments in this thread.

  49. @kemal

    Many immigrants have started out cleaning services or random stores. It does not take a lot of capital. How do you imagine Walmart started out? You open one small store, then another…

    Why don’t we see more communally owned and managed entreprises?

  50. I’ve been enjoying your arguments Daniel. Please keep up the good work you have some nice insights.

    @kemal

    It would probably be better to not post comments and instead try to start the better Walmart. Rome wasn’t built in a day and the improved replacement for Walmart would likely take years to build.

    A friend of mine, for instance, started a small corner produce store a few years ago paying good wages to his employees with good benefits. He’s found, though, that for the store to be profitable he needs the workers to be willing and able to learn a lot of skills not typically required by a Walmart so he ends up employing some of the well-educated college kids living in our neighborhood for the cheap rent. His pool of workers is very different that Walmart’s (or even Target’s based on conversations with a Walmart manager and Target manager that I know). Both Walmart and Target are pretty amazing in that they can have much lower prices for their consumers (who tend to be quite poor themselves) while being able to profitably employ people who otherwise would have difficulty finding a job.

    I have no doubt that they could be run better than they currently are, though I could not guess exactly how. However, if we take your economic story for granted and the CEO is really paid far in excess of the value they are providing then buying up enough shares to reduce Walmart’s CEO compensation should be quite profitable to the bottom line. This tactic requires working in private equity for a while but for a cause which brings such passion to you its probably worth it.

    Arguably Henry Ford did something like this. In 1926, before any union pushed for weekends, he instituted a weekend for his automotive factories for his workers to rest without decreasing wages.

  51. @Mark

    Walmart has millions of employees. Its CEO makes tens of millions a year. If he were to redistribute his pay to all his employees, it would not even register on their pay checks.

    But if he makes a mistake, he could cause hundreds of thousands of job losses.

    I personally want him to be very well remunerated so that they have the best CEO money can buy.

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