Skewed data from massive inequality in the US

Skewed data from massive inequality in the US October 22, 2015

Here is something well worth knowing. What many people do with America is take averages, say of income, earnings etc. However, this skews data. Because the US has the highest inequality, and the rich are super fricking rich, those super super rich raise the average considerably to make the average look okay, but in reality they are a tiny minority which disproportionately affect the figures. Here is an infographic which does a great job of explaining this:

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  • Otto Greif

    I forget why income inequality matters.

  • Otto Greif

    I forget why income inequality matters.

    • Peter White
      • Otto Greif

        I’m impressed you have read all of those articles you linked to.

        • Peter White

          Unlike you I never claimed to have that knowledge. You said you couldn’t remember so I gave you a resource to aid your memory. So either you forgot or you’re just another troll, like I said.

          • Otto Greif

            So you don’t know either.

          • Income inequality is a good indicator of further woes.

            Here is a bit of political philosophy:

            http://ideas.ted.com/the-4-biggest-reasons-why-inequality-is-bad-for-society/

            And the OECD report which shows that income inequality hampers economic growth:

            http://equitablegrowth.org/oecd-report-says-income-inequality-hampers-economic-growth/

            I could go on.

          • Otto Greif

            There’s no proof economic inequality causes a reduction in economic growth, or causes anything. That OECD report assumes causality, it also assumes all people are equally capable. As far as political philosophy, one could just as easily argue attempts to reduce inequality give government an unacceptable degree of control over the lives of others.

          • Annnnnd, you could use that exact argument against all of your positions.

            It is also supported by another report by the IMF:

            https://www.imf.org/external/pubs/cat/longres.aspx?sk=41291

            You are starting to sound desperate.

          • Otto Greif

            The burden of proof isn’t on me, I’m not making outsized claims or demanding large scale interventions.

          • Otto Greif

            From your IMF link: ” it must be borne in mind that the data are particularly scarce and
            unreliable for redistribution, even more so than for inequality. Indeed, one possible
            interpretation of our results is that the data on redistribution simply do not contain enough
            information to infer a negative (or for that matter a positive) direct effect.

            …We should of course be cautious about drawing definitive policy implications from crosscountry
            regression analysis. We know that different sorts of policies are likely to have different
            effects in different countries at different times, and causality is difficult to establish with full
            confidence”

            Compelling stuff.

          • Nice, so you choose not to include the middle bit because it doesn’t serve your purpose:

            ” We believe our results are nonetheless informative. We have used the best available data for the analysis of large numbers of countries over time. The analysis of spells inevitably requires the use of older and perhaps less comparable data, but the results for average growth hold even when the analysis is restricted to only the most reliable and recent data.”

            I think the conclusion strongly supports a mixed approach as I advocate. Take this together with the OECD report and other papers, and I think the point is sound. You, on the other hand, seem to have brought nothing to the party.

          • Otto Greif

            That they believe in their own results isn’t persuasive, is it.

          • Otto Greif

            Income Inequality and Poverty, Martin Feldstein
            “The first part of this paper argues that income inequality is not a problem in need of remedy. The common practice of interpreting a rise in the gini coefficient measure of inequality as a bad thing violates the Pareto principle and is equivalent to using a social welfare function that puts negative weight on increases in the income of high income individuals. The real distributional problem is not inequality but poverty. The paper considers three sources of poverty and asks what if anything might be done about each of them: unemployment; a low level of earning capacity; and individual choice.”

            http://www.nber.org/papers/w6770

          • Oh, the eminently dodgy Feldstein:

            “Martin Feldstein should be ignored”
            http://bilbo.economicoutlook.net/blog/?p=14356

            Who is about as biased as you will get whilst standing to gain from that bias.

            Martin Feldstein – a Harvard professor – has been found to have engaged in highly questionable conduct (to say the least) by investigations into the causes of the financial crisis. Feldstein must surely know that the government cannot run out of money. Which brings into question his motivation for providing misleading interventions into the policy debate. He has demonstrated over a long period his willingness to hide behind the “authority” of economic theory in order to pursue an ideological obsession with privatisation and deregulation. When writing what seemed to be academic papers or opinion pieces supporting financial deregulation, for example, he didn’t at the same time declare that he was personally gaining from such a policy push. His subsequent track record as a board member of companies, some of which collapsed in the crisis (AIG) or triggered the collapse has been appalling. Feldstein is not the sort of person anyone should take advice from much less pay for it.

            And another response to Feldstein:

            “Why We All Care About
            Inequality (But Are
            Loath to Admit It)”
            https://www.gc.cuny.edu/CUNY_GC/media/CUNY-Graduate-Center/PDF/Centers/LIS/Milanovic/papers/2004/challenge_proofs.pdf

          • Otto Greif

            Bill Mitchell is a crank.

          • Otto Greif

            Should we care about within country inequality, or global inequality? Because US immigration policies increase the former while decreasing the latter.

          • Peter White

            So it appears you are a complete loser. Not only are you a troll but you can’t read for comprehension either.

  • Geoff_Roberts

    The top 10% of earners in the US pay 68% of the federal tax bill while the bottom 50% of earners only pay 3% of the bill.

    http://dailysignal.com/2015/04/15/how-much-do-the-top-1-percent-pay-of-all-taxes/

    Socialists want to try to divide up the economic pie into what some elitist thinks is fair. Capitalists want to grow the pie for as many as possible. Who cares if someone makes a lot more (due to his own efforts) if everyone has the opportunity to make more as well. With Socialism, the economic pie will always continue to shrink.

    • “Who cares if someone makes a lot more (due to his own efforts) if everyone has the opportunity to make more as well. ”

      Therein lies some hidden issues with privilege, wealth breeding privilege through inheritance etc, and privilege breeding skewed equality of OPPORTUNITY.

      One must also talk about top corporations and how much tax they get away with not paying!

      Facebook paid about £4000 tax in the UK last year.

      I paid more than that.

      • Geoff_Roberts

        Of course, the world will never be precisely equal or fair. If one is born into a prominent, wealthy family there is no government mechanism possible that will make that fair or equal to those who are born into abject poverty and disease. We try to devise the best system that benefits as many people as possible. Free market capitalism, while not perfect, is the best system designed so far that allows the most opportunity for more people than any other system. Economic growth and wealth creation is the answer to reduce poverty and help those in the lower classes to move up.

        Centralized planning (Socialism) is a based on the lie that government bureaucrats can organize an economy better and more fairly than those who are already engaging in free trade and free enterprise. Instead, Socialism results in a shrinking economy and dis-incentivizes hard work, innovation and efficiency. Ultimately, we end up with a ruling class of connected, political elites and a lower class of workers that have no hope of improving their lot.

        BTW, the US already has the highest corporate tax rates of any advanced country. The corporate tax rates in Scandinavian countries that Bernie Sanders likes to promote is much lower than the rates in the US.

      • Geoff Benson

        The extreme unevenness in the distribution of wealth that we see today is indefensible economically. The suggestion that it is based on being rewarded for your efforts is absolute nonsense; there can be an element of truth in it for many, up to a certain level, but wealth of the kind referred to in the post is something very different, and very harmful.

        The point about contributions to tax revenue is just plain misleading. As you say, corporations, and wealthy individuals, pay huge sums to avoid tax, but also help create an environment in which low taxes, to the detriment of the poorer in society, is somehow seen as something positive.

        More worryingly, extreme wealth leads people to act in ways that are detrimental to society in general. The banking crisis was a direct result of unbridled greed in which everyone was sucked in to a corrupt economic model. Look at the insular, selfish practices that result, where people don’t matter. Tobacco, oil, coal, pharmaceutical; all riddled with lies and corruption. And would the NRA be anything like as powerful without the involvement of big business?

        There’s also the problem of what the ultra wealthy do with their money. Much, of course, is tied up in company shares and, guess what, that gives yet more incentive to boost share prices via dubious practices. Much of the wealth is also put into assets where it becomes, especially the case of things like art and gold, make it economically sterile. Only a very low proportion is actually spent where it can help the economy. Trickle down economics is perhaps the most fallacious claim it is possible to make in this regard.

        • Geoff_Roberts

          There’s a very comprehensive article from Pew Research which deals with the issue of income inequality.

          http://www.pewglobal.org/2014/10/09/emerging-and-developing-economies-much-more-optimistic-than-rich-countries-about-the-future/

          The obsession with wealth or income equality is counterproductive. We should be much more concerned with the ability of those in the lower economic class to move up rather than how much money someone else makes.

          So, how do we encourage economic growth for the poor and middle class and reduce poverty? With sound fiscal policy, free markets, free trade, a smaller government “footprint,” private property rights, and better education.

          A stable, pro-growth strategy benefits everyone including the poor. On the other hand, massive social spending on the poor does little to raise them up and creates a culture of dependency and entitlement.

          When a society puts so-called “equality” above freedom you tend to get a lower degree of both. If a society values freedom then you’ll get a higher degree of equality as well. We should be more concerned with creating opportunities for everyone rather than punishing those at the top.

          What is your answer, Geoff, to the “extreme wealth” problem (as you defined it)? Would it be government masterminds deciding that someone makes too much money and confiscating their wealth?

          • You appear to set a false dichotomy. I think Geoff Benson is likely to set most of what I would say out. Suffice to say, purely free markets are not workable, and would not be able to arbitrate morality. Furthermore, trickle down economics does not work. We presently have a world where the richest 1% own more than the rest of the world combined.

            Now there would be a good argument of corporatism vs pure free market capitalism…

            Now Sweden, Denmark and Norway, Switzerland, Germany and others have pretty much the highest X in the world where X is stuff people want. Look at the Global Peace Index, look at Well-being/thriving indices etc. These are nations which have good mixed economies, social democracies, good income distribution etc.

            On the other hand, where gross inequalities exist, social and other issues also exist. This is a rule of thumb, because there are some fairly equal countries where EVERYONE is pretty poor and things suck.

            The general point I am trying to make is that gross income inequality is a bad thing as an indicator of other woes. Trickle down economics does not work. The OECD recognise this, and even people like that big banking /economist guy who recently had to admit in congress that he got it all wrong. Damn, what was his name… Again, the IMF report was pretty damaging: eg http://money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-imf/

            Anywho, I am someone who favours a mixed approach, harnessing capitalism for social good, not letting it spiral out of control.

  • Geoff_Roberts

    The top 10% of earners in the US pay 68% of the federal tax bill while the bottom 50% of earners only pay 3% of the bill.

    http://dailysignal.com/2015/04/15/how-much-do-the-top-1-percent-pay-of-all-taxes/

    Socialists want to try to divide up the economic pie into what some elitist thinks is fair. Capitalists want to grow the pie for as many as possible. Who cares if someone makes a lot more (due to his own efforts) if everyone has the opportunity to make more as well. With Socialism, the economic pie will always continue to shrink.

    • “Who cares if someone makes a lot more (due to his own efforts) if everyone has the opportunity to make more as well. ”

      Therein lies some hidden issues with privilege, wealth breeding privilege through inheritance etc, and privilege breeding skewed equality of OPPORTUNITY.

      One must also talk about top corporations and how much tax they get away with not paying!

      Facebook paid about £4000 tax in the UK last year.

      I paid more than that.

      • Geoff_Roberts

        Of course, the world will never be precisely equal or fair. If one is born into a prominent, wealthy family there is no government mechanism possible that will make that fair or equal to those who are born into abject poverty and disease. We try to devise the best system that benefits as many people as possible. Free market capitalism, while not perfect, is the best system designed so far that allows the most opportunity for more people than any other system. Economic growth and wealth creation is the answer to reduce poverty and help those in the lower classes to move up.

        Centralized planning (Socialism) is a based on the lie that government bureaucrats can organize an economy better and more fairly than those who are already engaging in free trade and free enterprise. Instead, Socialism results in a shrinking economy and dis-incentivizes hard work, innovation and efficiency. Ultimately, we end up with a ruling class of connected, political elites and a lower class of workers that have no hope of improving their lot.

        BTW, the US already has the highest corporate tax rates of any advanced country. The corporate tax rates in Scandinavian countries that Bernie Sanders likes to promote is much lower than the rates in the US.

      • Geoff Benson

        The extreme unevenness in the distribution of wealth that we see today is indefensible economically. The suggestion that it is based on being rewarded for your efforts is absolute nonsense; there can be an element of truth in it for many, up to a certain level, but wealth of the kind referred to in the post is something very different, and very harmful.

        The point about contributions to tax revenue is just plain misleading. As you say, corporations, and wealthy individuals, pay huge sums to avoid tax, but also help create an environment in which low taxes, to the detriment of the poorer in society, is somehow seen as something positive.

        More worryingly, extreme wealth leads people to act in ways that are detrimental to society in general. The banking crisis was a direct result of unbridled greed in which everyone was sucked in to a corrupt economic model. Look at the insular, selfish practices that result, where people don’t matter. Tobacco, oil, coal, pharmaceutical; all riddled with lies and corruption. And would the NRA be anything like as powerful without the involvement of big business?

        There’s also the problem of what the ultra wealthy do with their money. Much, of course, is tied up in company shares and, guess what, that gives yet more incentive to boost share prices via dubious practices. Much of the wealth is also put into assets where it becomes, especially the case of things like art and gold, make it economically sterile. Only a very low proportion is actually spent where it can help the economy. Trickle down economics is perhaps the most fallacious claim it is possible to make in this regard.

        • Geoff_Roberts

          There’s a very comprehensive article from Pew Research which deals with the issue of income inequality.

          http://www.pewglobal.org/2014/10/09/emerging-and-developing-economies-much-more-optimistic-than-rich-countries-about-the-future/

          The obsession with wealth or income equality is counterproductive. We should be much more concerned with the ability of those in the lower economic class to move up rather than how much money someone else makes.

          So, how do we encourage economic growth for the poor and middle class and reduce poverty? With sound fiscal policy, free markets, free trade, a smaller government “footprint,” private property rights, and better education.

          A stable, pro-growth strategy benefits everyone including the poor. On the other hand, massive social spending on the poor does little to raise them up and creates a culture of dependency and entitlement.

          When a society puts so-called “equality” above freedom you tend to get a lower degree of both. If a society values freedom then you’ll get a higher degree of equality as well. We should be more concerned with creating opportunities for everyone rather than punishing those at the top.

          What is your answer, Geoff, to the “extreme wealth” problem (as you defined it)? Would it be government masterminds deciding that someone makes too much money and confiscating their wealth?

          • Geoff Benson

            Some interesting points here, and the Pew article is very thorough. The long answer, and proper one, would be very long indeed so perhaps I’m best replying in a quick points summary manner.

            Regarding inequality, my view would have nothing to do with punishing the wealthy. Indeed it’s not especially the wealth itself that’s the problem, it’s the economic ripple effects that striving to increase, and emulate, extreme wealth, that can become a problem. So, for example, in the UK we have very profitable companies looking to exploit workers by finding unintended loopholes in employment law. They find ways of paying less than the national minimum wage, of avoiding employment contracts, and of increasing working hours in surreptitious ways. Then when something goes wrong, for example an overly tired driver kills people because he falls asleep at the wheel, the companies plead innocence and blame the employee.

            Nicely leading on to free markets, before talking about government intervention policy. Do I believe in free markets? Well yes, but I’m yet to see one! No market is totally free, because they must always work within fairly tight confines. And what happens when one market that is subsidised competes unfairly; I’m thinking here of Chinese steel, which is leading to major job losses in the UK? Or what happens when the actions of a company affect health or the environment, such as the tobacco and oil industries? Should companies be allowed to impose harsh, draconian conditions on its workers? In a free market they could. So perhaps reference to ‘free market’ means only free of tariffs and quotas, but that’s a long way from the completely unattainable concept of libertarian free trade.

            As for government intervention, I believe it is important. It’s not an issue of whether it’s big or small, it is that it should be effective. Indeed, I would argue that governments are duty bound to do what they can to improve the lot of its citizens, and to lay down rules that all must adhere to, whether they be individuals, companies, or whatever. So taking your Pew research article as a starting point, that highlights the importance of education (and hard work, which tend to go together). Government must do what it can to ensure everyone is entitled to a decent education, something that’s far too important to leave to the whim and fancy of individual parenting. Health is important too; everyone is surely entitled to decent healthcare. How these are to be paid for is certainly an important part of the debate, but Republicans jumping up and down, deriding ‘liberals’ is one of the more childish aspects of American politics. Not that we don’t have plenty of silliness this side of the pond!

          • Yes, one must remember that if the free market had its way, we would still have children working down mines and heroin on general sale. Its about the savviness of government intervention.

          • Geoff_Roberts

            I think that is a gross overstatement. You’re suggesting free markets wouldn’t have to follow laws, civil rights, human rights, private property rights, and enforcement of contracts. Free markets don’t mean lawlessness. No one advocates such a thing.

            You seem to have such confidence, Jonathan, that faceless, centralized bureaucrats totally have your best interests at heart. I certainly don’t believe that and, in fact, submit that governments mainly care about holding power. Many of the excessive regulations they pass are self-serving, counter-productive, outrageously expensive, and are merely pandering for votes.

            http://www.economist.com/node/21547789

          • I was presenting the true free market which is the libertarian end, where individuals are their own gods and government barely exists.

            Any denial of this is an acceptance of the importance of government. It then becomes a discussion of how much of a part they play.

          • Geoff_Roberts

            One of the free market solutions to the problem you posed as “profitable companies looking to exploit workers” is more effective competition. If well-run competing companies treat emolyees well then they will be able garner more quality workers. Also, If there is increased competition for qualified workers then companies will need to compete by treating and paying employees well.

            Moving on to quality education which we both agree is essential to creating opportunity for the poor. The way to improve our failing schools is also by increasing competition. Parents should be able to choose the schools for their kids. Poor performing schools would disappear. This goes against the entrenched political structure currently in our schools which often are self-serving, corrupt, and low performing.

          • Geoff Benson

            I can’t help but think that you’ve gone a full circle with this argument.

            I agree that it sounds wonderful that you leave companies to compete freely and find themselves in competition for the best staff. And actually this can, and does, happen in a very small number of industries and types of profession where you can’t hide poor quality. IT specialists, professionally qualified, engineers, etc, all the types of employee that can move relatively freely between jobs.

            But what about the ordinary staff, who are largely unqualified and unable to move easily between employer. I don’t say that there aren’t many employers who treat staff well, but the reality is that without government intervention many companies would, and do if they can, treat these employees badly, seeing them as very easily replaceable.

          • @Geoff_Roberts:disqus Look at the arguments that the colliery owners made in Victorian Britain. These free marketeers argued for unfettered employment, deregulation that would have allowed continued child employment etc. This is the same for agriculture and factories at the time (hence the Factories Act, the Agricultural Gangs Act etc).

            I was part of this when I worked, before education, in corporate management. I worked for an American corporation for which we had to contracturally sign out of EU regulation so we could be worked as many hours as the company wanted. When I moved into higher management with them, it was clear that we treated employees like chattel.

            What were the ramifications? We screwed over heaps and heaps of people, and paid them shitely. And then? We had a massive turnover of staff; our retention was shoddy. Free marketeers would then argue that the market would take care of this as it would be a competitive disadvantage. But it wasn’t. We could undercut competitors on price. And this was ok because there was an endless supply, seemingly, of graduates to use as cannon fodder.

            So on and so forth. Point being that being able (forced?) to sign out of regulation meant we returned to morally unfettered free market economics. I ended up developing a moral conscience and left, but the whole culture was one of using people as a means to a profitable end, no matter what the (human) cost.

          • Geoff_Roberts

            The situation you describe is unfair and, in the end, counterproductive. Good people like yourself quit working for that company or even changed industries. So, how do we minimize what you describe?

            Certainly, there are regulations that need to be in place. As you have stated, the discussion is what is the proper balance? I submit that there are generally too many regulations which have adversely affected the market (at least here in the States). What would be the economy and prosperity be like if companies were freer to expand, grow, and hire more workers without excessive regulations and an unfriendly business atmosphere?
            The UK might not have experienced what we did during the 80’s and 90’s. It was booming for us and a totally different attitude was prevalent than we’ve had the last several years. We are not confident right now about our market. Businesses are not confident either. If those attitudes changed there’s no reason why we couldn’t boom again.
            When the economy is booming workers are treated better. There is a competitive atmosphere where qualified workers are highly desired. Head-hunters are very busy. I wonder how this could have affected the situation you described?

          • Geoff_Roberts

            Of course we need limited government to enforce laws, civil rights, employee rights, private property rights, contracts, etc. But it is the often over-burdensome centralized government footprint that disrupts and distorts the marketplace which helps to create job shortages and poor economic growth.

            These ordinary workers (as you referred to them) would have a much better chance at transferring to a better job if there were plentiful jobs available and the economy was growing at a healthy clip. Then employers would have more incentive to treat their valued workers better to retain them if qualified workers were in tight supply. It is also incumbent on the workers to do what they can to increase their value to the marketplace.

            As you know, there is no government program or policy that can mandate prosperity. Economic prosperity is the result of free individuals participating in a free and open marketplace. Wealth can only be created in the private sector and the more government interferes with private enterprise the more the economy will be negatively impacted.

          • Wealth can only be created in the private sector and the more government interferes with private enterprise the more the economy will be negatively impacted.

            Actually, that’s simply not true. I would suggest looking into infant industry protectionism, the sort that formed the foundation for success in the Industrial Revolution for countries like the UK and US. I would also look at things like SEOs in Singapore, and strategic planning (not in the communist sense, but in govts having an overall overview of things that single market enterprises do not). Again, Ha-Joon Chang details all this and more in his very good book 23 Things They Don’t Tell You About Capitalism.

          • Geoff_Roberts

            I looked into summaries and quotes of Chang’s book and was not impressed. He’s certainly on the political left and believes that politicians can, generally, make better business decisions than can the market. Obviously, there is a large ideological divide when it comes to economic theory. Chang has a point of view that most free market economists and philosophers would not agree with.

          • Well, yes, which is why you should read it!

          • Geoff Benson

            “Of course we need limited government to enforce laws, civil rights, employee rights, private property rights, contracts, etc. But it is the often over-burdensome centralized government footprint that disrupts and distorts the marketplace which helps to create job shortages and poor economic growth.”

            The problem is how much government involvement is needed. There’s one big difference between government and private enterprise; government is elected, and can be unelected, whereas private companies have no such constraint (shareholder control is a fiction). When conservatives criticise ‘big’ government, for example the idea that if they take away private guns then you’ll be at the mercy of government, they are referring to governments that have not been elected democratically, for example China.

            So we are talking about democratically elected governments which should, in theory, do that which best benefits its citizens. And here is the playoff. One side says you can trust corporations because the markets will ensure they do the right thing, whilst the other says you should allow government to exercise more control

            I have no faith whatever that companies can be allowed unfettered power, subject only to the markets. Small businesses I can just about accept exist for their customers as mutual institutions, though by no means in every case. Larger businesses never, ever, care about their customers, except insofar as they are forced to appear to care so as to grow. Taking the UK I can’t think of a single instance of where companies haven’t tried to take advantage of their customers, by finding loopholes in legislation (or gaps that hadn’t been considered in the first place). This means

            Claims companies for every thing you can think of, many ringing blindly, telling you there’s so much waiting in respect of your ‘accident’.
            Being forced to take payment protection insurance you neither need nor ever can claim against.
            Small businesses being sold interest rate swaps they don’t need and aren’t of use.
            Drugs companies commissioning research to favour some diet product.
            Telephone companies charging literally thousands of pounds for customers who inadvertently overuse their data limits.
            Telephone lines purportedly to official bodies (HMRC in a friend’s case) that charged £1.60 per minute to ring, and allowed a bill of £168 to accrue without speaking to a person.

            Business cannot be trusted. But I do accept that it needs to be able to conduct itself or we wouldn’t be able to enjoy the lives we now do.

            So it’s where to draw the line at government involvement. Should not government be involved if large companies, which are clearly profitable, don’t pay their fair share of tax, as per Jonathan’s point? Should companies be allowed unimpeded right to telephone people at any time of the day or night? Should banks be allowed to force products on you that you neither need nor want, in return for them giving you the product you do want. Should supermarkets be allowed to do great deals on alcohol, by cross subsidising on healthy food?

            I’m sure you get my drift. Every time in the UK that there’s a scandal involving a company (pretty well daily) we wonder ‘why hasn’t the government done something about that?’ For me I quite agree that a balance is needed, but the scales are set a lot differently to the ones you support.

          • Genuinely exceptionally well stated, Geoff. Thanks!

          • Otto Greif

            Corporations are constrained by the marketplace, examining how “democratic” governments actually work one finds most of government isn’t responsive to “the will of the people” or constrained by elections. You also assume voters actually understand what good policies are.

          • Geoff_Roberts

            It’s interesting that what you think of business is what I think of government! I don’t believe an ever-growing centralized, government leviathan can be trusted as has been proven time and again. Politicians will say anything and promise everything to attain and stay in power. The larger government grows the more corrupt and powerful they become.

            Yes, they can be removed from power but the overall trend in the States is that government grows more each year even if one politician is exchanged for the other. This takes away a bit more of our freedoms every year. Politicians don’t care about the “little people.” They care about lobbyists, big donors, the Washington establishment, and constituent groups they can pander to for votes. They are often above the law and make laws to exempt themselves. That is why government should be limited in scope and size.

            Now, you may say the same lack of concern exists for large corporations but I would submit corporations not only have to answer to a myriad of laws but also to their customers who may elect to take their business elsewhere if they’re not happy. And this transfer of business to another competitor can take place immediately rather than waiting 4 to 6 years for the next election cycle.

            So, the “correction” mechanism is much more efficient for the private sector than the public sector. Corporations should also not receive “corporate welfare” or be able to engage in crony capitalism which is allowed and aided by a corrupt government..

            To address a couple of specifics you brought up I believe the common reaction is for many to want to pass new laws to prevent every conceivable wrong-headed policy or outcome imaginable.

            You mentioned how supermarkets may reduce prices on alcohol and raise them on food. I say go ahead and see how that works out in a competitive marketplace. Those who want to buy alcohol will want the lowest price and those who want to buy food at the best price will go somewhere else. Why should the government interfere with how supermarkets charge for food? The marketplace will work all that out. The more government tries to micromanage industries like this the higher prices will go and more shortages will result.

            Then you mentioned banks shouldn’t be allowed to force products on you. I agree, but why go to that bank? Why not go to another bank that offers better services that you want? If all or most banks are doing this then that is another problem but one that should still be corrected with more competition. If a new bank comes along that provided better services for you wouldn’t you switch to that bank? Wouldn’t many other customers as well?

            Within a reasonable framework of laws and regulations businesses should be left to prosper, grow and hire more employees and provide the goods and services consumers want. People need jobs which can only come from a growing economy. If the economy becomes stagnant it is most often because of too much regulation, taxation, and interference form the government.

          • Just picking on one point quickly, you would just advocate moving towards monopolies which would have such economies of scale that they would form barriers to entry from potential competitors.This is why mixed economies like ours regulate with things like the Monopolies and Mergers Commission.

          • Geoff_Roberts

            I’m advocating just the opposite, Jonathan. I’m for increased competition and lowering the regulatory and economic barriers for new businesses, In my opinion, you don’t need a so-called mixed economy to lower barriers for new business. You need less government intrusion to let the free market create more competition and more jobs.

            A mixed economy will always have lower growth over the long run than a more free market economy. Growth doesn’t come from government “managing” the economy. All the government should do is enforce laws, contracts, and civil rights, etc.

          • Working in education, as I do, under a government in the UK which has been ideologically bent on doing this for 6 years, I can say that it is a failure to institute free market economic theory to education. We have the most fragmented school system in the world.

            The arrival of academies was a landmark in the running of state education in England, as Feintuck and Stevens point out. Contracting out represented a completely different and untried way of operating a school system. It was started by the Labour government and initially focused on struggling schools in deprived areas. Policymakers may have expected the arrangement to apply to just a small proportion of state-funded schools, and may never have considered the full implications. But when the coalition came to power, they wanted it to become the norm and it now covers more than half of all secondary schools and a growing minority of primaries.

            There has been no public debate about whether we want our schools to be run this way, even though this set-up raises enormous issues. An obvious issue of principle is the great power that this process places in the hands of central politicians. As Richard Pring, from the Oxford University, said in his recent book about secondary education: “What is being created is the most personally centralised education system in western Europe since Germany in the 1930s – each school contracted directly to the secretary of state…”.

            Further, if a few academy chains secure control of large numbers of schools – as some aspire to do – the legitimacy of their power could come into question. After all, who controls schools is far more than a technical matter of performance – moral, cultural and social issues lie at the heart of schooling.

            On the other hand, if there is a wide diversity of contractors, many of them small and including numerous stand-alone schools, the risk of great variability in quality is increased. The system becomes highly fragmented, and international evidence shows that this is not an effective strategy for whole-system improvement.

            Above all, there is a monumental challenge in managing such a large number of contracts from the centre, or anywhere else. Several high-profile failures, such as that at Al-Madinah free school in Derby, have vividly illustrated the risks. The government seems at last to have recognised this with its plan to regionalise the process based on eight commissioners and headteacher boards.

            But such a system will scarcely make the task any easier; it will create a raft of new bureaucracies and continue to block local input. The plan to manage more than 20,000 schools by contract is unsustainable, and the sooner that is accepted the better – not doing so will leave the system in a complete mess, rife with division and artificial distinctions.

            http://www.theguardian.com/teacher-network/teacher-blog/2014/jan/07/academies-free-schools-system-phased-out

            As for your first point, I wonder whether Amazon employees and Monsoon employees in the UK and elsewhere agree. And I wonder whether seat shop supply throughout the world is also a desirable outcome.

            FME fails to be able to strategically manage macroeconomics and overviews of economic society. Ha-Joon Chang raises these points in 23 Things They Don’t Tell You About Capitalism.

          • Geoff_Roberts

            I’m not sure how analogous our educational system is here in the US compared to the UK. Our system is quite centralized and we have public sector unions (teachers, administrators, etc.) that work in a corrupt fashion with the Democratic party. They work together to keep each other in power at the expense of students receiving a better education.

            This corrupt alliance needs to be broken and students needs should be the highest priority. School voucher programs and charter schools have worked tremendously wherever they have been tried. There were very successful charter schools in the D.C. area which is a notoriously poorly performing school district. Unfortunately, Obama closed these charter schools despite the mostly minority parents begging for them to be kept open. It was payback for the teacher’s unions supporting his candidacy.

            I don’t believe the education industry is any different than other industries and are still subject to the same economic laws that apply everywhere. There needs to be an element of school choice and competition which is the best way to improve the quality of the education. The power needs to be more in the hands of the parents – not the Feds.

          • You appear to set a false dichotomy. I think Geoff Benson is likely to set most of what I would say out. Suffice to say, purely free markets are not workable, and would not be able to arbitrate morality. Furthermore, trickle down economics does not work. We presently have a world where the richest 1% own more than the rest of the world combined.

            Now there would be a good argument of corporatism vs pure free market capitalism…

            Now Sweden, Denmark and Norway, Switzerland, Germany and others have pretty much the highest X in the world where X is stuff people want. Look at the Global Peace Index, look at Well-being/thriving indices etc. These are nations which have good mixed economies, social democracies, good income distribution etc.

            On the other hand, where gross inequalities exist, social and other issues also exist. This is a rule of thumb, because there are some fairly equal countries where EVERYONE is pretty poor and things suck.

            The general point I am trying to make is that gross income inequality is a bad thing as an indicator of other woes. Trickle down economics does not work. The OECD recognise this, and even people like that big banking /economist guy who recently had to admit in congress that he got it all wrong. Damn, what was his name… Again, the IMF report was pretty damaging: eg http://money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-imf/

            Anywho, I am someone who favours a mixed approach, harnessing capitalism for social good, not letting it spiral out of control.

          • Geoff_Roberts

            I’d like to set the record straight that no one advocates or has ever advocated (certainly not by any prominent figure) so-called “trickle-down economics.” That derisive term was coined by the Democrats as a counter-attack to Reagan’s overall successful economic policies. The lie gets repeated over and over by the left when it is a straw man argument. It’s a catchy phrase that has been successful in distorting the real record and policies of conservatives. See the linked articles:

            http://www.nationalreview.com/article/367682/trickle-down-lie-thomas-sowell

            http://www.forbes.com/sites/georgeleef/2013/12/06/trickle-down-economics-the-most-destructive-phrase-of-all-time/

            The Socialism in Scandinavia would be a disaster in the States. The Scandinavian countries are quite homogeneous in terms of race, culture, and political beliefs. They also have a Nordic-inspired hard work ethic. Those characteristics alone would make Socialism unworkable in the States.

            Also, it’s deceptive that much of the social programs there are financed by oil exploration and drilling. In fact, Norway is the 5th largest exporter of oil.

            The US already has a much more progressive tax structure than Scandinavia. Along with the open borders of the US we simply could not afford the cradle to grave welfare state that Scandinavia promotes.

          • Actually, as far as I remember from researching this ages ago, it was previously called horse and sparrow economics based on the idea that you feed the horse oats and it will eventually shit it out so that the sparrows can fly down and eat the oats in the shit.

            In terms of Reagan, wiki states it was Reagan’s own budget director who later turned on the idea and became a critic.

          • Geoff_Roberts

            Economic growth is the best way to reduce poverty. When the economy is prosperous everyone benefits. Maybe there are some who benefit more than others but if everyone is doing better we shouldn’t care as much about so-called income inequality. Here is a study from a few years ago that describes this phenomena:

            http://siteresources.worldbank.org/DEC/Resources/22015_Growth_is_Good_for_Poor.pdf

          • As I also said above, and referencing the OECD again, income inequality hampers economic growth:

            http://equitablegrowth.org/oecd-report-says-income-inequality-hampers-economic-growth/