UC Davis Econ in the News

Prof. Lindert’s work on pre-modern inequality is discussed by Tim Harford in the Financial Times.

The US, as the richest society in history, is therefore potentially the most unequal in history. The US population could be kept alive for the cost of about $100bn a year.

If the elites had total control, that would leave another $13,800bn (the rest of US GDP) a year to distribute among friends of the president – almost enough to give a sum equal to Bill Gates’s lifetime wealth to a new crony each working day.

But the US is not remotely this exploitative, no matter what you may feel the next time you buy a copy of Windows.

In the newly coined jargon, it has a low “inequality extraction ratio”, meaning that the poor have much more than it would take to keep them alive.

That is faint praise for the US, perhaps. But it is interesting to observe that while modern societies are rich enough to be much more unequal than their predecessors, they show similar patterns of income inequality. Perhaps – I am speculating wildly – human societies have some hard-wired tolerance for inequality?

What would determine that “hard-wired tolerance for inequality”? Does it vary by society? If so, why?

5 thoughts on “UC Davis Econ in the News”

  1. Genes? We’re a paternalistic, heirarchical species by default.

    I bet mass communications play a role in bounding inequality. It’s easy to be exploitative and decadent in private. It’s harder in public. Ask Marie Antoinette(‘s zombie head).

  2. …Not exactly, but remember that equations like that model observations of human behavior, not the other way around. I’d guess that the coefficient we’re sitting at is kind of a vector sum between our cultural momentum and our genetic (neurological maybe?) tolerance for seeing peers that seem materially better or worse off than us.

    As industrial capacity rises, I’d guess that the range of deviations gets bigger- compare the chief of a small tribe to an oil tycoon. I’d also guess that the scope and speed of media can dampen these swings – it’s hard to keep up a life of debauchery when the paparazzi are forwarding a video feed to the plebs. Hope that made sense.

    Actually, I wonder if there’s a relationship to this other thing you just blogged about.

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