If economists shift there focus to human inequality, they should not forget to take ecology into account

Inequality

I’m reading a book on the Euro by Joseph Stiglitz, I’ll get back to that when I’m done. One of the big premises concerns the question on the influence of inequality on the functioning of the economy. His point: the smaller the difference between the top and the bottom, the better things work. If I read it well, that’s mainly because of two reasons. The first reason is that the people will feel more motivated to work if they don’t just make the rich richer, and the second is that the productivity of countries will be higher if unemployment is low.

As an ecologist, I’d immediately stretch this point beyond humans, down to all microbes and other little fellahs that are usually forgotten. Prosperity will only work if there’s attention for all of them as well. Because people will also be more motivated to work if they feel that they’re doing something good.

Sidenote: I’m of the opinion, not entirely unlike Stiglitz, that when it comes to knowing anything about the economy, and particularly the global economy, there is very little substance. Essentially, there is not even a global economy yet, even though economy in itself is not new. What we have of scientific evidence on the economy of today is largely based on case studies on a few hundred countries for the past hundred years, all of which have measured things in their own way. Besides, things have recently sped up, and these studies have largely ignored culture, politics and massminds as well as most basic ecological insights and practice. They looked at numbers that are still under construction.

Now, I must say reading this book is inspiring me to take the issue of economy up again, as had the great recession, so this is not the last word I’ll speak about it. But a main critique I have on Stiglitz’ premise: deal mainly with unemployment, is the question: at what cost?

Throughout history we have seen that Western employment has gone hand in hand with destruction of nature. It’s the case with agriculture, with oil production and with all services if you consider the impact of consumption after receiving salaries. As all economists do, Stiglitz emphasises the need for growth. An ecologist would immediately point to limits of growth in any system. When a forest is old, for example, its mass doesn’t grow. What does happen, is that more and more interconnections arise. Something that has been happening to the global economy in recent years. But even that has a limit. I have been saying this before the crash in 2008 and am saying it again now. There will be a day the global economy stops growing. If we’re lucky the population will be voluntarily shrinking at that time, and prosperity keeps growing, but if we’re unlucky, it won’t.

I think that Stiglitz is incredibly right when he says the top shouldn’t own it all. And I believe it’s possible to get wealth to the people in ways that support the ecology rather than undermining it. We, and with that I mean economists, should not forget to keep the ecology in focus. Shifting the attention to unemployment – which I think economic policy makers will do out of pure necessity – backfires on the long run, just like all other economic paradigms have (I’ll also get back to those, thanks to Stiglitz). What I basically want to say is: inequality is not purely a human thing. Because, speaking of the 1%, let’s not forget that we’re an even tinier percentage of the beings alive.

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5 thoughts on “Inequality”

  1. Gilles, have a look at Perrine & Charles Hervé-Gruyer’s fascinating book Miraculous Abundance. It may change your mind about whether “Throughout history we have seen that Western employment has gone hand in hand with destruction of nature.” I wonder if rather than employment per se you’re actually referring to automation and addiction to consumption. We’re leaving the Industrial Age and will soon enter the Digital Age, where even more than in the Industrial Age, the owners of the machines (which are more and more digital than mechanical) win big, until they figure out as Henry Ford did that if they don’t leave enough for others no one will be left to be able to afford to buy what their machines produce. Employment is more of an Industrial-Age concept than a universal one, as it’s correlated with the Industrial concept of trading Money for Labor; Community is probably a more broadly relevant concept.When the alliance of Government and Business/Wealth to the exclusion of the interests of the plebeian citizenry becomes universal (which I fear is a rapidly growing trend – to the extent that it hasn’t always been the case), the rest of us are likely to depend for our Survival more on Community, formally or informally trading Labor for food-shelter-security, than on employment per se.

  2. Interesting read. income inequality is not the problem, but how to explain the difference between the top earners and the lowest earners.

    Society always has to find a compromise because some people will take bigger risks for bigger rewards. So yeah a higher income makes sense. No easy answers…

    1. The ‘high top’ idea intuitively appears correct, but as it seems, there’s ample scientific proof today that bigger inequalities lead to worse overall results. An example: it seems that there is no correlation between (extremely) high salaries of CEOs and their profitability for the company. So there is no compromise to be made here. That’s the fundamental insight I wanted to share here. In other words, your statement represents a flawed and old-fashioned paradigm which is to be forgotten asap for the sake of humanity. I’ll come back to this in 2017. Happy new year!

      1. Excellent response, Gilles. I think “Society always has to find a compromise” because “some people will hoard more if Society lets them get away with it” and because “some people will take advantage of unpriced ‘free’ externalities to exploit the Community and feed their own greed” would be more relevant than “because some people will take bigger risks for bigger rewards.”

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