Inequality vs poverty

Résumé du document

For this discussion paper, I would like to focus mostly on Feldstein's argument of tackling poverty instead of inequality and why this is a dangerous perspective. To begin with, Feldstein's argument concerning the Pareto principle refers to the economic concept of Pareto superiority, which assumes an allocation of resources that helps at least one person while keeping everyone else at least as well off as before. Pareto efficiency, on the other hand, assumes an allocation where no one can be made better off without making at least one person worse. Thus, Feldstein suggests that we live in a Pareto superior society, where we have not yet achieved maximum efficiency. In other words, we have not reached our full productive potential and thus the increase in wealth among the rich should be seen merely as an advance towards pareto efficiency carried out by the upper stratum of society.

Extraits

[...] educational system to keep classes separated (also shown by low support for class-based affirmative action) accentuates the likelihood that growing inequality will reproduce itself. Even if we do accept pareto superior trends in our economy, we are only looking at the short-run. Are we as a society prepared to accept the long-run consequences of a highly polarized society where the capitalists rule over the workers in an undemocratic fashion? By focusing on poverty, Feldstein seems concerned only with the short-term problem while he turns his back on inequality and the political biases it will brew. [...]

[...] They will continue to keep wages low (causing the problem of individual choice); they will continue to keep education from being integrated (causing a lack of earnings ability); and they will continue to have a disincentive towards on- the-job training (causing long-term unemployment). Thus, all of Feldstein's reasons for poverty in the U.S. can be traced to the way in which a capitalist state behaves when unconstrained by democratic law. Essentially, asking the government to provide a minimal level of assistance to the poor only mitigates these problems temporarily; it does nothing whatsoever to structurally level the playing field of opportunity and that is what our country is supposed to be based on. [...]

[...] Focusing policies on poverty sidesteps the driving forces of the issue, which revolve around a system that will naturally produce inequality until it is truly democratized. We have seen in numerous readings that the wealthy are by far the most influential class in the realm of politics, but Ladd and Bowman also cite the fact that if our middle class begins to feel that it is being squeezed in by classes below or above them, and they feel that odds are being rigged against those who work hard and play by the rules, the political importance of economic inequality will grow.” In other words, the middle class could potentially have a greater voice in this issue, but they lack an incentive to do so since the root of inequality is mostly affecting the lower class. [...]

[...] Inequality vs poverty For this discussion paper, I would like to focus mostly on Feldstein's argument of tackling poverty instead of inequality, and why this is a dangerous perspective. To begin with, Feldstein's argument concerning the pareto principle refers to the economic concept of pareto superiority, which assumes an allocation of resources that helps at least one person while keeping everyone else at least as well off as before. Pareto efficiency, on the other hand, assumes an allocation where no one can be made better off without making at least one other person worse off. [...]

[...] However, I think it is important to step back and reevaluate the desirability of a pareto superior economy that is favoring the wealthy more so than the poor. In such a scenario, the wealthy are gaining because they are able to take advantage of greater opportunities than others, and this allows the capitalists to gain more economic power vis-à-vis the working class. Ultimately, this will translate into greater political power for the capitalists (as has been occurring in our “democracy”), which will only solidify their advantages in opportunities. [...]