econ of inequality midterm 1

equal libertarianism

absent force and fraud, market outcomes are simply the result of the free exercise of the rights of property and contract; any attempt to redistribute away from market outcomes is therefore a violation of rights

• Robert Nozick

pareto criterion

any changes to the existing distribution of resources (allocation) must make everyone at least as well off as they are currently

• Vilfredo Pareto

luck egalitarianism

variation in how well-off people are should be wholly determined by the responsible choices people make and not by differences in their unchosen circumstances

utilitarian welfarism

redistribution from better-off to worse-off raises aggregate welfare because of decreasing marginal utility

• Jeremy Bentham, JS Mill

the priority view

improvements to the welfare of worse-off people matter more than improvements to the welfare of better-off people. Even if the resource may have higher utility with the rich, it would be better to give it to the worse-off person

• Derek Parfit

the difference principle

features of an institution that generate inequalities are just only if they benefit those who are worse off, and those features couldn’t be eliminated without making some people still worse off

• John Rawls

egalitarian reasons

reasons can be egalitarian if they are strictly concerned with the difference between groups

• TM Scanlon

egalitarian in the broader sense

reasons are objecting to the difference between what some have and what others have, including reasons based on the consequences of this difference, even when the reasons for objecting to these consequences have nothing to do with equality

egalitarian in the narrower sense

reasons are grounded, ultimately, in some idea of why equality itself is to be sought, or why inequality itself is objectionable

TM Scanlon

• equal concern

• status inequality

• substantive opportunity

• control

• political fairness

• fair distribution of income

equal concern

inequality can be objectionable because it results from an agent providing a higher level of benefit to some people than to others to whom it owes the same obligation to provide this benefit

status inequality

when enough people in a society hold views of superiority and inferiority, with the result that the practices of exclusion and preference exist and are stable

• poor must live in a way that is reasonably seen as humiliating

substantive opportunity

social institutions are not justifiable to those whose life prospects depend on them unless the positions of advantage that they create are open to all

control

inequalities can be objectionable because they give some people an unacceptable degree of control over the lives of others

political fairness

the wealthy may be much more able than others to influence the course of political discussion, more able to gain political office themselves, and more able to influence others who hold office

fair distribution of income

what is held to be unfair is the way in which unequal rewards are assigned to certain economic roles or positions rather than the lack of opportunity that individuals have to compete for those positions

Gini coefficient

• most frequently employed

• 0 (complete equality) - 1 (extreme inequality)

• takes into account entirety of distribution

• the average absolute difference between two random individuals in the population, in relation to the average standard of living of the population as a whole

Theil index

• always positive, higher values indicating greater inequality

• sum of inequality between groups and within groups

1820-1950

great divergence

1950-2000

era of 3 worlds and social democratic consensus

2000-present

rise of Asia and internal cleavages

great divergence

• slavery until 1865 in US

• colonization well past 1950

• industrialization in western Europe, North America, and European settler colonies

era of 3 worlds and social democratic consensus

• decolonization following WWII

  • indian independence

  • african countries gaining independence

• emergence of social welfare states in industrialized economies

  • social security in the US (excluded most women and many occupations)

  • social security acts in france

  • national health service in UK

rise of asia and internal cleavages

• trade and financial liberalization

  • trader liberalization in china

  • economic reforms in india

• retreat of inequality-inducing policies in industrialized economies

  • margaret thatcher and ronald reagan

between countries partition

• 1820-1940: slavery, colonization, and industrialization

• 1940-1990: war, decolonization and cold war

• 1990-2016: globalization and rise of asia

• 2016-present: ???

within countries partition

• 1820-1940: industrialization

• 1940-1980: war and social democratic consensus

• 1980-2016: neo-liberal consensus

• 2016-present: ???

one-hundred percentism

complete horizontal equity

equalization of lifetime income profiles

this focuses on inequality of future income prospects, rather than on the people’s current positions

mobility

a desire to narrow the differentials and to reduce the barriers between occupational groups

mobility

a desire to narrow the differentials and to reduce the barriers between occupational groups

economic inclusion

the objective is to reduce or eliminate the feeling of exclusion from society caused by differences in incomes or some other endowment

income shares

society aims to increase the share of national income enjoyed by a relatively disadvantaged group— such as the lowest tenth of income recipients

lowering the ceiling

attention is directed towards limiting the share of the cake enjoyed by a relatively advantaged section of the population

avoidance of income and wealth crystallization

eliminating the disproportionate advantages in education, political power, social acceptability, and so on that may be entailed by an advantage in the income or wealth scale

international yardsticks

a nation takes as its goal that it should be no more unequal than another comparable nation

scalar

all different features of inequality are compressed into a single number