Wednesday, January 22, 2014

Markets Have Little To Do With Inequality, It's All About Power

I'm far from the first person to say this but reading over some blog posts on inequality have left me a bit exasperated at how the inequality debate keeps getting framed. A lot of right leaning people seem to think that the opposition to inequality is a criticism of the market system and fall back on technological and trade explanations. People on the left then go back to saying how annoyed they are by this because they are not talking of the divide between the 95th (or even 99th) and the 50th percentile but instead are talking about the divide between the 99.5th and the 99th percentile which cannot be explained by structural factors like technological shifts.

The central problem here is the right seems unable to acknowledge that economic success brings power and that this power is a distortion of markets. If market forces were at work the extreme inequality wouldn't exist, instead the wealth would be more evenly spread as competitive forces lead companies to either return more wages to employees or to slash prices forcing real wages up. The issue is that at some point in an organization market forces stop operating and the discretion of powerful individuals in the organization takes over. This allows these individuals to pursue policies that divert wealth to either shareholders or managers rather than to making the organization more competitive by slashing prices or by raising workforce quality through higher wages.

Of course, those in these positions justify their policies with elaborate theories justifying their income as the result of merit or some other nonsense. But there is no solid evidence backing these claims up, it's cognitive bias or, for the honest ones, outright legal theft. Owners and managers are complicit as a result of their positions in power in diverting wealth towards themselves. To counteract this power we need to exercise our political rights through our government since political power is more evenly distributed then economic power. As long as the myth persists that inequality is caused by market forces, rather than the exercise of power by the powerful, there will be a substantial obstacle to the level of political organization necessary to break this power.

And for those worried about government power, ask yourselves this. When was the last time that you heard of a government dictating when a non incarcerated individual can take a piss? Yet we hear of many companies doing this to their low wage employees. Which is exercising more power over an individual's life?

1 comment:

  1. hear , hear!
    And check this one out; short and sweet!

    ReplyDelete