Tuesday, April 29, 2014



i really hope i can push economic inequality as an agenda for my freaking country to take up!


Large inequality is indeed one of the things having most known negative externalities to a society. Therefore income taxes and progressive wealth taxes are needed to collect money and then distribute it to the less fortunate.

The extent of this egalitarianisation does have a limit though. Money may make people mean, but taking away all inequality will take away all incentves for people to do their best. Luckily we are all wired is way that something in us wants to do better than our neightbour. If that 'doing better' will not be translated anymore by money, people will start to dustinguish themsleves to the more powerfull in a different way, creating the crony, corrupt and kleptocratic systems we have seen in history so often and still see.

So there will need to remain a link between risk and reward. People who will use their talents and take risk will be better off than people who choose not to do that. Taking that incentive away is recepie for disaster.

But we are a greedy selfesh bunch and I believe that we want more all the time. When the bankers got bonusses of 1mln per year and they saw their peers got 2mln, they felt fucked over, when Chaves had done its 8 years of dictorial socialism he changed the law to be able to stay in power longer, putin will not stop stealing land after the Crimea invasion. If we think we can get something we want it and will take it and our brains will tell us it is our right to have it and that our cleverness got us there. Because our brain is wired this way we survived for so long and are now the most powerfull species on the planet.

So because we can't help ourselves we need some help. We need the governement to take away some of our income and capital and give it to the weak abd unfortunate. The governement needs to ensure the weak are protected by a propperly functuning legal system. They need to ensure all have access to propper education and healthcare. They need ensure governance of markets is healthy including transparency, sound supervision of law abiding business and force excesses out of the system by laws (for example cap bonusses).

Its not just governement though trying to cap our animal instincts. It should also be us customers influencing the good in the world by making the right choises. Our brains have a limit overseeing the consequences of the decisions we make, and if we are aware of the consequenses we rarerly rationally weight them. That is not because we are inherently unethical selfish or lazy, it is just bounded rationality. So each time we make a decision we should be reminded of the consequences. If we buy clothes we can include the condition of the Bengal laborer in our decision, if we buy meat we know how the cow had lived and how he was slaughtered, if we buy cigaretes it should show dying people to remind us we are killing ourselves, if we go fuel up our car at Shell we should have to do that standing in 1 meter of water reminding us about the global warming consequences. We humans just need to be helped sometimes a bit in our decisions. Read 'nudge'. Increasing transparency in markets and products will hugely help.

We are not bad people, we sometimes just do bad things. The systems around us can curb that for the better.


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