Hello all,
Sorry to bombard you with my emails. Fell behind on this site and so I'm
responding piecemeal as I read. But what follows is an email that I started
and then saved unfinished sometime last week, which was a mistake because
that thread's been lost. But let me pick it up again because this discussion
is far from over (dittoing Michelle's sentiments ... hey, all the best on
finishing up your diss!).
For starters, here's an article I found on the web (and that I comment on
below) written by some law profs that addresses the CEO salary issue very
convincingly, I think, and flies directly in the face of Graham's notion
that the "system" rewards the most skilled.
http://www.law.stanford.edu/publications/stanford_lawyer/issues/72/CEO...
html
And here's a news article that cites an economists, of all people, who sees
a danger in the growing disparity between rich and poor
http://www.iht.com/articles/2007/03/29/business/income.4.php
And here my old email....
Hi Franz, Michelle, and all,
I've been meaning to jump (back) into this discussion too for some time now,
but you "guys" (meaning the male econ faction) are hard to keep up with.
Much of it is difficult stuff to follow and digest, let alone to take to
task.
To comment on Franz's remark about Cubans' good health but lack of
happiness: from everyone I have talked to who has visited Cuba, the people
there are quite happy. They (those who visited Cuba, like colleagues of mine
in the Spanish dept) were surprised to see this, considering our perception
that everyone is trying so desperately to flee the country. Seems that only
a small percentage feels that only in a capitalistic, free market economy
can they pursue happiness.
But then again, I've been to Mexico, and the people there appear happy as
well, though I'll admit that I came back thinking "nice place to visit, but
I certainly wouldn't want to live there." Why -- because of all the poverty
you see around you, surrounding the oases of plush resorts for the "rich"
(very relative term here) Americans. That you won't see in Cuba, so I think
I'd probably come back from there not as saddened as by what I saw in
Mexico. In fact, that's precisely what I heard – one doesn't see any abject
poverty in Cuba like you see in other 3rd world countries.
So I'm tempted to apply the research that Michelle cites (great stuff,
Michelle -- great response) to the global economy, meaning that we would do
well to work to close the huge global gap between rich and poor for the very
same reasons (e.g. overall health). In fact, that's probably why Bush is
pouring billions (3 billion is the figure I remember) into curing (i.e.
containing) AIDS in Africa. He was probably made to realize that it's in the
interest of our own health as well. Actually, that's been so obvious all
along it goes without saying, but all the more reason to fight for global
equality across the board and not just specifically targeting health
epidemics.
So Danny, this fits in quite well with our phone conversation/debate, namely
the "desert island" scenario and your argument that free-market economic
principles would work there as well, meaning they would intuitively stratify
those who offer the most to the overall well-being (or what you guys call
utility) of the community from those who offer the least -- and that this
"utility" stratification would be reflected in our current global society at
large. NO WAY, I countered!! ( didn't you say you would reconsider your
entire position if you couldn't make it work for the "desert island"
model?). And here's an good article written by some top-notch law profs
whose research proves this theory wrong, i.e., that laissez-faire market
forces will NOT determine the most gifted and qualified, meaning those who
rise to the top are anything but the most competent and deserving:
http://www.law.stanford.edu/publications/stanford_lawyer/issues/72/CEO...
html
It's about the argument we were having regarding the astronomically high
CEO salaries -- I remember you saying that no economist you know of would
criticize this since it goes totally against conventional economic wisdom.
Well, granted that these aren't economists, but what their research shows is
that the bigger the company, the less competent the CEO. (Following their
research, no wonder someone like Bush ends up as pres. of the biggest, most
powerful country in the world).
Bottom line: the bigger-is-better "merger" principle of global economics
does not hold up if you go by their research. So back to the desert island:
yes, the most qualified would rise to the top given the small size of the
community, but there the "white collar" brains vs. the "blue-collar" brawn
model would most likely be reversed, or at least be equalized in a way that
does not reflect the huge disparity that now exists between these two basic
groups of labor, especially when viewed in global terms. Example: You'd be
paying someone lots and lots of yootles to dig a well for you, huh!!
So Danny, the challenge is on: make your model work for the desert island
scenario!
Trixie
P.S. Just writing this makes me feel like I'm improving the world!! (meant
with a strong dash of irony, of course)
>From: "Franz Marschall"
>To: "Michelle Sternthal" ,"Daniel Reeves"
>
>CC: "James W Mickens" ,"Dave Morris"
> , ,"Steven Reeves"
> , ,
>Subject: Re: mind the gap
>Date: Sun, 2 Sep 2007 13:58:52 +0200
>
>Great text!
>This puts a completly new view to the subject. If the research data is
>real, I am convinced that too much inequality is bad for all. What can be
>more important than having a long and healthy live. The problem seems to be
>the proper balance. In Cuba, the health situation seems to be fairly good.
>But how important is the happiness?
>
>Franz,
>the darwinistic environmentalist
> ----- Original Message -----
> From: Michelle Sternthal
> To: Daniel Reeves
> Cc: James W Mickens ; Dave Morris ; improvetheworld Æ umich.edu ;
Steven
>Reeves ; reeves-hayos Æ umich.edu ; reeves-kalkman Æ umich.edu
> Sent: Saturday, September 01, 2007 4:11 PM
> Subject: Re: mind the gap
>
>
> I have remained silent for too long! I have to admit, that as a
> sociologist, the notion that income inequality is good for society
> is anathema to our discipline (which is probably one reason
> sociologists and economists have a noted rivalry).
>
> But putting intellectual/philosophical disagreements aside, from a
> purely rhetorical/debate perspective, I have been somewhat frustrated
> by the notable absence of empirical evidence used to back up the
> arguments that income equality is good for society or at least
> "fair." Since we are loyal positivists who embrace the scientific
> method, allow me to introduce some research on the matter.
>
> Since my area of interest, forgive me if I focus on the health
> effects of income inequality. A question which has preoccupied
> health researchers/sociologists, and even health economists is
> whether, indeed, the growing gap between the rich and poor is good
> for a society's health (let's use mortality, a nice objective
> indicator. Dying young is less good than dying old, all else being
> equal).
>
> There are reasons to believe that income inequality hurts everyone,
> even those not on the bottom. Let's assume two states have the same
> average income-- $50,000. In one state, the distribution is pretty
> wide, so there are people really poor and people really rich; in
> another, the distribution hovers around the $50,000 mark. Which
> state would we want to live in, from a health perspective at least?
> Research suggests that it would SUCK to live in the first for a
> couple of reasons. First off, in an unequal society, you are much
> more likely to be in the bottom than on the top, and being poor is a
> well-established cause of bad health. Second, David Marmot, an
> epidemiologist, has argued that simply being in a stratified society
> can harm health. A twenty-five-year follow-up from the Whitehall
> study found that the higher the position in the occupational
> hierarchy in Britain, the lower the mortality rate from all causes,
> from coronary heart disease, and from a range of diseases not related
> to smoking Note that NONE of these men was poor in any usual sense
> of that word. They were all in stable, office-based employment in and
> around Whitehall, London. (Marmot, "Inequalities in Health," New
> England Journal of Medicine (12 July 2001): 134–136). Here, relative
> income deprivation mattered more than absolute.
>
> But even beyond that, it seems that a society with large income
> inequality hurts those at the top. One of the more famous studies,
> by George Kaplan of U. of Michigan and colleagues (1996) examined
> income inequality among the 50 states. Kaplan et al. showed that
> that income share held by the least well-off 50 percent of the
> population in each state was strongly correlated with the state's
> mortality in 1990 (r=-.62, p not affected by median state income, was
consistent across age
> groups, and ALL income brackets. Moreover, areas with high income
> inequality have not only high mortality but high crime rates,
> especially of homicide. Such factors can affect everyone, not just
> the poorest ( M. Wilson and M. Daly, "Life Expectancy, Economic
> Inequality, Homicide, and Reproductive Timing in Chicago
> Neighbourhoods," British Medical Journal (26 April 1997): 1271–1274). T
>
> But even assuming that the "utility" gained in terms of health for
> rich people was unaffected by the distribution of income, it may
> still make "economic" sense to have a less unequal society. It may
> be more efficient and maximizing everyone's utility. Angus Deaton,
> a British health economist, has shown that there is a nonlinear
> increase in probability of dying with decreasing income (Deaton,
> "Health Inequality and Economic Development",Working paper, Princeton
> University Research Program in Development Studies and Center for
> Health and Wellbeing, 2001). Meaning, that if, at low levels of GNP,
> a small increase corresponds to a large increase in longevity, then
> taking some money from rich people will have less effect on their
> mortality than giving the same money to the poor will affect theirs.
> Therefore, other things being equal, a population with more
> egalitarian distribution of income will have better health than
> another with the same average income but greater income inequality.
>
>
> Here are some other articles attached for more discussion on the matter.
>
> --Michelle
>
>
>
>
>------------------------------------------------------------------------------
>
>
>
> > I have to respond to your yootles critique first!
> > Our aim is both to decrease to next to nothing the overhead of
> > applying more formal mechanisms to decision-making (and more
> > recently, prediction and prediction+decisions) as well as convince
> > you there's plenty to be gained. Bethany and I yootle every day
> > for every little (and big) thing imaginable. (Being both
> > indecisive types it often saves us a ton of time.) Granted, we're
> > gigantic dorks and no one else cares yet.
> >
> > I'm of course not done defending my boyfriend Paul either. More on
> > that later.
> >
> > But I'm actually delighted that we're making real progress on
> > circumscribing the disagreement while identifying common ground
> > (eg, Graham is at least right in some other fantasy universe;
> > Trixie won't like that concession at all! and of course I conceded
> > on slavery and may do so on health care, where basic human rights
> > are at stake.. although Kevin may set you straight on the
> > healthcare issue!).
> >
> >
> > --- \/ FROM James W Mickens AT 07.08.31 22:21 (Yesterday) \/ ---
> >
> >>> You're characterizing our disagreement as hinging on whether public
> >>> policy should optimize economics subject to moral constraints or
> >>> optimize morality subject to economic constraints. I'm unclear
> >>> on what
> >>> either of those really mean for public policy.
> >>
> >>
> >> There's a difference in the intent of your policy and the methods
> >> that you will use to evaluate it. For example, suppose that you've
> >> devised a new tax code for an underdeveloped country. When you
> >> evaluate its success, will you look at how much additional wealth
> >> it generated, or some actual measure of utility such as the
> >> percentage of citizens who have access to electricity or clean
> >> water? I use the term "actual measure of utility" because I think
> >> that just examining, say, the increase in GDP is a bad way to
> >> measure net social welfare. The net wealth of a society is, at
> >> best, an indirect measure of its net welfare because aggregate
> >> wealth trends tell us nothing about the *distribution* of wealth
> >> or whether that wealth is being used to satisfy some particular
> >> goal. The classic example is health care. Despite rising levels of
> >> aggregate wealth in America, many *individual* Americans have poor
> >> health and inadequate access to proper medical care. Is the
> >> solution to this problem the creation of even more wealth in the
> >> hope that the health care industry will spontaneously reorganize?
> >> Or is the solution a targeted policy, whether it be nationalized
> >> health care, better health education in schools, and/or something
> >> else? I argue that the latter approach would be better,
> >> particularly since the market has thus far been ineffective in
> >> addressing this issue.
> >>
> >> The failure of wealth-driven policies is even more obvious in the
> >> international pharmaceutical market, where drug companies develop
> >> medicines for diseases that affluent people care about (e.g.,
> >> restless leg syndrome, diabetes) and ignore a huge number of
> >> illnesses (e.g., diarrheal diseases) that affect a much larger
> >> number of people who have much less money. People who care about
> >> net welfare should find this problematic. So, in the international
> >> drug market, should we pursue wealth-driven or morality-driven
> >> policies? In other words, should we allow drug companies to
> >> maximize their profits and hope that they'll turn a charitable eye
> >> towards the developing world, or should we force them through
> >> regulation, subsidies, tax credits, etc., to address the needs of
> >> poorer countries? History suggests that the former strategy will
> >> fail if you're trying to optimize for health and not profit.
> >>
> >> I understand that it is extremely expensive to develop new drugs
> >> and that pharmaceutical companies must be given a way to recoup
> >> these costs. However, it's obvious that a market system which
> >> focuses on maximizing their profits will not lead to a net
> >> increase in global health (an important utility metric).
> >>
> >>
> >>
> >>> Let me first defend Graham's point. He concedes whole classes of
> >>> exceptions and I think social injustices are included, if not
> >>> explicitly. His argument -- that income inequality is not,
> >>> inherently, unjust -- remains intact.
> >>
> >> Once again, I'm claiming that economic justness does not equal
> >> moral justness. When you say that income inequality is "not
> >> inherently unjust," you should specify whether you refer to the
> >> economic definition, the moral definition, or both.
> >>
> >> If Graham includes social injustice in his exceptions list, then I
> >> suppose that he and I are in agreement. But if Graham believes in
> >> the entrenched, pervasive nature of social injustice, why does he
> >> spend so much time waxing poetic about the inherent fairness of
> >> economic inequality? This fairness only exists in an idealized
> >> model of the economy which bears little resemblance to the real
> >> one. The fact that Graham spends most of his time talking about
> >> this idealized world suggests that either a) he is a hopeless
> >> utopian, or b) he does not, in fact, believe that social injustice
> >> is entrenched and pervasive ;-).
> >>
> >> ~j
> >>
> >>
> >> p.s.
> >>
> >>> And just to nip a potential subthread: the non-mathematically
> >>> inclined are not allowed to blithely declare human motivation to
> >>> be irreducible to mathematics.
> >>
> >> Ah, but I claim that the mathematically inclined are not allowed
> >> to blithely declare that human motivation *is* reducible to
> >> mathematics ;-). The reason that I do not use yootles to determine
> >> who will pick me up from the airport is that, in the common case,
> >> this decision is not subject to rigorous mathematical or economic
> >> constraints, nor should it be. In many scenarios, I only care
> >> about approximate notions of fairness. I suppose that if gasoline
> >> were $27,000 a gallon, it might be reasonable to employ a strong
> >> mathematical framework to prevent tragedy (e.g., "Oh no, Todd has
> >> taken me to the airport fifteen times but I haven't taken him at
> >> all. Todd has now spent $405,000 on gas while I have escaped scot-
> >> free."). Absent such extreme conditions, the introduction of
> >> mathematics into simple human transactions will often just add
> >> overhead and produce little tangible benefit.
> >>
> >> It is frequently possible and fruitful to analyze people's
> >> behavior using mathematical models. However, that doesn't mean
> >> that the underlying psychology of the individual is actually
> >> driven by these models, or that giving the math to people will
> >> make it easier for them to manage their lives.
> >>
> >
> > --
> > http://ai.eecs.umich.edu/people/dreeves - - search://"Daniel Reeves"
> >
> > Dilbert: "...and we'll buy a dozen of these. We're trying to
> > spend our budget so it doesn't get cut next year."
> > Salesperson: "This is great! You guys are so dumb that I don't even
> > have to use my fake personality to make the sale!"
> >
> >
> >
>
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