Tuesday, October 19, 2010

Income Gap : Too Big to Ignore....

The following is extracted from an article by Robert H. Frank [NYTImes - Income Gap : Too Big to Ignore] in the New York Times. He is working on a paper [working paper here] on the relationship between savings rate /expenditure and the income distribution..

In a recent working paper based on census data for the 100 most populous counties in the United States, Adam Seth Levine (a postdoctoral researcher in political science at Vanderbilt University), Oege Dijk (an economics Ph.D. student at the European University Institute) and I found that the counties where income inequality grew fastest also showed the biggest increases in symptoms of financial distress.

For example, even after controlling for other factors, these counties had the largest increases in bankruptcy filings.

Divorce rates are another reliable indicator of financial distress, as marriage counselors report that a high proportion of couples they see are experiencing significant financial problems. The counties with the biggest increases in inequality also reported the largest increases in divorce rates.

Another footprint of financial distress is long commute times, because families who are short on cash often try to make ends meet by moving to where housing is cheaper — in many cases, farther from work. The counties where long commute times had grown the most were again those with the largest increases in inequality.

The middle-class squeeze has also reduced voters’ willingness to support even basic public services. Rich and poor alike endure crumbling roads, weak bridges, an unreliable rail system, and cargo containers that enter our ports without scrutiny. And many Americans live in the shadow of poorly maintained dams that could collapse at any moment.

ECONOMISTS who say we should relegate questions about inequality to philosophers often advocate policies, like tax cuts for the wealthy, that increase inequality substantially. That greater inequality causes real harm is beyond doubt.

But are there offsetting benefits?

There is no persuasive evidence that greater inequality bolsters economic growth or enhances anyone’s well-being. Yes, the rich can now buy bigger mansions and host more expensive parties. But this appears to have made them no happier. And in our winner-take-all economy, one effect of the growing inequality has been to lure our most talented graduates to the largely unproductive chase for financial bonanzas on Wall Street.

In short, the economist’s cost-benefit approach — itself long an important arrow in the moral philosopher’s quiver — has much to say about the effects of rising inequality. We need not reach agreement on all philosophical principles of fairness to recognize that it has imposed considerable harm across the income scale without generating significant offsetting benefits.

No one dares to argue that rising inequality is required in the name of fairness. So maybe we should just agree that it’s a bad thing — and try to do something about it.

Robert and his co-authors were looking at income inequality in counties in the USA but his findings are all too familiar and the negative effects of the big income gap is similar to what we experience in Singapore....perhaps with greater severity because there is only one developed country with an income gap higher than that of USA....that country is Singapore. With the large income gap, we cannot get the "net happiness" SM Goh talks about in a recent speech...it will always be "net unhappiness" and govt policy can only try to reduce the unhappiness.

35 comments:

Anonymous said...

The Day of reckoning shall be soon!

Anonymous said...

The evidence of sufferings is everywhere.

Of course if people want to believe that it is not as bad as Sudan or Somali,that is their prerogative,but it is really unnecassary in our present stage of development.

MM Lky is scheduled to have THE audience with our creator pretty soon,I sincerely hope that he can reduce the unnecessary sufferings.

It is of course unkind of me to ask an aged and sick,weak oldman for this,but what to do?he is the one who matters and he wants it this way.

http://vonhayek.blogspot.com/ said...

The answer to your posting has become template for Straits Times over and over again. I think LKY and Kwa Geok Choo (she was speculated to be an acrimonious bitch) , must have invented some of them. Else SPH would not let this shit appears more than 100001 times.

//////////////////////////////
Champion grumbler, you loser dares to blame everything one PAP. the best garment in the world.

Don't blame the government if you are poor and unsuccessful, the government is there to provide equal opportunities. You want government to make you rich when you are a useless person?

Blame that you are stupid or lazy or not motivated. If you do not like, just migrate.

1st class government, 3rd class people, get away from my elite face.

Anonymous said...

Of course,that elite guy can't be respresentative of PAP who are high I.Q.people and who clearly know well that their main problem is
that they have created the most incohesive people in the world,
that they hv educated well generations but who are w/o wisdom,and we are supposed to be marching smartly lumber sato in the world of 6 billions


Being not in fvour of PAP pwsonally ,I love that elite guy way of talking,what you feel when you see some really stupd guy declaring himself to be the brightest in the world.

But alas,PAP ministers are really not that stupid,in fact,their biggest strength is the strong ability to wayang,and by this they have managed so far so good.I think.

Anonymous said...

Whoever says PAP or MIW are not clever must be a goodu. You should know it takes super intelligent people to scheme. Can anyone beats them in scheming? And they scheme in pack, mind you.

TokyoSingaporean said...

The day to stay in one apartment in this lifetime in Singapore is gone. One would be moving up and about to hope to cash in on a dry CPF account that has been consumed over a 20-30 year loan during your productive years.

The lack of funds for a humanely decent retirement has been the result of a misprojection and ineefective management of the country's investments and resources.

We need to create an active civil society. We are also in need of a different economic policy and course. We need a leader who has the heart and mind for Singaporeans, and humanity at large. We are not seeing examplary leadership with this present administration. We lack heroes in this country.

The level of communication that is pegged in Straits Times is distasteful. I stopped reading ST as I did not like the soft poison and bullshit that they spin. They lack clarity and critical perspectives, annd the quality of English is also poor.

The fundamental problem is the imperfections that exist in the capitalistic model. It seems that we have to plan our lives ahead of the government's own policies and make our own projections and studies, else we will be misled by the mispolicies purported by the administration.

Gone are the days where one can trust the government to take care of its people's welfare. We don't have such leaders leading us. And reality is asserting itself on us each day.

Anonymous said...

Our hope lies in the next generation or a few generation down the road. But we are not generating enough babies. We need to build more love hotels,invest in porn industry, to encourage a sexual revolution that will replenish our earth.
Out of some these illegitimate births, we may find a new rebel leadership that will fuck all these nerds from their political office.

Anonymous said...

Rising inequality is needed for a bigger economic pie, for individuals to excel.

If u do not want inequality, u should not have sports competition where there is 1st place, 2nd place....10th place etc.

What u are advocating seems similar to Marxism.

Anonymous said...

told u he is a leftist.lol

According to leftists, a society without substantial equality will distort the development of not only deprived persons, but also those whose privileges undermine their motivation and sense of social responsibility. This suppression of human development, together with the resentment and conflict engendered by sharp class distinctions, will ultimately reduce the efficiency of the economy.

Anonymous said...

as usual, arguments have come down to extremes, viz how can one have no income gap. the topic is really about REDUCING the income gap. it is NOT about having NO income gap.

the arguments in favour of a LARGE income gap raise one question: How on earth did we get as far as we have economically and in other ways with a MUCH SMALLER income gap?

Anonymous said...

HaHa,in fact all learn fr LKY.

If so and so,whatever,meaning if u do not let me(LKY),and my future generations to be in power,yr girl friends and sisters,mothers would all become maids in other countries.

Remember,sure do!

Anonymous said...

Who would want maid that cannot cook, wash and take care of baby?
When shit hits the fan, Singapore ladyfolks can be social escort, massage specialist and the older ones ply the coffee shops and eateries for ah pehs and lao ti koes with some cpf left.

Anonymous said...

"told u he is a leftist.lol"



as opposed to the rightists in white who are mere stooges of western colonialists? lol

Anonymous said...

Yes, it's happening in china now which happiness rate keep falling when the inflation when up. Below is the HPI ranking and look at where singapore rank.

http://en.wikipedia.org/wiki/Happy_Planet_Index

Anonymous said...

"Income Gap : Too Big to Ignore...."

But in Singapore they can continue to ignore what!

Or else how come it become worse each year.

But nothing happened, right?

And most likely nothing will happen, right?

Hence most important is to ensure nothing happens.

Then not only income gap, but any type of gap also OK.

Hang Seng Parasite said...

Say what you may about problems that is far from being manifested. Singaporeans have everything to lose for. When they have nothing, than i will believe and regret that the policies that had brought us to this path is one that is regrettable.

Otherwise, the current system that advocate low taxes and minimal welfare is one that provide push factor for ecnomic progress. Lets all who have cash, make hay!

Anonymous said...

Who in the pap dare to move when LKY said that income disparity is not important. Even his son LHL the PM has to echo him. LKY's attitude on this subject has to some extent been entrenched in the Singapore system. The only way Singaporeans can force a change here is by drastically cutting down on their support for the pap.

TokyoSingaporean said...

To what extent is a human life valuable? Is a Bangladeshi life lesser than a Singaporean one? Is a Chinaman life more valuable than a Singaporean's? Until we start to see that we don't need to kill 200 000 students to save the future of China, we can then move beyond the immature confines of talking about competition and begin talking about cooperation instead. Competition is tearing Earth apart. And Mother Earth is telling us that supposedly meritocratic ideal couple with competiion -blind or otherwise - is not working. The future of humanity lies in cooperation and understanding what it means to be a human being for a few decades on earth. No one remembers politicians, they make a living through crafting. But everyone remembers a Jesus, a Christ, a Buddha or a Mohamed.

Whatever happened to sportmanship? Playing to win and outdo someone is an ego trip. Competition only seeks to strengthen one's face and status. Cooperation is more mature for it recognizes the need to care for society. Competition is a selfish pursuit, be it individually or in groups. Being cooperative is being realistic. As much as it is a dog eat dog world, I'm sure we all do not want to live in such a world. And that choice always remain open to every generation to push the envelope.

By the way, the presence of the porn industry and love hotels did increase the birth rates in Japan. It decreased it instead. Men and women could now satisfy their desires without marriage in Japan. So there is no incentive to get married in Tokyo except to keep up with appearances for the ladies. Many young japanese ladies still do want to be mothers. But the men are not marrying. This is by far no the final word on the issue.

Sorry to write so long... I had some spare time this morning.

Cheers!

Anonymous said...

It is kind of ironical to read some of the posters messages above...

There is a very hostile universe out there which can't wait to make man-kind extinct...

At the rate the supposed "elite" or "uppity class" or "the special self serving few" continues to think and make policies of a dog eat dog world and ensuring the advantages still remains with them...the hostile universe has now additional "free and self idiotic help" in assisting the demise of man-kind faster and really ridiciously easier...

It is a pity future genrations of kids/grandchildren 10 - 30 years from now can only curse the past generations for creating and contributing to the the conditions in that very real future hell-hole called earth they will be living in...with dimishing resources...droughts...withering heat...lack of portable water/un-contaminated food...etc

And all their grandparents/greatgrandparents pleas of sorries, forgiveness and regrets are far too late...no matter how sincere or heart-rending it is...much much too late...

Too bad...mankind can be so much more...but because of the self serving "few" & the self serving politicos/super-rich with 'em...which due to their "intellect" would be the major contributor to its fall...

Another cycle...another historical footnote in the passages of time.

So many past historical precendents of this...human nature at its worst again.

1 more "intelligent" race to add to the bag by a "hostile" universe which is imicable to all intelligent life everywhere and everywhen.

Anonymous said...

Since the beginning of time, a Chinaman's life has never been valuable.

Every great monument in China was built at great expense of human life, slave or conscript labour. Chinese rulers, ancient and modern, raise huge armies and have no qualms sending them to their deaths.
Slaughtering entire clans is a routine purge for most Chinese rulers.

Even in today's marketplace, Chinese food producers have no qualms poisoning hundreds of thousands of babies just to make a few extra bucks.

Safe precaution in mines also rank poorly.

Respect for human rights, rule of law, has never been a core point in any part of Chinese history. They are all more concerned with stability, status quo and obedience to the state.

You will always be asked to sacrifice yourself for the motherland. But when your family is hungry and desperate, the same motherland will turn her back on you and tell you to go fend for yourself.

And it is sad we are importing such values into our own Singaporean society; deliberately witholding the pay of low-income workers, making them work in dangerous conditions with little safety precaution, deliberately making them live in cramp and dirty conditions while we can splurge tens of thousands on our personal home renovations.

Our problems are here to stay because they are so pervasive in our society.

Anonymous said...

Seems like we are walking on Uncle Sam footprints? Soon we will be choked with some bad wind!

Anonymous said...

'Too big to ignore' eh !

What can Sinkapooreans do ?

If the Leaders want to fix You,

Sinkapooreans lan lan will have
to swallow it man !

What will You answer if they ask You what You want ?

Anonymous said...

12.24,excellent point,I have been thinking too.
Look and check around,it is indeed the case,compared to unlucky tribes,such as Pinos and Burmeses,we surely will agree with yr point.
So it may not only be LKY!although I totally dislike him,tell you frabkly Ah Bei is not a very nice man,but he is much better than LKY,if we compare their values to Chinese race,in operhaps 30 years time.President Ma would be a big hero!He thinks very far,beyound his generation.

LKY,he thinks only up to 20 years ago,a historan by DNA composition.

Anonymous said...

@TokyoSingaporean

"Many young japanese ladies still do want to be mothers. But the men are not marrying. This is by far no the final word on the issue."

The reasons why is here....

In Japan, these trends began after the unprecedented bubbles in Japan's real estate and stock markets popped in 1990. Now, a third of jobs that are available are free-lance/contract or other temp jobs, or part-time positions that pay one-third of typical corporate salaries.

Lacking sufficient income to be independent, young people are moving back home or staying at home because that is the only financial option open to them. In bonding themselves to the security of their parents, they enter a state of permanent adolescence in which marriage, having children, and making long-term plans have no place.

Beneath the bright lights of Tokyo and the evident wealth generated by decades of hard work and the massive global export machine of "Japan, Inc." lies a different reality: increasing poverty and decreasing opportunity for the nation's youth.

The gap between extremes of income at the top and bottom of society—measured by the Gini coefficient -- has been growing in Japan for years; to the surprise of many outsiders, once-egalitarian Japan is becoming a nation of haves and have-nots.

More of the same can be viewed at http://www.chrismartenson.com/blog/guest-post-when-economic-recessions-become-social-recessions/43734

Anonymous said...

Add salt to injuries.
People with so many papers & qualifications still cannot find a proper job (just bec they are a bit older like 40+), now blame people for not "upgrading"??

Anonymous said...

Those Singaporeans who blindly went for 'upgradings' in whatever as exhorted by the leaders should blame themselves for wasting their time and money.
As they were/are blindly following hollow wisdoms of the so-called 'talented' leaders or some called deaf frogs.
Yes, plenty of innocent and naive tadpoles around.

Anonymous said...

the tadpoles should leave the deaf frogs to themselves and look for new places to survive and flourish. never ever be goaded by deaf frogs.

Anonymous said...

How to help a "scholar" with masters or otherwise impressive academic records to be UPGRADEd to a "cleaner" or "security guard"?

Anonymous said...

How about those that need not upgrade anything except their remunerations yearly and are paid or going to be paid for life without having to work ?
May their successors fight among themselves to hell for the fortunes and assets of these Sinners.

Anonymous said...

/Anonymous said...19/10/10 14:27
This suppression of human development, together with the resentment and conflict engendered by sharp class distinctions, will ultimately reduce the efficiency of the economy./

while true. who gets to produce (brick-n-mortar work or services if there is such a thing) and who gets to bet n sometimes lost big time.

Anonymous said...

I wonder the video below discuss on Taiwan or Singapore.
Can someone kindly help me.

http://www.youtube.com/watch?v=VnDQb8fOhVs

http://www.youtube.com/watch?v=PxMuAcBJUek

http://www.youtube.com/watch?v=9MkW-2J1yPw

http://www.youtube.com/watch?v=VdMwUSZ1aSw

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Lipton said...

"An imbalance between rich and poor is the oldest and most fatal ailment of all republics"
Plutarch

Anonymous said...

"There is only one developed country with an income gap higher than that of USA....that country is Singapore".

Spore number 1 again!!!???

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