Are Democracy and economic equality fundamentally incompatible?

[Mr Khan]

SamuelRSmith said:

BMaker11 said:
I don't think economic equality is achievable, period, in a capitalistic society. The largest thing I took from my senior Econ class (don't make fun of it! I did go on to go to Purdue) was that in order for there to be rich people, there must be poor people.

I've heard conservative pundits say "see, they think that if I make $100, that's $100 they can't get. But in actuality, we want to increase the amount of money for everyone". But that can't ever happen. Money is finite. There has to be, and will be, a difference in income in people. Because consumers control prices. Even if we all made the same amount of money, if I want an item more than the next guy, I'll pay more, meaning the supplier will have more money than he "should". That simple concept will eventually make a gap in income.

Not to mention that the moment everyone starts making even remotely similar wages across the board, there will be screams of socialism, and people will fall back on "why would I go through years of training to become a doctor when I can just work at McDonald's?"

This is false. Just about everything you said.

In a purely capitalistic system, there's only one way to make money: by trading something you have for it. How can there be losers in trade? If I thought I was going to get poorer through by trading something, I would never do it! When I go into a shop and buy X with $Y, I'm not $Y poorer, I'm X - $Y richer.

Value is subjective, everybody perceives things to be valued different things. This has to be true, or trade simply could not exist. When I buy a burger in McDonald's, it's because I value the burger more  than the money, and when McDonald's sells me the burger, it's because they value the money more than the burger.

Everybody wins in trade, everybody gets richer, it's a win-win situation. There are no losers.

"Win" is a very relative term. People may make the "best" decision, but that is hardly a "win" in most cases, but rather the least painful loss: "become homeless or declare bankruptcy" is a choice that many might face as economic actors, and one can certainly make the rational decision, hedging homelessness against bankruptcy, but neither of those choices are a "win" in anyone's book. Monopolistic tendencies clean out the rest.

You can never assume perfect markets. It's pure theory like that which, ironically, corrupts the study of economics, because then people assume that these "textbook markets" are possible. Part of the reason why Macro should be taught in schools before Micro.