| sc94597 said: That is all good and all, but when you suggest two political-economies can't be compared, especially on basic, generalized macroeconomic metrics like income distributions typically you have to consider a reason why they can't be compared. Why are we able to compare New York (or the U.S) to Finland (and yes we do make these comparisons all the time) on say education but not to Alaska or Utah on income distribution? Alaska isn't more egalitarian because rich people don't want to live there. It is famously a getaway for a specific type of rich person. You could argue poor people don't want to live there, but again there are plenty of poor people too who have lived there for generations. Or on the other-hand, it could be that things like the Alaska permanent fund, and other social ownership policies (largely relating to natural resources) do have an effect on income distributions. In the case of Utah, there is a de-facto two-layer welfare state in the form of the actual state insurances + mormon church, and for years they had a housing first policy for houselessness. And yes, maxing out equality at any other cost isn't a good idea, but: 1. Other developed countries (and states) have shown us that you can be a lot more equal than New York and California are and still have high GDPs/HDIs and better off working classes. This includes states and cou tries with a variety of economies, natural resources, and populations. 2. The Democratic Party is ostensibly the party that argues for egalitarianism and egalitarian income/wealth policies. 3. Your point that these can still be good places for the poor to live despite the high level of inequality has fewer exemplars and I am not convinced that the working class is better off in New York, as an example, than neighboring states that are less unequal. Often this is directly because of policy too. As an example, New York has had a famously anemic unemployment insurance benefit compared to its neighbors , despite having areas with a much, much higher cost of living.* Why is the maximum benefit in New York less than that in Rhode Island and Pennsylvania? Why is California's less than that found in Wyoming, Kentucky, and Texas? The actual answer to all of this is that California and New York have historically been economically conservative states compared to many other states (all but the deep south really.). When the GOP shifted to a hard cultural conservative stance over the 80's-00's these states also shifted more heavily Democratic, but many of their conservative economic policies weren't changed as Democrats shared fiscal conservatives with the GOP. The fiscal conservatives in the Democratic party undermine the more active, change-oriented parts of that party limiting what economic issues can be addressed and how. *I noticed this when my father was getting a (slightly) smaller unemployment benefit in New York than I was in Pennsylvania during Covid, despite him making 1.5 as much (before becoming unemployed) as I did at the time, meanwhile his cost of living was double.
Edit: Just looked the 2024 number up, Pennsylvania's max unemployment benefit is $604 per week vs. New York's of $504 per week and California's of $450 per week. |
Well, I think there are also serious drawbacks to comparing the education systems between NY and Finland haha
Again, I feel like you can just look at the two states (NY and Alaska) and see the significant differences, but I'll try to break it down a bit more. I would describe an economy here as being certain central industries and the more ubiquitous ones that rise up around them. For example, I grew up in a Fishing town, so Fishing would be the central industry, but of course you still had the ubiquitous restaurants, grocery stores, drug stores, etc. I think those pillars of the economy define a lot about the shape of that economy and the pillars of each of these states are very different.
Pillars of NY's Economy: Finance, Health Care, Technology, Real Estate.
Pillars of Alaska's Economy: Mining, Oil and Gas, Fishing.
So, what does this mean for each of these economies? NY is largely based around "high-skill" jobs which inherently puts a large gap between those workers and the individuals working the more ubiquitous support positions. Alaska on the other hand, tends to be built around more labor heavy jobs which require a lot less education but still command solid compensation (though not to the level of a lot of a lot of New York jobs). This doesn't really leave those who aren't working those positions behind, while also allowing those without significant schooling to acquire solid wages. This can be seen if you look at the Mean income in the wealthies tax brackets in each state. NY sees far higher mean incomes, upwards of $500k, while AK doesn't crack $200k. I see this as a consequence of the different stuctures of these economies moreso than, say, tax codes. High Skill economies put a wider gap between those who are involved in those pillar industries and those in the support industries than labor economies.
While you can certainly criticize either economy for a variety of reasons, I don't think avoiding high-skill economies is a solution to the problems areas like NY are facing (which is what I was saying earlier, where I think the "solution" needs to exist in the context of the reality of the economy and not ask for a restructuring of these economies from high-skill to labor (although labor does play a part in all economies)).
I also wanted to circle back a bit to what I was saying earlier: "As for Gini index, I feel that just that graph demonstrates some pretty substantial limitations. States which are more financially developed will naturally have more inequality as there will be a higher percentage of high earners and their economies will be more dependent on those high earners. "
I said this largely because it felt like common sense. You posted some data indicating that it was not correct, which I've been struggling to entirely square as it feels somewhat counter-intuitive. While writing this post, I found a couple sources echoing my original thoughts (to a degree) so I dug a bit further and this is what I found:
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Why Are Some Places So Much More Unequal Than Others? - FEDERAL RESERVE BANK of NEW YORK "The most unequal places tend to be large urban areas that have benefited from strong demand for skill and agglomeration economies, with these factors leading to particularly rapid wage growth for high-skilled workers. The least unequal places tend to have seen weak demand for labor, largely as a consequence of technological change and globalization, and this weakness has led to lackluster wage growth across the entire wage distribution— particularly for middle- and lower-skilled workers. These findings suggest that a relatively low level of regional wage inequality is often the result of a weakening local economy, while relatively high regional wage inequality is often a consequence of strong but uneven economic growth." "Wage inequality has increased significantly in the United States since the early 1980s. This trend has been driven primarily by technological change and globalization, which have resulted in strong demand and wage growth for those at the top of the wage distribution and more muted wage growth for workers toward the middle and bottom. Importantly, the economic effects of technological change and globalization have been geographically concentrated. In some places, the demand for skill has been robust, leading to strong wage growth for top earners. In other, often distinct places, technological change and globalization have displaced workers and depressed wage growth for many middle- and lower-skilled workers. As a result, some places are much more unequal than others." " Increases in the demand for high-skilled workers have been most pronounced in large and dense urban areas, such as San Francisco and New York City, while decreases in demand for lesser-skilled workers have been concentrated in other places, such as Detroit and much of upstate New York. The places where demand for skill has been strongest tend to be large urban areas with agglomeration economies and appeal for skilled workers. At the other end of the spectrum, many of the least unequal places in the country have struggled with weak economic conditions, resulting in sluggish demand for workers, particularly in regions where manufacturing jobs have plummeted over the past three decades. This weak demand has led to more subdued wage growth for workers toward the upper portions of the wage distribution, coupled with either a modest increase or a decrease in wages for those toward the middle and bottom of the wage distribution." |
| Does Financial Development Affect Income Inequality in the U.S. States? "We find robust results whereby financial development linearly increases income inequality for the 50 states." " For above-average inequality states, income inequality decreases up to a threshold level of financial development. After the threshold level, a growing financial sector increases income inequality at an increasing rate. For below-average inequality states, a growing financial sector increases income inequality at a slower rate until financial development reaches its threshold level. Once financial development passes its threshold level, income inequality begins to fall. " |
I'd also just like to reiterate, I agree with a lot of what you are saying so if I didn't address something you said, it's probably because I agree. I think being "less inequal than we currently are" is generally a good goal. I think if New York reduced inequality, it would probably be a good thing (assuming it didn't do so by weakening it's economy). But, I think there are serious drawbacks to comparing different areas, as contexts play a huge role in these figures and the reasons inequality may be higher or lower in one area may not be able to be extrapolated out to other areas. For example, we talk about New York a lot, but it's worth noting that Gini varies wildly across the state even though they deal with a lot of the same state level policies you are talking about, because of how the economies in different geographical regions are made up.
Last edited by sundin13 - 1 day ago
