Inequality: Brown University Janus Forum

Brown University Janus Forum Lecture: Inequality: Is America Becoming a Two-Tiered Society?

N. Gregory Mankiw and J. Bradford DeLong

Faculty Club at Brown University :: 5:30 PM - 8:00 PM :: October 17, 2016

My Presentation:

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Since the Invention of Agriculture

Inequality has ruled since shortly after the invention of agriculture.

Once people began to farm, they become relatively stationary. This opened up the possibility of relatively dense populations. And so society changes. First, there are much denser populations: hunter-gatherers appear to have a population density of perhaps 5 people per square mile [(Hamilton et al. (2007))][]. This then brings larger social groups: bigger and then much bigger than the hundred-or-so maximum of the previous hunter gatherer era.

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More important than density, perhaps, is the fact that agriculturalists cannot carry their resources away with them. Their wealth is in their land and the crops they are growing, rather than in their heads and in the tools they carry. Thus farmers cannot run away when thugs with spears show up and demand half their crop. And, of course, once they have half your crop on which to live, the thugs-with-spears can professionalize. They can spend time training with their spears, thus become professional rather than amateur practitioners of coercive violence, and so any form of resistance by farmers then becomes much more hazardous.

Farmers also found themselves confronted with another caste of human parasites: not so much thugs as grifters--those who claimed privileged access to the mind of the gods, and who would also demand to be fed out of the farmers' crops. These grifters could indeed prove that they understood the mind of the gods. They would watch the stars. And so they could, with high probability predict when the last freeze had passed, or when the rains would begin, or when the first freeze would come. In this ability, at least, the grifters who claimed privileged access to the will of the gods were at least useful--or so I believe given the number of days I stumble into the kitchen not knowing whether it is Tuesday or Wednesday [(Calvin (1991))][]. (The thugs with spears could also claim to be "useful", in that they could say they spent much time protecting the farmers from other thugs with other spears.)

Thus we were off and running, with grossly unequal societies.

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Note that having to provide half your crop to the thugs with spears and the grifters who claim to know the mind of the gods is in no sense "functional" for a human society. At least, it is in no sense "functional" from the perspective of those of us who take it for granted that the point of a human society is to achieve the utilitarian greatest good of the greatest number. In agrarian societies, this kind of inequality is not "productive" but rather "extractive". More than a generation ago, the strongly egalitarian Brookings Institution economist Arthur Okun warned against too vigorous a pursuit of inequality. He wrote of a "leaky bucket": transferring income from rich to poor transferred less to the poor than it took from the rich, equalizing but impoverishing society, hence it shouldn't be pushed too far [(Okun (1972))][]. The "leaky bucket" of Arthur Okun remains a famous metaphor that shapes the discussion about inequality today. But it does not apply to pre-industrial agrarian-age extractive inequality at all.

How pronounced was this agrarian age extractive inequality?

We see it deep in the roots of human literature. The first piece of human literature that has survived to us and thus is accessible to us is a Mesopotamian story: [The Man Who Saw All Things][]--what we call the Epic of Gilgamesh. It begins thus:

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Surpassing all other kings, heroic in stature, brave scion of Uruk, wild bull on the rampage! Going at the fore he was the vanguard, going at the rear, one his comrades could trust!... Who is there can rival his kingly standing, and say like Gilgamesh, ‘It is I am the king’? Gilgamesh was his name from the day he was born, two-thirds of him god and one third human....

The young men of Uruk he harries without warrant, Gilgamesh lets no son go free to his father. By day and by night his tyranny grows harsher, Gilgamesh, the guide of the teeming people! It is he who is shepherd of Uruk-the-Sheepfold, but Gilgamesh lets no daughter go free to her mother...

Inequality--gross inequality--is at the heart of the story. Gilgamesh is the great and glorious king of Uruk. Gilgamesh is two-thirds god and one-third man. He dominates and oppresses the people of the city. He forces the men to work on his construction projects and drill in his army. He forces the women to serve him and disrupts the dance of sex and matrimony.

The people of Uruk are unhappy. They do not, however, seek to overthrow their king. Gilgamesh is, after all, fit and worthy to be king, and rightfully king: he is, after all, two-thirds God and one-third man. And it is good to be the king. So they do not try themselves to overthrow Gilgamesh or ask the gods to strike Gilgamesh down. However, they do ask the gods for help:

The women voiced their troubles to the goddesses.... "Gilgamesh lets no girl go free to her bridegroom".... The warrior’s daughter, the young man’s bride, to their complaint the goddesses paid heed...

So the goddesses and gods take counsel, and then go to their chief Anu for help:

The gods of heaven, the lords of initiative, to the god Anu they spoke…:

A savage wild bull you have bred in Uruk-the-Sheepfold, he has no equal when his weapons are brandished. ‘His companions are kept on their feet by his contests, the young men of Uruk] he harries without warrant. Gilgamesh lets no son go free to his father, by day and by [night his tyranny grows harsher. Yet he is the shepherd of Uruk-the-Sheepfold, Gilgamesh, the guide of the teeming people. Though he is their shepherd and their protector, powerful, pre-eminent, expert [and mighty, Gilgamesh lets no girl go free to her bride[groom.’

The warrior’s daughter, the young man’s bride: to their complaint the god Anu paid heed...

And Anu, father of the gods, decides that the right thing to do is to distract Gilgamesh: to give him something more interesting to do than force the young men to work and drill, and use the girls, daughters, and mothers of Uruk. Anu decides to devise... adventures for Gilgamesh:

"Let them summon Aruru, the great one, she it was created them, mankind so numerous."... The goddess Aruru, she washed her hands, took a pinch of clay, threw it...

And our story is off and running...

Dimensions of Inequality

When economists think of inequality, they almost invariably think of it terms of incomes, spending, and prices and as measured by the yardstick of money. An unequal society is one in which those at the bottom get to make use of a small and hello Brad along here and share of societies resources, and in which the work they must do to gain access to that small amount and share is lengthy and burdensome.

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A great deal of inequality, however, it's not just work, income, spending, and prices. Hey great Dino is simply things that you are not allowed to do, or are expected and required to do, by virtue of what we might as well call your caste. Women. Minorities. Serfs. Slaves.

This is always present as a background, and usually much more than a background, factor in human society. And, no, I am not a fan of those who try to distinguish wealth from freedom--power to command resources from autonomy--positive from negative liberty--in human societies. If you are locked in a cage, it matters a little to you whether you could buy a key if only you had the more money which you do not. So never take a distribution of wealth or income as in any sense a set of sufficient statistics for inequality.

I, at least, I think that this can be seen most strongly and strikingly in the agrarian human societies that flourished between 5000 and 2000 BC. We all know that you can trace exclusive female descent--daughters' daughters' daughters' daughters'--through mitochondria, for each human inherits their mothers and not their fathers mitochondria. We all know that you can trace exclusive male descent--sons' sons' sons' sons'--through the Y chromosome, for each son inherits his fathers and not his mother is nonexistent Y chromosome. Geneticists now try to look back some 75,000 years to the time when our effective population size was less than 1000--either because of a language-development related speciation or sub speciation event, or an Indonesian super volcano related near extinction event, which I think are now the two live theories.

They see rough balance in the survival of mitochondrial and Y chromosomal lineages up to 5000 BC. They see rough balance in the survival of mitochondrial and Y chromosomal lineages since 2000 BC Corian from 5000 BC to 2000 BC, however, they see 15 female mitochondrial lineages survive for every single male Y chromosomal lineage that survives. This would seem to mean that 5000 to 2000 BC saw substantial polygyny for a few men and non-reproduction for others, it also that if your great grandfather had the resources to have more than one wife but the odds were higher that you were at the top of the inequality pyramid as well: inherited as well as substantial inequality. This age of super patriarchy stands out in our genetic record. The social structures and institutions to support it are not there before 5000 BC, and do not persist since 2000 BC.

What was life like for women in those 3000 years?

https://logarithmichistory.wordpress.com/2015/09/27/the-patriarchal-age/

http://genome.cshlp.org/content/early/2015/03/13/gr.186684.114.full.pdf

Gini Coefficients and Bad Philosophy

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A great deal of economists and sociologists studies of inequality presents its results in the form of "Gini coefficients". I do not know why. It is not a terribly intuitive measure. And very few people have a sense of what it means. So let me try to anchor it in a way to make it more familiar:

If the bottom three quarters of the population were to get on quarter of the income, the top quarter to get the rest, and were income to be evenly distributed within the top quarter and the bottom three quarters , then the Gini coefficient would be 0.5.
If the bottom two-thirds were to get one-third of the income and the top third the rest, once again evenly distributed within the top third and the rest, then the Gini coefficient would be 0.33.

Suppose that we decide to be bad philosophers: suppose that we decide to think like early 19th century British utilitarian Jeremy Bentham. Bentham believed that the obvious point of society was to maximize utility: to attain the greatest good of the greatest number. And he saw no reason why utility, or happiness, or well-being, should not with sufficient progress of a society be susceptible to objective quantitative measurement just as natural philosophers had figured out how to quantitatively measure something as subjective as heat and cold. Bentham further thought the people were pretty good judges of their own utility and were highly motivated to make choices that increased it. End it seemed much more than reasonable to Bentham to believe in diminishing marginal utility: that each doubling of the resources you could command to devote to increasing your utility would add the same amount to your well-being.

If all that were to be the case, then a move of society from a Gini of 0.5 to 0.33 would have the same effect on total societal well-being--provide the same increment to the social welfare function--as a 30% boost to everyone’s income. By such a yardstick, a reduction in the Gino from 0.5 to 0.33 would be an advance in societal well-being add an increase from 0.33 to 0.5 a retardation equivalent to what we get in an average 15 years of economic growth at the pace economic growth has proceeded since 1870. That means that shifts in inequality of the type we have seen are substantial deals in this particular assessment of how well our society is doing. Shifts in inequality are a much smaller deal then the extraordinary rising tide of economic growth over the past 150 years which has given us 10 successive such increments. But it is not something that you want to ignore, even if you put to one side the consequences of the distribution of wealth for politics and sociology.

Philosophers, of course, will have winced by now. Perhaps they will have done more than winced--although I did not see any philosophers rise and run, screaming, from the room. I have drawn strong conclusions about how high and important a priority reducing inequality should be for making a good society by being a bad philosopher. Philosophers would presumably say that I should first be a good philosophy, and that only after having reached good philosophical conclusions should I then use those conclusions as a springboard to derive "oughts" for political economy.

The problem, of course, is that there is no agreement on what the good philosophy is. I maintain that my bad philosophy is a middle ground. I draw conclusions for society from it. As you decide on what your view of good philosophy is, you move from my bad philosophy to yours, and that movement will carry with it a move of your political economy conclusions from the baseline I have established to those that you will think best.

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Pre-Industrial Extractive Inequality

There is another dimension to inequality, in addition to what we see as the distribution of income and wealth on the one hand and the effects of caste and status group on the other. This third dimension is: how is the income extracted? How much social pressure--and what kind--do we see to actually transfer income from those who work to those who eat?

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