Inequality or absolute poverty

I have mixed feelings about the inequality argument. I think the issues are a slightly more complex than often argued, but in general I do not find it a problem. This puts me at odds with many of my fellow Christians, or at least the more vocal ones. Absolute wealth has its temptations, but I don't see inequality per se as a specific problem. We have inequality in many other areas of life: sporting, music, literary, and numeracy capabilities. Not many people argue against this natural inequality and most would just seek to optimise each individual's ability. Money has some differences to this but also some similarities.

Now I don't necessarily have sympathies with the extremely wealthy. I am not sympathetic to the legal protections for bankers or government bailouts. I think money can be made immorally. However I don't object to people having money just because they have a lot of it.

Nevertheless, I am concerned about the poor; especially the oppressed poor. Perhaps I could be more concerned in my actions, but in general I support just laws which I think protect the poor from oppression and, in the long term, rise them out of poverty.

But inequality is not the issue.

The Guardian quotes an Oxfam report.

The share of the world’s wealth owned by the best-off 1% has increased from 44% in 2009 to 48% in 2014, while the least well-off 80% currently own just 5.5%.

But what does this mean and why is it so?

Here is the comparison of rich and poor.

Now there is some difficulty using this timeframe. It is during the time of the global financial crisis which may skew results based on fluctuations of various currencies. And it is probably too short, a longer timeframe would be preferable. Even so, the benefit of this graph is that it shows absolute values.

According to this data: in 2000 the poorest 50% had $400 billion, in 2002 $700 billion, in 2005 $1300 billion and by 2014 $1800 billion. So if we completely ignore the wealthy we note that the wealth of the poor has grown by billions in the last decade. Even taking into account the rising population, the poorest 50% are significantly increasing their wealth. This is a good outcome. Now this seems more preferable to me than the richest 80 people increasing their wealth, but that they did so does not bother me. And it is not obvious based on this graph (alone) that the increased wealth of the rich was detrimental to the poor. Now perhaps it was detrimental, especially when politicians offered to bale out massive companies at the cost to middle class taxpayers, though that probably hits the richest 50% in developed countries. But what if wealth grows like that?

What if, as productivity increases through the use of capital, the labourers and the owners of the capital both increase their wealth? If you had the opportunity to increase the income of the poor from $2 a day to $5 a day by entrepreneurs who also doubled their income from $10 million a year would you be happy? Or would you rather remove income from the wealthy and give the poor an extra $1 a day knowing that the following year their income would be back down to $2 a day?

Now if men make money from fraud or theft then justice demands that this is taken from them and given to their victims. And those with money should help the poor: both direct giving when necessary, or providing work, opportunity, or capital. But the cry of "inequality" without consideration as to the why can just reflect a politics of envy.

Love of money

Paul's first letter to Timothy gives us an example of Scripture which some people under-read and some over-read; though both represent a misreading of the text due, in part, to not paying enough attention. Paul writes,

For the love of money is a root of all evils. (1 Timothy 6)

It is not uncommon to hear that money is the root of all evil. While having money is associated with temptations that are less common for the poor, the misquote places the source of the evil in the an amoral object, or rather the possessor of the object. It implies that having money is reflective of an evil heart.

When read right, that the love of money is a source of evils, we avoid this error. By seeing that covetousness is the problem we see that the desire to obtain money causes a great many evils, and it can be a temptation to all men, not just the wealthy.

Somewhat less common is the idea that every specific evil in the world has as its root, the love of money. Some modern translations translate this the passage as,

the love of money is a root of all kinds of evil

While a true statement and in line with what I am arguing, it is not warranted in a literal translation.

We can see that not every evil has its source in the love of money. Consider the sin of Adam and Eve. This passage should be read proverbially. The context concerns false teachers, the necessity of contentment, and those who long to be rich.

Those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all evils.

Paul's phrase does not require one to think that every evil ever seen is motivated by money, it merely is a proverbial type statement directed at people who want to be rich: showing them that this desire will lead them into many evils.

Paying close attention to both what exactly the passage does say (love of money) and the genre and context (people longing to be rich) helps the reader understand what Paul is saying here. Covetousness, especially coveting money, will lead men into all manner of wickedness.

Income inequality

Joe Carter has written a useful article about income equality that I think Christians from both sides of the political spectrum it should read.

Carter's points

1. Incomes are measured in money—and money is not wealth.
2. The existence of income inequality is generally a sign of a fair distribution of incomes.
3. Both low and high rates of income inequality can be signs of unfairness.
4. Income inequality is not the same as economic inequality
5. Measures of income inequality are meaningless because incomes are not zero-sum
6. Income inequality and poverty are separate issues.
7. No one in America is really concerned about absolute income inequality.
8. Discussions of income inequality are almost always about redistribution of income.
9. The only real threat caused by income inequality are problems caused by envy
10. The focus on income inequality is at best, useless, and, at worst, immoral.

A few thoughts from myself

1. Note that the essay is about income inequality and not poverty.
2. One can be concerned about poverty but not income inequality.
3. It makes a difference if your money is a result of creating wealth or just taking it, especially if you take it directly from the poor. This may include aspects of the finance industry.

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What Every Christian Should Know About Income Inequality

Here are ten points about income inequality that every Christian should understand:

1. Incomes are measured in money — and money is not wealth.

Income inequality is not in itself an economic problem. The simplest way to illustrate this point is to provide a simple “solution”, for there is a simple method that would lead to perfect income equality.

The first step is to calculate the number of earners and rank their incomes from lowest to highest. For example, let’s say a country has 100 million workers, with the lowest workers paid $10,000 a year and the highest earning an annual salary of $1 million a year.

The second step would be for the government to print enough money to equalize all the incomes. For instance, a worker who was making $10,000 a year would get a check from the government for $990,000 while the person making $1 million would get no check at all. Everyone else would get a check for the difference between their income and $1 million dollars.

The result is that all 100 million workers would then have an income of $1 million – the problem of income inequality would be solved!

If that seems a bit too easy, it’s because (a) income inequality is not in itself an economic problem, and (b) incomes are measured in money, and money is not wealth. A country’s primary economic goal is not to make sure everyone has an equal amount of money, but to improve people’s standards of living.

“The money itself is not wealth,” says Don Boudreaux, “Otherwise the government could make us all rich just by printing more of it. From the standpoint of a society as a whole, money is just an artificial device to give us incentives to produce real things — goods and services.”

The rest here.

The poverty curve

In Bill Gates' annual newsletter, 2014 edition he addresses 3 myths about global poverty.

1. Poor countries are doomed to stay poor
2. Foreign aid is a big waste
3. Saving lives leads to overpopulation

All 3 sections are interesting; I have mixed thoughts about number 3, though noticed after I had read it that is was authored by Melinda Gates.

In the first section Gates has a graph on the change in individual wealth of the world over the last 50 years. Note that the x-axis is logarithmic.

This comes about through productivity and trade. Wealth is created. Some of the big drivers of productivity include rule of law, private property, and low tax which suggests that had we seen optimum conditions in the last few decades we may have seen even better improvements. Still, this is encouraging. Gates mentions several other drivers such as health and education. Not mentioned (as a cause of productivity) is energy which allows significantly more output per person. The climate change paragraph can be ignored, developing nations need cheap and reliable energy, not low carbon energy.

Money, employment, and wages

In A Humane Economy, (which I have not read) Wilhelm Röpke (1899–1966) argues that

...we cannot have all three: stable money, full employment, and further wage increases.

If that were that case which should we prioritise?

I think this can best be solved by looking at what the government should do, the nature of wealth, and the importance of work.

Man is created to work. The earth is cursed and thus work is often toilsome. Our attempts at redeeming work by removing toil have been moderately successful over the centuries. Work is what God has created men to do and as such it seems to be a priority over remuneration, or increases in remuneration. Still, we should pay what we have agreed to pay (James 5). High wages tends to allow a higher standard of living which seems a good in itself, though in a fallen world this can tempt us to seek security and independence from God (Deuteronomy 8). Further, wealth is its own temptation. Wage increases here are presumably for the masses, not the most wealthy. If wage increases were only for the latter then it would not seem wise to sacrifice stable money and high employment for this. Nevertheless, improving the material welfare for most of the population seems a desirable good.

Neither of these goods have seemed to me to be a priority of government. Policies that indirectly encourage vice and discourage virtue should be avoided, but the primary role of government is (direct) justice and punishment. So of the 3 options Röpke gives us it seems that goverment should only involve itself in one—money. If this is the case then we priorise stable money because it is a moral good. If money were material rather than fiat then stability would cease to be an issue. The problem would cease to be stable value and become an issue of equal weights.

Aside from this it seems to me that stable money is the only moral good in the list. Honest weights and measures are a necessity and dishonest measures sinful.

You shall not have in your bag two kinds of weights, a large and a small. You shall not have in your house two kinds of measures, a large and a small. A full and fair weight you shall have, a full and fair measure you shall have, (Deuteronomy 25:14-15)

Whereas high employment and high wages are desirable. Quite desirable. But increases in unemployment is not immoral in and of itself. Of course high employment is likely to have flow on effects that limit immoral behaviour in the community, though indirectly.

Finally, wages reflect value. People over-estimate the value they provide and under-estimate the cost for a product or a service. Tax excluded, at minimum the cost for you to pay someone to do a job will be the wages for you to do the same job plus overheads. You can't desire someone mow your lawn for only $10 and expect people to pay you $20 for the same job. Even so, with stable money and high employment (and a few other important factors), wages will likely increase over time.

I therefore prioritise these 3 in this order:

1. stable money
2. full employment
3. wage increases

The invisible hand and central planning

I have not read Adam Smith and it may be that his metaphor has been extended beyond the original intention; yet the invisible hand is frequently used in the context of free trade, with the suggestion that government leave alone.

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

Freedom of trade in general leads to greater economic prosperity than that of a centralised economy: the invisible hand guides better than the economic planner.

I agree with this is general. It seems, however, that the metaphor implies that a less informative process is more productive than a more informative one; that a planner is less productive than no planner.

The thing is that there is planning, it is just that it is extended to all the buyers and sellers in a marketplace. All those minds making decisions about their economic options contain a vast wealth of information; more information than any group of planners could have. It is not an invisible hand that guides, it is an invisible collective knowledge that decides.

The richest men of the last 1000 years

Celebrity Networth have calculated the wealthiest people of the last 1000 years adjusted for inflation. Presumably these are people whose wealth is known from history. While gold can be compared by weight, I am not certain how accurate property assessments are. I guess that various monarchs held substantial land holdings that may reach this level of wealth.

Figures are in 2012 $US.

1. Mansa Musa I – Net Worth $400 Billion
2. The Rothschild Family – $350 Billion
3. John D. Rockefeller – Net Worth $340 Billion
4. Andrew Carnegie – Net Worth $310 Billion
5. Nikolai Alexandrovich Romanov – Net Worth $300 Billion
6. Mir Osman Ali Khan – Net Worth $230 billion
7. William The Conqueror – Net Worth $229.5 Billion
8. Muammar Gaddafi – Net Worth $200 Billion
9. Henry Ford – Net Worth $199 Billion
10. Cornelius Vanderbilt – Net Worth $185 Billion
11. Alan Rufus – Net Worth $178.65 billion
12. Bill Gates – Net Worth $136 Billion
13. William de Warenne – Net Worth $147.13 Billion
14. John Jacob Astor – Net Worth $121 Billion
15. Richard Fitzalan 10th Earl of Arundel – Net Worth $118.6 Billion
16. John of Gaunt – Net Worth $110 Billion
17. Stephen Girard – Net Worth $105 Billion
18. A.T. Stewart – Net Worth $90 Billion
19. Henry Duke of Lancaster – Net Worth $85.1 Billion
20. Friedrich Weyerhauser – Net Worth $80 Billion
21. Jay Gould – Net Worth $71 Billion
22. Carlos Slim Helu – Net Worth $68 Billion
23. Stephen Van Rensselaer – Net Worth $68 Billion
24. Marshall Field – Net Worth $66 Billion
25. Sam Walton – Net Worth $65 Billion
26. Warren Buffett – Net Worth $64 Billion

It is interesting to compare the wealth of Solomon. One cannot directly assess his wealth, but some calculations are possible. 1 Kings 10:14-15 states,

Now the weight of gold that came to Solomon in one year was 666 talents of gold, besides that which came from the explorers and from the business of the merchants, and from all the kings of the west and from the governors of the land.

It is uncertain if 1 year represents his best year, i.e. a specific year, or every year. Taking 1 talent as roughly 75 pounds (~34 kilograms), 16 ounces per pound, this is an income of 799200 ounces. At $US1750 per ounce this is an annual income of $14 billion dollars in 1 year. Solomon ruled for 40 years though he may not had had that income every year, especially in the earlier years. This is besides all the income from explorers, merchants, kings and governors.

He also had $11 million worth of chariots of his own besides what he made thru exporting them. He had wealth in ivory, fauna, and spices. Silver was so abundant its value was not worth calculating, "Silver was not considered as anything in the days of Solomon." (1 Kings 10:21).

He also owned much land. His palace in Jerusalem, his palace in Lebanon. He was able to give cities to King Hiram and his wife was given a city by Pharaoh on Solomon's marriage to his daughter. The land holdings probably add significantly to his valuation. It is likely he would get into the top 25 above.

How to give away $500 million

Forbes has an article on David Green, a billionaire who has bankrolled the popular youversion app.

Much of his philanthropy is directed at distributing biblical literature,

Through foundations he supports, he has already distributed nearly 1.4 billion copies of Gospel literature in more than 100 countries, mostly in Africa and Asia. The OneHope Foundation targets children age 4 to 14 with Scripture tailored to them, while Every Home for Christ sends evangelists with Bible booklets door-to-door in some of the poorest countries on Earth.

The temptations of wealth are significant, and one should not seek the world in exchange for his soul (Matthew 16:26). But what if you seek the kingdom and in the process God blesses you with wealth. There are several biblical examples such as Abraham, Job and Solomon. There are moderns such as George Muller. A well known New Zealand example was Robert Laidlaw.

Interesting read and Green gives some useful advice.

Ridiculously expensive iPhone

Luxury phone goes for an obscene amount of money.

It has a gold casing with over 500 diamonds. The carrying case is made of platinum and gems.

I don't think I would (I hope I wouldn't) bother with this, even if I considered £6,000,000 small change. Why was this made? Who would want one?