wealth

Using Math to Solve for Inequality

- Adam Clare

Inequality has been increasing globally for years, and developed nations have seen inequality rise in rates comparable to the start of the great depression. This situation is understandably problematic and worrisome. Accordingly, a lot of thinkers have looked into the problem, most solutions come down to some level of redistribution of wealth. The New England Complex Systems Institute has used a complex math approach to conclude that tax cuts will only make the gap between the rich and poor worse. The solution is, indeed, wealth redistribution.

Bar-Yam and his colleagues’ new research shows that a purely monetary solution to the US economy’s current imbalance is insufficient. Bar-Yam likened this to trying to drive a car by focusing only on the gas and brake pedals, and ignoring the steering wheel. In addition to interest rate regulation, Bar-Yam’s research points to a transfer of wealth to the less wealthy sectors of society as the most effective way to rebalance the consumption and production cycles.

This conclusion is based on response theory, a way of looking at complex systems by changing the environmental conditions to see how the system responds. Bar-Yam and his colleagues analyzed historical data to create models that showed how the US economy responds when the distribution of wealth between the production and consumption cycles are altered. Their models demonstrated that the Trump Administration’s current approach to economic growth—cutting government spending while slashing tax rates for the rich—is misguided.

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Be Happy With What You Have

- Adam Clare

It’s often thought that if one had more money they would be happier, bills would be easy to pay and work would be less stressful. It turns out that that is not the case. Once one has their basic needs met the more they earn the less of an impact it has on their happiness.

Be happy with what you have and stop thinking that material wealth will solve your problems. Embrace the now and appreciate what is around you.

The idea of the hedonic treadmill can apply to discrete pleasures—like getting accustomed to better beer—or it can apply to an overall lifestyle. There is evidence that if an individual’s basic needs are met, after a certain point, increases in income do not lead to much greater happiness. As the money we have to spend goes up, so too do our expectations and desires—and with them the possibility of disappointment. A now-classic study from 1978 compared the happiness of lottery winners with a control group drawn from the same neighborhoods. The researchers interviewed lottery winners after the initial thrill had worn off. When asked to rate their present level of happiness, the lottery winners answered in the same way as did the control group. The two groups also made similar predictions about their future happiness. And when asked about a number of mundane pleasures—talking with a friend or eating breakfast—the lottery winners actually derived less pleasure than did the control group.

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Kickstarter CEO Wants You to Have a New Job

- Adam Clare

Yancey Strickler is the CEO and cofounder of Kickstarter he sees the future of work and the economy different than most CEOs. Strickler sees a future with people working jobs that actually matter for causes that make the world a better a place. Instead of profit over people, we can have people who all profit.

He suggests many alternatives to the bland, “normal”, work life of 9-5 in a depressing office. You can work for a co-op, a charity, a benefit corporation, or do your own thing!

This is a talk about what happens when a culture is driven by the need for money to make more money.

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Don’t sell out your values, don’t sell out your community, don’t sell out the long term for the short term. Do something because you believe it’s wonderful and beneficial, not to get rich.

And — very important — if you plan to do something on an ongoing basis, ensure its sustainability. This means your work must support your operations and you don’t try to grow beyond that without careful planning. If you do those things you can easily maintain your independence.

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Redistribute Neighbourhoods Instead of Wealth

- Adam Clare

People hate taxes despite the fact that basically every person who studies economics knows they are needed and a great way to spur economic success. Despite the fact taxes are needed and good at helping poorer people in society, taxes are hated.

As a result, some researchers in the USA have looked into alternative ways to help poor people escape poverty. One solution is to change the way we help neighbourhoods rather than looking at taxes.

More Americans live in high-poverty areas than ever in history, defined usually as places where more than 30% to 40% of residents are below the poverty line. The number of people who live these neighborhoods of “concentrated poverty” has doubled since 2000, especially in smaller cities. There are huge racial disparities in these neighborhoods, too. One in 4 African Americans and 1 in 6 Hispanics live in an area of concentrated poverty, compared with 1 in 14 whites. While explicitly racist policies such as “redlining” have subsided, their legacy remains in how neighborhoods are racially and economically segregated today.

THE LINK BETWEEN LOCATION AND LIVES

Montgomery County, Maryland—less than an hour’s drive from Baltimore—is a unique case that shows it doesn’t have to be this way. It is among the wealthiest counties in the nation, and its school system is among the best. It also serves its low-income families relatively well. Like some other cities, it requires some real estate developers to rent a portion of their homes at affordable, below market rates. More uniquely, the county itself also reserves the right to buy some of these homes to create public housing for the poor. The result? Poor families, earning an average of $22,500 a year, living right alongside the affluent.

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IMF: Tax the Rich to Improve the Economy

- Adam Clare

The International Monetary Fund has just completed a study that compiled data across time and space to conclude that taxation isn’t harmful for economies. Indeed, taxing the rich is actually very beneficial for any national economy because it stops inequality – which is an awful thing for both people and economic progress.

Labelled as the first study to incorporate recently compiled figures comparing pre- and post-tax data from a large number of countries, the authors say there is convincing evidence that lower net inequality is good economics, boosting growth and leading to longer-lasting periods of expansion.

In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme.

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