What is the fairest economic system
Is it all fair in this country? What a question most will answer. Of course not, on the contrary. The fact that the differences between above and below are getting bigger and the conditions in Germany more and more unfair, that is taken for granted in the public opinion of the republic. On the other hand, there is less clarity when it comes to what a fair distribution of income would look like. Very few want, if you ask them, that everyone deserves the same regardless of what they do. But what distribution of income is fair then? There are starkly different views on this among economists. For some, inequality is bad per se (Thomas Piketty became famous with the topic), for others inequality is not a problem at all because they rely on the poor indirectly benefiting from the wealth of the rich ("trickle-down effect") .
The argument is inevitable because justice cannot be measured. What someone considers fair is always a question of judgment, and that has changed fundamentally in the course of history. God saved Noah and his family during the Flood because he recognized him as "righteous" (Genesis 7: 1). That simply meant: Noah had kept the commandments of God. In the Middle Ages, Thomas Aquinas demanded that a fair wage be paid according to the "status", i.e. the social position of the person paid. For the conservative Italian theologians Luigi Taparelli and Antonio Rosmini who used the term in the 19th century social Having invented justice, they wanted everyone to get what was "due" to them. This has nothing to do with the current usage of the word.
Today there is not only "social justice", but also "gender justice", "fair" language and much more. The dispute about a "fair" distribution of income goes on and on. That will probably not change in the foreseeable future either. But perhaps it is possible to argue a little more informed than today about the subject. A study that three economists have just published in Munich could contribute to this ("Measuring Unfair Inequality: Reconciling Equality of Opportunity and Freedom from Poverty, CESifo Working Paper No. 7119). The authors, Paul Hufe and Andreas Peichl from the Ifo Institute and Ravi Kanbur from Cornell University, as the title suggests, is looking for a "fair" distribution of income.
Inequality, according to the initial thesis of the authors, is not a problem as such - as long as it does not become unfair. Inequality is fair when it has been created by factors that individuals themselves can influence, such as personal performance or professional qualifications. On the other hand, it becomes unfair when a large number of people slide into poverty. Statistically, when they have less than 60 percent of the median income available. It is also unfair when inequality is heavily dependent on things that are beyond the control of the individual: the professions of the parents, their education, gender or migration background.
The example of America is very instructive. Economist Hufe says: "In the USA, from the 1990s onwards, development has actually been driven more by unjust factors, ergo either poverty or injustice." One can only say something about the causes to a limited extent, but it is plausible to assume that this is also a late consequence of the deregulation in the 1980s. For example: "If you cut public welfare programs, the scope of (poorer) parents to make financial investments in the education of their children decreases. If, as a result, those children achieve worse results in the labor market than children from richer parental homes, the state translates into Austerity policies directly into an increase in injustice of opportunity.
In Europe, income is most fairly distributed in the Netherlands
The researchers summarize their results in country tables. Within Europe, income is distributed most fairly in the Netherlands. Only 7.0 percent of the differences there are unfair. So only a few Dutch people live in poverty, and very many can increase their income through their own efforts. At 31.6 percent, income is distributed particularly unfairly in Italy. That is because there are proportionally very many poor there. With 11.6 percent unfair distribution, Germany is still comparatively cheap. The numbers for the United States are noteworthy. Here the researchers had data going back to 1969. At that time, the USA was in the midfield internationally with an unfair distribution of 16.6 percent. After 1996, however, the number rose sharply and landed in 2012, the last documented year, at 32.6 percent, which puts the USA at the top when it comes to unfairness.
The researchers' numbers certainly cannot be translated directly into practical policy; they are based on model calculations and very special assumptions. But with them you can let the air out of speech bubbles. What use is the formula invented by the "Occupy Wall Street" movement of the "one percent" of the super-rich who allegedly face the remaining "99 percent" of humanity, if the opportunities are unevenly distributed within this 99 percent? Nor does inequality necessarily result in poverty. If so, you have to fight them specifically, but not "the" inequality. And if you want "equal opportunities", like the authors, then you have to talk less about redistribution than about sufficient daycare centers, better schools, better educational qualifications and help in building up your assets, just old-fashioned.
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