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Terrors, eh, terrors

It comes from a place some might not welcome: the EU. For decades, Brussels has been levelling up Europe, with structural funds – currently more than €50bn (£44bn) a year – boosting poorer regions. This brings results: an extra half a percentage point on economic growth in those regions. But while average incomes rose, so did income inequality within the regions. Better-off households received bigger income boosts, because pay rose most for more educated workers.

So, back to that old question. Would you prefer to live in a generally richer society or one that is more equal? Here, as so often, we find that it is a choice. A both richer and also more equal society isn’t one of the available options.

Poorer and more equal is.

We can even test what people, on average, prefer. The migration flows are to richer countries irregardless of the inequality of the society once someone gets there.

We can also discuss it through the veil of ignorance. A preference for being born into a richer society or a more equal one? Again, migration flows seem to indicate the choice is richer.

So, classical liberalism it is then, the one socioeconomic system that makes places richer faster. Our useful options run from something like Hong Kong’s laissez faire through to Swedish style social democracy. We can, like the Swedes, tax the top off the economic froth to redistribute, or like Hong Kong not do so. But – unlike the UK, US and many other places – we cannot not have that classically liberal free market economy humming along underneath.

Or, as we could put it, there are economic facts and then there are sociopolitical choices. Free markets, capitalism, those are facts. Tax rates and redistribution are choices.

4 thoughts on “Terrors, eh, terrors”

  1. You can argue that enforced equality is unnatural – and although a slavish devotion to what is unnatural, or natural, is philosophically naive, it is easy for too much intervention to expand and result in a runaway cycle.

  2. When arguing with friends over this I like to point out that Afghanistan is one of the most equal societies in the world.

  3. As you have pointed out elsewhere, the greater the power over incomes concentrated in the state and those administering on behalf of the state, the greater the inequality. There are two obvious reasons for this: firstly those administering the funds tend to reward themselves generously and secondly those with contacts in the bueaucracy and/or skills to game the system get most of the hand-outs (“support for projects”)

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