> how can we improve our average level of well-being
What average?
MEAN:
Two systems of 100 people
System 1: 1 person with $10m and 99 people with nothing (mean=100k)
System 2: 100 people with $50k (mean=50k)
The latter is far far better despite on mean being worse.
MEDIAN:
Two systems of 100 people
System 1: 51 person with $1m and 49 people with nothing (median=$1m)
System 2: 100 people with $250k (median=250k)
The latter is better despite median being worse.
If you want to decide if a system is fair or not, think which system you'd like to live in if you rolled a D10 and ended up being born into the decile you landed in. Roll a 10 in america and it's great. Roll a 1 and you're collecting cans and hoping you don't get an ingrowing toenail.
Yeah but in reality what happens is that if you redistribute too much, you stifle productivity to the point where you have no improvements at all, and your mean will start to regress. Why? Because you have removed all incentives for people to improve, and rather introduced the perverse incentive of preferring to be on the receiving end.
In reality it's more like
System 1: 100 people with $50k (mean=50k)
System 2: 98 people with $60k and 2 people with $10m (mean=259k)
And then people argue that System 2 is worse because the small increase for the most people is not worth the humiliation of some times seeing a person with 10m which is unfair.
Norway, Sweden, Finland, Belgium, Austria, New Zealand, Luxembourg, Germany, hellholes like that where you can't even have the joy of going bankrupt because your kid got shot at school and you need to pay for the surgery
Yeah but my point still stands: the more you redistribute, the less incentive people have to work, and the less money you will have overall.
If you redistribute too much, you will lower your overall productivity and not have enough money and your average will go down. If you redistribute too little, you will have a revolution.
What I'm trying to say, is that everyone wants to have a system where you can simply raise the mean without any increase in inequality, but such a system doesn't exist, so there's always a trade off to be made, and when people ask for less inequality, that will also mean less money overall, and also less for you if you are in the middle.
> Yeah but my point still stands: the more you redistribute, the less incentive people have to work
You'll have to back that claim up
> everyone wants to have a system where you can simply raise the mean without any increase in inequality, but such a system doesn't exist
Well I don't care about the mean - not much use if Rockerfeller takes 90% of the income of a country and the rest have to deal with the 10% even if the mean is high. I care about how much money I have (specifcally what goods and services I can get with it), and how that is affected when various things happen (someone crashes their car into me, I get a cancer diagnosis, find that the CEO has been running the company into the ground and we're all laid off)
During the Great Compression, income inequality dropped dramatically, while the median increased. This was driven by policies like strong unions, the New Deal and Price Controls, and resulted in America's golden age, where the working and middle classes were far better off in 1960 than they were in 1930.
Personally I much prefer System 2 and I'm happy that I have 60k instead of 50k. Money is just a tool to give me freedom, and 60k means more freedom than 50k, so I'll take that deal any day.
The rich guys who have 10 houses or whatever, doesn't bother me at all, I simply don't care, and I'm sure that they are not much happier. Exactly the same way that I don't spend my time grudging over the fact that some guys are 100 times more handsome and charming and talented than me
What average?
MEAN:
Two systems of 100 people
System 1: 1 person with $10m and 99 people with nothing (mean=100k)
System 2: 100 people with $50k (mean=50k)
The latter is far far better despite on mean being worse.
MEDIAN:
Two systems of 100 people
System 1: 51 person with $1m and 49 people with nothing (median=$1m)
System 2: 100 people with $250k (median=250k)
The latter is better despite median being worse.
If you want to decide if a system is fair or not, think which system you'd like to live in if you rolled a D10 and ended up being born into the decile you landed in. Roll a 10 in america and it's great. Roll a 1 and you're collecting cans and hoping you don't get an ingrowing toenail.