Equity, equality and positive feedback

I’m reflecting on Deborah Rogers‘ presentation on equity/equality at the Balaton Group meeting, concerning the apparent evolutionary drivers of the transition from a long human prehistory of egalitarian societies to today’s extreme inequity. A key point of terminology is that equity and equality are not quite the same thing – equality implies similar wealth or resource access, while equity implies something more like Rawlsian justice. But you can’t have one without the other, because inequality leads the haves to tilt the tables of justice against the have-nots.

This might not be a deliberate choice to exploit the masses. It could occur as an evolutionary consequence of the inability to predict the outcome of dynamically complex decisions.

I once described a complex theory of the emergence of inequality to Donella Meadows. I no longer remember the details, but perhaps it was the ancestor of this. Her answer was characteristically simple and insightful, to the effect of, “it doesn’t matter what the specific dynamics are, because the rich control the decisions, so the question boils down to how much inequ(al)ity the elite will tolerate.”

Evidence indicates that high inequality is bad for growth, so a possible irony is that policies that transfer wealth to the wealthy in the short run are bad for them in the long run, because growth eventually dominates allocation, even for the richest.

So, for me, the key question for society is, how much positive feedback should a civilization build into its social organization?

A bit of positive feedback can be helpful, if it creates a gradient that guides individuals who aren’t making the best decisions to imitate the habits of their more successful peers.

However, this probably requires a relatively low level of inequality. As soon as there’s stronger positive feedback, it’s likely that dysfunctional feedbacks take hold, as the wealthiest institutions use their market power to block innovation and good governance in service of maintaining their exalted positions.

I think the evidence that this occurs today is probably fairly simple. Look at the distribution of IQs or any other metric that might be an input to productivity in the economy. It’ll be relatively Normal (Gaussian). But the distributions of wealth and power are heavy tailed (Zipf or Double Laplace). That’s a pretty clear indication that there’s a lot of reinforcing feedback at work.

6 thoughts on “Equity, equality and positive feedback”

  1. Hey Tom, I can’t find the “Evidence indicates that high inequality is bad for growth;” and Picketty and Saez findings have some pretty big data issues from my observation.

    I really do wish that this idea were backed up in the data.

    Second, I like your question: “how much positive feedback should a civilization build into its social organization?” But, how do we measure this “feedback” and think about it at the policy level?

    1. I thought I was thinking of Barro but that’s not it, though in his framework one could easily imagine feedback from equality to education and rule of law, which would create a drag on growth from high inequality. Barro does cite a bunch of literature that shows drag effects from inequality, which is probably what I was thinking of. I’d have to dig for details.

      Deborah’s work did suggest an interesting new mechanism (for which I haven’t actually seen the model details). That is, high inequality shelters the top of the distribution (i.e. leaders) of an economy from signals that there are problems. Certainly one could see that in the US today.

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