Even if the economy is growing, income inequality... - Deepstash

Even if the economy is growing, income inequality and stagnant wages can make people feel less secure as their relative status in the economy diminishes. Behavioural economists have shown that "our status compared to other people, our happiness, is derived more by relative measures and distribution then by absolute measures. If that’s true then capitalism has a problem.

DENISE STANLEY

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MORE IDEAS FROM Why the next stage of capitalism is coming

As poverty is relative (and in many societies a matter of comparison rather than an absolute fact), inequality leads to inevitable social disruption. If that is something that the ones who hold the reins of wealth and power do not feel empathic about, it might become something that they will feel fearful about. The same type of discontent led to oppressive regimes around the world, either ideological (such as communist ones) or simply conjuctural (every military dictatorship); it is easy to destroy an unfair system, much harder to replace it with a fair one.

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A shift in measuring well-being

People in societies such as ancient Greece, imperial China, Medieval Europe, and colonial America did not measure people's well-being in terms of monetary earnings or economic output.

In the mid- 19th century, the United States and other industrializing nations such as England and Germany moved away from this historical pattern. They started to measure progress in monetary value and social welfare based on the ability to create income.

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Political ideology

A political ideology is a set of ethical principles of a social institution that explains how society should work.

Contains certain ideas on what would be the best:

Has 2 dimensions:

  1. goals: how society should be organized.
  2. methods: the most appropriate way to achieve this goal.

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Adam Smith: the father of modern economics

Adam Smith was an 18th-century Scottish economist, philosopher, and author. He is considered the father of modern economics.

  • Smith was born in 1723 in Scotland. He studied moral philosophy at the University of Glasgow and enrolled in postgraduate studies at the Balliol College at Oxford University.
  • After returning to Scotland, Smith held a series of public lectures at the University of Edinburgh and earned a professorship at Glasgow University in 1751. Later he earned the position of Chair of Moral Philosophy.
  • In 1763, he accepted a more remunerative position in France. There, Smith counted philosophers David Hume and Voltaire as contemporaries.

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