Inequality and (Fiat) Hierarchy

By Matt Perez

“Growing inequality is caused by a redistribution of income within hierarchies.”

 

Growing inequality is caused by a redistribution of income within hierarchies. Blair Fix, Redistributing Income Through Hierarchy. ∇ 

My Summary

The author of Redistributing Income Through Hierarchy, ∇  Blair Fix, comes to the conclusion that, Hierarchies are perhaps the dominant feature of our working lives. Yet paradoxically, they rarely enter into mainstream theories of income distribution. Unfortunately, … the study of income distribution became dominated by human capital theory , which focused on personal traits and neglected ‘structural’ explanations of income.

Hierarchical Power

A few facts,

  1. The United States has grown more unequal over the last 4 decades
  2. This growing inequality occurred via a ‘fattening’ of the income distribution tail
  3. Growing inequality is associated with a dramatic increase in US CEO pay
  4. … the pay increases of US CEOs has an underlying uniformity … [it] seems to have increased
  5. This increasing ‘hierarchical despotism’ among US CEOs correlates with rising US inequality … US hierarchies have become more despotic.

And the same is true throughout the world, not just in the US.

Despotism

Below, D represents hierarchical power or despotism. In other words, the greater the value of D, the more despotic the hierarchy.

… despotism is not just a game for rulers. It is a game played by everyone in the hierarchy … the more despotic the hierarchy becomes, the more rapidly income will increase with hierarchical power.
Relative Income ∝ Hierarchical PowerD

The word despotism is used to indicates that,

  • Hierarchies concentrate power at the top
  • Rulers can use their power to benefit the group. But they can also use their power to enrich themselves
  • The more [rulers enrich themselves], the more ‘despotic’ the hierarchy.

From our perspective,

  • Despotism is common of all hierarchies
  • Businesses hierarchies are hierarchies.
  • Modern governments are hierarchies.

Hierarchy

The reason top incomes follow a uniform pattern… is not because income has an ultimately simple cause. Instead, it is because the complex forces that shape income pass through a ubiquitous feature of human organization: hierarchy.

Like Water to Fish

Hierarchy is not only a ubiquitous feature of human organization, it is the only system we can think of. All “revolutions” have been but variations of it. ∇ 

The Radical system is an alternative,

  • Meaning and belonging (people) are at the root of it.
  • All forms of organizations are decentralized and transparent. ∇ 

ENDNOTES

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