Beta 008: Income Inequality

[[violet]]

Beta 008a: Income Inequality: Rescaling + Policy impacts of feudalism and slavery

Proposed Change: Feudalism and slavery directly contribute to wage inequality. Also apply harder scaling via more checks on nations approaching the maximum value. In particular, this downscales nations that are currently at or near the maximum value but do not have Feudalism and Slavery, have generous Welfare spending, or have not addressed many wage-related issues.

[Beta Paxiosolange]

support

[VoVoDoCo]

Surprised that feudalism and slavery didn't contribute already.

Support.

[Nouveau Yathrib]

Income distribution is unrealistically equal in this game. Idk if there are any countries where the top 10% make on average less than 5 times as much as the bottom 10%. I thought feudalism and slavery were already factored into the calculation.

[Krampusreich]

I'm likewise surprised they didn't already factor those in. That would definitely affect income equality, disproportionately. I support this.

[He Qixin]

Support because I'm unaffected by this beta.

[[violet]]

Income distribution is unrealistically equal in this game. Idk if there are any countries where the top 10% make on average less than 5 times as much as the bottom 10%.

Very true. It is a shame that real life is more extreme than NationStates. That's not like us. Maybe I should fix that, too.

edit: Actually we don't look too out of whack with reality.

[AquilaJordyn]

Hmm. The feudalism makes sense, but slavery? Just from a logical standpoint, in such a nation, the slaves wouldn't be counted as citizens but as property, so I don't know how they could really be considered into wage inequality... are you operating from the assertion that slaves are counted in the population of the nation?

[Nouveau Yathrib]

Income distribution is unrealistically equal in this game. Idk if there are any countries where the top 10% make on average less than 5 times as much as the bottom 10%.

Very true. It is a shame that real life is more extreme than NationStates. That's not like us. Maybe I should fix that, too.

edit: Actually we don't look too out of whack with reality.

Yeah, it's not as bad as I thought. Costa Rica was disappointing.

[Candlewhisper Archive]

I'd note that excellent linked graph doesn't exactly describe the same thing as our stats.

My front page, for example, says:

with the richest 10% of citizens earning XXX per year while the poor average XXX, a ratio of X to 1.

That implies its an average of the richest 10% compared with an average of the poorest 10%. Of course, it doesn't actually say that exactly, its all very vague.

That graph, on the hand, compares the 90th percentile with the 10th percentile. That's a much milder figure, as it cuts off the very top end. The top 1% in the USA, for example, have 40% of the nation's wealth. Zoom all the way down to the 10th centile, and you're already looking at the "poor half" of the nation.

So if we're going to use that graph to say our figures are alright, we probably ought to redefine our descriptions to:

with citizens on the ninetieth centile earning XXX per year while those on the 10th centile earn XXX, a ratio of X to 1.

That's not as aesthetically appealing, of course, but it's considerably more precise and meaningful.

[Trotterdam]

We already have contexts (like the relationship of Average Income to Economic Output) that imply that we're using means, rather than medians or percentiles, though. It would be awkward to mix them up. Well, even more than we already are.

EDIT: On that site, the "S80/S20" and "Palma ratio" perspectives are closer to what NationStates currently calculates than the P90/P10 perspective that [violet] linked to. Effectively, NationStates income inequality is S90/S10 under that terminology (and if I'm understanding this correctly, then the Palma ratio is S90/S40, maybe with a constant factor 4 somewhere depending on how exactly you interpret it).

Where the site gives values in the range of 3-6 for the P90/P10 of respectable nations, it gives values of 3.5-8 for the S80/S20 of same. While we can reasonably expect the S90/S10 to be somewhat higher than the S80/S20, and it's hard to say how much, an income ratio of 5:1 (as Nouveau Yathrib cited) doesn't seem that absurd.

However, income ratios below 3:1 (by any measure) definitely seem dubious in real life, while NationStates makes it pretty easy for income to be "distributed extremely evenly, with little difference between the richest and poorest citizens", even to a perfect 1:1 ratio. Then again, NationStates also lets it get as high as 1948.83:1, which is decidedly above anything listed in that chart, however you count it.

[Pencil Sharpeners 2]

I like this change, but have a question: Will choices like banning trade unions or abolishing the minimum wage still decrease wealth gaps for those close to the upper limit?

[[violet]]

Will choices like banning trade unions or abolishing the minimum wage still decrease wealth gaps for those close to the upper limit?

You mean increase wealth gaps? Yes but only to a point. Banning unions and abolishing the minimum wage will increase wealth gaps, as will instituting feudalism and slavery, and a nation that does all four will have more income inequality than a nation that does only some of them.

[Pencil Sharpeners 2]

Will choices like banning trade unions or abolishing the minimum wage still decrease wealth gaps for those close to the upper limit?

You mean increase wealth gaps? Yes but only to a point. Banning unions and abolishing the minimum wage will increase wealth gaps, as will instituting feudalism and slavery, and a nation that does all four will have more income inequality than a nation that does only some of them.

I meant decrease. Various 'freedoms of the worker' contribute towards economic freedom, including the ones I mentioned. Since economic freedom and wealth gaps are tied together at the moment, there were some very counter-intuitive effects where decreasing the freedom of the worker (by banning trade unions etc.) would then decrease wealth gaps, even if the option would pretty obviously increase (or at least maintain) wealth gaps if applied IRL. I can't remember which issues/options those were exactly, since I now dismiss them with my high-economic-freedom nations (Pterodoria and Pallidonia). Since freedom from slavery was another 'workers freedom' that could inadvertently result in decreased wealth gaps, and this is being fixed now, I thought the others may be fixed along with it.

[[violet]]

I can't comment on the effect on particular issue choices without knowing which issue choices you're referring to.

[Nouveau Yathrib]

We already have contexts (like the relationship of Average Income to Economic Output) that imply that we're using means, rather than medians or percentiles, though. It would be awkward to mix them up. Well, even more than we already are.

EDIT: On that site, the "S80/S20" and "Palma ratio" perspectives are closer to what NationStates currently calculates than the P90/P10 perspective that [violet] linked to. Effectively, NationStates income inequality is S90/S10 under that terminology (and if I'm understanding this correctly, then the Palma ratio is S90/S40, maybe with a constant factor 4 somewhere depending on how exactly you interpret it).

Where the site gives values in the range of 3-6 for the P90/P10 of respectable nations, it gives values of 3.5-8 for the S80/S20 of same. While we can reasonably expect the S90/S10 to be somewhat higher than the S80/S20, and it's hard to say how much, an income ratio of 5:1 (as Nouveau Yathrib cited) doesn't seem that absurd.

However, income ratios below 3:1 (by any measure) definitely seem dubious in real life, while NationStates makes it pretty easy for income to be "distributed extremely evenly, with little difference between the richest and poorest citizens", even to a perfect 1:1 ratio. Then again, NationStates also lets it get as high as 1948.83:1, which is decidedly above anything listed in that chart, however you count it.

If I'm not mistaken NationStates measures S90/S10, while violet's link gives P90/P10. The mean income among the top 10% is by definition higher than the 90th percentile individual income, even if there's not much difference between bottom 10% and 10th percentile mean income. It's completely reasonable to expect S90/S10 to be above 5:1 even in the most equal countries.

[Merconitonitopia]

support, very begrudgingly, as an egalitarian nation that also somehow reaffirms a very strict social order wherein serfs and slaves have no rights to speak of. if this goes through maybe I'll have to look into getting rid of these.

Just from a logical standpoint, in such a nation, the slaves wouldn't be counted as citizens but as property, so I don't know how they could really be considered into wage inequality

lol

[The Glorious Third Reign of Templedom]

This beta doesn't affect my nation (flagship/only) but I'd like to offer some comments:

Slavery should be relatively easy to simulate, simply vastly increase the income gap such that the bottom 10% earns practically nothing, we're talking '000s or 10,000s of times difference between top and bottom rungs of slave-owning societies - as it should be.

Feudalism is much harder to model, as you ought to see an inverted tax structure: meaning, the poor should be paying a-third to two-thirds taxes on income, while the rich pay much lower, 5-10%. Don't know whether it's possible to model in NS or worth the trouble, but that'll capture the essence of a feudal economy.

[Merconitonitopia]

slavery would only being effecting a fraction of the the population, it's not like the entire bottom 10% is going to be enslaved. slaves are probably going to be less than 1% of the population, Rome only managed 1.5% at best.
I think it would be reasonable for roughly 1% to be slaves, who will be making next to nothing as they don't earn wages. so that's 10% of the bottom 10% not earning their own income, which, intuitively speaking, should result in a decrease in poor income by about 10%. (this would presumably start off lower and increase the more pro-slavery you were, or even decrease if you treated your slaves better like in #898.)

of course, this is NationStates, so you could very well have a nation with 10% or more of their people in chains.

[Trotterdam]

slavery would only being effecting a fraction of the the population, it's not like the entire bottom 10% is going to be enslaved. slaves are probably going to be less than 1% of the population, Rome only managed 1.5% at best.

Source?

It is estimated that 25% or more of the population of Ancient Rome was enslaved, although the actual percentage is debated by scholars, and varied from region to region.

Estimates of the percentage of the population of Italy who were slaves range from 30 to 40 percent in the 1st century BC, upwards of two to three million slaves in Italy by the end of the 1st century BCE, about 35% to 40% of Italy's population.

In South Carolina in 1720, about 65% of the population consisted of enslaved people.

The proclamation made the abolition of slavery an official war goal that was implemented as the Union took territory from the Confederacy. According to the Census of 1860, this policy would free nearly four million slaves, or over 12% of the total population of the United States.

[Merconitonitopia]

huh... I guess we're going to have to up what would be considered ridiculous in NS terms to 99% of the population, or perhaps "everyone except @@LEADER@@."

[Derecta]

Is this getting implemented soon?

[Krusavich]

From what I've heard, the coding admins don't have a lot of free time nowadays to actually implement these things. So it'll likely be many more months before we get an update on these betas.

[Phydios]

At long last, the betas are moving forward again! May they keep up their momentum!

I've been especially excited about this beta, since it's really, really nice to my anarchist dystopia Chirun.

[Merconitonitopia]

At long last, the betas are moving forward again! May they keep up their momentum!

I've been especially excited about this beta, since it's really, really nice to my anarchist dystopia Chirun.

Impressive.

My ancap country's inequality is going to be axed big time. An 84.2 percent drop in wealth gaps, while poor will enjoy a 380 percent pay rise.
Look through the samples, it seems like this beta has a very big positive or negative effect on a small group of nations.