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Old June 9th, 2010, 8:20 am
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Klio  Female.gif Klio is offline
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Re: Crisis in Greece, the Euro Area and the European Union

Hmmm... it's a good question, but it has its problems.

What you are suggesting is essentially a communist system (I mean that in a strictly technical sense -not as a term of invective, so please, mods, let it stand). Communist states tried this - not quite that extremely, but the gap between wages of unskilled workers, skilled workers and various posts where academic degrees were needed were not supposed to be too different from each other.

It sounds like a system that should work well and lead to a fair society (and a cheap public sector). As far as I understand it (and I don't understand it very well, it has to be said) the main problem there is that people lack incentives to try harder. If I earn just as much without getting any qualifications, as I do after years of training, why should I bother?

Of course, lots of people bother anyway just because they want to, but you lose a lot of potential when people just don't have an incentive to try as hard as they possibly could.

In any case, those economies ended up very slow and unproductive, and very poor overall. I guess it's also a problem if there isn't anybody who can actually spend on stuff that's not strictly necessary - because that spending keeps other people in work, too.

I believe strongly that it is bad for societies as a whole if the difference between wealthy and poor gets too big (as it has been in many developing countries for ages, and unfortunately the developed world seems to be getting there, too), but abolishing all difference isn't good, either.

I suppose what we would want is a system somewhere between these extremes - a society seems to work best with a large middle class, but enough difference to incentivise effort.


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