A good thing turns bad if there is too much of it

Living in the Future Tense #02, August 28, 2014
Reprinted in the Tampa Bay Times, September 8, 2014

When More of a Good Thing Is Bad

Edward Renner

If something is good, surely more must be better. But it is not necessarily so. It is true that when you are alone or don’t have any money that a friend or any amount of money is very valuable. But, the more you have of either, the less valuable any additional friend or money becomes, just as a meal for a hungry persons is more important than for someone well fed. What we often don’t fully appreciate is that both too little and too much are extremely damaging, but in very different ways and for very different reasons.

I recently received a friend request from someone I did not know.Why would a complete stranger want to be my friend? Maybe, it was because they liked my last column? A new Fan!

No, It was because we have the same last name. It turns out he had over 3,000 friends, many with our last name. It turns out he had more than 3,000 friends, many with our last name.

So, when is a few friends not enough, and a large number too many?

Facebook now has 1.11 Billion members. The 10% with the fewest friends have less than 10 friends each; but the 10% with the most friends have 500 or more friends, some up to the maximum limit of 5,000.

The typical Facebook participant has between 100 and 190 friends: These include close friends, colleagues, some personally unknown associates, and even some family. With some, they have a genuine reciprocal relationship, for others mainly one-way communication.

This number is very similar to the 150 people that social science research has show that most people can manage in a meaningful way. Facebook is a much more immediate and personal than e-mail, which in turn was more immediate and personal than the Post Office.

 

However, to collect 5,000 friends has little if any redeeming social value. In fact, what is true for the distribution of friends on Facebook is also true for the distribution of wealth in the US.




The Distribution of friends on Facebook and the distribution of wealth in the US are identical functions. For both groups of people the upper 10%, and in particular the upper 1%, have an excessive number of either friends or amounts of money

The important difference is that the supply of potential Facebook friends is endless, and individuals with an excessively large number of friends are the primary victims of their own excess: Too many superficial friends may be the means to loneliness no less than too few friends.

In contrast, there are only so many dollars in the economy. The supply of wealth is limited. How wealth gets distributed does make a difference. In this case, the primary victims are the 90% of individual who do not have an equitable share of the wealth.

At the poor end of the distribution a small additional amount of money makes a big difference for the person with little money. At the rich end of the distribution any additional amount of money does not make any noticeable difference.This fact is neither new nor radical. In classic free-market economic theory it is the “law of diminishing marginal utility.” But, this well established economic principle seems to have been forgotten by the current economic policies that have allowed the excessive accumulation of wealth by the1%. 

One way to correct this distribution is to increase the minimum wage to be an effective living wage, including adequate food, shelter and health care. However the very rich have used their money and influence to blocked this simple reform. Clearly, their excess has not trickled down as the promised alternative; indeed, just the opposite.

The damage this false argument has caused is great compared to the economic stimulus and improved quality of life that would result from a greater degree of equality.

In a democracy, individuals are generally free to behave in self-serving ways as long as it does not harm others. That is why a few people are free to choose to distribute their social energy to accumulate an excessive number of meaningless friends.

Perhaps, the question we should re-consider is whether, like Facebook, to permit a few people to accumulate excessive meaningless amounts of the national wealth, when the result is so harmful to the national level of well-being.



In Quality of LIfe US Trails Peers

This essay may be reproduced and reprinted. 

Reprinted in the St. Petersburg Times, Nov. 30, 2011, 11A.

Who Is Fairest of Them All?

Edward Renner, PhD

If we compared the United States with the other rich, developed, market democracies of the world -- such as France, Germany, United Kingdom, Australia, New Zealand, Norway, Denmark etc. -- where would we stand?

Would the United States be in the upper or lower half of these nations on indexes that measure the quality of life of their citizens? Mark each of the following statements as true or false.

The United States is among the top half of these developed nations:

1.       With the lowest incidence of mental illness.

2.       With the lowest incidence of drug use.

3.       With the lowest infant mortality rate.

4.       With the lowest rates of obesity.

5.       With the lowest rates of teenage pregnancies.

6.       With the lowest rates of homicide.

7.        With the lowest rates of people incarcerated in prison.

8.       With the highest level of social mobility (the opportunity for children to do better economically than their parents).

9.       With the highest rate of national income spent on foreign aid.

10.   With the highest UNICEF Index on the well-being of children.

11.   With the highest level of life expectancy.

12.   With the highest levels of math and literacy scores of 15 year olds.

Not only is the correct answer to each of the questions "false," but even more sobering is the fact that on the first eight questions the United States dead last. On the combined index of the number of social and health problems the United States is clearly last. The common factor accounting for the quality of life in these countries is the disparity of wealth and income within the nation.

Of all the nations, the United States, by far, has the largest degree of income inequality between the rich and the poor. As the Occupy Wall Street movement has publicized, 1% of the people have 90% of the wealth and the top 400 have as much as the 159 million people at the bottom.

The Gini coefficient is recognized worldwide as the standard measure of income of inequality. In the US, the coefficient is reported annually by Bureau of Census and is published in the Statistical Abstracts of the US, as are the other national statistics used for the comparison with the other countries.

These are the facts that describe our current reality. This is the information, not ideological beliefs, on which we must base our conclusions.  

When the Gini coefficient becomes too large a nation becomes less efficient. The very rich use their wealth to corrupt the political process by gaining undue advantage, in the US through lobbying and campaign contributions. The number of people living in poverty increases and government support for social programs is reduced. The result is a breakdown in the social structure; as the quality of schools, roads and services decline people become less satisfied, less healthy, less cooperative and less peaceful.  

It has not always been this way. For over 200 years we were the model of equality and prosperity. Now, we have become the exception to our own ideals. This is in direct contrast to how we see ourselves.  We have lost our perspective on the quality of life in our own country.

We can recover the historical standing we have had as the American ideal. The mechanisms responsible for smaller disparities of national income and wealth are well known. Countries with higher levels of health and happiness, and fewer social problems have:

1.       A steeper progressive tax system

2.       A higher maximum marginal tax rate.

3.       Government sponsored universal health care.

4.       A government sponsored social safety net.

5.       Government regulation which balances the competing forces of corporate power with the general welfare.

6.       A willingness to limit standing military capacity, and the use of armed force only as an intervention of last, rather than first, resort.

All six have been part of our own history. It is not that we do not know this, but rather, we have lost the will, and perhaps the capacity, to use them.

The Gini coefficient for the US has been steadily increasing above the upper limit for efficiency since 1980. This is when tax cuts for the wealthy, and corporate and financial deregulation, became fashionable as our political philosophy. In a market economy, the lower limit for efficiency is a coefficient around 26. At this ideal level, inequality is minimized, without yet triggering the disincentive loss of creativity and productivity associated with socialism.

The Occupy Movement is a wakeup call to our civic consciousness. We have become an exception to what we have always believed ourselves to be.

Will we hear the wakeup call, and take America back, or continue on in our 30 year snooze.

Professor Renner teaches in the Honors College at the University of South Florida. This blog is based on his podcast series “Forums for a Future” at www.kerenner.com