These are interesting thoughts.
One thing the article doesn’t take into account: the establishment of mechanisms by which people who can’t personally weather a shock have effective assistance made available to them (such as a government-provided health service, retraining for people put out of work, and the like). I suspect this is because the author is writing in a context where these things don’t really exist and are not likely to exist any time soon. But in some countries, they do, and they provide a brake on the tendency of societies to become more unequal for the reasons outlined here.
Originally shared by Yonatan Zunger
If you want to know how wealthy you really are, ask what kind of financial shock you could weather.
If you want to know why inequality happens without any seeming outside force, it’s because people who get hit with a random financial shock end up dropping an economic level, and much of the wealth they lost gets redistributed among everyone else. That’s true for both random shocks like flat tires, and coordinated shocks like economic downturns or a mortgage crisis.
And then changes in bargaining power happen, and that’s what shapes societies.
I probably should have added a discussion of that. In a US context, those things seem almost unthinkably revolutionary.
Wow.