Here’s a quote from an answer on Quora that I found interesting(I hope he doesn’t mind because he has the bears behind him.) I’ll tell you more about it below.
Kenneth Cochran, Software developer, staunch advocate of the right to arm bears.Yes. There is an interesting study which sought to compare egalitarian societies with socially stratified ones using agent based simulation. What they found was that egalitarian societies did better than socially stratified ones when production outputs of a society remained constant. But in simulations where access to resources and production fluctuated the egalitarian societies always ended up collapsing or being absorbed by the stratified societies. They introduced the ability to stockpile resources to see if it altered the outcome. The change drastically improved the outcome for stratified societies while worsening the demise of egalitarian ones.
Of note was that the stratified societies were modelled after rigid class systems with no upward and varying amounts of downward mobility.
The simulation was rerun on societies with a stratification based on Pareto wealth distribution and no restrictions on upward and downward mobility. The results were similar to those based on rigid casts.
I have no idea what opinions Krugman or Piketty have on such experiments.
Problems with “stratified societies” (those where income equality is extreme, such as the current situation in the US and Russia) include economic research indicating that when income inequality is high, growth and development of production is impaired. In addition, such societies are basically unfair. Reasoning suggests that when consumers at the bottom are deprived of adequate resources and infrastructure, the whole of society should suffer because of lack of demand for finished products and services among the most numerous part of society.
The worst aspect of stratification is the feeling of dissatisfaction among the bottom consumers– when income inequality reaches levels just slightly worse than we have now, revolution is in the air.
This has also been discussed on numerous other sites recently, including an article in Scientific American (not paywalled but with cookies) that I highly recommend for further reading. The article is entitled “The American Economy is Rigged–And What We Can Do About It.”
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Conrad Theodore Seitz