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Comment by jgord | Hacker News Reader

PGs articles aren't wrong - but they are second order, when we need a first order response to a current evil [ before it leads to bloody revolution ]

If you look at income distribution its a hockey stick - you really have to slap yourself on the face and realise there is no middle class - what you thought of as professional-middle-class-contributor is actually college-debt-burdened-lower-class - no matter how many years they work they will never pay off their debt, let alone own their own home.

People aren't asking for "income equality" they are asking for some level of humanity and democracy to be restored to our version of Capitalism, to strengthen that capitalism.

So, just as "All Lives Matter" is not a good response to the "Black Lives Matter" movement, its not useful to discuss "income inequality is not intrinsically a bad thing" when we are in a time when the lower class are basically slaves and the middle class has been in steady decline - your _only_ chance to have security is to win a lottery [ the Startup or the PowerBall variety ]

So, what needs to be talked about is rather : how to take money out of politics, how to get poor people out of the ghetto, how to stop young black people from being shot by police on a weekly basis, how to bring back a reasonable level of tax on the super wealthy, and how to stop large companies from getting subsidies to pollute our environment.

A small amount of Socialism is needed urgently to bring Capitalism back into a survivable form - if not, I really think we are headed for bloody revolution, because most of the populace are angry, and its a rational anger because their survival needs are barely being met, in many cases.

View on HN

"lower class are basically slaves"

You're going to compare working graveyards at 7-Eleven to slavery?

You should read a little bit about slavery and human trafficking. https://en.wikipedia.org/wiki/Slavery I suspect most slaves would not agree with you.

yes - in order to say something that is true, I need to say something that is false. You'd be right to call me on it, and I'd have it no other way.

Back in the days of slavery you were expected to provide some care when they got old. If you're an employee you can be cast away to go die in the street.

"Fifty dollars reward, for the negro Jim Blake--has a piece cut out of each ear, and the middle finger of the left hand cut off to the second joint."

> in order to say something that is true, I need to say something that is false.

What does this mean?

I use the term 'slavery' because its descriptive, not because its literally true.

I do understand that 711 shift workers don't have their feet cut off if they leave.

When I say things like "we need a bit of Socialism right about now" .. I don't mean hardcore enforced-total-equality Socialism, I mean nice Socialism like the kind Bernie Sanders has been raving about.

> I don't mean hardcore enforced-total-equality Socialism, I mean nice Socialism like the kind Bernie Sanders has been raving about.

It's taboo to point this out, especially on HN, but I'm feeling bold today:

You can't discuss the socialist policies of Western European countries without addressing their wealth. And you can't discuss the current wealth of Western European countries without acknowledging the process by which they acquired that wealth.

The "nice socialism that Sanders has been raving about" is the kind that is practiced in countries with a long history of colonization and slavery[0]. During this timeframe, they "earned" a massive amount of money by extracting resources from people that they literally enslaved. This started before the 17th century and continued into the 20th century.

Those people who were colonized and enslaved (and their countries) are still feeling the effects of that today, and they would not be so quick to describe that kind of socialism as "nice".

[0] Denmark and Sweden are the two that Sanders has called out specifically by name.

Many countries in Western Europe have been destroyed and rebuilt multiple times since the 19th century when slavery was practiced.

> Many countries in Western Europe have been destroyed and rebuilt multiple times

This doesn't change the fact that the current economic status of Denmark and Sweden today is directly linked to their status as colonial powers and slaveholders from the 17th-20th century.

> since the 19th century when slavery was practiced.

This entire subthread began with the claim that being "low-class" in the US is tantamount to slavery. If that's the case, there should be no problem with accepting colonialism, as it was practiced by Sweden into the late 19th century and Demark into the early 20th century, as a form of slavery, since it resembles slavery far more closely than being a member of the working poor in the US.

So perhaps you can explain why, whatever this wealth was providing Denmark's 'economic status' the Nazi's didn't plunder it when they occupied it during WWII?

https://en.wikipedia.org/wiki/Denmark_in_World_War_II

AFAICT, Denmark (and Germany, Japan, China, Singapore, South Korea, and everybody else) have whatever 'economic status' they have due to a lot more to what happened during the post WWII years than to colonial times.

Yes, and attributing Sweden's wealth to slave trade is disingenuous. Attributing it to WWII years and selling ball bearings to Nazis is more relevant - but then, who in their position wouldn't have done that? I.e. stay out of the nasty war and trade, if it helps to keep peace on borders.

Late 19th century, early 20th, Sweden was one of the poorest countries in Europe. The wealth of Sweden was accumulated post-WWII when the rest of Europe stood in ruins and needed to be rebuilt, not by being a colonial force to be reckoned with (it never was).

> Late 19th century, early 20th, Sweden was one of the poorest countries in Europe. not by being a colonial force to be reckoned with (it never was)

I mean, yes, if you compare Sweden only to the really lucrative colonizers, it'll look "poor" by comparison. But all you're really saying is that Sweden was less effective as a colonial power than its neighbors who were even "better" at it (England, France, etc.). That doesn't change the original point. If you look beyond simply Europe at where Sweden was with respect to the rest of the world, especially the regions that were colonized and enslaved, it's clear where they stood, and clear how much they benefited by being the ones who colonized, as opposed to the ones who were colonized.

The point is, you can't just look at "nice European socialism" in a vacuum and ignore the reasons why that philosophy has succeeded in Western Europe and why that exact same philosophy has been an empirical disaster in countries that were previously colonies of Western European powers and are still impoverished enough that they cannot export the working class down the economic chain any further (the way Western European powers - and the US as well - have).

I think you're just really really attached to the idea that colonialism explains the modern world.

Over the course of the 20th century, the Ottomon and British empires crumbled. World War II happened. The US and Soviet Union became superpowers, there was a Cold War, and the Soviet Union split apart. The US pursued aggressively open trade. Western Europe unified to a common economic zone. World power structures have been reorganized several times over since colonial times.

For example, how does your theory explain Singapore going from a British colony, occupied by Japan during WWII, to US$56,319 GDP per capita in 2014?

https://en.wikipedia.org/wiki/Economy_of_Singapore

> you're just really really attached to the idea that colonialism explains the modern world.

You're putting words in my mouth. I never said anything of the sort.

I said that one can't understand Western European socialism (the kind which OP appears to advocate) without understanding this aspect of those countries' history. The implication is that calling such socialism "nice" is ignoring and whitewashing the negative side, both historical and contemporary.

In any case, I know better than to seriously engage in a discussion about this on HN; it's really not the forum for these sorts of conversations.

For the record, I didn't say you said that directly, which "putting words in my mouth" would imply.

It's my interpretation of your viewpoint.

I'm sorry to inform you that slavery is alive and well in Western Europe: http://www.theguardian.com/world/2015/may/16/lithuanian-guil...

No, you just linked to an article proving that it's illegal and prosecuted when it occurs.

Language can be used in a rigorous, technical way with definitions and as close to accurately as possible. Like in a technical manual or programming language.

Or it can be used in an expressive way, the way that normal people write and talk and communicate, where people say things that are technically inaccurate but express meaning and and allow the listener or reader to understand the position, emotions, facts, thoughts and experiences of the speaker or writer.

For example, "I'm starving, let's get a bite to eat." Do you say "No you aren't, that's technically inaccurate, how dare you minimize the concerns of the starving multitudes across the globe" or do you say "Okay." because you understand what he means? That first response is how the "that's not real slavery!" thread of discussion here looks to the rest of us.

I think what he meant by that was he is communicating in the second, expressive way.

Church.

I wrote a blog post recently that somewhat excoriated the technical community for a blunt and mechanistic approach to argumentation along these lines:

http://likewise.am/2015/12/06/nitpicking-is-the-lowest-form-...

Masters actually bought slaves. They weren't cheap. So they had to, you know, feed them and care for them somewhat. Now when you aren't needed at the 7/11 you can almost just go die in a fire: have you seen was homelessness is like in the US? I have.

You do understand that this is basically the argument that slaveowners used to justify continuing slavery in the 19th century?

Except that no one is justifying slavery, it's just the opposite.

You know it is a good time to re-think the current economical distribution when the slavery looks like a valid alternative to the status quo.

It would be a mistake to say I'm advocating slavery by making this comparison. The slave to a master is just like an automobile: you have to put gas into it to make it go. Turning a human being into something the equivalent of an automobile is an abomination. But I don't really think wage slavery is really all that different at the end of the day. My point is both are abominable.

that may have not been your intent, but it does reveal the error in your thinking. You may call both abominable, but do you not see the fundamental reason why one is categorically worse than the other? If not then you are doomed to advocate for the very problems that were the root of the atrocity of slavery, just in other, possibly more cryptic and slyly paternalistic forms.

Slaves weren't cheap, but the income and wealth inequality of those times was incredibly larger than today. In many jurisdictions slaves actually were just property, not people. Wealthy slaves owners still could kill slaves just for fun, without feeling much financial loss. Like today someone could buy a Tesla and then decide to burn it.

(Though we should recall that the rights of slaves and whether slave-owner could be prosecuted for manslaughter obviously depended on era and jurisdiction).

I find it astonishing that people compare modern-day income equality and the position of the poor in our time, in the Western world, to that of historical slavery (slavery in United States, or slavery in other slave-based economies in the New World prior to 19th century, not to mention slavery in the Old World which continued officially well into later half of 20th century).

In the West, no one is legally killing, whipping or dismembering the poor workers for not being obedient. Even the poor are still free to leave a place if they find life there unsustainable. Modern-day comparisons to "slavery" typically involve something along the lines "you are expected to do something in exchange for money that is given to you and you feel unpleasant about it".

It just doesn't compare with the actual, terrible injustice of real slavery.

The difference between slaves and workers is that dying or becoming too wounded to work is an expense, for slaves.

> I suspect most slaves would not agree with you.

No kidding! Believe it or not, even in 2016, there are tens of millions of people around the world living in actual slavery[0]. Most of them would probably still literally give a kidney to trade places with one of these lower-class people in the US.

[0] https://en.wikipedia.org/wiki/Contemporary_slavery

Both have in common the order-giver and order-obeyer.

Of course, I agree wage slavery is better than chattel slavery. Better to have some choice of master than one imposed on you. (Though slaveowners made the interesting argument that they must take care of their workers because they own them, unlike the capitalist who merely rents them.)

In the US, the prison system replaced slavery as the mechanism to control the black population. So the US has not improved much in that regard, with even children killed in broad daylight by the state.

  >  In the US, the prison system replaced slavery as the mechanism to control the black population. So the US has not improved much in that regard, with even children killed in broad daylight by the state.

Source?

> You're going to compare working graveyards at 7-Eleven to slavery?

> I suspect most slaves would not agree with you.

The abolitionist and former slave Frederick Douglass initially declared, "now I am my own master", upon taking a paying job. But later in life, he concluded to the contrary, "experience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery, and that this slavery of wages must go down with the other"

https://en.wikipedia.org/wiki/Wage_slavery

It's true that post Civil War blacks weren't doing well. (Actually, a lot of whites weren't doing well either.)

But it's a real stretch of the imagination to say the current United States (especially post income tax and Social Security entitlements) is anywhere even close to post Civil War circumstances.

His point was not about blacks, whites, or even the Civil War.

> Wage slavery refers to a situation where a person's livelihood depends on wages or a salary, especially when the dependence is total and immediate. It is a pejorative term used to draw an analogy between slavery and wage labor by focusing on similarities between owning and renting a person.

There is a difference between "slaves" in the popular sense (chains, beatings, whips, rape), and "slaves" in the economic sense, but both are premised upon the unjust abrogation of freedom at the hands of another.

This article describes the latter case quite well:

http://www.buzzfeed.com/jessicagarrison/the-new-american-sla...

The quote was from Frederick Douglass, a black man living during the Civil War.

Impossible to know for certain, but I suspect he wouldn't be terribly pleased with a comparison of the current "lower class" to real slaves.

Comparing the lower class to real slaves was exactly and explicitly what he did do. Or are your scare quotes meant to imply that the modern lower class isn't a "real" lower class?

Why derail this over a word? Wage slavery is a well-known and widely-used term that is useful.

> So, just as "All Lives Matter" is not a good response to the "Black Lives Matter" movement,

It's tangential, but can you please explain this part? It seems to me that "All Lives Matter" really is the more apt phrase, because it shifts the focus from an us-versus-them conflict to actual justice.

Edit: Got it. I'll stop being part of the problem. The only remaining question is this: What's the most effective way to be part of the solution?

Canonical answer: https://www.reddit.com/r/explainlikeimfive/comments/3du1qm/e...

http://fusion.net/story/170591/the-next-time-someone-says-al...

The cost of saying "All Lives Matter" in response to "Black Lives Matter" is that you are seen to be ignoring the main issue.

Its not that its wrong, its that its perhaps insensitive - a certain amount of empathy and solidarity could be a start in acknowledging the problem.

So while "All Lives Matter" is truer, its less useful at the current moment in time when Black people are experiencing real pain, and we have a huge problem that needs to be addressed urgently.

Of course everyone believes that all lives matter. But the context is important. If someone says "black lives matter" and your response is "ALL lives matter", you're not just saying you think all lives matter, you're saying you don't think it's a racial issue. And willfully ignoring the problem of racism is what has allowed racism to flourish in, say, police departments.

So when you say "all lives matter" you're essentially saying "This problem that effects specifically black people doesn't matter. Let's focus on the more general and still important but less urgent problem that effects white people too, and maybe the problems facing black people will go away". It's like if someone comes to you with statistics about how horribly out of proportion police brutality is towards African Americans and your response is an anecdote about this one time the cops beat up a white guy. Or if someone brings up how serious sexual assault and harassment is for women and all you talk about is how men can be sexually harassed too. If you willfully refuse to recognize the problem, you're part of it.

>you're saying you don't think it's a racial issue.

Correct, it isn't a racial issue. Take the two most well-known cases for instance, Trayvon Martin and Michael Brown.

Trayvon Martin assaulted Zimmerman unilaterally (Zimmerman never threw a punch,) had him in a ground-and-pound position and was bashing the back of Zimmerman's head onto the sidewalk while Zimmerman repeatedly screamed for help. If any white seventeen-year-old had done the same thing there would be zero outcry about recognizing the need for self-defense on the part of the neighborhood watchman. If a white kid in a hoodie was walking behind houses in the rain and looking into windows, nobody would label it "profiling" when a neighborhood watch leader called the police, since that's obviously questionable behavior.

Michael Brown had just committed robbery at a convenience store, then he assaulted a cop who asked him to walk on the sidewalk, then tried to wrestle away the cop's gun. Forensics shows Michael Brown didn't have his "hands up" when he was shot, meaning the witnesses all lied about the situation. Again, if a white teenager had committed strongarmed robbery and proceeded to try to grab a cops gun there would be literally zero sympathy or outcry when he was shot in self-defense by the cop. People would basically just call the dead teenager "trailer-trash," or something equally derogatory and move on.

The only factor race plays in any of this is that we would never have even discussed or heard of these absurd cases had the so-called "victims" not been black. If race enters into the narrative at all it's in the form of black privilege / supremacy, in that black communities seem to believe these incredibly violent assaults are fine and don't merit self-defense for some reason, solely due to skin color.

More accurately, it's all hyped up and manufactured by the media to stoke division because nothing sells ad space like impassioned controversy.

Regarding witnesses and lying. Check out this Ted talk https://www.ted.com/talks/scott_fraser_the_problem_with_eyew...

In the US, "Black Lives Matter" was a phrase adopted by a protest movement to draw attention quite specifically to the way black people are treated. Rather than addressing this injustice, the right wing responded by attacking the name of the movement. It was seen as diversionary and insincere, since the suggestion of the phrase "All Lives Matter" was not accompanied by any sincere effort to amend the situation.

It goes a little further than what the other people are saying. It's not just that the reply "All Lives Matter" is ignoring the issue of police violence against African Americans. It's being used as a defense of the police officers who did the killings, an apologistic post-hoc rationalization that the cop was defending himself. When a person uses "All Lives Matter", what they really mean is "cop's lives matter more".

The easiest thing you can do is donate to the ACLU. You could probably also find part-time volunteer work at any of the many institutions trying to end or mitigate poverty.

>When a person uses "All Lives Matter", what they really >mean is "cop's lives matter more"

No, I understand it to be "police can sometimes use force unjustifiably towards anyone, of any race." If a cop murders someone, s/he should be held responsible (sadly, they are not). The reason that more black people get murdered by police is that they (blacks) get in trouble more often (which is NOT a justification to kill them)

https://en.wikipedia.org/wiki/Race_and_crime_in_the_United_S...

yes, of course

> No, I understand it to be "police can sometimes use force unjustifiably towards anyone, of any race."

This would be true if this is what the people saying it demonstrated beliefs that were congruent with their actions. However, the overwhelming majority (to the point where the counterparty is anecdotal and, frankly, possibly mythical) use it to establish a fundamentally conservative defense of the status quo. I mean--"All Lives Matter" sounds good. Except it is used as a direct and intentional response to the institutional prejudice and societal control via police that is applied to black people, and when you look at deeds instead of words, that's super fucked-up.

"All Lives Matter" requires intentionally misunderstanding "Black Lives Matter." What it means, and what they no-sell as hard as they possibly, possibly can, is that it's really "Black Lives Matter, Too". Because right now, to society at large, black lives don't matter.

Deeds, not words, and the deeds are uniformly bad.

  > the overwhelming majority (to the point where the 
  > counterparty is anecdotal and, frankly, possibly 
  > mythical) use it to establish a fundamentally 
  > conservative defense of the status quo

While "All lives matter" is an inappropriate response, it is a natural one which well-meaning people come up with all the time. Honestly, when heard out of context "Black lives matter" is more than a little cryptic, and the first time I heard it my initial thought was "Are they claiming their lives matter more than most??"

http://www.npr.org/sections/itsallpolitics/2015/06/24/417112... http://www.cnn.com/2015/07/18/politics/bernie-sanders-netroo...

If it's a default response for you (the generic you, not you specifically) to say it rather than think through the problem...I mean, that says a lot about societal awareness, and I can't really find much sympathy for that, but you're right in that some well-meaning idiots might view it as a surface-level thing. But those well-meaning, superficial people aren't in the discussion in the first place. Even Hillary Clinton--who should have known better--isn't going to BLM events explicitly as counter-protestors to chant "All Lives Matter" at them. Right now, as 2016 opens, "All Lives Matter" is the dog whistle of dog whistles.

My point is that it's not just a question of societal awareness. The links in my GP post show Secretary Clinton and Governor O'Malley making exactly this mistake. They are not idiots and their ambitions depend on courting black voters, so they are acutely aware of the issues affecting black people.

The phrase is probably the best you can do in a slogan, but it is cryptic.

> they are acutely aware of the issues affecting black people

See...I really don't think they are (or at least were before they got shellacked). I think it's so profoundly pervasive that even at the highest levels it hasn't been An Issue until very recently. So it's pretty tough for me to see that. (While I don't know O'Malley, I don't pay attention to inconsequentials, I think Hillary Clinton is a status-quo-favoring moderate on most things, which probably doesn't make me more sympathetic.)

"All lives matter," as a response to "Black lives matter," carries roughly the same implications as "Everybody hurts!" would, as a response to "I'm hurting real bad right now!"

What's interesting about this election is that so much of the anger, especially from lower class whites, is being channeled into the Republican party. It's not a cry for wealth distribution, it's a cry against immigrants supposedly taking our jobs. And that's a big failing by the Democrats to tap into that anger.

But I think this is going to be typical of elections going forward, red hot anger being directed at the system. It's not healthy for society and I don't see it ending up anywhere good.

Wealth distribution is a big problem, because the richest can essentially buy the government (and that's exactly what they have been doing) [http://www.nytimes.com/interactive/2015/10/11/us/politics/20...]

But if you took the money from the 1% and distributed it to everyone, it would probably amount to a few thousand dollars each, at best.

The reason for lack of jobs is the they all went to India, China, etc.

As for immigrants, don;t you think there is something awfully wrong with the fact that Massachusetts for years provided housing and money to the Tsarnaev family (the Boston bombers and their parents), yet war veterans are often homeless, because there is never any money left to take care of them?

> But if you took the money from the 1% and distributed it to everyone, it would probably amount to a few thousand dollars each, at best.

That's patently absurd, given that the top 1% own 90%+ of the wealth.

> given that the top 1% own 90%+ of the wealth.

Citation, please? https://publications.credit-suisse.com/tasks/render/file/?fi... page 24 claims that globally the top 8.1% own 84.6% of the wealth, while the top 0.7% own 45.2%. So the top 1% owns something between those two numbers.

Within the US, the top 1% owns an even smaller fraction (of a bigger per-capita pie), because there are many fewer poor people.

That said, the top 1% do own quite a bit of wealth. Same report, page 15, figure 2, looks to me like total global wealth is about $260 trillion as of 2015. World population is 7.3 billion. That comes out to $35000 per person or so. So globally this number would in fact come out higher than a few thousand dollars; per our calculations above it's about 0.5 to 0.85 times $35k (but note that this is including the the "1%" quite a large number of US retirees, for example; the threshold for 1% global wealth is not that high).

If you look at the US, https://en.wikipedia.org/wiki/Wealth_in_the_United_States#We... has numbers for 2007 saying that the top 1% owned 34.6% of the total wealth but that grew to 37.1% after the Great Recession. Total wealth in the US according to the above Credit Suisse report is about $86 trillion; that gives about $100,000 per person if you redistribute the wealth of the top 1%.

This buying the government is terrifyingly real. In university I once went to a dinner/seminar hosted by one of the top three law firms in DC, where we were instructed on how exactly to bribe congressmen. It turns out to buy a vote, a Representative is 10k and a Senator is 20k. They walked us through how we could give bonuses to employees with the understanding that part of that money would be written as maximum individual size checks to the campaigns. We were assured that it was not illegal as long as these bonuses and donations to not match in space and time. The law firm offered to prepare the appropriation text to be inserted into an omnibus. Then once it passed the money would be laundered through the Dept of Education, the Dept Labor, the Dept of Defense, or other Dept that would take a 15% cut for the service. Then we would be awarded the money, or get a tax credit, or so on. The law firm charged another 15% for their service, and would charge half now half on delivery.

This is the instruction that the children of the ruling elite are getting at Ivy Leagues, it permeates the entire culture of the privileged class.

  We were assured that it was not illegal as long as these
  bonuses and donations to not match in space and time.

It's absolutely illegal. What he was apparently trying to convey is that it you are less likely to be caught if the contributions are spread out.

Yes that is true, bribery is illegal and this kind of conspiracy is bad. But if you spread it out and do not put anything in writing, it will be hell for the IRS to prove this. And if you are the type of person who attended this, you have a personal lawyer that you got when you turned 16. It will be very difficult to ever press this to a conviction. And remember, the various departments of the executive branch are in on this, they are the ones laundering the money and further removing it from the original bill that released the funds from the treasury.

  >  It's not healthy for society and I don't see it ending
  >  up anywhere good.

It's a symptom. The disease is the dysfunctional system.

> I really think we are headed for bloody revolution, because most of the populace are angry, and its a rational anger because their survival needs are barely being met, in many cases.

From someone who grew up poor and identifies strongly with outlaws, I concur.

But unlike OP I think it needs to happen.

Surely a cool, calculated, orderly effort to solve the problems described by the GP would be better than bloody revolution, which is a mere outpouring of anger that might not even solve the problems and would probably create entirely new ones. Do you think that no other option is possible at this point?

Edit: Talk of revolution makes me think of the song "Won't Get Fooled Again" by the Who, particularly the closing lines, "Meet the new boss. Same as the old boss."

Revolution may or may not improve things for the underclass, but it certainly ruins things for the upper class -- at least they are forced into playing political games all over again and cannot rest on previous political success (though, yes, if they are trained or predisposed towards politics at least they have a chance). And the credible threat of revolution forces that cool, calculated, and orderly effort to go somewhere, instead of merely watching the arc of history bend as slowly as the earth's surface.

Britain, for instance, was not irredeemably terrible during the American Revolution, as evidenced by them being basically as reasonable a place as America today and not having had a revolution of their own since then. And they even managed to do some things better (e.g., they banned slavery before America did). But the American Revolution was still worthwhile, and that gave credibility to the American approach instead of the imperial one.

>Surely a cool, calculated, orderly effort to solve the problems described by the GP would be better than bloody revolution

Well yes, but talking about cool, calculated, orderly solutions has a tendency to get you labeled a "dirty socialist" by the Right and a "dirty reformist" by the Left, with the former being overwhelmingly stronger.

Wait, are we talking about humans or our nascent AIs? Humans need hope and social / political pressure-release-valves or else ... bloody revolution.

> People aren't asking for "income equality" they are asking for some level of humanity and democracy to be restored to our version of Capitalism, to strengthen that capitalism.

That phrase could mean anything in practice that anyone wants it to mean. If we're going to discuss these things, we should be specific. What specific policy is desired, and how is it going to help? "Humanity" and "democracy" are not economic policies, nor are they specific enough goals to design policies around.

I am unsure whether economic equality is a goal that we should strive toward. I wonder if a better measure for our economy would be how well off people are at each place in the distribution. Almost all middle class people in America today still have really nice TVs, mobile phones, Internet, etc., which suggests that their standard of living is quite good in absolute terms. We should be looking at absolute terms, not relative terms.

Taxing the wealthy has undesirable effects. It's not as if wealthy people take their money and put it under their mattress. No, they invest it. That investment money flows to other corporations who then spend it on goods and services, or spend it on their employees. All of the wealth that the rich accumulate makes its way back into the economy, except it's at the direction of the rich according to their investment decisions. The alternative, if you tax the rich, is that the same money flows to the government and the government spends it on programs.

That's certainly valuable, and I believe it makes sense for the government to have tax revenue to spend on its programs, but I don't necessarily think that more revenue for more programs will lead to better results. I'd rather that we spend substantially less on wars, for example, and redirect that money into infrastructure for our own country.

Take the F-35 development program - the government has basically thrown over a trillion dollars down the drain (I'm being hyperbolic, but it's really pretty bad). A trillion dollars!! The government would have plenty of tax revenue to spend on smart infrastructure investments if it stopped throwing money away on programs like that.

I'd hazard a guess that wealthy investors through their investments are more effective at creating wealth and raising the standard of living in the country than the government is (on a marginal basis from where we are today). Investors are far better at examining where their money goes, what effect it has, and doubling down on investments that demonstrate promising results, and pulling the plug on pointless ones. The government by comparison keeps burning more and more money on programs that are clearly ineffective - examine the Healthcare.gov or F-35 boondoggles. Private investors do better. Let them keep their money to invest it smartly.

It's not as if wealthy people take their money and put it under their mattress. No, they invest it. That investment money flows to other corporations who then spend it on goods and services, or spend it on their employees.

No they don't. From what I've read (Piketty etc) they do not re-circulate it into the general economy. They use investment vehicles which are increasingly divorced from "real world" economics and more like moving chips around on a poker table. It's wealth in the service of wealth creation. All of that happens in an almost separate level of the economy. No poor or middle class person is even involved.

I'd "hazard a guess" that wealthy investors might be more effective at creating more wealth, but not at raising the standard of living of the countries they are in. In fact, the standard of living in the United States is declining.

Approximately 100% of the money that poor and middle class people spend goes to corporations. If you give them money, they spend it on goods and services. That's pretty efficient.

The alternative, if you tax the rich, is that the same money flows to the government and the government spends it on programs.

Is that the only alternative? At this point, probably. I don't trust the government either, it's a bloated plutocracy. But you could still make a completely economic/utility theory argument that the benefit to 100M+ people outweighs the overall good for the 1K+ people at the top of the current hierarchy.

> They use investment vehicles which are increasingly divorced from "real world" economics and more like moving chips around on a poker table.

Which investment vehicles are those?

You cannot in general invest money into vehicles which earn a good return but which are divorced from the real world. Imagine if you invest in a company like Apple. Apple developed products like the iPod and iPhone, and the company's value comes from the fact that 500 million people gave their money to Apple in exchange for an iPhone. Apple's $233 billion dollar revenue, and resulting net income, leads to their valuation, which leads to the return on our hypothetical investment.

The investment profits because Apple developed a useful product that people chose to spend money on - the people who bought the products benefited, and the investor benefited from a return. Everyone is better off, and the standard of living has risen. Technology makes things cheaper over time, so that more people can afford such devices. A vast majority of people living in poverty in America own cell phones.

Can you describe how these investment vehicles work such that they're earning a return while being disconnected from the real world? Where does the money come from for the returns?

> Which investment vehicles are those?

Hedge funds and the like.

> leads to their valuation, which leads to the return on our hypothetical investment.

'Return' on an increase in valuation isn't a real return. It's exactly like poker.

The way markets are supposed to work is you invest in an IPO, then you get a dividend sometime in the future, and then maybe the company buys back your shares.

The way it generally works for most people is you buy shares on the open market, then someone else buys those shares from you. This has nothing to do with the 'reality' of the company because both of you are speculators, neither has given money to the company, and neither has received money from the company. You're both just playing with poker chips.

> Can you describe how these investment vehicles work such that they're earning a return while being disconnected from the real world? Where does the money come from for the returns?

You buy into the market (non-IPO). When the value goes up, you sell. You're selling to other investors.

So the answer is, much of the money for the returns comes from other investors (not unlike a Ponzi scheme, however since you're both speculating, it's more akin to a poker table).

On a large scale the way it works is that hedge funds and traders are the ones making money, at the expense of less sophisticated traders, like mutual funds, pension funds, and retail traders.

Of course, this doesn't include the fact the dividends and buybacks actually are real, and do represent a non-trivial portion of the market, but there certainly is a large enough amount of investment vehicles which are divorced from the 'real world'.

The analogy with poker is a poor one. Poker is a zero-sum game. Capital markets are not zero sum. Capital allocation can create (or destroy) wealth, and the transactions to which you point make that process more efficient. If there were no secondary market for shares, there would less money invested in IPOs and other primary investments.

> 'Return' on an increase in valuation isn't a real return. It's exactly like poker.

Completely false. Let's talk about how investment money is used, and how that impacts valuation.

Say that a friend has started a new farm as a business and he's seeking investment. He'd like a cash investment in order to buy a tractor, harvester, and combine for the farm, which he can't afford himself. So I make the investment and the farm buys the equipment, which enables the farm to grow substantially more crops (vs tilling, planting, and harvesting by hand). By growing more crops with that equipment, the farm has vastly more revenue and earnings.

This farm has actually grown more crops than it could have otherwise - the investment led to the creation of wealth. The crops are net additional wealth, and the farm's ability to grow and sell them for revenue leads directly to the increase in the farm's valuation.

The farm grows and hires more employees; it's also an engine of job creation. All made possible by the investment, without which the farm could not have gotten started.

> Hedge funds and the like.

And what do hedge funds do with the investment money they receive from the wealthy? Do they put that cash under their mattress and somehow generate returns by doing that? No, they invest it in companies which use the cash to create wealth.

Say that a friend has started a new farm as a business and he's seeking investment.

That's really not a good example of what we're talking about here. A single family farm is not a profitable business at all. There was an HN story about it just a couple of days ago. https://news.ycombinator.com/item?id=10823747

He'd like a cash investment in order to buy a tractor, harvester, and combine for the farm, which he can't afford himself. So I make the investment and the farm buys the equipment, which enables the farm to grow substantially more crops.

No you don't. He might get a bank loan, in which case he is actually paying a fee in order to borrow that money. Now, if you were talking about the profitability of people paying you to borrow money, now you're in the right ballpark. I hear it's quite a profitable business.

Look I'm not talking about hypothetical small business hand wavy stuff, I'm talking about the trillions of dollars floating around at the top end. Most of which is currently flowing into real estate, powering various bubbles around the world.

I'll give you an example: from what I understand, Larry Ellison doesn't actually sell his stock in order to buy islands. He uses it as collateral to secure a loan. Those loans (something like 10 billion dollars worth at this point) can be spent/invested/leveraged, but it's not directly taxable because it's a loan. That's the kind of thing that you can do when you have a few billion. You don't even have to spend your own money. The net increase in the value of his real estate holdings is more than enough to pay the interest. Now, try playing that game if you have zero billions.

http://www.bloomberg.com/news/articles/2014-09-25/larry-elli...

No, they invest it in companies which use the cash to create wealth.

Apple isn't a good example either. Companies do get cash from IPO's. After that, having a valuable stock is certainly nice. Apple doesn't fund operations by selling their stock. If the stock doubles, Apple doesn't get that money. Indirectly, of course Apple does issue stock as bonuses to employees, and buys back stock to return cash to investors. If Apple was privately held they'd make just as much money. They don't need the stock at all, it's just a side benefit that they can take advantage of when they make compensation packages.

> I'll give you an example: from what I understand, Larry Ellison doesn't actually sell his stock in order to buy islands. He uses it as collateral to secure a loan. Those loans (something like 10 billion dollars worth at this point) can be spent/invested/leveraged, but it's not directly taxable because it's a loan.

Right, but if he converts money into land, the land does get taxed. Additionally, he pays a sales tax when he purchases the land.

> That's the kind of thing that you can do when you have a few billion. You don't even have to spend your own money. The net increase in the value of his real estate holdings is more than enough to pay the interest.

False. He is spending his own money, because he still pays back the loan. He borrows money, buys some land, then pays the loan back.

You just described what happens when you receive an initial investment, like an IPO. You also didn't describe how the hedge fund gets a return. What you described could also be accomplished through debt.

I was talking about something different.

Many hedge funds do invest in IPOs. They also invest in all sorts of debt: corporate, municipal, sovereign, emerging market.

It's true that hedge funds and mutual funds also invest in the stock market, which is a secondary market where the money doesn't go to the original issuers. However the existence of a healthy and liquid secondary market is what gives primary investors the confidence to buy stakes (or lend) to start-ups in the first instance. Who would want these assets if they literally had no choice but to hold onto them forever (or until maturity or acquisition or bankruptcy).

Not saying it's a bad thing, only that it's a thing, and the availability of these types of funds to the rich and lack of availability to the average investor is one of the reasons for inequality, as the original poster was saying.

Becoming 'increasingly divorced' from economic reality doesn't mean that it's completely separate, only that even in times of low growth, the ultra rich have high yield funds available to them which exacerbates economic inequality. It's just a trend. Or as Piketty states, r > g. Hedge funds used to be entirely defensive against market downturns, today they're increasingly run by speculative traders, many of whom offer outsized returns.

  > Which investment vehicles are those?

Madoff's ponzi scheme comes to mind. Everybody involved knew he had to be stealing to make those kinds of returns, they just didn't realize he was stealing from them. They thought it was some kind of front-running scheme.

I wonder if this explains why the money supply is increasing without any accompanying inflation. The money is just getting turned into economic dead weight.

I think it's fairly well established that money supply increase has led to asset price inflation (but not consumer price inflation like you said), but that has also meant bond yields have stayed low, letting companies and countries borrow cheaply to fund their various projects. So I don't think 'dead weight' is the correct description.

Of course, it may have had other, less pleasant, effects.

Erm in that case why do the Rothschilds run RIT Capital Partners - which is explicitly set up to allow non family members to invest (as I do )

Picketty explicitly claims the opposite of this. According to Picketty, the rich invest in the economy and achieve a growth rate r. As a result the level of capital stock grows more rapidly than incomes (which grow only at the rate g, for r > g).

In contrast, money spent on consumption does not grow at the rate r. Picketty even speculates (providing no real evidence however) that only the rich can achieve growth rate r - investments by others will only achieve r' < r.

Did you even read Picketty? (The math parts, not the mood affiliation.)

I shouldn't have name dropped that particular book since I haven't read it, only summaries/reviews of it.

But the question still remains of how "rich people invest in the economy". Do they really? Or is it entirely indirect? Not one of them is giving small farmers money to buy tractors. Maybe they're building hotels which eventually employ housekeepers, sure. That's what I think of as the general economy. There's probably a more specific technical term for this. But I think using a billion dollars to give small farmers loans would be the worst possible use for it. You'd probably speculate in oil futures or whatever. While it's technically all the economy, sure, I'd argue that the super-wealthy generally don't add much to the economy, they extract value from the economy using their existing wealth as leverage.

What I'm getting at is that money spent on stuff/food/buildings/etc is different than money used as a tool/leverage/instrument just to make more money. I get the sense that it's an entirely different game (again, mostly an intuition from reading a lot of commentary about economic issues).

Sure, we all earn money and pay rent in dollars. Those dollars and that activity are only tangentially related to what a hedge fund uses dollars for.

According to Piketty, rich people invest secretly into large mysterious companies. This pretty much precludes public markets, so they probably own lots of smaller businesses (e.g. hotels).

Why do you believe lending to farmers is a bad use for resources?

Investing in oil futures is transmitting information to the markets. It encourages current users to avoid unnecessary use of oil and produces to produce more. That's a valuable service.

What exactly do you think a hedge fund does?

According to two different 'Outlook of M&A' panels I attended in the past two months, corporations have more uninvested cash on their balance sheets than is typical. I mention that because even the money invested by the wealthy into corporations does not necessarily get spent by corporations. This is part of the reason why the argument for 'tax cuts for the wealthy' doesn't hold up under current conditions.

Thinking about it in terms of supply and demand of goods, increasing wealth of the middle class increases overall demand, and increasing wealth of the wealthy increases supply, but only to the extent that demand will support.

Source from 2013 but still applicable: https://www.stlouisfed.org/Publications/Regional-Economist/J...

On the other hand that uninvested cash should help more companies weather the storm in times of crisis, which should save jobs.

"Almost all middle class people in America today still have really nice TVs, mobile phones, Internet, etc., which suggests that their standard of living is quite good in absolute terms. We should be looking at absolute terms, not relative terms."

Absolute terms are meaningless in this context. It's like comparing a poor person living in Appalachia to an indigenous person living on a remote island. Does the Appalachian resident have a better standard of living ? Absolutely. Does it matter in the context of the US ? Absolutely not.

Also, you conveniently leave out some of the largest symptoms of wealth inequality. It's not consumer goods that define our standard of living, it's things like:

- Being able to pay for college without going into significant amounts of debt

- Not living paycheck to paycheck and being able to save money each month

- Eating well and not being forced to live on substandard food products that are extremely unhealthy

- Being able to afford quality health insurance, and being able to afford the deductibles and co-pays associated with it

- Being able to save up for a down-payment on a home, and then being able to afford to both pay the mortgage and keep the home in decent shape (new roof, water heater, furnace, etc.)

- Being able to afford transportation that doesn't constantly break down and result in more unplanned expenses that one cannot afford

- Being able to retire (if one wants to)

- And, most importantly, not having to work 2 or 3 jobs and have quality free time that can be used to explore hobbies and/or better oneself

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