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Comment by dmix | Hacker News Reader

Changing the graph from "Share %" to "Average Income or Wealth" shows a much more optimistic looking chart, with every country ramping upwards, almost at an exponentially positive rate.

The world as a whole is moving away from poverty and quality of life is improving which IMO is the most important metric here. Far more important to the average person than the relative wealth ratios at the top vs the bottom, which yes I know will skew the bottom end upwards in these averages, but regardless is still on an upward trajectory overall.

This should be the primary metric which success is measured by. And I hope in the effort to balance the wealth ratios this progress isn't crippled in the name of some abstract concept of equality.

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Averages can be troublesome. Compare Population A where 9 people have $1 each, and one person has $100, to Population B where 9 people have $5 each and one person has $40. Which population is poorer? Which would you rather live among?

EDIT:

How about Population C, where 9 people have $10 each and one person has $10,000?

It's a difficult question because we don't know what sort of goods we can buy in thoses society.

Assuming wealth is the same, population B is better.

( If you don't like averages maybe we should also compute standard mean salaries )

What do you mean when you say success, progress or upwards?

Here's a hypothetical: If a person is moved from a situation where they have no money, but the food, services and mobility they need for a somewhat comfortable and stable life to a system of employment that is less stable and creates dependency on this employmenet is that progress? That person or family might have moved out of extreme poverty but is their situation improved?

I suppose my underlying point is a critique of how wealth and quality of life are connected. People in Cuba get $20 a month but they have have free healthcare and housing. I spend $20 a day and can't afford healthcare and worry every month about how I'm going to pay rent.

How much of the world is moving towards a situation where we're unable to see a doctor and hold down two or three jobs to make rent in a house we could never afford? Is this an upward trend?

It’s a fair point that the income stats might be not the full picture.

It’s not really a fair point that Cuba has a better standard of living than the USA, for example.

When in doubt, look at the simplest metric - which way do the rafts flow. The desperate people flow from Cuba to Florida, and not the other way around.

There is a great TED talk by Hans Rosling showing the same improving global condition through different metrics.

https://www.youtube.com/watch?v=RUwS1uAdUcI

The world would be moving away from poverty a lot faster if there was less inequality.

Or the argument can be made that the world is moving away from poverty at the back of 1%ers. The point being that 1% is getting richer than the average person of their own country, by lifting the poorest person of a poor country upwards.

The only loser here is the middle class of rich countries, not middle or poor class of poor countries.

Correlation doesn't imply causation, or ave you got any supporting evidence of that?

The middle class in America today is wildly, wildly better off than 100, 50, 25, or 10 years ago, IMO.

100 years ago, they didn't have phase-change refrigeration, instead relying on ice. (That's why your grandmother might still call it an "ice box".)

50 years ago, they didn't have air conditioning.

25 years ago, they didn't have cars that would reliably run for 250K miles with airbags, anti-lock brakes, traction control, and which required very regular servicing to keep running.

10 years ago they probably didn't have a smart phone with the world's information in their back pocket.

All of those things are now readily affordable and very commonplace in the middle class.

All great results of relatively free markets.

And we have people complaining about housing and healthcare.... I know the solution to theses issues

I really dislike the effects that globalization and growing inequality has had on rural America in particular, but I'm not sure that _global_ poverty would be improving at the rate that it has been without globalization. Much of impoverished eastern Asia has been growing economically because manufacturing jobs have been shipped there from the richest areas in the world. Without that massive injection of capital into those areas, it would have been incredibly tough, if not impossible to get the momentum required to generate such growth.

This would be true only if China, et al, just took the jobs and did them the same. But Asia is not just known for their cheap labour, they are really really good at running factories and manufacturing products.

If their only value prop was cheap labour then manufacturing could easily have flourished in plenty of other countries with cheap labour (eastern europe, latin america, africa?). And plenty are geographically closer and have more similar language/culture to the western markets than Asia. But there is more to it, Asian countries have a talent for it and have mastered manufacturing and related industries like steel production.

I doubt any American factories could legitimately compete with Asia, even if the wages were the same, without some heavy-duty automation. And Asia has many other advantages around vertical integration of factories, such as access to raw materials, from there and other countries they've developed relationships with.

Now it's possible these advantages are just a side-effect of the fact the industry residing in Asia in recent decades but I believe there's far more to it, even regardless of the wage advantages, they are very much deserving of that industry.

I highly doubt there is some hereditary trait that makes Asians better at running factories than those other countries. It's more likely that given the tremendous amount of manufacturing that's been pushed to those countries, they have had ample practice to become leaders at the process.

If you look holistically at what happened, you're more likely to find why so much moved to Asia. Geographically speaking there may have been closer low-wage countries, but distance alone does not determine where you can build appropriate facilities.

Geologically, China has access to large ports, allowing large amounts of tonnage to flow in and out. You have a generally easy path from China to California. Eastern Europe is out because you can't easily ship to and from. Similarly, jungles and mountains in Latin/South America and Africa keep large manufacturing bases from being built. Africa lacks sufficient ports - its largest ships 1/10 the tonnage that Shanghai does.

At a local political level, you have governments willing to subsidize manufacturing and tolerate certain working conditions that other governments wouldn't. From an international perspective, you have incentives to bring capitalism to the borders of previous socialist countries as a destabilization measure (large increases in US-China trade in the 80s).

As an American, my interest is in seeing the quality of life for my fellow citizens improve first.

Yes, people in other countries are people too, etc., but they also have their own governance, their own resources, their own economics systems to manage and oversee.

I can take no active part in any of that--only my own country's.

Until we have one world government, I'm always going to prioritize the places where I have at least some capacity to pull the levers in ways I think are better for people.

(This is why I dislike, in general, the specious globalist argument, "but the poors overseas deserve wealth too," sure they do, but they also live in sovereign nations and it's up to them to guide and shape their own.)

I just want to vocally support your having expressed this view. I don't necessarily agree wholesale with the position, but I think it's a perfectly reasonable and sound preference to have, but one that, if said in public, with your real identity attached to it, you may be admonished for.

And that I find to be a shame -- that we find it so difficult to see the logic in a position we may disagree with.

Because in reality, it leads to the bigger guy (America) bullying the smaller guys (middle east, central and south america, etc) in the name of making life better for Americans. Now that China is in the fray, and India to a lesser extent, Americans will start feeling the real cost of having such a high standard of living compared to others.

Hey thanks!

The other thing is, I don't just apply this to international politics, I'm a firm believer in working to change your local politics as much as possible above all else.

How your city runs is both more accessible to the layperson and has a far bigger impact on your day-to-day experience than federal stuff, for example.

That's not to say I'd eschew federal level politics--I'm a huge proponent for socialized medicine, stringent environmental regulations, and a host of other stuff.

But when I go out and campaign, I do it for local folks.

Yes, lowered inequality is a good metric for success but it's very popular these days for it to be sold as a complete solution in itself. The problem with pure redistribution as a model for increasing wealth in developing countries, or stagnant wealthy ones, is that you can only take someones money and give it to another person once. You can't transfer a wealthy persons ability to generate wealth to another person or country.

A long term reduction in poverty and a more balanced relative income ratios has to come through self-sustainable economic development in the middle, and upward mobility from the bottom. Wealth transfer is just a temporary fix, an initial boost - but it is not an adequate endgame... as many pure socialist countries quickly learned after the glow of the early days wore off. Redistribution as a primary policy is also increasingly difficult to pull off via central policy, given global marketplace, technology's impact on finance, and the growth of countries which act as tax havens.

There is plenty of indifference in practice towards legitimately taxing the wealthy but it's been a hot topic globally for a while now and I fear this obsession has been a large distraction from figuring out how to help the middle/bottom develop their own jobs and businesses. To push up their wages and salaries as the primary goal, not just increasing the tax base for better government services and reduced tax burden on the middle.

>lowered inequality is a good metric for success

For measuring the success of what, exactly? Economic success? Average incomes? Doesn't seem to be a very good metric for either.

Lowered inequality seems to me to be a good metric for measuring the success of attempts to lower inequality, and not much else.

It's a good metric for success at giving everyone equal opportunity at birth.

Not really. You can have low income inequality through redistribution of wealth and still have massive differences in opportunity at birth based on other, non-monetary societal factors.

I see that, and yet those other factors nowadays have some correlation with wealth too. In Spain gypsies are discriminated against, with a stereotype of them being poor, not educated, and thieves. And yet the children of a rich gypsy football player won't probably even be thought of as gypsies, just kids.

That's not because he's rich; it's because he's a famous footballer. People won't know that he's rich if he's not also famous, and they associate him with the club he plays for and the skillset he possesses more than his wealth.

I disagree: You're describing what fans of him will think of his son.

But in this kid's day-to-day life after graduating, unless he becomes famous on his own, nobody will know who he is. They'll just see a dude that dresses well, lives in a well-off neighborhood, and got an education like everybody else. He won't have been raised in a violent neighborhood with poor access to education. And no employer will think twice about his application on account of his looks or the way he speaks.

That's possible, yes. However if his father is not a football player but instead is a bookkeeper, the education and accent may end pulling him out of the racial association he is in just as easily.

Yeah, agreed, I was thinking of the footballer because it's a real-life case I know of. But it's not necessary to have rich parents, just not being poor helps with those other societal factors you mentioned that hinder equal opportunity.

Theoretically only.

"You can't transfer a wealthy persons ability to generate wealth to another person or country."

When wealth generation is coming from rent collection on existing assets, redistributing wealth and redistributing wealth generation are equivalent.

In other words, wealth is the means of production.

Nothing is being produced when rent seeking.

That's a good point, which potentially leads to Georgism: https://en.wikipedia.org/wiki/Georgism

> Georgism, also called geoism and single tax, is an economic philosophy holding that, while people should own the value they produce themselves, economic value derived from land (including natural resources and natural opportunities) should belong equally to all members of society.

> Any natural resource which is inherently limited in supply can generate economic rent, but the classical and most significant example of 'land monopoly' involves the extraction of common ground rent from valuable urban locations. Georgists argue that taxing economic rent is efficient, fair, and equitable. The main Georgist policy recommendation is a tax assessed on land value. Georgists argue that revenues from a land value tax (LVT) can be used to reduce or eliminate existing taxes (for example, on income, trade, or purchases) that are unfair and inefficient. Some Georgists also advocate for the return of surplus public revenue back to the people by means of a basic income or citizen's dividend.

That actually matches my current political views fairly accurately. I didn't know the name for it (or that there was a name for it).

You can't transfer a wealthy persons ability to generate wealth to another person or country.

Isn't that exactly the VC model?

It's hard to prove that, actually.

Median instead of Average would be most illustrative

Not really. What if the top 55% made over $1,000,000 (or $100,000) per year and the bottom 45% made less than $20,000 per year? The median would look pretty nice.

Would still be more informative than the average.

Isn't it common knowledge that there is a big spike at the top end of the wealth distribution graphs.

It _is_ incredibly positive how the world economic system has been improving poverty in some of the most impoverished areas in the world. However, I don't think we can look at an average number and ignore concerns at the top end of the curve where many life quality measures and wealth accumulation have been going backwards.

The world economy isn't homogeneous, and what we may be looking at is that the current system is pretty good at taking people in economic/industrialized state A -> B, but bad at going from B -> C. If that's the case, sooner or later more and more people will arrive at state B and we will have a problem. It's even more of a problem if we get to B and it has people slipping back to state A in life qualitative measures (irrespective of imperfect quantitative measures like GDP...).

Are you sure you didnt select average income for the top 1% (which is the default on the left)

Switch to middle 40% and it will be still an increase but definitely does not look exponential - which most likely is the main point of the site creators

Depends on which average. In the case of very large wealth inequality the mean is going to make the picture a lot rosier than the median. I’d posit the average person cares more about the median than the mean as well.

What do you mean by "depends on which average"? As far as I know, average is another word for mean, and median is the middle value, unrelated to mean.

He probably meant to say "measure of central tendency".

You might be right. I'm not sure why I was downvoted for asking for a clarification.

In any case, it wasn't clear if he meant the average person or an average about wealth or income. Average could have meant a colloquial reference to the average person, or it could have been a misuse of the statistical term.

Sorry I meant wealth and thought that was obvious from talking about wealth inequality as opposed to income inequality.

I guess I was colloquially referring to the difference we would see depending on whether the mean, median or mode was used. At least from my (British) point of view these are all called an “average” generally speaking. Hopefully the second and third sentences cleared that up as I specifically describe what I meant in terms of the mean and median.

Thank you for the clarification.

progress has no bounds. it's like water, finding a route where none existed before. even if you try to dam up some portion, the pressure mounts, and the dam breaks. do not worry about stifling advancement, especially through economic means.

when it comes to wealth (in)equality, you basically want to balance greed on one side and anger on the other. sure, allow the greedy to amass a little weath to promote their playing by the rules, but only just enough for those ends. and the other side, make sure wealth is distributed enough that people feel collectively prosperous, so we don't have riots and the like (fairer wealth distribution should come from better ways to more equally value the work of all people, not just that of gatekeepers and rent-seekers; and it should especially not come from simplistic wealth redistribution schemes like universal basic income).

wealth inequality has risen sharply over the past 50 years. whether you're a lefty or a righty, most people agree that it's time to level that playing field. there's absolutely no need to worry about stifling progress as we do that.

Wealth is produced, not distributed. You earn stuff you created, not stolen from someone else

if you want such a simplistic view, then no, you don't really produce wealth, you accumulate it. we create value and that is what we accumulate in the form of wealth. money is used to abstract that value into a commonly exchangeable medium, which is the form in which wealth is generally accumulated. it's a pretty neat system at its core.

the concept of stealing is entirely beside the point.

   we create value

How ?

a good intro to the topic: https://en.wikipedia.org/wiki/Value_(economics)

Spot on, this article precisely never talks about value creation.

   we create value and that is what we accumulate in the form of wealth

So if you go to a concert, you accumulate that experience into your wealth, and you think this value should rather be redistributed ?

The average would or at least could be a rather poor metric, most people could get poorer and the average could still rise. Besides that people certainly care a lot about inequality and, in my opinion, that is absolutely justified. You don't become a billionaire by producing goods worth billions with your own hands, you become one by letting a lot of people work on the factory floors and taking a share from the value they produce. And because you can, you don't take a share that makes you ten times better of than your workers as compensation for the risks you took, you take a share that makes you thousands of times better of.

I agree mostly. The narrative that "the world is being robbed by the rich" is far from being true.

Still, its a problem that we don't understand yet, and we have no economic model to solve. Milton Friedman's economic paradigm does not help. We need something new.

But which data segment are you looking at? Top 1% national income share is the default.

The top 10% share and top 1% share are increasing. The middle 40% and bottom 50% have gotten worse. The data in some of these graphs are for as few as three countries.

It paints a picture of the rich milking the rest of the world for wealth. It does not paint a picture of global improvement for the commoner. (Though, tbf, there isn't data on quite a lot of countries, so we really don't know.)

I think ratio of top to bottom does matter, or can matter. I don't really care how rich the rich are, but I do care that upward pressure on size and amenities for housing in the US means that there is a long standing (going back decades) shortage of genuinely affordable housing in the US. There are people who are homeless in the US in part because they can't find anything for $400 or less a month in rent. We have largely done away with very basic housing, such as SROs and boarding houses. We tore a lot of those down (up to 80% of them in some cities) when the Baby Booomers were coming of age and didn't need something that cheap. We never rebuilt.

So, the US suffers from this idea that all housing needs to be appropriate for a family of four or five while our demographic has moved away from the nuclear family. We have a lot more single people putting off marriage, couples putting off having children or not having them at all or only having one child, seniors whose kids have all moved out, etc. But we don't really have housing designed for the needs of 1 to 3 people.

If we had strong policies to create enough very basic housing to house around 2 percent* of the population, then I likely would agree that I don't really care how rich the rich are compared to me. The problem is that the rich are the only ones being served here. There are huge challenges for the average person in the US.

I think the rich folks at the top are fools for doing this. This is the kind of thing that leads to bloody revolutions.

I won't be leading some bloody revolution. I am doing all in my power to reverse such trends. But I am an incredibly poor divorced single mom with health problems and adult special needs kids that still live with me. There are substantial limits on what I am likely to accomplish.

Doing a little blogging and making comments on forums is the majority of what I can do about this at the moment. Currently, I am also trying to put out flyers locally to promote some of my blogs to try to help put a dent in the high rates of poverty in the town I moved to. Unemployment and homelessness are rampant here.

But I am new to town and I lack connections and have credibility challenges. People think my "how to make money writing online" site is probably a scam. People don't want to approve the flyers for it. When they do get approved, people who see the flyers remain skeptical.

So, the reality is that the fools at the top who are milking the majority for money are the ones with the most power for trying to reverse such trends in some way (and, no, basic income is not the answer -- that is a lazy concept and won't work). I won't be leading the bloody revolution, but if it does happen, I will kind of sit back and laugh at the "victims" of it who brought it on themselves. Cuz, duh, you could see that coming from miles away and did nothing about it, you greedy dumbasses.

I am not talking about morality. I am talking about enlightened self interest here. (A la Henry Ford wanting all of his employees to be able to afford to buy a car.)

* http://projectsro.blogspot.com/2017/10/the-two-percent-solut...

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