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Comment by ddebernardy | Hacker News Reader

> It also strikes me as one of those measures that assumes that the good times (good order books, low unemployment) are here to stay.

42 people holding as much wealth as 3.7 billion might also have something to do with it:

https://www.theguardian.com/inequality/2018/jan/22/inequalit...

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Even if we buy into that (and I fully agree with ddebernardy) you're assuming that those 42 people's accrual of wealthy will continue to stimulate the German electrical and machinery based sectors. I'd cast doubt on that, they probably already have Miele appliances in every one of their homes, all the BMWs and Mercedes they need for when the supercar is inconvenient. Unless they are in the market for a submarine there isn't really much more they can do to drive demand. It is likely the middle classes, and the newly rich middle classes abroad who are driving German exports.

What matters far more is that the unions are essentially asking for a temporary 20% pay increase (plus a 6% permanent one) for two years every so often. Making the, not unreasonable, assumption that pay is a major component of manufacturing costs that would suggest that if the world economy falters (consider Brexit, Trump, southern Eurozone issues, a war on the Korean Peninsula, Iranian protests) German manufacturers might suddenly find themselves very uncompetitive.

I think you're missing the point, and you actually agree with grandparent. When people point to extreme wealth inequality, they usually argue that redistribution of wealth will give said money to people who actually use it to consume, thereby getting it back into circulation and benefitting their local economy.

Hi, I'm Rich Factory Owner. If you take my profits and redistribute it among the people to consume, that's a great opportunity for me and my buddies to raise prices to make up for the difference!

Is your argument that governments should do more to stop illegal price-setting cartels? If so, I agree with you.

You just increased demand and took away the capital that I could have used to meet that demand. I don’t need a cartel to tell me to raise prices.

Or you could just get some 0% loans from FatCat Banker and satisfy the demand that way.

I get it though, your Rich Factory Owner can only conceive of screwing someone over rather than taking advantage of all the social benefits they have access to as Rich Factory Owner.

That depends on the price elasticity of yourself and of your consumers. In a society with extreme inequality it's not a bad presumption that consumers have high price elasticity and producers low price elasticity, at least for non-essential goods.

We've been over this several times now. Oxfam uses very disingenuous criteria, and their numbers are not to be trusted. They consider debt to be negative wealth, which means that a middle class family with no net savings and a mortgage on their house is "poorer" than a starving child with 2 cents on their pocket.

How does that work? Wouldn't the house be considered an asset then and, assuming it's not underwater, put the family back in the black?

Shh... Your ruining his narrative.

I believe the point stands. If a penniless, homeless child has a worth of 0, and I have a house valued at 80,000 with a 90,000 mortgage, am I really worse off than the child without a home? Assuming I have a job and can make payments.

If you assume you can make payments, then you are equivalently assuming your job has present asset value (or that you have human capital). So yes, a full accounting will show you are not actually underwater.

If you are delusional and have no job security, then yes, you're worse off than the child.

That specific example is a bad one as you say. A better is perhaps student loans. I recommend checking out BBCs More or less, they has covered the issues with Oxfams claims several times.

Even in the case of student loans, that's still not an incorrect way to count net worth. The only problem with it is that we don't have a good way to measure the value of human capital.

One of the Oxfam reports [1] states »The 1,810 dollar billionaires on the 2016 Forbes list, 89% of whom are men, own $6.5 trillion – as much wealth as the bottom 70% of humanity«. Let's assume they accumulated all this wealth in just 10 years, how much better off could everyone have been if we evenly spread the money instead of putting it into the pockets of just 1,810 people? If we spread it across all 7.6 billion people over 10 years everyone would receive $85.25 per year or $7.12 per month or $0.23 per day.

So while the rich are really rich they are also very few and in consequence spreading the wealth among the many poor has a much smaller impact than many expect without doing the math. I am not saying that it would have no impact, it could probably lift the about 20% of the world population still living in extreme poverty - $1.90 or less per day - above the extreme poverty line if spread among them but it certainly wouldn't make everyone on Earth rich.

If you do the math for other scenarios, for example calculate how much better of all the employees of a company could be if the top executives would just receive average wages, you almost always get similar results. That still doesn't mean that I am okay with such situations, far from. I think more equality would be a good thing on its own even if the difference for most people would be relatively small.

[1] https://policy-practice.oxfam.org.uk/publications/an-economy...

Haven't Bill Gates shown what these kinds of money could buy for billions ? isn't it a fairer approach to judge such things ?

They certainly helped to improve the situation of many but I am not sure that they managed to affect a billion people. And you can certainly do a lot of good with a couple of billion dollar but you can not make really many rich. And that was my main point, the wealth of the very top is not what makes the poor poor just due to an uneven wealth distribution.

There are many ways to spread it evenly. You can build infrastructure, or make loans and investments to capital-constrained communities, etc.

But we're not talking just a one time capital redistribution.

The idea is to reverse the flows of capital to improve the "natural" pyramid of distribution.

I am not sure what you are suggesting. My point is that there is not really that much money to redistribute. To make it concrete, let's say you have a company with 10,000 employees making an annual profit of $1B before labor costs. In that case you could pay everyone $100,000 annually. Or you could take away 1% from everyone paying them only $99,000 and give yourself a nice $10,000,000 pay check every year. You are now 100 times better off than your employees but they individually just lost 1% each. So while being 1% better off might have some compounding effects in the long run this hopefully illustrates that there is often not really that much wealth at the very top if you see it in relation to the large number of people you want to redistribute it to.

You cannot expect me to make responsible decisions so long as non-normal distributions are allowed to exist!

The inequality doesn't bother me so much, but I do think such inequality gives labor a bargaining position - a position the union in this article is wisely using to its advantage.

why is it that inequality doesn't bother you so much?

Because if being rich is your goal, no one stops you from achieving it, other than yourself.

That's a gross over-simplification of wealth accrual. Hyper-concentration of wealth will most certainly prevent new entrants from entering the coveted class of the 1500 worldwide billionaires.

Regardless of desires to be wealthy, inequality has a lot more to do with inherited wealth, not the ability to be lucky as an entrepreneur. There are plenty of billionaires (and millionaires, etc) who did nothing but enter the world with the correct surname.

Hyper-concentration of wealth will most certainly prevent new entrants

We have hyper-concentration of wealth now. Yet there are new entrants entering billionaire class every year.

There are plenty of billionaires (and millionaires, etc) who did nothing but enter the world with the correct surname.

And there are plenty who did not have the correct surname at birth.

> We have hyper-concentration of wealth now. Yet there are new entrants entering billionaire class every year.

Your proof? Most of the 'new entrants' actually have quite a wealth of already accrued money. For example, Jeff Bezos had a loan from their parents for 300k, which is equivalent to for 15 people's yearly salary

The market system is a competition, so by definition everyone is (at least potentially) trying to stop you from achieving wealth. Just ask anyone who started a business, for example. Saying that the only obstacle is in the individual is, at a minimum, disingenuous.

competition != inequality

And that's assuming a hypothetical perfect market. The real world has monopolies, rent-seeking and other obstacles that make it harder for new contenders to enter a market.

Right. I should really shut up and work hard to fulfil my dream of being born in the Walton family.

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