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Comment by cal5k | Hacker News Reader

Steven Pinker's new book, Enlightenment Now, has a pretty compelling section on wealth/income inequality. The basic position - and I think the data supports this - is that it really doesn't matter what the top 1% are doing so long as the bottom half are seeing improved living conditions.

Furthermore, wealth isn't a static I win/you lose proposition - much of that wealth has been created in recent history. People spend less as a percentage of income on food and housing, have better access to healthcare, and more leisure time than ever before. It's a remarkable story.

Over a billion people have been lifted out of poverty over the last 30 years thanks to globalization. I think that's much more important than how much money Warren Buffett or Bill Gates have.

Income/wealth inequality has been the state of humanity for all of recorded history, and it seems unlikely to go away any time soon - it's trivially easy to show how wealth accumulation occurs using game theory even if trade is relatively fair. The only events that seem to reliably reset the balance are global wars, huge famines, or natural disasters.

I think it's a natural human inclination to fixate on the rich and to demonize them, and perhaps some are deserving of such demonization, but it doesn't seem to be a terribly useful way to think about improving the human condition. It just spurs on class resentment which is, if history is any guide, just about the worst way to go about things possible.

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It couldn't possibly not matter, because wealth is not only standard of living, but also power. At the highest level, the wealthy are not simply comfortable. They have the power to shape and organize aspects of the economy, supply chain, and the laws. That has to matter in some way beyond having one's material needs met or not.

It matters, and it might be ok if the wealthy were being nice about it. Unfortunately a very active subset seems to be bringing back feudalism. In the 20s-70s rich people were conveniently afraid of communist revolution and thus inclined to distributed gains. Without another credible threat of global revolution I don’t know how this gets fixed. Of course, communism did have downsides for the people who actually lived under it.

I basically agree with your first sentence. Specifically, I don't believe capitalism itself is the root problem, but rather something like a deficit in social cohesion. No sense that we're fellow humans collectively struggling towards a better society. That sense doesn't necessarily imply a communist implementation. It could mean something as simple as an ethos in which those who are better off try to help others up. I couldn't begin to address how that might come about, and I'm as wary as anyone about trying to use a State to do it. Because the State never actually turns out to be the People, except in the naive or fanciful abstract.

Capitalism works fine, the only 'flaw' I think it has is that excessive capital can compound way too fast.

If you have $10m, and you invest that really really really well, you might be making 10 to 30% on that capital. Maybe more if you're an entrepreneur investing strategically. That's fine.

But let's say you're worth $1bn, and you compound at 10% per year.. you're making money hand over fist. Add smart use of debt to that, and that's probably too much rent seeking to be healthy.

Basically, once you pass a few 100 million, I think it gets really unfair. Below.. it doesn't really matter. No one will live in poverty because someone owns $100m -- it's meaningless in the grand scheme of things. But wealth is a snowball that doesn't grow fast enough on the low end, and too fast on the high end.

The only way to fix that would probably be a global wealth tax, but I don't see that happening anytime soon.

"downsides"

Largest understatement I've seen in a while.

Between Mao and Stalin alone you're probably talking 50-100MM deaths. That's one hell of a downside.

I assure you, capitalism has killed more people than that. We just don't call them victims of capitalism.

At least in Capitalism you are allowed to talk about your suffering. In the communist utopias of the 20th century, speaking of your suffering or trying to alleviate it was a capital offence.

I'd really like to see your accounting to see if it's apples to apples, because the 50-100M is not counting people who died due to proxy wars, or anything like that, just people who lived directly under communist governments, and died directly because of communist policies that lead to things like mass starvation, and in many cases, because of literal death squads.

It's surprising that people already seem to be forgetting how incredibly horrible communism was when implemented.

We're going to need more than assurances to see your point.

You can assure me all you'd like, but it's data that I find compelling. Many of the deaths in Maoist China were of starvation, a direct consequence of Mao's crackpot policies. Venezuela is a striking modern example of the same phenomenon.

If you can find an example of a government's commitment to free markets directly resulting in the starvation of tens of millions of people your argument would be much more credible.

EDIT: This is re: the comment below. We've reached HN's maximum allowable comment depth.

"Nice about it"? What should they do, hand it out to people?

Pay their taxes without whining or trying to take over the government. Don’t try to discredit science to protect your wealth. Consider the social costs of their investments. Engage in substantial philanthropy.

That's a good argument, and to many it's an argument for wealth redistribution. I prefer to look at it instead as an argument for limiting the powers of government in order to limit its susceptibility to corruption.

The main thrust is that this seems to simply be a consequence of differing ability/circumstance, and there is no counter-example in recorded history - even our views on the "noble savage" are probably skewed by the fact that large hunter-gatherer societies with enough wealth to allow accumulation have been stamped out.

The follow-on question is: what do we do about it? Attempts to artificially "correct" inequality for the sake of correction are universally disastrous. Progressive taxation and redistribution are, I think, reasonable, as is universal basic income, and sound government has a huge role to play. But the goal should be to provide basic services and create opportunity for the bottom 50%, not wrest control of wealth from the top 1%.

The goal of actually stamping out inequality is a fool's errand.

Fortunately, thanks to your solution, the basic services for the bottom 50% will make them no less free than slaves... (admittedly, history happens like that but it's been continually fought)

Does limiting government limit the powers of the wealthy? It would limit one channel for them to exercise their power, but other channels like corporate control would exist.

I believe we are going to find it increasingly essential to view corporations as a second government that has a particular relationship with the nominal one.

The key difference is that you can opt out of your relationship with one, but not the other.

At least they tend to lock horns. To the extent that the two collaborate, we should be suspicious.

The choice of opting out only exists where competition exists. Without a government to keep corporations in check, your ability to opt out would evaporate.

And yet a powerful government is really good using its power to limit competition, discourage competitors, protect incumbents, and so on.

A powerful government is also really good at using its power to increase competition, encourage competitors, protect new comers, and so on. And a powerful government in command of its people will do more of that.

What government "power" is required to 'encourage competitors'? If there is business opportunity the market will attract participants all by itself without any need for government intervention.

In my experience, government incentives are generally misguided and force mis-allocation of resources. That is to say the government is distorting the market to favor activity that wouldn't otherwise be attractive to a business.

Net neutrality would be a good example.

In what sense? ISPs are government-granted monopolies in the first place.

More on the issue: https://www.wired.com/2013/07/we-need-to-stop-focusing-on-ju...

Yes, imagine how much more competition there would be on the pharmaceutical market, say, if governments didn’t discourage innovation by demanding that products be tested and safe. Think of barriers to entry it creates in the chemical industry that waste must be discarded of in highly regulated (and expensive!) ways. Not to think of air travel, which is so regulated that I doubt we’ll ever see a startup in that market ever again. /s

This seems to me to be the trap of a false choice between regulatory power without bounds vs no regulation at all. A much more interesting discussion would be about the proper scope of regulation.

To take your example regarding pharmaceuticals, instead of mandating a particular regime of testing and efficacy, why couldn't the government require products that have not passed that particular hurdle be labeled as such?

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

This podcast, about workers rights and how companies are basically private governments, is really interesting: http://www.econtalk.org/archives/2018/02/elizabeth_ander.htm...

What sorts of instances of corporate control are you thinking of here? Most examples that come to my mind involve corporations wielding the power of the state over people.

Control of mineral resources, for example. Mining and oil/gas companies are already some of the largest corporations in existence. These are capital-intensive businesses where small entities often can't survive market downturns. Small resource owners get acquired by bigger ones during periods of financial distress, or juniors pre-emptively try to join forces with established companies as soon as they have a proven project to develop. The "natural" tendency, in absence of limits imposed by states, would be to reap maximum economies of scale, control over pricing, and resilience to downturn by combining extractive businesses without limit. A handful of giant corporations could acquire a commanding position over every mineral commodity required by industrial civilization. OPEC could be a very effective price-setter indeed were it a transnational corporation with unified ownership. Its monopolistic aims are actually hobbled by the diverse ownership of the oil fields of its members.

If you picture eliminating the state altogether, including its enforcement of property rights and contracts, then I concede that the powers attendant to wealth would no longer involve a de jure state. I think that the powers of concentrated wealth would remain nonetheless. Wealth would hire private guards to exclude others from their mines instead of using the law enforcement apparatus of a state, for example.

> Its monopolistic aims are actually hobbled by the diverse ownership of the oil fields of its members.

So, "competition"? Cartels in general are unstable because of these internal competitive forces.

I get that corporations with large market share can set prices in the short term. But every resource has a substitute. Even oil. So even price-setters have to operate within limits or risk their power being marginalized.

I am picturing the elimination of the state. And I agree that one can enforce his own property rights.

Where market competition exists it's effective in limiting prices and spurring innovation. But the natural tendency of successful businesses is to minimize exposure to competition. That can happen by buying the competition even if there's no state. (You can argue that regulatory capture is how successful businesses minimize competition by using the state, and I'm sympathetic to that argument, but it's also just another example of the tendency to eschew competition.)

OPEC is frequently divided against itself in terms of production targets; ExxonMobil is not. In a world without states there's no antitrust regulation preventing ExxonMobil from acquiring a market share equivalent to present OPEC, then exercising that pricing power with more effective discipline.

I am picturing the elimination of the state. And I agree that one can enforce his own property rights.

An entity that answers to no higher authority and enforces its own territorial claims with force is a de facto state. I understand and sympathize with many arguments for personal liberty over the power of the state. I don't understand the implication that unbounded private power is more trustworthy. It's an affront to liberty for the State of Delaware to exist and enforce its laws at the point of a gun, but it's ok if a corporation or family can acquire a Delaware-sized, Delaware-shaped parcel of land and enforce its decrees at gunpoint within those borders? That may not fairly represent your point of view. I have previously had arguments where self-proclaimed anarchocapitalists affirmed that it's fine for a small group of people to wield power equivalent to a state government as long as it's not called a state.

> but it's ok if a corporation or family can acquire a Delaware-sized, Delaware-shaped parcel of land and enforce its decrees at gunpoint within those borders?

Since "acquire" implies voluntary vacation of the premises by those who previously owned and occupied it, yes, exactly. I don't see a particularly problem with that scenario.

Consider the British East India Conpany, which at its peak controlled a vast territory and had an army larger than the British government’s.

For smaller, more common examples, look at the history of company towns and union busting.

Companies these days exert control by manipulating the power of the state because the state usually won’t allow them to exert control more directly. Nothing says it must stay this way.

There are some historical examples of corporate control of people's lives.

Henry Ford's Sociological Department did unannounced visits to employees' homes to ensure they were "model Americans" and probe for union ties.[1][2]

Walmart "locking in" janitors.[3]

There are a lot more examples of negative environmental and financial impact, I picked these two as they are examples of controlling human freedoms.

[1] Negative source: https://jalopnik.com/when-henry-fords-benevolent-secret-poli... [2] Positive source: https://www.thehenryford.org/collections-and-research/digita... [3] https://www.nytimes.com/2004/01/18/us/workers-assail-night-l...

If you're engaged in a voluntary business relationship with a corporation, they're going to have their own terms, reasonable or not. And yes, the more asymmetric the relationship, the less reasonable the terms.

Fortunately, working for any particular corporation is voluntary. And thankfully, it seems that sunlight has disinfected these specific extreme practices. Hadn't heard of either.

Off-topic: This is the first I've encountered explicit citation of negative/positive sources. I like it.

Actually, government is generally a limiting factor on the power of wealth, just like it is a limiting factor of the power of violence etc. That's kind of why we have governments.

Now of course wealth tries to subvert that, and particularly in the anglo-saxon countries, the US first among them, it has been particularly successful.

The government is a small part of the state. The police and armed forces are part of the state, and can be corrupted, even if the government is impotent. All the individual rights and guarantees in the world are of no help to you, if the generals or police chiefs are corrupt.

that is really funny mistype :)) makes one think... :)

Capital concentration increases the impact of capital mis-allocation.

A market economy is more efficient than a command economy. A market with only one capitalist is a de facto command economy.

A small and limited government is a weak government. A weak government is susceptible to corruption.

To avoid corruption you need the state and the collection of the most powerful corporate/private actors be of similar size, and they must be as isolated and independent as possible. This way you get a balance of power, rather than one corrupting the other.

The problem in the US is the isolation/independence part. Money in politics and revolving doors has corrupted the balance.

“Limited government” is an idea sold by people who want government to be weaker so it’s more easily corrupted.

What we should strive for is the middle way. Just the right amount of government.

> A small and limited government is a weak government. A weak government is susceptible to corruption.

Why? Also, is that borne by history? Was the US federal government more corrupt when it was more limited?

> A small and limited government is a weak government. A weak government is susceptible to corruption.

Your assertion isn't self evident. A government could have great power within its defined scope of power and little power outside that scope.

There is also a reasonable argument that as the scope and strength of government power increases so does the desire to corrupt and control that power.

Which is more dangerous a corrupt but weak and limited government or a corrupt strong and expansive government?

The integrity of a weak government is uninteresting. Let them be corrupt, what will they do? Reprimand you?

If the government has power. If is an authority in the eyes of the people. In those cases we should care about the integrity of the government.

It’s not a static group. Those in the 1% are not the same group over the following years. This has been well established.

For another simple example, look at the Fortune 500 of today vs 20 years ago. Very few companies remain, it’s still very much fluid.

I think it's more relevant that the vast majority will never be in the group, than that the group's roster changes.

By definition, only 1% of people can be in the 1%...

*At any given time

You could have a contrived round robin system where 100% of people eventually end up with 100% of the wealth.

> For another simple example, look at the Fortune 500 of today vs 20 years ago. Very few companies remain, it’s still very much fluid.

To my eyes, your statement seems to be completely false.

http://archive.fortune.com/magazines/fortune/fortune500_arch...

Ooh nitpicking! Okay, I’ll bite, so let’s just go through the top 10 from 1998 and 2017 to see if there is any dynamism or if it’s a static body like you’re suggesting.

1998, 2017: 1) GM, Walmart 2) Ford, Berkshire Hathaway 3) Exxon, Apple 4) Walmart, Exxon 5) GE, McKesson 6) IBM, United health 7) Chrysler, CVS 8) Mobil, GM 9) Altria, ATT 10) ATT, Ford

Wow, outstanding ! As you can see there are a number of companies that are new, dropped lower ranking, moved up in ranking, and completely disappeared.

We could keep going even further back a decade and the changes will be more visible. There’s a few companies who are entirely gone from the top 10, and I can guarantee that none of them wanted that outcome.

So to you, I say, got any more nitpickings?

There's a lot to agree with, for example the things Pinker talks about and the fact that wealth is not necessarily a zero sum game.

However...income inequality by itself is a problem. Hmm...I thought it was one of Hans Rosling's (amazing) TED talks, but now I just see Richard Wilkinson's talk:

https://www.ted.com/talks/richard_wilkinson

Anyway, the fascinating thing is that everything gets worse in a country when there is "too much" inequality. Even the rich in unequal countries are worse off by many/most measures than the rich in more equal countries, despite having more money. (And even than the not quite so rich in the more equal countries, IIRC).

And that's without the whole pitchforks action that starts to happen when things get too out of hand.

So yes, there is some level of inequality that we need to tolerate in order to run a basic capitalist economy, and interestingly enough most people are OK with that. But you also need to work hard to not let that inequality get out of hand, and not because of a bleeding heart, but because of pure self interest.

I think this is fundamentally the correct point of view, however my argument would be that it's best to focus on improving the lives of the bottom half than bemoaning the wealth of the top 1%. This can be accomplished through progressive taxation and the like, which as a secondary benefit does reduce inequality.

Agreed that that needs to be the primary focus...however (you knew there was going to be a "however"):

Income and wealth inequality have reached pretty ridiculous levels, and noting that as a problem is not "bemoaning" people their (well-earned) wealth. A lot of that is not money earned by advancing society, a lot of is extractive/rent-seeking that is actually harmful (cough 2008 cough).

For example:

"The median American estimated that the CEO-to-worker pay-ratio was 30-to-1, and that ideally, it’d be 7-to-1. The reality? 354-to-1. "

https://www.scientificamerican.com/article/economic-inequali...

Sorry, 354:1 is absolutely ludicrous, and I know a little bit of what I am talking about. My father was a high-ranking auto-executive, had actually been planned to succeed Carl Hahn as CEO of Volkswagen, but some funky politics got in the way of that. He never made that kind of money, and didn't want to. He thought it was obscene. And it is.

He also thought unions were a Good Thing™, and they are. If nothing else, they are selective pressure on companies to become better. And that's despite having that belief tested to the limit, because at VW the unions pretty much run the place.

So yes, envy is not a good thing, but noting that CEO pay is ridiculous, that banker's bonuses need to be reined in lest we all suffer the consequences, again, and that inheritance tax is not the devil is not "bemoaning".

Most people don't become wealthy by getting a job as the CEO of a large company - they start companies, work in finance, inherit their wealth, etc.

It's an entirely symbolic ratio. If you halved it tomorrow it would not make one whit of difference. It just sounds outrageous and makes for compelling headlines.

> [Most people not CEOs → finance, inheritance, start COs]

Hmmm...I actually mentioned finance and inheritance. Both are at current scales arguably worse. Finance has devolved into rent-seeking that leeches off the real economy and caused the 2008 crisis, with virtually no consequences. Unlimited inheritance creates oligarchies with wealth and power that hasn't actually contributed to society.

> entirely symbolic ratio.

Er, no. Please read up on behavioral economics. If rewards are too lopsided, the game too obviously unfair, people stop playing. That's a really, really, really bad outcome. One we want to avoid at nearly any cost.

I'd be interested to read more on the topic if you have some recommendations?

My suspicion (hypothesis, really) is that CEO compensation is too abstract a concept to actually impact behaviour all that much. It might spark outrage when people think about it intensively, but most people would be more focused on specific, tangible barriers to their economic wellbeing. Examples might include applying for jobs, networking, performance reviews, salary compared to industry average for their role (higher or lower?).

I would imagine that behavioural economics in academia is probably very specific and attempts to be predictive, whereas behavioural economics in popular journalism is more philosophical and hand-wavy.

everything gets worse in a country when there is "too much" inequality

How sure are we of the causality here? Does inequality make these things happen?

Maybe countries with strong feelings of unity tend to look after their poorest members better, and tax or restrain their wealthiest members more strongly. In countries with no such feelings it's every man for himself, and those who can screw those who can't, economically and politically. These are less nice places to live, but inequality is one of the results of this, not the cause.

> How sure are we of the causality here?

Does it matter?

In fact, I am almost certain that these are results of other things, but that they are so closely linked that if you get income inequality as an outcome of those other things, you also get the other negative results. And vice versa.

I think it does matter. Almost every discussion of inequality seems to be tied to a discussion of whether to use taxation (or other laws) to change it, with a view to changing these other things. And that only works if the causal link is from the money to the bad things.

I'm not sure that there is no causality, BTW. I'm just objecting that too much discussion assumes it's obviously all causality: The money just falls from heaven onto certain Brazilians, not others, and that's why Rio has the murder rate they do, and you could fix it with income tax. This seems crazy.

I don’t think it’s sufficient that conditions for the bottom 50% are just improving. In my opinion, humanity has the technology to provide for everyone to have access to clean food and water, modern medical care, and primary education. These should be provided without regard to the ability of the recipients to pay. Wealth inequality definitely gets in the way of this goal, as wealth that might help achieve these goals instead ends up in he hands of a few. In the US we effectively deny modern medical care to poor folks - you are required to go essentially bankrupt before Medicaid kicks in. Many people forego care so they don’t go bankrupt. The fact that more sane policies have not been implemented is a direct result of the influence of a wealthy political donor class which does not want to help pay for such a system. Inequality is inevitable, but we at least ought to move the safety net up a bit (and globally too).

I don't disagree at all. I just don't see how railing against the notion of inequality does anything to address this - the US collects enough in tax revenue to solve these problems already. What it needs is better policy.

I should also mention that I live in Canada which, though flawed in many ways, seems to have struck a better balance.

Canada (and most of Europe, for that matter) don't bear the costs of their own defense. That helps a lot.

You may be wondering who would want to attack Canada. Well, you have an awful lot of wheat and oil, and China has an awful lot of hungry people and factories.

China spends less than half what America spends on defense, and yet nobody is crazy enough to want to attack China. I'd also argue that a de-escalation in defence spending is entirely possible without sacrificing national security.

Would China invade Canada if the world's defence budgets dropped precipitously? Probably not - it has far more to gain through trade than by attempted colonization.

In fact, last time I checked nobody in Canada or Western Europe was asked to vote on the US defense budget. I'd gladly vote to cut it in half and devote more to shoring up your healthcare system, but it's a sovereign issue and it's up to Americans to solve it for themselves.

> China spends less than half what America spends on defense

We're not talking about what China spends. We're talking about what Canada spends. Which wouldn't be enough to defend against Mexico in a fair fight, much less China.

> Probably not - it has far more to gain through trade than by attempted colonization.

Yeah, well, you might want to talk to Tibet, Vietnam, and India about that. Or, for that matter, any of the people who are being displaced by Chinese colonization in Africa as we speak.

Edit: lots of food for thought here. https://duckduckgo.com/?q=chinese+colonization+africa&ia=web

This is actually a perfectly logical thing for Canada to do given our geographic proximity and economic ties.

Do you know what would happen if the US suddenly dropped its defense budget and pledged not to defend its NATO allies? We'd spend more on defense. Although to be frank, the idea of Canada facing China solo in a military conflict is ridiculous.

In 2017 we spent around $19B on a federal budget of about $311B. If you accounted for provincial budgets, it's probably close to $500B in annual expenditures. We could easily triple our military spending without adversely affecting the economy.

The more important question: why does the US spend so damn much?

We lack universal healthcare in this country because the value system shared by approximately half of voters rejects it. This is not Elites vs. The People. Conservativism is a real thing that vast numbers of voters really believe in. Curtailing the power of elites sounds great, but what you are actually talking about is curtailing the power of vast swaths of the population.

I think a point can be made that most of those voters rejecting universal health care are persuaded to do so by the very interests of those very wealthy.

> People spend less as a percentage of income on food and housing

I've lived in several places in the last few years and this couldn't be further away from truth. I spend the same or more % of my income in housing than my parents did, and I get much less for it. They were able to buy a 4 bedroom flat in town working blue collar jobs, and me, with an engineering degree, probably could aspire to a 2 bedroom out of town at best.

I totally empathize with your situation, but globally the numbers are irrefutable.

That's not to say that many people aren't still struggling - we can always do better, but I think there's reason to be optimistic.

> I totally empathize with your situation, but globally the numbers are irrefutable.

Indeed they are. Here are some numbers from NPR (hardly a right-wing thinktank):

https://www.npr.org/sections/thesalt/2015/03/02/389578089/yo...

In 1960, Americans spent about 18% of their income just for food. Now it's less than 10%.

And, of course, the quality of food available to a typical American is vastly better than it was in 1960.

The quality of food is better? That's hardly believable. Do you have a source? All first person accounts I've ever read from people who lived then and now indicate otherwise.

My grandparents didn't have a freezer until the 1950s. They kept a beef in a commercial freezer 15 miles away in town. They grew vegetables that they sold to grocery stores, so I guess they had good access to that sort of thing.

I doubt any of the stores my parents shopped at in the 1960s Midwest particularly had things like avocados.

This is to a large degree explainable by way of "rosy retrospection".

Quality has many facets - for example, I doubt they could tell you how often people in their youth died from salmonella, e. coli, or the like. Food was also significantly more expensive, and in colder regions fruit was nearly impossible to come by in winter months.

Was an apple from 1918 more nutritious than one bought in store today? It's possible, but then again nobody (in the developed world) in the 2008 recession was in danger of starving - a very different proposition than during the Great Depression.

> The quality of food is better?

The quality of food is immensely better.

For one, you can get actual fresh veggies and fruits year 'round, even in the northern regions.

They didn't have Whole Foods in 1960, dude.

In fact, 1960 was the era of Cheez-Wiz, TV dinners, Tang, Velveeta, and Wonder Bread.

First of all it is an illusion to say that conditions have improved because of capitalism alone. In most of the places where people had some improvement, this happened because of socialist policies of wealth redistribution lead by the state, including in the USA. If you go back to the US of the 1910-1930s, most people lived in near poverty, with the "dream" of one day becoming something else, until a socialist plan of wealth redistribution called new deal was implemented.

Second, wealth inequality is a direct threat to the democratic system. In a country that has extreme levels of wealth concentration as we see here in the US and elsewhere, it is very easy to enact policies that harm society in general in benefit of the minority that holds economic power. This in fact was the downfall of capitalist society in the 1920s. In such a society, there is big turmoil among the general population, which frequently leads to revolutions and economic disasters. We are just starting to see this pattern happening the the US, with increasingly big economic calamities such as in 2008 and political turmoil such as the election of Trump. I wouldn't be surprised if the US and similar countries are heading towards a popular revolution as we saw in the 19th and early 20th centuries.

Further, even if we give 'capital' a pass (the use of imaginary points to grease the wheels of trade) and move on to the Free Market. A market works if everybody has something to trade there. For those that bring only their labor (whether ditch digging, medicine or engineering) they have a finite value over their lifetime - they will never be wealthy as the top 1% are.

Now automate. We no longer need the labor of millions to run the machine (country's industry). We need only a million. Then only a hundred thousand. Then none. What happens to the 'laborers'? They are dropped out of the bottom of the machine as scrap.

Its this 'means of production' that gets us into trouble - when a few folks squat on it and call it 'theirs', the rest of us are reduce to marginal participants in the machine, expendable.

Automation is happening in the US at an explosive rate. Heard about a factory coming back from China? Only because now even Chinese labor is too expensive, if you can automate. There are insignificant jobs 'coming back'. And there never will be any more, again.

No, the age of labor is nearly over. And what will the millions of us do then?

This just points out that capitalism as it is practiced nowadays is unsustainable. Not news, of course, the general functioning of the system is known since the 19th century, but the shoes are starting to drop. Since technological revolutions happen so fast, I wonder if we're already seeing the beginnings of the downfall of all this.

If you go back to the US of the 1910-1930s, most people lived in near poverty, ... until a socialist plan of wealth redistribution called new deal was implemented.

Actually the USA in 1910 was the richest society the planet had ever seen. This was why half of Europe was busy trying to move there, to start at the bottom. (It was poor by today's standards, of course.) It's a lie to claim they got rich "because of socialist policies".

The depression was a brief dip in the growth of the income of the average guy, over let's say 1870-1970. Things went backwards by the equivalent of about 15 years or progress (on average! it was rough for some). The effect of the new deal on ending this, or perhaps prolonging it, is a confusing issue. Certainly it paid some people's wages, and hit some rich people hard (and had non-economic implications too), but my understanding is that there's a serious argument that, without such action, the depression might have been sharper & shorter, like the 19th C ones.

Do you know that real people need to EAT, right? If the big depression had been even worse, it wouldn't matter if it were shorter, because most people would be dead at the end. Humans can only go a few days without food and basic necessities. This shows why conservative thinking is a dead end.

Are you claiming that there was starvation in the 19th C depressions, England / USA? This would be news historians.

Besides differences in government response, the other big difference was that employment had become more secure, more long-term, more Henry Ford and less Charles Dickens. You could indeed argue that this made it more serious. Compare a 20% drop in employment which meant 4 days a week for everyone (because they were all casual, factory or farm) vs 1/5 of workers (who thought they had jobs for life) being unemployed for years.

> Are you claiming that there was starvation in the 19th C depressions

I am not claiming nothing of this. But everyone knows the huge toil of the great depression on poor workers. The only reason why the new deal was enacted is that people were on the verge of revolt. If the recession had been any worse, there would be blood on the streets and even more people would starve to death, and possibly the US government would be overthrow by communists who were very active at the time. That's the fundamental reason why these silly ideas pushed by conservatives never come to fruition: a completely free market is guaranteed to lead to revolution sooner or later.

Oh I don't doubt that the new deal was politically a good idea. Blood on the streets is bad for one's re-election prospects. And communist overthrows certainly produce lots of blood.

I'm just dubious of claims that it was economically a great idea, especially in the long run. This seems to be unclear from the data, looking back from a safe distance.

The knee jerk response of 'envy' to any discussion about inequality trivializes economic discussion. Given this is not mere conjecture but backed by hard data by the work of economists like Piketty[1] continued talk about envy betrays a camel in the sand approach.

There is now consensus among leading economists like Stiglitz [2] and even bastions of neoliberalism like the University of Chicago and IMF that something has gone seriously wrong in the last 40 years.

Piketty's data shows a dramatic increase in inequality since the 1980s with labour share of income shrinking with wages stagnant and essentially at the same levels as they were 40 years ago with disproportionate gains going to the top 1 percent.

Grandiose claims about lifting 1 billion people out of poverty are meaningless without any data to back them up. Where, how was it achieved, how long it did take, which specific policies? Why haven't we been able achieve these results in the poorest parts of Asia, Africa and even the USA inspite of trying for the last 70 years?

Contrary to the 'envians' no one cares about the rich in any serious economic discussion, but many do care about the majority in a society getting poorer, unequal outcomes, bad economic policies, lobbying and capture, exploitation, unemployment, underemployment as this can only lead to highly unstable societies.[3]

[1] https://www.newyorker.com/news/john-cassidy/pikettys-inequal...

[2] https://www.theatlantic.com/business/archive/2015/11/stiglit...

[3] http://evonomics.com/joseph-stiglitz-inequality-unearned-inc...

> Furthermore, wealth isn't a static I win/you lose proposition

In some areas that's true, but in others it isn't. There's only so much land, and if rich people own all the best places to live (i.e. the ones within reasonable driving range of jobs), then the poor people are stuck paying rent.

Other examples are that the rich have a disproportionate influence on the political process, have greater control of the media, and increasingly (thanks to Facebook, Google, etc.. and advances in machine learning) they have fine-grained knowledge of the opinions and preferences of whole populations, knowledge which is used specifically to influence the behavior of those people -- mostly through ad placement, but also to influence elections (e.g. the recent Cambridge Analytica scandal).

Your example would create an opportunity for companies to relocate to areas where where "poor" people live (and buying a house is affordable).

It would, for awhile -- until the real-estate speculators catch on.

I haven't read Pinker's book and he is certainly more knowledgeable than I am on the topic. What does he say about attitudes like "keeping up with the Joneses", jealousy, and similar emotions? It seems to me that most people tend toward jealousy and compare themselves to those who are better off rather than those who are worse off.

I've been under the impression that disparity, inequality in and of itself is a problem due to human nature. Does Pinker's research show otherwise?

I think the picture is perhaps more muddy than it's made out to be re: "keeping up with the joneses". I can't really speak confidently to the research from memory, but Pinker does address this specifically.

I think it's disingenuous to label someone who is struggling to fund housing and healthcare as just jealous.

I think it's disingenuous to argue against words the above commenter did not actually write.

It seems to me that most people tend toward jealousy

You added a phrase that I did not write.

as just jealous

I did not write this or imply this. People who struggle with food or housing are not merely jealous. They have real concerns and need. The discussion I referred was not about such people or conditions.

I was responding to the notion that inequality does not matter as much now because conditions for the those at the bottom have improved. Clearly the implication is that we are not talking about people struggling with food and housing. The idea is that if everyone has their basics needs met does inequality still matter?

I suggested it would still matter due to the tendency toward jealousy and comparing oneself to those who are better off.

People who struggle with food

Now you are mis-quoting.

It was fairly obvious what you were implying.

I misread “fund” as “food”. I’m on a mobile device without my glasses. Sorry for the error. The mistake was mine.

It is bad for you to ignore the rest of what I wrote in my previous comment. I think I did make it clear what I was talking about. Specifically, what reasoning does Pinker give for believing that inequality doesn’t matter as much? He claims that it doesn’t matter. I would like to know why this is so given the tendency of humans toward jealousy and similar emotions.

Despite my clarification you appear to still be under the impression that your original interpretation is correct. Since we don’t know each other common courtesy mandates that you accept my clarification.

I think inequality does matter. But Pinker does not and he is much more knowledgeable about the issue than I am. Hence my inquiry into why this is so. Addressing the inquiry would be the proper way to respond to my original comment. Or, ask if indeed I think people with real struggles are merely jealous instead of making that assumption.

I think you need to go and read your original comment a bit more thoroughly then, I just did and it seems pretty clear to me what you were intending to imply.

We’ll certainly don’t not accept my clarifications. At some point it is just being pig headed to do otherwise. I don’t need to reread my original comment because I know what I intended b6 it. I’ve since clarified.

An expert claims inequality is less of a concern than it used to be. I wonder why due to attitudes like “keeping up with the joneses”, jealousy and similar emotions. Have those gone by the wayside since those in the bottom economically are better off now? It’s a legitimate question. You apparently don’t know the answer or don’t care to answer it. Why then comment at all?

What do you hope to gain by your posts? In what way do they contribute in a positive manner? I’m clearly not denigratingmthise with real struggles, I’ve said as much directly yet you persist. It’s quite fascinating.

> think the data supports this - is that it really doesn't matter what the top 1% are doing so long as the bottom half are seeing improved living conditions.

But what if there are alternative models where the bottom half are improving faster than they are now? I think it's helpful to think about different economic models in terms of optimizing a figure of merit. Free-trade globalization is probably good for optimizing aggregate global GDP. In a democratic society, that's not necessarily the most relevant figure of merit. Are there a different set of economic rules that, for example, maximizes the wealth of the middle 50% (such that they have more wealth under that system than they do under the current one)?

Improved living conditions are great, but not at the cost of ceding almost full control of what goes on in the world to a small handful of people.

Even if many of them are benevolent for now, it may not always be that way. It's simply not a safe system. We need a level of opportunity for all to advance. And that means some level of economic equality for all.

This is a matter of intrinsic justice but also more importantly a matter of practicality to avoid the hazards of slavery, corruption, dynasty and stagnation.

Inequality has always been, and likely always will be. And this natural and its fine (like most things) within certain parameters. Inequality doesn't doesn't need to exist at these extremes. Its dangerous.

Income/wealth inequality always happens and probably always will, but it doesn't NEED to be so big and become bigger and bigger as it's doing since Reagan started the movement to tax the rich less and less.

Riches are not working at all, so it is not important how much taxes they will pay, because all taxes will be paid by workers.

The richest pay the vast majority of the tax in the US, regardless of whether they work. And the very richest in the US almost all got there by working, many of them by starting huge companies.

Marxist reverence for the proletariat has been an enduring concept. The problem is that nobody has actually defined who the prols are - are they the factory workers? Entrepreneurs? Teachers? Accountants? Lawyers? Engineers? Civil servants?

The US economy is crazy diverse. There really is no such thing as a unified working class struggling against "the man".

If you're just talking about Marxian definitions, it's simple:

Owns means of production: bourgeousie

Works without owning means of production: proletariat

Where do all the workers who have 401k plans composed of shares of all the public companies in the US fit?

They don't. I'm not even sure what the "means of production" are in a service economy like the US.

I'm not sure what you're trying to do. Do you want to have a sincere discussion or do you want to just debate semantics and pull out exceptions?

Do those workers have say in their economic situation? Can they change the direction of their company without losing their jobs? Do they have economic and political power?

Stop equating stock ownership in a fund as if it is "owning the means of production." You know that it is a mere extension of the word "own" and it probably doesn't refer to what Marx talked about, so stop trying to twist definitions and thinking it counts as sincere argument.

Owning part of a fund is equivalent to owning part of their holdings, which includes owning the means of production owned by those companies in which they hold shares. I don't agree that it's semantics to point out that the divide between "owners" and "workers" is not at all clean in the US.

I think there were other classes than just capital and prole, for example the Kulaks. So blue collar workers with enough wealth to participate in the capital market but not enough to take it easy forever would probably be some other class. Maybe "middle," class: something which was very small and weak in every country that turned communist.

Weren't the Kulaks essentially massacred?

What about prostitutes?

Or Uber drivers...

Actual tax rates as a percentage of total income are remarkably flat in the US. It is commonly stated that the rich pay almost everything, but this is done by examining only the federal income tax and ignoring all the other taxes we pay.

I didn't say that they paid a large proportion of their income, I said they paid almost all the tax. That's because their incomes tend to be much much larger than those of the poor.

I was responding to "because all taxes will be paid by workers.", which is complete nonsense.

That’s not true either. The top quintile accounts for a slight majority of income in the US, and someone at the 20% mark, while doing quite well, is far from rich.

When people talk about the top 1% owning almost all the wealth, they're typically referring to the global top 1% (at least that's the case with this article). The top quintile of the US is certainly considered rich globally, even if they don't feel like they are.

I'm interested to see your source for the US tax receipts by quintile, though. I could definitely believe I was wrong about the richest portion paying "the vast majority". I probably should have said the top half.

If you want to count the entire world for wealth then you need to count the entire world for taxes too. I strongly doubt that the super rich are paying the vast majority of taxes worldwide.

For US taxes, see: https://itep.org/wp-content/uploads/taxday2017.pdf

The rate is definitely lower for poorer people, but nearly as much as the standard punditry, focusing only in federal income tax, would have you believe.

Unless I'm reading your source wrong, it looks like it says that the top 10% pays 50% of taxes?

I feel like I should make it clear that my personal opinion is that top marginal tax rates should be much higher than they are, especially on capital gains, but I don't think it's fair to say that the working class is paying all the taxes, given the breakdown.

Almost 50%. Add in the next 10% and you get a majority, but not a huge one.

49.8%, I think we can call that 50%.

> It just spurs on class resentment which is, if history is any guide, just about the worst way to go about things possible.

Indeed, the worst thing slaves could do is to resent against their masters. I am sure there must have been a better way.

This is a classic logical fallacy called an "Appeal to Extremes" (https://www.logicallyfallacious.com/tools/lp/Bo/LogicalFalla...).

It is about as compelling as stomping your feet and yelling at the top of your lungs.

In game design, an imbalanced game is not fun for anyone.

Games that allow both skilled/rich and less-skilled/poor players are common even in balanced games, and they are fun.

The problem becomes when a few players are cheating or the game is imbalanced to the point that noone can win but the already winners and noone can have any fun.

Right now we have inequality that is more like cheats in a game than a balanced, fun, fair game.

Ultimately money wasn't designed to be hoarded, it was designed to be an exchange of value and services. Hoarded money that isn't put into action is taking from the game and the fun which cheats everyone.

> it really doesn't matter what the top 1% are doing so long as the bottom half are seeing improved living conditions.

No. When inequality increases more people are necessarily below the average while a tiny minority gets way above average. The total wealth on the planet is divided among people. This is a basic economic fact.

As inequality increases people are rewarded more for "climbing the ladder". Competition and selfishness increase and cooperation and solidarity decreases.

> I think it's a natural human inclination to fixate

This is the "human nature fallacy".

> People spend less as a percentage of income on food and housing, have better access to healthcare, and more leisure time than ever before

A critical phrase uttered without any evidence. I urge you to look at the slice of people for whom housing and healthcare are increasingly out of reach, not just the globalization fairy tale you would like to focus on in your post.

I think the biggest mistake people make when counting this wealth is that if it is hoarded and never spent then it might as well not exist and should be viewed as anti-inflationary.

What if all the billionaires in the world decided 'let me just hit delete on all of the zeroes in my bank account' what affect would that have on the rest of the world?

The banks are using the zeros to back loans.

Most wealth already isn't hoarded. It's things like amazon.com and jets and buildings and so on.

Not so much hoarded as invested. Warren Buffet primarily keeps his money in BerkHa stock, which itself puts its money to work employing nearly half a million people.

If the wealthiest 1% had their assets wiped out tomorrow, most of us wouldn’t have a job the next day.

Define "wiped out". If the wealth were simply redistributed, for example the ownership of the companies transferred to the employees, no jobs would be lost.

Not that I am an advocate of that.

> What if all the billionaires in the world decided 'let me just hit delete on all of the zeroes in my bank account' what affect would that have on the rest of the world?

In the long term, nothing.

>... so long as the bottom half are seeing improved living conditions.

What about western countries where people under 35 are dealing with high student debt, unaffordable housing, stagnate wages and "gig" economy jobs? Things look pretty glum unless you've got some form of inheritance on the horizon.

The high student debt and unaffordable housing are almost entirely due to policies of the Democratic Party, a.k.a. the party that is supposedly trying to reduce income inequality.

Interventions often don’t do what you wanted them to do.

I'm not a fan of Obama but one good thing he was doing towards the end was cracking down on fraudulent "higher education" programs milking students and the taxpayer. He was deliberately choking off the loan subsidy fraud game. Unfortunately, Trump immediately resumed the Bush policy of pumping up the student debt for worthless degrees bubble.

But that’s not the real problem. The real problem is that the legitimate schools have been able to raise their prices tremendously because the students have all this easy money given to them for just that purpose.

Well, I agree, but that's definitely a totally bipartisan scam. It's not just the loan subisidies, though. A huge amount of federal policy building over 70 years shovels tax money towards "higher ed". Most major schools are de facto defense contractors.

Tongue in cheek it can't help that people take advantage of states by getting cheap state subsidized tuition and then flee to low tax states when it pays off.

>are doing so long as the bottom half are seeing improved living conditions

I dont think much has changed for bottom half living conditions. Especially since QE.

>People spend less as a percentage of income on food and housing

Is that true though? If you take any housing prices and rent and compared to salary in the last 10 years.

> is that it really doesn't matter what the top 1% are doing so long as the bottom half are seeing improved living conditions.

Which they are not: real wages for the bottom four quintiles have been stagnant since the seventies and the 1% have captured essentially all income gains from productivity growth since then. That is the source of the discontent.

> Over a billion people have been lifted out of poverty over the last 30 years thanks to globalization

You're trying to pull a fast one here. The statistic about "a billion people have been lifted out of poverty" has been greatly overblown: it's technically true, but it turns out most of those people are in China— if you exclude China, the number looks much less impressive. And yes, China's development is impressive, but it's a non sequitur to go from "Dirt-poor Communist country becomes richer when switching to free-market capitalism" to saying that contemporary ultra-laissez-faire economics are a good thing for developed nations.

> It just spurs on class resentment which is, if history is any guide, just about the worst way to go about things possible.

"It's only class warfare when we fight back". If, as the evidence strongly hints, the rich are leveraging their capital into political power to get more and more opportunities to stack the deck and create an unfair playing field (in a positive feedback loop), then not noticing this and subsequently demonizing them is deliberately blinding oneself to the problem and the most plausible avenues of solution.

> Which they are not: real wages for the bottom four quintiles have been stagnant since the seventies and the 1% have captured essentially all income gains from productivity growth since then. That is the source of the discontent.

I'm talking globally. The American middle class has done uniquely poorly during this period. (I'm not American)

Still - if you can tell me with a straight face that you'd rather be poor in the 70s vs today, I would label you crazy. It's almost impossible to account for the changing quality and abundance of goods - huge advances in medicine, computation, a plethora of high quality goods and services. Life today is qualitatively different than it was 40-50 years ago.

>You're trying to pull a fast one here. The statistic about "a billion people have been lifted out of poverty" has been greatly overblown: it's technically true, but it turns out most of those people are in China

How is that a fast one? A billion people is a billion people. If the fact that they're primarily Chinese bothers you we'll need to have a different discussion.

> "It's only class warfare when we fight back".

Who are we fighting? This is an entirely unhelpful rhetoric.

> Income/wealth inequality always happens and probably always will - it's trivially easy to show how this happens using game theory even if trade is relatively fair.

Do you have a reference for this? Interested to read more (game theoretic basis specifically).

Capitalism is an efficient mechanism for serving dollar weighted people. This is the central problem with massive inequality.

I am super interested in reading Enlightenment Now - I will do so especially after your comment. I'll have to do this because I so vehemently disagree with your summary or assessment of the situation. Specifically,

> The basic position - and I think the data supports this - is that it really doesn't matter what the top 1% are doing so long as the bottom half are seeing improved living conditions.

This is whataboutism and justifying means to ends and it makes no sense to me. How could this be? Many of the top 1% in our world are murderers and killers and so greedy they are set out to hurt the poor as much as possible. This matters. It does matter who they are. Their character matters. Their actions matter. Their words matter. Due in part to their wealth, the world listens to them for better or worse, and they hold a responsibility that the current 1% batch (and perhaps none in history, I don't know) are not holding up.

Yes, overall the poor are seeing vastly improved living conditions. This does not mean that it should not be better. It is offensive to a population to tell them that they have it better than before and to basically not worry about it or complain that the inequality is so intense, because their parents or even ancestors had it worse.

No, the attitude should be that it is still really bad for a lot of people, and that state of affairs should be unacceptable. That much human suffering is unnecessary. It should not be happening in a world of surplus like today's.

The top 1% matter immensely - who they are, what they do, how they act.

This is true. The feeling of entitlement, that their wealth was earned, and the lack of obligation to give back to the greater good, is the biggest problem with wealth growth since the 1980s. The 19th century British aristocracy might have been horrible, but at least they thought they were supposed to be building a better world, not just feathering their own nest.

_How Much is Enough_ is a very conservative British book about this, and the idea that modern Capitalism has forgotten what the point of life might be.

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