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Comment by psyc | Hacker News Reader

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.

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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 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.

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?

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