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Comment by pedrocr | Hacker News Reader

> a small proportion of the population has manipulated law and the markets to allow them to make off with the wealth

I was with you up to that point. Do you have a reference for this? My reading was that centralization of wealth was a relatively natural consequence of our economic model and not something that was manipulated into being. Hence the discussions on UBI and other ways to fix it.

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Are you not familiar with the rampant regulatory capture in the US? Changing law and manipulating markets often go hand in hand. Corporations exist to benefit the wealthy mostly. Schools are absurdly expensive and result in something like indentured servitude. What about high frequency trading? Things work the way they do by the choice of those in power, not by some economic imperative. That's an excuse, IMO.

This doesn't square with my experience. HFT reduces transaction costs for market participants. You can see this in the narrowing of bid/ask spreads from the early 2000s on. Corporations exist for many reasons, but I wouldn't say benefiting the wealthy is the primary reason. More important reasons seem to be: limiting liability for owners, formalizing ownership structures so that owners can benefit in proportion to their role in the business, and simplifying tax and accounting issues.

I agree that the growth in regulation has negative consequences and that the education system is largely ineffective, but I think these are unintended consequences rather than the result of conscious manipulation by powerful people and organizations.

>HFT reduces transaction costs for market participants. You can see this in the narrowing of bid/ask spreads

If HFT were a net positive for market participants then those same participants wouldn't be fleeing to dark pools in an attempt to avoid them.

They go to dark pools because they are less transparent and it's easier to sell large blocks of shares without making a large price impact (in theory at least).

Exactly. I believe the term HFT uses for exploiting that is "spearing whales".

Capitalism primarily benefits capital holders, and you don't think one of its central constructs serves that purpose? You don't think people with [absurdly concentrated] power exercise it to help themselves, as rational actors?

My understanding isn't without nuance, nor am I trying to claim I have a replacement system. I'm just being intellectually honest about these elephants in the room.

I think it's a combination. It's a natural consequence of both our economic and political model.

Markets that allow unregulated investment of private capital have a natural tendency to concentrate wealth through multiplier effects. Basically the more money you have, the easier it is to make money from your money, and the more money you get.

But wealth is power. As you get more money, you have more money you can use to manipulate the political system in any of a myriad of ways. Everything from donating to campaigns, to hiring lobbyists, to funding ads, to the revolving door and regulatory capture, to just straight up bribes.

So I do think there are natural concentrating tendencies that we can introduce policies, like UBI, to counter-act. But there is also pretty clear evidence of those with wealth manipulating the system to grant themselves more of both wealth and power.

Just look at the lobbying the wealthy have done over the past few decades that have taken America's formerly very progressive taxation system down to where it is today. That didn't just happen. People with wealth pushed for it. The same can be said of any number of other changes to the regulatory and economic infrastructure that primarily benefited those with wealth and harmed those with out (weakening of unions and collective bargaining, the weakening of financial regulations, weakening of environment regulations, and so forth). That stuff didn't just happen. It wasn't a natural outgrowth of the system. People made it happen.

> our economic model

That you frame that as a "natural truth" and not a cultural artefact is part and parcel of the manipulation. Our "economic model" is something that has been arrived at by centuries of manipulation and is constantly being contested and changed in ways large and small.

Centralization of wealth occurs as part of an economic model because more money means more power.

>But there is a theme that threads through and ties together all the strands: many of the most talented, driven Americans used what makes America great–the First Amendment, due process, financial and legal ingenuity, free markets and free trade, meritocracy, even democracy itself–to chase the American Dream. And they won it, for themselves. Then, in a way unprecedented in history, they were able to consolidate their winnings, outsmart and co-opt the forces that might have reined them in, and pull up the ladder so more could not share in their success or challenge their primacy.

It depends on what you mean by "our economic model."

http://time.com/5280446/baby-boomer-generation-america-steve...

If you look at the economic graphs[1][2][3], something nasty and drastic happened virtually overnight, around 1973. None of the growth since then has "trickled down". Our history books don't say anything about a radical overhaul of the economic system in 1973, nor does America have a massively different system than other first world capitalist countries, which do have inequality problems but not on the scale the US does. There's something uniquely bad going on, and since a very small group of people is getting enormously wealthy off of it while the rest get nothing at all, it's reasonable to assume that it's on purpose.

Incidentally another thing happened around 1973 - the incarceration rate began a meteroic rise[4] that did not abate until Obama's presidency. Connecting these facts is left as an exercise for the reader.

[1]https://stephenpruis.files.wordpress.com/2012/12/chart-wages... [2]http://www.mybudget360.com/wp-content/uploads/2013/07/us-deb... [3]https://upload.wikimedia.org/wikipedia/commons/d/d7/2008_Top... [4]https://www.lexisnexis.com/legalnewsroom/cfs-file.ashx/__key...

Holy st. Unless these graphs are misleading somehow, it's indeed interesting.

> Our history books don't say anything about a radical overhaul of the economic system in 1973

They don't?

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

I hadn't heard of that. While I don't see an obvious causal link, the timing is certainly somewhat suggestive.

Globalization, free trade deals, and illegal immigration only benefit corporations and shareholders. Jobs are outsourced to the country willing to take the worst deal, immigrants with no federal labor protection flood in lowering wages and living standards. Corporations pocket the labor saving rather than passing it on to consumers.

End result is increasing income inequality. If nothing is done we will return to the historical norm of peasants and wealthy nobles with nothing in between.

Immigration also tends to benefit the immigrants themselves and their families, who should not be discounted in this.

There are 5 billion impoverished people who would move to a first world country and depress natives' wages to nil if given a chance. Those who haven't done so yet shouldn't be discounted either.

>Globalization, free trade deals, and illegal immigration only benefit corporations and shareholders

I'm sorry, but that is obviously not true.

In the case of illegal immigration, the illegal immigrant is definitely better off by finding a higher wage and safer life than in his/her home country. The average Central American working illegally in the US, while not afforded employment rights like a legal worker, is still unequivocally better off than his/her options in his/her home country.

Similarly globalization has been a major benefit to the poor in many developing countries. If you compare the median per capita GDP in countries like China, Vietnam, or any African country, it is immediately obvious that economic development and globalization has been good for them.

I think what you are referring to is the it has not been good for the average American while it has been good to elite/wealthy Americans.

But please don't misrepresent that it has only been a benefit to the few simply bc it hasn't helped the majority of people in developed countries. People in developing countries have been benefitted immensely.

It also does not seem to be the case, in the U.S. at least, that immigration depresses wages: https://www.brookings.edu/blog/jobs/2012/05/04/what-immigrat...

It doesn't depress wages in aggregate but it certainly does depress wages of low skilled workers (your article seems to think it causes a -5% hit).

Technically, we're already there—in a world where iPhones are made about as easily and cheaply as they used to make pewter teapots.

Or worse. The amount of control and capital on that 'wealthy noble' side is way more than it's ever been at any time in history, and we are watching the kinds of damage they inflict when they're capable of that much more than just 'buying fancy tulip bulbs'. All it takes is a few crazy ones deciding the best thing to do is kill all the serfs, and their real power will show. We're already seeing it.

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