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Comment by barrkel | Hacker News Reader

Inequality of outcomes is a requirement for incentives to improve. Correlated variance in income in return for variance in production is just. Generally, prices provide information about where more production is required, though at the cost of obscuring how that production was obtained.

What we quibble about is (a) the distribution of the income function relative to the individual's production, and (b) how much income gets distributed on the basis of mere ownership, rather than production.

The super-elite benefit much more from (b) than from (a). Mobility of capital means (b) is generally under-taxed.

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The tricky part is, of course, that legitimate economic efficiency arguments can be made for allowing the highly productive to bequest their incomes to beneficiaries who are mere owners (to encourage the originators of the wealth to continue to be productive). But in practice, that leads to concentration of resources in the hands of people who are not necessarily as productive as their predecessors

The other confounding factor is that "production" itself in dollar terms is not some immutable variable, but the price-system reflecting the aggregate desires of all those people holding resources. As ownership of resources becomes more concentrated, the measure of income from production becomes less an ability to meet the needs of wider society through effort and skill and more the ability to secure the patronage of a member of a diminishing number of superrich.

The relationship between the basic economic concepts of productive efficiency (viz. creating as much value as possible) and allocative efficiency (viz. ensuring resources are exchanged to permit everyone to obtain as much value as possible without someone else having to subsidise it) therefore exists in tension.

Agreed that we need variance on the overall distribution of incomes to produce incentives to more efficiently produce goods, but not necessarily the bimodal distribution that's forming now. Not really disagreeing with you: I agree that we do not tax ownership-based income enough.

You can have inequality of outcome with a much higher floor than what we have today. Social benefits are not an attempt to smooth things out, it’s scraping the excess from the very top to raise the bottom up to a dignified existence.

>Inequality of outcomes is a requirement for incentives to improve.

What proof do you use?

I claim this is self-evident. What counterproof do you propose?

Are you unironically claiming that having an inequality of economic outcomes is the only way to motivate/incentivise human behaviour?

No, "inequality of outcomes" . If you are motivated by status, then inequality of status outcomes. If you are motivated by helping your siblings, then inequality of your siblings' well being. If you are motivated by glitter, then just how much glitter you get. Money is but one dimension... I am saying it is self-evident that there must be some non-trivial gradient in at least one direction.

To be fair, it's not completely self evident in the sense that monetary inequality is the only incentive to improve. There are other kinds of inequality. Social status, for instance, rewards improvement, although it's very different.

If it were self-evident, it would not need to be stated.

Imagine the game monopoly. Then, imagine a house rule that says all players receive $300 at the start of each turn.

That's not the only source of income in Monopoly though.

Yes, but the incentives improved equally.

"Inequality of outcomes" is essentially what we don't have. These days, as capital has become even more important, your likely outcome is relatively easy to calculate. In many major cities today it is almost better to be wealthy and unemployed, than successful and wealthless. This state of things is somewhat expected of Europe, but lesser so of the US, or at least not of Americans.

Or we could give up the illusion that individual production is easily measurable, especially where it comes to highly collaborative / creative industries. (See: any number of debates on "10x" engineers, C-suite compensation, how much managers vs. their reports ought to get paid, etc. - and that leaves out discussions of more "team-oriented" cultures where success is thought of as a collective endeavor.)

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