Is Inequality Inevitable?
scientificamerican.com
scientificamerican.com
And the idea that things have a "true" value, the one put on them by enlightened campus philosophers, so a transaction not controlled by the wise and just will have a winner and a loser. I waited for the idea that I, shoeless but with ten loaves of bread, and you, hungry but with ten pairs of shoes, might reasonably value bread and shoes differently and BOTH win from the "redistribution" of bread and shoes, but it was not part of the model.
But their model (which they claim "reproduces inequality with unprecedented accuracy") could also (they claim) be fitted to a variety of different observed power law distributions when its parameters were adjusted, and the more parameters, the better the fit became. Yes, and they could probably get their model to describe the frequency distribution of English vocabulary (also a power law), with remarkable accuracy which probably does say something about economics but maybe not as much as they seem to think.
That’s because the people making the models don’t create wealth and don’t really understand where it comes from.
It’s like the way you see Marxists saying “seize the means of production” but never “build the means of production”.
People create all of the time with extremely limited resources. Especially ones that haven’t been seized.
So if they own it, they can do what they like with it.
Including give it to their daughter.
If you aren't born with capital, and don't win the lottery, you can't pay people to build something for you.
You can work very hard, together with other people, and build something as a community. This is difficult and almost never happens in practice, as it requires extreme dedication and some alternate revenue stream to be able to live until the thing being built is done and can be used to produce ongoing value.
But when this does happen, the end result is in the ownership of the community, it is not any one member's to give away or sell.
Alternatively, if you are born with wealth, you can dispense with all that effort, and simply invest several fractions of your wealth in things until you hit on one thing that you can collect rent from. Sure, you'll do some work, but the money accumulated by your ancestors, often built on slave labor, monopolies, theft and other nice things, will do most of the work for you.
Why is anyone entitled to own food? If someone invests their resources to have something built (or help make it themselves), why wouldn’t they be entitled to own it?
The rich daughter gets to own it because that’s what the owner wanted and the thing about owning something generally is deciding its fate.
If someone builds themselves a house out of wood they chop from trees they grew, do they get to keep it? What if they exchanged goods and services for the wood instead? What if they also exchanged goods and services to have someone else build it who needs the goods and services.
> have to work their whole lives, and convince hundreds of others to work with them, to create a chip fab, if they wanted to own one.
So? That’s how many of the successful chip fabs existed.
What’s your proposed alternative when 10,000 people want chip fabs and there are only 200 for you to steal? The government seizing them certainly doesn’t make more and it completely discouraged anybody from wanting to invest their time/labor/money into building new ones.
I said nothing about the state in this. I am still talking exclusively about private property.
And as for food, I believe people are entitled to life, and by implication to anything required to sustain it, such as food, medication, water, air etc. The exact means for realizing this entitlement (free food? UBI? I don't know) are not clear, but the fact that you can starve to death in a country with enough food to feed the whole medieval world is a travesty.
Well, economic theory says that the profits should approach zero as more and more competitors join the market and the provided goods or services become commodities. This effectively is a redistribution mechanism. The reality is a bit uglier.
By the way, prevention of wealth accumulation doesn't require repossession of existing property. A simple redistribution policy could dictate that a single person is not allowed to inherit more than 50% of the wealth of their parents. This forces parents to have two children and split the wealth. After a few generations the children will have 25%, 12%, 6% of the original wealth and so on.
There are still ways to exploit this if the siblings are colluding but let's be serious. If your family is rich and owns 50 billion dollars. Would you prefer $25 billion or $0 billion for the sake of higher generational wealth?
My point is that you need to create policies that even rich people would agree with.
You are entitled to life insofar as nobody may actively take it from you. There is plenty opportunity in this country to earn; $1 per meal is enough for healthy comfort (thanks to capitalism, food is plentiful, varietal, and cheap).
I was also talking about democratic governance among the worker-owners: this is how cooperatives work in general. The strict top-to-bottom autocracy of regular corporations is not the only possible system of governance for a successful market actor.
As for food, it's not so much capitalism as enormous state subsidies that affect the price of food in America. And living on 2-3$ worth of food a day will not lead you to a long life. Also, how is someone refusing you the right to take food when you are starving not actively taking your life from you?
I wouldn't deny a starving person my food, though the reality is that I rarely come into contact with someone who is starving.
On the other hand, a lot of restaurants and super markets do regularly deny starving people food - they ask for money in place of common human decency.
The well off do far more for the poor than you think - without gov't compulsion.
Remember that we actually depend on some people literally not having a chance to eat unless they agree to collect our garbage, clean our floors etc.
Do you think that a cleaning person in a contract with Google or with the city of LA had any kind of real negotiation power?
Collecting garbage, cleaning floors, etc has value - that's why we pay people to do it. Is it really worth more than ~$7.25/hr? would you pay someone $20/hr to do it?
A thing is worth what another will give for it. People are willing to trade $7.25 for an hour of mundane labor.
And yes, there is real negotiation power. Businesses are having to pay more, or find alternatives, for services because not enough people are willing to do those jobs. That's negotiation, in context of large numbers of people being willing to do a job.
BTW: if you're working where Google is, or in LA or the like in general, you MUST provide above-min-wage value because the carrying capacity of those areas has been reached - there are people making >$37/hr wanting to live in the same place, and $MinWage/hr can't compete with $37/hr productivity. I threw my stuff in a truck and permanently moved 1000 miles on short notice - so can others who likewise seek economically viable conditions.
I've lived off the land. Most of humanity did. If you don't want to plant seeds and build cabins (always a viable option), get busy doing something others will pay enough for.
How will you buy the land to build your cabin and plant your seeds on? We live in a system where all of the land is already owned.
> All one need do is work 25 minutes mundane labor a day to afford 3 square meals per day
This is just so wrong... Again, you can't have a healthy diet with 3 dollars a day. You also can't keep a job if all you earn is food money - you also have to have a place to live and shower, you have to have clean, non-raggedy clothes, a car, gasoline, maintenance for the car and maybe washing machine, health insurance so your life doesn't crumble at the smallest sign of disease, and possibly others. These are all necessary in order to even have that job which you claim lets you eat for 25 minutes of work a day.
> Collecting garbage, cleaning floors, etc has value - that's why we pay people to do it. Is it really worth more than ~$7.25/hr? would you pay someone $20/hr to do it?
Your thinking about this the wrong way around. Nobody would be willing to collect garbage for 7.25 if they had some alternative. It is essentially a job of desperation. So, it is vital for us as a society that there are always enough people desperate enough that they are even willing to collect garbage to make some money.
And in a worker driven job market (by which I mean, a job market where employers compete for workers, instead of the current economy, where mostly workers compete to find employment), garbage collection would be a high-paying job, precisely because it is absolutely vital for any community, and no one really wants to do it.
I frequently make healthy meals for $1/plate; don't tell me I can't when I do. Covering meals in 25 minutes or less means time earn for other needs. Give me specifics, and a willingness to make money work, and I'll give you good inexpensive solutions to all needs.
The notion of a "worker driven job market", where menial tasks make enormous salaries, or "there should be some alternative", is pure fantasy. Of course everyone has alternatives: anyone can pick a preferred job, find an open position for it, and apply. Supply-and-demand is an economic law: garbage collection is not a high-paying job, because there's always someone willing to do it for less. You think GC should be high-paying, but you're not willing to pay someone high to do it; concocting (and forcing on others) a society inclined as you indicate would quickly devolve back to what we have now, precisely because easy & widely-available jobs are not worth high pay.
Bottom line: it takes a certain amount of effort to live off the land (go watch Primitive Technology on YouTube); everything else is an alternative because we contract for better options, and wishing for better doesn't work.
If I make a coffee why should I be entitled to drink it? Well it's obvious. I bought the ingredients, heated water, etc... I consumed my own resources to make the coffee. If I don't own the end result then by making coffee I am just harming myself.
>while anyone else would have to work their whole lives, and convince hundreds of others to work with them, to create a chip fab, if they wanted to own one.
So would the rich daughter. A chip fab requires external funding. This means the rich daughter has to obtain credit from a bank. In an ideal world the bank is itself funded by the depositors which have agreed to let their bank lend the money out. (in reality the central bank offers low % credit to encourage this)
Also, even if you involve a bank: the rich daughter can get credit to buy a factory, while the worker in the factory certainly could not.
So it's not an innate ability to create value really that matters, it's the ability to navigate a system with many gatekeepers who have entrenched interests, and where not everyone is starting from the same spot, but we should pretend they are, and pretend that all wealth accumulated is justified. Let's not question the means to that wealth or its ramifications on society as a whole.
Namely, his starting point is that labor is identified with value. Wealth is created when raw materials and the means of production are combined with labor. In the capitalist theory of value in contrast, one's legal right (inherited or otherwise) is one of the things which is identified with value.
It's not a claim that this value is something metaphysical, just a political assertion that this is what we ought to think of as "value". It's all about what you want to consider as the primary "cost" in production.
This has been refined over the years. I'm not an expert so I may not be able to respond to any and all criticisms but I will try my best.
the miracle is that we can build more while doing less, but nothing gets built if we do nothing at all (e.g., wealth concentration).
If people really think Marxism can be dismissed with a simplistic argument like this, I'd encourage them to actually read the first few chapters of Capital. Agree with his world view or not, Marx was not an idiot.
And which Capitalist Paradise Cruise ship do you picture yourself manning for this critique? Elsevier?
This is a large mistake. For example, spending an hour on an exercise bike is certainly a lot of labor input, but nothing of value, since nobody will pay you to cycle on an exercise bike.
(to make my point more explicit: in Marx' definition of labor he implies labor of enterprise, not just spending calories. Just like your definition of value implies financial value, not just any positive outcome. I'm purposefully misrepresenting your definition of value just like you're purposefully misrepresenting Marx' definition of labor.)
When the discussion is about economics, that's what matters. There is no intrinsic value to labor.
> Marx' definition of labor he implies labor of enterprise
The economic value of labor has no necessary relationship at all to the effort or time supplied by the laborer. If Bob works inefficiently, his labor is worth less than Bill who works efficiently, even if they both work exactly the same length and effort.
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I will add that I still am a physicist who likes to think about things like this. One addition I would make to the model is that the poorer a person is the larger a percentage they are willing to risk. It still doesn't get around the fact that this whole model is based around the fallacy of object value but I like playing with models.
As a percentage, sure, but in real terms the poorer person doesn't have 'much' to lose (to be regained) over someone extremely rich risking the same percentage. The potential rewards are also likely to be immensely larger in percentage for the poor person too.
But this is also relative risk against wealth in context. Comparing poor against poor there will still be comparable poor people with completely different risk profiles (basic example is one with children vs one without).
The model I imagine must primarily establish reasonable/full context before determining any value factors.
This is questionable. The assumption that a poor person can more easily regain their stake is shaky---a poor person who loses their money may become homeless, which could in turn make it harder for them to be employed, or if they are a trades person maybe they lose their tools or can no longer afford to rent them. By contrast, a rich person has access to credit lines and investors in their social network. For the poor who aren't wiped out below a critical threshold, then, it may be true, but you're not taking into account the significant number who drop below that threshold and may never recover.
I would rephrase the original statement, "the poorer a person the larger percentage they are willing to risk" as "the poorer the person, the larger percentage they are forced to risk if they want to achieve comparable returns on a percentage basis."
It is true that calories = calories-in - calories-out.
It cannot not be true.
It just isn't helpful.
How does calories in vs calories out work regarding the energy left in food that is not extracted (i.e. the caloric value of poop basically).
Is digestion / energy extraction pretty consistent throughout the population or do the specifics of people's digestive systems play a role in how many calories are actually available to the body?
Basically, would a constipated person's digestive tract pull more energy out of the food since it is in the intestines longer?
And even if the numbers were accurate, they're still rule-of-thumbish, because human metabolism doesn't simply ingest all energy available in a food. For instance you'd absorb roughly 40% more calories from peanut butter than from actual peanuts (of the same calorical value).
There are more reasons why counting calories isn't nearly as accurate a method as people tend to assume, but these two are really sufficient.
tl;dr: The only time CI-CO is truly accurate is when CI=0.
For instance, in a study of obese women, a reduction of (4.3 +-(4.6) kcal/kg) was observed in a calorie restriction diet of 20kcal/kg
Similarly, in a different study, a 30% calorie intake reduction was linked to only about a 5% reduction in total energy expenditure.
CI-CO is not a perfect model, in that it doesn't perfectly estimate weight loss rates, but the general concept holds true.
I didn't mean to imply that it was 1:1, just that the model doesn't hold entirely.
> CI-CO is not a perfect model, in that it doesn't perfectly estimate weight loss rates, but the general concept holds true.
In general, I suppose, however most people aren't trying to lose weight but rather fat. Consuming sugar causes a spike in insulin, and insulin triggers the uptake of sugar in the blood by adipose tissue as fat, and actively prevents the release of fats stored therein. [1]
So in the most literal sense, CI-CO works, in that (net of the 16% reduction in TEE relative to your reduction in CI per your data) you're going to need to get the calories from somewhere. However, if you eat 30% less calories than your BMR entirely as sugar, you're much more likely to be burning alcohol, glycogen and protein than fat, certainly in the near term.
If you combine that with the "eat 6 meals per day" fad and you're in for a seriously tough time losing fat. On the other hand if you at 30% less calories than your BMR entirely as sugar in one sitting over 20 minutes and fasted the remaining 23h30 you may actually lose fat, since that'll give your body time with low insulin levels.
Let me re-state: CI-CO is a very inadequate model for losing fat.
[1] https://www.diabetes.co.uk/news/2018/jan/drop-in-both-insuli...
CI-CO is accurate if CI<CO. There is absolutely no way it cannot be. This doesn't depend on any kind of reasoning about biology or insulin or hormones at all. It's the law of conservation of energy.
That's the beauty of it. It always works. If CO<CI, you will lose weight. There has never been an exception to this in the history of life, and there never will be.
Even fasting, which you mentioned, only works as a means to an end. And that end is CI<CO. Research shows that the actual timing of fasts is irrelevant; the same calories eaten in 6 hours per day have the same effect if eaten over 16 hours of the day. But when people fast they tend to eat less overall; it's all that matters.
So many people try to follow your path, and figure out a way to manipulate complex metabolic systems they don't understand to try to wheedle the body into dropping pounds. It works only rarity, and 98% of people on this path are just deluding themselves to avoid facing the fact that they need to get CI down under CO. So they take refuge in complexity, endlessly finding ways to rationalize away the need to do the actual work.
- GK Chesterton
I am no Einstein, to be sure, but I do particularly recognize the experience he had as a teen, learning the math and engineering of his father from his father. His father and uncle, it's worth noting, built electric power generators. Mentally building an effective model of fields was surely something Einstein had to learn early, and perhaps without the math first.
Note that he too did most of his work in isolation, and he too was extremely proud.
The mathematical models you find in the works of many highly regarded economists are even more simplistic, more vulnerable to criticism.
"When you have such hubris and make such simple mistakes..." that pronoun "you" should be the economists!
That's why econometrics is a thing, that's why most economists nowadays are taught statistics, computer programming, advanced maths, etc... It's why there's a different process used to describe why things happen in a paper vs. predicting real world numbers.
(1-3): I honestly forget which of these it was, but the key term I search for is "mind-breakingly"
https://www.deirdremccloskey.com/docs/paradigm.pdf
I see it most often attributed to George Box, a statistician, but it's not completely clear he was the originator. In physics you have a luxury of verifying models at many empiric touchpoints via data collected in controlled or precisely measurable conditions. Comparatively in economics it's difficult to establish you have a useful model because the empiric data is difficult, and with unmeasurable aspects around human choices.
Utility function is logaritmic.
The need for money saturates slowly. Think about winning 1000 dollars (nice dinner pehaps), 10 000 (better car), 100 000 (larger appartment), .... , 10 000 000.
At some point it doesn't matter if its 200 000 000 or 300 000 000.
On the other hand a lotter ticket is 1$. What is the utility of 1$ - a can of coke pehaps. But the perspective of winning $1 000 000 - thats a nice idea to hold for a few days... So many people do despite the slim chances.
[] https://economics.stackexchange.com/questions/23952/is-the-u...
[] https://www.forbes.com/sites/rogerkay/2013/08/05/how-the-mar...
But your first link does cite evidence that _if_ utility is CRRA, we are not far from the case where utility is logarithmic
I don't agree with it. Poor people tend to be very risk-averse (they teach their kids to get "stable jobs" above everything else), and this puts them in a self-reciprocating loop of poverty. Many rich people who i know became so by repeatedly getting involved into "bold" things looked totally bullshit, and usually indeed was - apart from 1-2 in their lives that wasn't, and made them millions.
They show that a simple mechanism, with very few assumptions about real world behavior could reproduce a remarkably realistic phenomenon.
Anecdotally you met some college kids whom you perceived as not understanding economics. But the knowledge of increasing wealth inequality and the current deficiency of private investment is uncontroversial. Regardless of what the impression those kids gave, there number of techniques to address it and _increase_ GDP through the stimulus.
The real problem is "people are not secure in their lifestyle" which is not addressed by the first solution and is probably exacerbated by the second. People getting antsy about inequality as a final problem instead of a symptom of another issue are not going to find their way to solutions that increase prosperity.
But surely these can't seriously be the best rebuttals to the paper: that straw-man, anecdotal opinion about college campuses and physics professors and a statistics joke about, but certainly not refuting, the elephant curve. I really can't tell if these arguments are genuinely considered valid or is this just a semi-polite troll technique to shout down unpleasant information.
Is it stupid? Yes. Is it a straw man? Not so much compared to what is done in practice. When people seriously say that the policy is to "stimulate the economy" they mean incentivising people to consume rather than save. This has a positive effect on the economic figures but it is madness to believe it is setting up a better future; because setting up for a better future generally involves saving in the present.
> And since no one is suggesting that...
I haven't seen anyone propose a plan to tackle wealth inequality that doesn't involve confiscation and redistribution of some form or another. The argument is over whether that is appropriate or not.
As for GDP it is generally accepted that setting up a free market and leaving it alone maximises the GDP. There is lively debate about whether than is the best outcome. There is a serious argument that lower-than-maximum GDP with resource redistribution to the poor is better - which is what happens in practice.
> certainly not refuting, the elephant curve
There is nothing to refute. Inequality is not a problem - people can't even detect inequality! Nobody has a gut feel for it and the average level of mathematical intuition isn't high enough to understand the charts. Certainly people can't suffer because someone else has it really easy.
People suffer when their lifestyles deteriorate and we should be focused on preventing that. That is a completely different problem and one that actually deserves attention. The living standards of poor and middle class people is a real and ongoing issue that should be focused on. It does not matter if dealing with that makes the rich ricer. And in that context, the elephant curve can reasonably be interpreted as a massive success story that we can all be proud of as millions are lifted up to a better standard of living.
That would mean Venezuela, top in the world for printing money, has the highest GDP growth. Zimbawe and Argentina would be next.[1] In the event one might claim they are, here[2] is the actuall GDP growth rate by country.
>As for GDP it is generally accepted that setting up a free market and leaving it alone maximises the GDP.
The highest per-capita GDPs are in exactly those countries which monitor and adjust the market, for example the Scandaniavn countries. And in the US, the period 1945-1980 saw vastly more regulation and taxation than 1980-today yet vastly greater growth. So evidentilly, modest regulation and taxition and zealous anti-trust enforcemnt are actually good for an economy. Far from generally accepted, very few economist disregard all evidence and assert zero regulation means maximum growth.
> Inequality is not a problem - people can't even detect inequality!
The existence of inequality is not remotely controversial and is trivial to measure, for example with the GINI and even the absurdly blunt Elephant Curve. And indeed, vast swathes of the population very much feel the decline in their quality of life and say so loudly and are electing lunatic politicians as a consequence.
Actually, if you happen to have a reference, I'd be interested in where one hears that printing money increases the GDP, inequality is undetectable and ending anti-trust enforcement et al makes a market healthier.
>doesn't involve confiscation and redistribution of some form or another
One could call gasoline tax "confiscation" bridges toll "redistribution" and, on the other side, call rent "theft". Calling stimulus spending "confiscation" is as extreme as saying that wealth was "stolen from the proletariat in the first place". I humbly suggest it is not helpful. At any rate, as further proven by this paper, the solution to both QoL declines created by inequality as well as a stagant GDP is a wealth tax used to increase consumer spending power.
> the elephant curve can reasonably be interpreted as a massive success story that we can all be proud of as millions are lifted up to a better standard of living.
Then how is ridiculing its reality a refutation of this paper? And the rise of devolping countires is not in dispute. The problem at hand is the preciptous decline for those who lost out and who are still loosing. And who, as it turns out, are the middle and lowerclass members of the richest countries which also contain the people that benefited by far the most.
[1]https://en.wikipedia.org/wiki/List_of_countries_by_inflation...
> I'd be interested in where one hears that printing money increases the GDP
That one is self evident. I'm talking about nominal GDP not real GDP.
> inequality is undetectable
Nobody in my building could order the people in my building by wealth or income. You can't order the commentators on this article by wealth or income. It is unlikely anyone you know could tell you how much wealthier the wealthiest person in your city is than they are. I'm much more clued in to the wealth & income statistics than most people, and I have no idea what the wealth gap is between me and the people in my social circle where the range is large.
The only way to detect wealth inequality is for someone to specifically go and survey it, using a somewhat artificial and abstract construct like GINI. Inequality doesn't have a measurable impact on anyone's daily life and cannot be detected without putting in a large and special effort. Compare that to crime, poverty or homelessness which are extremely easy to detect and potentially have a real everyday impact.
> and ending anti-trust enforcement et al makes a market healthier.
I'm pretty sure I didn't say that.
The existence of the top 0.1% essentially has zero impact on grocery prices, healthcare, housing, etc.
> One could call gasoline tax "confiscation" bridges toll "redistribution" and, on the other side, call rent "theft".
Rent is voluntary, taxation is not. A bridge toll charges for use, so it’s actually fair. You don’t get charged $3000 to cross the Golden Gate Bridge because you do it in a Porsche.
Do you really think that nobody has ever thought of measuring inflation adjusted GDP?
The point I'm making is that the problem is living standards and prosperity. If we try to improve arbitrary single measures, like GDP or Gini, then the easy solution is pick something stupid that games the numbers then work it back towards the Overton window of ideas until it is mainstream enough that people don't understand why it is failing.
The metrics to focus on are real outcomes like living standards which are - and this is the central part of my point today - not negatively affected by someone else in the city being filthy rich.
If we allow people and families to accumulate wealth indefinitely, it’s not hard to imagine a future whereby a very small elite control a vast majority of the resources. In this future, people can still create wealth by mixing their labour with raw resources... as long as they can afford to pay the rent to the rentier class.
Past performance does not guarantee future results. The story of our society was not written with a fairytale ending. Whether we succeed and create a better future for all or destroy ourselves or create a hellish dystopia, there are no guarantees.
We managed to find new ways to tap resources better, more efficiently, deeper, and so on, so we revealed new carrying capacity which we haven't reached yet.
If we don't advance again the way we did before, a return the Malthusianism is possible. That should be your null hypothesis. However, spreading past Earth or transcending to entirely new ways of existing (e.g. computational life) are also possible. The future resists past-based analysis because the rules are always changing.
But there's no reason in principle that we can't tap extraplanetary resources, any more than a Roman-era tribe in Britain couldn't pump for oil in Texas. It just took a lot of steps to get there.
The leap to another planet is far, far greater than to a new continent. It is an open question whether or not we could achieve it at all before a crisis destroys our civilization to an extent we may never recover from. There can be no second fossil fuel revolution, that was a onetime event in Earth’s history.
But setting aside the challenge, with new possibilities come new opportunities for inequality. In the case of the former, it’s not difficult to imagine a wealthy person owning an entire planet. In the case of the latter, might I suggest the short story Incarnation Day [1] by Walter Jon Williams. In a world of finite resources and computational life, perhaps only the wealthy and privileged can afford to be incarnated.
[1] https://en.wikipedia.org/wiki/Energy_returned_on_energy_inve...
There is an article on the front page about solar companies in Australia shutting down every other day because of negative energy prices. Burning 100MW for 10MW of oil makes perfect sense under these conditions.
Here’s a thought experiment for you: why do you think we have batteries given they take more energy to create than they will produce?
When the EROEI of a source of energy is less than or equal to one, that energy source becomes a net "energy sink", and can no longer be used as a source of energy, but depending on the system might be useful for energy storage (for example a battery).
If oil is made to compete against batteries then it will lose. It may have higher energy density but it’s also non-rechargeable, requires a heavy and complicated and high maintenance (compared to a very simple electric motor) internal combustion engine, and produces large amounts of greenhouse gases.
About the only thing it would still be cost effective for with a negative EROEI is aviation fuel, but even that application is facing competition from batteries [1].
[1] https://www.cnn.com/travel/article/electric-aircraft/index.h...
EROEI will come and go with nary a shit given. The entire value prop of oil at this point already is it’s portability, density, and refuel time.
Electric cars are already cheaper per mile when it comes to fuel, yet tons of people don’t bother because of charging logistics.
Energy into extraction is just part of the cost like anything else. There is nothing magic or even meaningful about it. That whole theory is based on the stupid notion that energy is fungible.
Regardless, here on Earth, eventually we will either reach a point where growth in energy production is practically infinite or we will be faced with the rather herculean task of converting all of our waste back into usable material, ad inifintum, with less energy available than was put into the system to create that usable material to begin with. At that point entropy comes knocking on the door.
Here are some facts showing the opposite:
https://reason.com/2019/10/09/the-economy-keeps-growing-but-...
This topic has been litigated on HN before: https://news.ycombinator.com/item?id=21020682
Key quote: Finally, and speaking of stepping in to fill the void: ctrl-F - "China" - 1 match. The single mention is to refer to it as a developing country, not to acknowledge it as the present-day location of much of the USA's manufacturing.
Inequality isn't magic. It goes up and down in response to both economic cycles and public policy. It's been set all all sorts of levels over history, and right now is at a post-industrial zenith and getting higher rapidly. And some of us think that's bad, for reasons of simple fairness.
And lots of actual academics agree with this, and have pretty solid numerate arguments that might convince you if you were willing to read them.
Even if I and you were equally skilled at making both bread and shoes, by economies of scale we can produce more bread and shoes if we specialize. Thereby, the use of trading makes us both better off.
The invention of trade, and inventions that facilitate trade (money, banking, stock markets, contracts, property rights), have greatly benefited humanity.
I'm guessing that your disquiet at this notion comes from the possibility that everyone is creating their own wealth, and to some extent that is no doubt true. But if you start with the simplifying assumption that everyone's wealth creation ability is equal, and you just look at distribution, and you find that your model pretty accurately reproduces the real-world distribution of wealth, it's at least some evidence that wealth-creation ability is not that different from person to person, and what's driving inequality is the distribution mechanism.
Since virtually all human traits follow a Gaussian distribution, it seems like whatever the wealth-building factor is, it would also follow a Gaussian distribution. But wealth follows more of a power law distribution. You never encounter anyone 1000 times taller than average, but there are many people 1000 times wealthier than average. This casts some doubt that wealth accumulation is down to individual human ability.
Couple that with the micro-economic observation that someone with 1 million dollars is astronomically more likely to make another million dollars than someone with 100 dollars, even if the two people are otherwise identical, and it seems pretty unlikely that wealth creation has much to do with the distribution we see.
I know nothing of this, but how can distribution be understood without the forces that drive it?
I think of it as something like a phase change, with insufficient energy applied equally enough across enough atoms you can't make it from solid to liquid and have a much lower mix rate in the economy.
Someone who scores 85 marks in an exam is more likely to score 95 with a little more effort than some one who scores 35 is likely to score 85 with a lot of effort. This is for a very simple reason that to get to 85 requires a lot of effort, which builds a whole range of human qualities along the way.
That kind of thing exists in my example too. The real problem is people are similar but not the same.
It’s a really complex process of getting the right market fit for your product (i.e. your time in the laborer case). Someone who can produce a lot of wealth in one society can completely fail in another. Or they can just fail in a different market environment. Wealth production comes from giving the market what it wants at a higher price than it costs you.
I'm not sure this is correct, at least not on average. Take two average persons, give one of them a million dollar, then watch what their net income is the next 10 years. I'd bet that the one you gave a million dollars will have used up a large part of it thus having a huge net loss while the one you didn't give anything will still be roughly at zero.
Edit: This study shows that people significantly reduce their income after winning the lottery, suggesting that there is a negative correlation between wealth and earnings given that everything else is the same.
I don’t see any reason to think this same linkage holds for those with a propensity to make money from entrepreneurial or investing activity.
More money helps fund better training which leads to elite networking/training (elite colleges, for example) which leads to well-paying, high status jobs and the cycle continues. Granted, it's not just money alone, but the major theme of the book is that high income from labor (rather than inherited wealth) is a positive feedback loop passed along generational lines and concentrated among the upper quintile of incomes
The training for schooling outlined in the book is often independent of the school structure (e.g., tutoring, test prep etc.). The upper echelons didn't think it was uncommon to spend $100k per student on this extra training. The authors point was that training works and that the rich have more advantages to educating and training their kids
By the Gini coefficient, the inequality is much lower, but the social mobility rate is about the same.
http://faculty.econ.ucdavis.edu/faculty/gclark/The%20Son%20A...
The point is that someone who has a million dollars is in a position where it will be easier for him to make another million dollars, or at least it's more likely for him to be in that kind of position than for someone who does not have a million dollars.
I assure you it is true. It is not true only if there is a negative value to capital (ie, capital essentially destroys itself). That's what you seem to be saying with your link, but that link looks at only a narrow segment of people (lottery winners) and even then, appears to merely be observing that winners subsequently have less labor income, not less overall income. Which intuitively seems reasonable---winners would be more likely to take early retirement. The idea that, all else being equal, having money means your income will go down is absurd on its face.
This is nonsense. Lets take an easy example, books, people don't want to waste their time reading bad books so only the most palatable books gets a good amount of sales. This means that a small difference in skill leads to a large difference in sales, which would recreate the power-law of wealth creation. Similar arguments can be made about engineering skills, management skills etc.
For every JK Rowling or Steve Jobs there's maybe 100 who either fully or mostly extracted their wealth while going to great efforts to pretend that they're really just another JK Rowling or Steve Jobs.
That does not follow at all from your initial observation. You could just as easily state that a small difference in exposure leads to a large difference in sales, thereby taking skill out of the equation again, and thus supporting the GP's initial argument.
This is why people say "The first million was the hardest", because after you have used their skills to make a million others will trust your skills and thus give you more exposure and opportunities. So winning a million on the lottery wouldn't help much, it gives you capital but it doesn't validate your skills which was the most important part.
Of course I am not saying that luck doesn't play a part, just that earning power doesn't follow a Gaussian distribution.
It is precisely advantages like this that drive the "trickle up" effect. To use your original example, let's say one author legitimately wrote a book that was 10% 'better' than the next best effort. As a result, many more people bought her book (let's leave aside for now the notion of winner-take-all markets, which is another factor in the skewed distribution), and now she (and her publisher) are enriched. On her next book, they can afford a lot more promotion, and with her name recognition, her next book is a huge success, even though it is 10% worse than her nearest competitor. Now they've both written two books, and they're both 1-1 in terms of quality. But the one with the first good book has two best-sellers, and the second is a failure who will probably drop out.
No one is saying that the first author is morally wrong, they're simply saying that if we, as a society, want to reward people according to their skill and effort, the current system fails in numerous cases because it is heavily biased in favor of existing wealth over talent.
- That people who are bad at writing books are either equally bad at everything, or derive most of their income from writing books. "Don't quit your day job" is a meme for a reason.
- That writing quality (by some metric), as opposed to marketing, is the primary driver of book sales. Sales of Twilight demonstrate otherwise. It's even more clear in music: see any one-hit wonder from a past decade. In many cases, people who liked it then now wonder why.
- That the economic model of book sales is representative of the economy as a whole. Books are almost pure intellectual property. Intellectual property is typically characterized by high development costs recouped through high margins. Services and commodity physical goods are typically characterized by low development costs and low margins, with non-commodity physical goods lying somewhere in between. The latter categories make up most of the global economy, so most of the economy doesn't meaningfully compare to books.
I feel marketing itself could be enough to recreate power law - ceteris paribus, even a little edge in marketing lets you get more money quicker, which you can then reinvest in marketing; rinse, repeat.
And marketing is not the only way you can reinvest money to make more money. All those ways turn making money into a form of: dmoney/dt ~ money, to which solution is an exponent.
Granted, but if you do that, it's no longer making the point that GGP seems to be trying to make.
If I compare myself to Shakespeare / Einstein / Elon Musk I do feel that their abilities outstrip mine by an order of magnitude more than one would expect with a Gaussian distribution.
That it’s somehow dictated by physics is another example of people with emotional minds filled by godheaded supervisors that social hierarchy is preordained, not the uglier truth: the elite and their sycophants get violent when it’s pointed out they aren’t gods owed political deference
However, I'm not aware of any metrics or markers for wealth creation - other than revenue / profit. So in other words, most of our attempts to study economics ignore this, just like the model in TFA. They look at successful businesses and growing GDP and infer that wealth must have been created.
Another related concept - similarly murky and unaccounted for - is wealth destruction. If wealth is defined, say, as the capacity for people to live a good life, then how often is this capacity destroyed in the pursuit of growing business? We similarly have no markers for this factor in most of our economic models that I'm aware of.
An accelerating and historically high broad societal effect is naturally a product of broad and unique properties of the current regime, rather than fundamentally consistent properties, which would naturally be seen across all time.
What is more broad and far-reaching than manipulation of the money supply itself? “We have found that inflation (1) worsens income distribution; (2) increases the income share of the rich; (3) has a negative but insignificant effect on the income shares of the poor and the middle class; and (4) reduces the rate of economic growth” http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295...
It’s not difficult to see why - under an inflationary regime, those holding currency lose out relative to those holding assets, because the former’s wealth is not preserved; and low income wages are facing a constant headwind that their earners are less equipped to navigate.
We in the US have been engaging in an experiment since 1971, which has resulted in a marked discontinuity and a shift in to whom productivity growth accrued: https://wtfhappenedin1971.com/
This is not necessarily the true or only explanation of our accelerating and historically high inequality, but it has the properties of a realistic explanation, in that it identifies a broad, historically distinct cause.
This is an interesting question, but that's [1] a terrible study.
It compares "data averaged over 5-year periods" across different countries. It's effectively a scatter plot of income inequality versus inflation.
The study's findings are better stated as "countries with high inflation have worse income distributions." Which makes sense. High-inflation countries tend to have low-quality institutions and low economic growth, factors which make being middle class difficult and poor miserable.
The right way to do this is longitudinally, studying populations over time. Even that's hard, given the number of interceding factors. At a minimum, an input must be the distribution of credit and debt, given inflation transfers wealth from the former to the latter.
[1] http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295...
The issue is that the scatter plot shows there are something like 30 countries with an inflation rate of 0-15% and no correlation between inflation+gini/inflation+growth and then 8 countries where there is.
That depends how you measure inflation. The government-published inflation rates use all kinds of creative accounting to make the number seem artificially low. It's in the government's interest to make it seem like that's the case. The reality is that housing prices (and rents) are increasing at a very high rate, and this is probably the biggest expense that we all have to pay. It's also a fundamental need.
If you were able track housing prices of equivalent homes and adjust for land scarcity from population- you'd have a much stronger metric. Without that context it's hardly relevant.
The difference is between those who held dollars and had a 56%+ loss of value over 20 years, vs those who held the same in assets which appreciated at the same rate as the general increase, and so did not lose value over time. https://www.aei.org/carpe-diem/chart-of-the-day-or-century/
Granted, you're a lot worse off if you need to pay a hospital bill or go to college, but I don't think any serious person argues that the real structural problem there is lack of a Gold Standard...
Very few people could afford to do this, but in some markets for home ownership those would be the only type that could actually afford to own a home any more.
The gold standard has always been there for thousands of years and is likely to remain for many forseeable lifetimes to come.
The structural problems (from the citizens' point of view) are a result of how & when the US declined to participate any longer.
Not much different than anyone else over the centuries who could once afford a little gold but no longer any at all.
Remember since the US dollar was always tied to gold (after foolishly withdrawing from additionally constitutionally mandated silver in an earlier century), then when that was later tied to the confiscation of gold from the citizens, that allowed the dollar to be more powerful than gold as long as US taxpayer's assets were strong, making the USA actually relatively affluent as a nation. Therefore the gold price worldwide could be stabilized at $35 per ounce for decades, indefinitely if the taxpayer's assets would have been truly worth preserving by the regime. This was as long as the dollar remained tied to gold, even though citizens had not been allowed to hold gold of their own for most people's lifetime by then. With income taxes skyrocketing beyond the "temporary 1 percent tax on income" needed to pay for wars, tremendous wealth was transferred to the federal government over the decades and held as gold, until the fed had more wealth than the citizens which is the opposite of how the US actually grew as a free country, back when prosperous stuff could just pop up anywhere without federal interference.
Then one day Nixon comes along and offers the US gold to the rest of the world for $36 per ounce. Citizens still not allowed to participate, but the Saudis for example being some really big ones having a faster appreciating asset that sizable took great interest because they could actually afford to trade a portion of their faster-appreciating asset for one with less forseeable upside at the time.
Then Nixon "opens up China" so there can sooner be a new lower living standard to decline towards, gradually of course which is generous because the taxpayers can be put into free-fall at any time without a parachute since then.
This might be off topic but it has become a pet peeve because I've even started to encounter it in real life. It is similar to starting a discussion with "if you disagree with me, you are stupid".
Um, why would it be incoherent? By all observations of perfectly coherent physics, the universe itself is currently the largest it has ever been and is growing at an ever faster pace. While perhaps your opinion is that such things should not be possible, it is clearly non-sensical to say that such a thing is incoherent when it actually seems to be the basis of the entire universe.
I don't think that is the reason for it being inappropriate. In my opinion, such phrases are a result intellectual laziness, of which I am also guilty at times.
And I don't think "accelerating inequality we’re witnessing is not the natural inequality of competition and the power law, easily explained by simple arithmetic" as an axiom compares to "that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness".
As an aside, I believe the founders of the US did some great work, but let's not put their use of certain phrases on a pedestal. For example, I for one do not believe in a creator at all.
Add "you can look it up" to the list, a frequent Chomskyism which sounds like a casual declaration of confidence in his sources but in effect functions as a rhetorical control device, in that it passively asserts the listener is uninformed about the data being referred to, and that Chomsky presumes not just the authority of an expert, but arrogates the prerogative to assign homework to his listeners/interlocutors as well.
And to assume that he does not have authority as an expert in a myriad of topics seems to be giving him little credit.
Also, as a smell, when you say "I think most people" you're often just trying to mask your own biases.
Meaning that income tax is less progressive now.
Also the 38% number that right wing groups like to throw around is very carefully crafted to avoid FICA taxes, which account for a much larger percentage of the tax burden for lower income earners. And the social security component goes away after the first $130k in income.
"Why should I have have to pay a penny more in taxes than that teacher over there. It's not like I'm consuming more units of military protection than they are."
Hopefully you can see the problem with that.
Bernie Sanders has stated he wants to tax billionaires into non-billionaire status. So yes, it's about eliminating the 1%.
You're also making some weird assumptions that transferring money away from billionaires would just destroy that money, and that the current billionaires are using their resources in the most productive way possible. The real world isn't Atlas Shrugged.
Look up income velocity of money.
There's nothing weird about that. You don't get to be a billionaire by being bad at managing your money, nor do you get to be a billionaire by investing in less productive investments.
By taxing the 1%, you are removing money from the most productive investments.
Since close to half of America's billionaires inherited their fortunes, that's not really something you can prove. And that fact that it makes money doesn't necessarily mean it's beneficial to society, nor does it even mean it's the most economically productive possible use of resources.
>By taxing the 1%, you are removing money from the most productive investments.
Billionaires aren't the 1%. And "the most productive" investments isn't something you can prove or even make a semi-convincing argument for.
2. Even if we do assume that the current billionaires are better at making money individually, there are still advantages to collective action. That is to say that taking 10% from the most individually productive members of society and building an interstate system likely produces more societal and economic benefit than whatever they would have done with the that money individually.
You're completely correct here. Unfortunately, neither the current levels of income inequality nor the acceleration of said inequality is unique or historically high. It's not even unique in the last hundred years.
I'm not sure what you're saying, as these statements are unqualified:
"current levels of income inequality"?
"acceleration of said inequality"?
"historically high"?
Are you saying that I need to break down what measurements I'm talking about? I can agree with that but we're on a forum and I was responding to a person who I assume, based on how they wrote, shares a general knowledge base upon which we can have a conversation.
https://en.wikipedia.org/wiki/File:Chart_of_foreign_born_in_...
https://en.wikipedia.org/wiki/File:US_Historical_Inflation.s...
I don't doubt that inflation is a factor. Duh. It's just a tax by another name.
But it takes extreme incredulity to ignore the biggest policy change (pink elephant): shifting the tax burden from capital (assets) to labor (income).
PS- Your cites note Bretton Woods. What's your position on the gold standard?
Equality is unavoidable as long as people are allowed to compete for stuff.
If people are allowed to compete for property then those that are better at competing will have more property.
It might be possible to have property equality when people have access to same things but compete for different things, for example status, choice of partners, etc.
And the most important point people seem to forget:
Inequality does not mean we need to have people who can't satisfy their most basic things. It is possible for people to be allowed to compete for wealth and at the same time ensure those that don't want or can't compete have their basic needs like food, shelter and medical care satisfied.
And it's not just that "those that are better at competing will have more property". Every person is free to make a variety of choices for themselves, including how much they prioritize wealth creation. Since each one of us has only one life to live, and only one way to live it (i.e., the way each one of us choose to), and so many choices to make, there's no way we'll all make the same choices. Some will prioritize love, others family, others art, others business, or some mixture of these and other things. And that's just fine. We can't all pour ourselves into our work the way Elon Musk does, and we can't all only pick great ideas to pursue, and we don't all have the same talent or drive.
> Inequality does not mean we need to have people who can't satisfy their most basic things. It is possible for people to be allowed to compete for wealth and at the same time ensure those that don't want or can't compete have their basic needs like food, shelter and medical care satisfied.
Indeed!
Historically, people made little progress in circumstances where they could not amass and defend wealth. Property rights and working public institutions is what allows people to stop spending their entire time defending what little they have and instead figure out how to improve what they amassed (in other words progress).
If it is too easy to gather wealth so you can gather wealth without actually having to create any value (through corruption, extortion, monopoly, theft, deception, enslavement, etc.) then you will have the bad kind of inequality where most people are not compelled to put hard work to create value for others in order to create wealth for themselves.
Again, GINI does not differentiate between the good and the bad kind of inequality, so two countries with same GDP and same GINI might be very different. One may be on the rise, with a number of enterpreneurs creating huge progress and value and the other might have couple of oligarchs who were able to amass their wealth with corruption.
rent-seeking should be there too
EDIT: Ah yes, rent-seeking is a problem. That was identified by Adam Smith, and it's a problem that's as yet unsolved.
Or you know, just by taking the surplus value of someones labor.
Lets stop living in the 1960's. Don't take our impression of American business from history. Today its very, very different and very, very predatory.
The "growing of the pie" is also a fairy tale though to mask the realities...
For one, the "growing pie" still manages to give some people not just most of the pie, but also to live the majority with smaller (in absolute size) slices than before -- stagnant inflation adjusted wages for decades, higher rents and houses, higher education costs, higher health costs, etc.
Second, even if the "larges slices to the average person compared to before" was true, we shouldn't accept a minority to hoard increasingly more of the growing pie. For one, because money is power, so those elites would have increasingly more power over the rest damaging democracy. Second, because people should be compensated (for increased productivity etc) relatively to the size of the pie, not just larger than before.
If an economy was scaled at 10 and now is scaled at 1000 (units of money), then it's not enough that those making 0.0001 now make 0.0002. Doesn't have to be equally distributed to all, but people in such a society should make closer to (1000/10)x not just 2x.
Wealth in society is relative like that, not mere absolute. I don't think those proposing otherwise would be happy to be paid 2x what a peasant made in 1700 (inflation adjusted of course), just because it's "more". They expect their compensation to raise in accordance with the wealth level of their society and relatively to the size of the pie, not merely as a larger slice than some past in absolute terms.
The point about higher rents, education, health costs, etc, is a miscalculation of inflation. There's a difference between two things:
(1) the undesirability of a 1000x/2x split due to increased demand for the fixed supply of land and genius doctors, which means the 1000x/2x didn't properly account for inflation, and
(2) the fact that it'd be way cooler to have a properly-inflation-adjusted 990x/12x income split than 1000x/2x, among 50%/50% of the population.
On the other hand, Haiti and the Dominican Republic have equal populations and a 10x income difference, and I'm not shedding a single tear over it.
Yes. But both things hold, and will (2) is "nice to have", the (1) also actively declines quality of life and prospects for many people. But sure, they have better gadgets than in the 60s, so there's that.
>On the other hand, Haiti and the Dominican Republic have equal populations and a 10x income difference, and I'm not shedding a single tear over it.
And Mexico has a very unequal population (a few huge moguls and tons of poverty) and its quality of public infrastructure, infant mortality, and other metrics, US begins to descend to...
E.g.: "Using a combination of data from Blue Cross Blue Shield, the CDC, and prior health studies, the report predicts millennials will achieve the new triple threat of being sicker, broker, and dying younger than the previous generation, Gen X."
https://www.bcbs.com/sites/default/files/file-attachments/he...
And Switzerland is usually even richer GDP per capita and average wage than the US, and with much better infrastructure, service, and quality of life (e.g. it's much cleaner, less full of homeless people and crazes, rarer to get shot by a cop, and so on).
It's almost as if you can have more equality without Haitian results...
Though valuing ancient goods at equivalent modern prices is debatable, it seems like a reasonable metric.
This should not be a controversial statement. Imagine a simple scenario where Walmart alone, represents the economy and they sell 100 units per year. Then Amazon comes along and starts competing and after a while Walmart is only selling 50 units a year and Amazon is selling 60 units per year. You could now argue that 10 units/year of wealth have been created.
Maybe I am misunderstanding you but it seems you are arguing that 60 units/year of wealth were created in this scenario?
Of course this is only a simple scenario where all the variables are fixed, in the real world there are thousands variables (or more) interacting with each other. Which is why IMO, it's overly simplistic to say that one person's prosperity is zero-sum but also equally simplistic to say that wealth is created independently of the rest of the economy.
The point is primarily one about productivity growth and that causes the economy to grow. Consider agriculture.
When we were all out in the fields plowing them with oxen the whole time, and grinding flour by hand with stones, we didn't have much time to be doing anything else.
The invention of water- and wind-powered mills reduced the amount of time spent milling. Add (in no particular order) the seed drill, the horse-drawn reaper, pesticides, crop rotation, scientific theories of plant breeding, combine harvesters, nitrogen-based fertilizers, insect-resistant bio-engineered crops etc.
Productivity in agriculture in the developed world has DOUBLED since the 1960s.
John Deere invented the self-scouring steel plow and became famous and wealthy as a result. Some of that wealth came as a result of people buying his plow instead of buying someone else's; but the economic growth that resulted from his innovation was in terms of improved efficiency in farming in the plains of the Mid-West.
but how does it even work - what things on that list have actually remained unchanged? Is a chicken in medieval times really the same as chicken today, and that's just in the last 800 years, not in the last 5000.
And in what direction do you compare? I suppose the price going up shows the growth of the economy, but what does the price going down show. Let's take aluminum, that price would have gone down a lot since medieval times, because it has been very much changed by increase of technical abilities. So we must not look at that because it is no longer like the aluminum of medieval times, but if you can not look at and measure stuff like that how can you actually measure the growth of the economy where value creation takes place.
I would need to see some arguments on how this works to even begin to get past the sounds clever but also sounds wrong stage of thinking.
Of course nobody is doing this silly thing, but trying to think about how the way it is being done works seems to be equally as silly to me.
No, it's not a reasonable metric at all, because it ignores the fact that the vast majority of per capita GDP growth between the Stone Age and now is not that we have improved the quality of items that existed then. It's that we have invented a huge number of new items that Stone Age humans could not have even conceived. The huge growth in productivity and wealth from the Stone Age to now is not because we make stone tools that are that much better. It's because all they had was stone tools, where we have combine harvesters and backhoes and steel skyscrapers and railroads and container ships and airplanes and medical imaging devices and computers and the Internet and...
We still create beef because beef has value to us. So, sure the basket of goods created back then is less valuable than what we create today. But, that does not somehow mean the value created back then is meaningless.
In the end combine harvesters are more efficient than hand tools, but they both end up harvesting gains.
I don't think it's 100x; I think it's a lot more. I was giving reasons why I think that.
> the basket of goods created back then is less valuable than what we create today. But, that does not somehow mean the value created back then is meaningless.
I never said it was.
> combine harvesters are more efficient than hand tools, but they both end up harvesting gains.
Yes, but combine harvesters greatly multiply the productivity of a single human at harvesting grain, which frees up many more other humans to invent so many other things that didn't exist before.
Also, combine harvesters are only one of the things I mentioned.
I am not saying you’re being disingenuous, but you listed stuff without context. A 1% slice of a pie looks tiny, you need numbers to judge these things not lists.
The context is farmers and ranchers still make up 1.3% of the labor force in the US, but globally 28% of the population are just farmers. https://data.worldbank.org/indicator/sl.agr.empl.zs Sure, more productive society’s have whither output for everything but agriculture adds up to ~6% global GDP / per capita GDP.
Now, we can argue that today’s food is better, but meat and fish likely made up a significant fraction of the Stone Age diet. So, suggesting it’s more than 6x more expensive using today’s market value seems unlikely. Note, food going bad is irrelevant as the value existed at one point, and food is temporary.
PS: Of course the population is also ~1,000x as large. So total worldwide GDP should be ~100,000x as large by my estimate, if that makes you more comfortable.
If more than 6% of current GDP is from farming, which it is, then everything else adds up to less than 20x the value farming provides. That’s just simple math.
So, we can just compare agricultural production and absolutely ignore everything else because it’s already included in the above calculation.
PS: Now you can argue that you care more about the internet or healthcare than a meal. But, I guarantee you would quickly change your mind if you had not eaten in several months. Food is an absolutely required and unlike air and water not naturally available for free in vast quantities.
Clean Water
Land
Natural resources
You can take your pick about which one runs out first/be consumed by a small group of ultra-wealthy, but one of them WILL run out first.
Increasing our effectiveness removing natural resources doesn’t increase the amount on earth, so again, fixed. We will eventually run out.
Desalination assumes that the ocean is clean water. Micro plastics would like to have a word with you.
We're so far off using anywhere near all of even the easily available natural resources on Earth that considering it as a limited quantity is fatuous. By the time we legitimately run out of materials on Earth we'll be able to colonize other planets or just create whatever we need through fusion and chemical synthesis.
Desalination for potable water includes filtration which removes microplastics along with everything else.
How am I moving the goal posts? I literally started out saying it's a fixed resource and the only way to increase is to colonize space. Your response is "but we can use more of it than we're using today" - sure, but it's STILL a fixed resource. We can move portions of it from one place to another. We can come up with creative solutions to utilize more of it than we are today. NONE of that changes the fact it's a fixed resource, and if/when we happen to use or destroy it all, it isn't magically going to create more on its own.
>We're so far off using anywhere near all of even the easily available natural resources on Earth that considering it as a limited quantity is fatuous.
*In your lifetime. If you look at the rate of development and destruction caused by humans, to claim we'll NEVER do it is RIDICULOUS. We'll never destroy the rainforest. We'll never take down all of the california redwoods. We'll never kill all of the bison roaming the plains of the midwest. We'll never... Sorry that I'm concerned for my great grandkids (if I happen to have any) and the generations beyond those, not to mention the entire human race. My purview of the world doesn't begin and end with me.
>Desalination for potable water includes filtration which removes microplastics along with everything else.
Uhh, no. The current method of removing microplastics from seawater includes using chemicals that are deadly to humans. Potable desalinated drinking water includes our tiny friends.
That's missing the point completely. No one is going to argue that a Helium, or Cadmium, or Carbon shortage will be the death of us all, and reducing this planet's natural resources to just its constituent chemical elements is depressingly naive.
When people talk about natural resources, they mean the functional elements of our planet's ecosystem that keeps this planet habitable for us. They mean forests, that regulate temperature and humidity. They mean insects, that pollinate our crops for us. They mean the glaciers, that create an abundant supply of fresh water.
We're nowhere near the level of engineering that we can replace the natural systems we're destroying with artificial machines. Not at scale, at least.
It is possible to create wealth. If I can do something that you can't and you can do something that I can not, then if we exchange services we can create wealth from nothing. I have more than at the start, you have more than at the start and nobody else is affected.
The maximum possible wealth I think is also not limited. There is always potential to take something and create something with more worth. Good, pure example is art. Painter takes resources that are relatively cheap and plentiful (paints, canvas, his time) and can create something of huge value to some people. Intel might take a bunch of sand and other resources and create processors from it.
There is also "intellectual property" which is not tied to any natural resources. Anybody can create something new (derive new chemical formula or write a book) that would be an example of creating wealth from nothing.
When success in competition increases success in competition (e.g. compound interest), the game tends to extreme inequality. And when extreme success gives you power to change the rules of the game, people start to lose their basic needs.
The kind of inequality that is perceived as problematic is something different though. It's the rent collection that transfers wealth from the poor to the rich.
Plenty of the poor actively destroy value, see the sanitation nightmares that are homeless encampments in the Seattle area. And the rest of the poor don't produce life sustaining value. Wealth transfers in the US are exclusively from the middle class and wealthy to the poor. To say otherwise is simple demagoguery.
Most of the wealth from the poor is stolen through increasing rent seeking behaviors from landlords, insurance companies and lobbying. I could speak at length the ways banks organized things as to punish the poor by organizing deposits to occur after transactions so that they can charge overdraft fees or insurance companies deciding not to cover you because of pre-existing conditions.
You could go on at length about that stuff, but you'd mostly be wrong. Don't write checks unless the money is in the account to cover the check. Pre-existing conditions don't work like that.
Ultimately, if it costs $18000/year for a person to live and they only earn $15000/year then they are short $3000 and that money comes from the middle class and wealthy. When you factor in all government services and transfers this is what happens to over 60% of the country. It is objective reality that the lifestyles of the bottom 60% are subsidized by the top 40% of tax payers.
https://www.cbo.gov/sites/default/files/114th-congress-2015-...
Chase has had to settle class action lawsuits due to the predatory way they handled overdraft fees [1] so don't feed me that bullshit. It was something I personally experienced and saw my parents struggle through due to the way they were paid and Chases scummy behavior.
As for pre-existing conditions that is literally how they worked before and is something that insurance companies constant lobby to go back to. Because when my mother had her stroke her insurance denied her immediately because they determined the stroke was somehow a pre-existing condition.
And ultimately your logic is incredibly flawed because profits and productivity has gone up while pay for the workers has not kept up. This isn't wealth transfer, this is the rich deciding to underpay their workers to the point that they can't survive working for them, which then gets billed to the government. Your logic also offers zero explanation why wealth is concentrating towards the wealthy because wealth transfer would imply that, you know, it's actually going to the poor people.
[1] https://bucks.blogs.nytimes.com/2012/02/06/chase-agrees-to-s...
I am aware of the complaints about how banks process transactions in and out of customer accounts. It's a moot point for two reasons. First, the complaint boils down to whether a bank making a checking account available is also an agreement to extend small value, short term loans to people. If you don't try to float checks then you will not be hit with overdraft fees. It's as simple as that. Second, it's irrelevant where someone spends their money. If someone doesn't earn more than it costs to maintain their lifestyle their spending habits only impact how much they get from others, not how wealthy they are.
As far as preexisting conditions go, denial of coverage on that basis has been illegal for ten years. The only reason to bring it up is because you want to prompt an emotional response from people who are ignorant.
Profits and productivity are, again, irrelevant. If the question is "Which way does wealth transfer?" The answer is simple to discern and simply requires that we know how much it costs to survive and how much a person earns. We know both of this things on average nationally and wealth is transferred from the top 40% to the bottom 60%. I linked to the government report that demonstrates this.
As far as this unrelated statement goes:
>Your logic also offers zero explanation why wealth is concentrating towards the wealthy because wealth transfer would imply that, you know, it's actually going to the poor people.
Someone can create $1000/year in value, and another person comes up short by $300/year in survival. The first person transfers wealth down to the second person while still becoming wealthier. This is pretty basic stuff.
As for your second point, calling 'profit and productivity irrelevant' is ridiculously flippant because profit and productivity doesn't come from the void. It's generated by people. So let me illustrate:
Person A is 'creating' $1000/year in value.
Person B is 'short' $300/year in order to survive.
Person A employs Person B. The reason why Person B is short of funds is because Person A is earning their value from Person B and not properly distributing that wealth down through labor to Person B. Ergo, the situation isn't some sort of 'wealth transfer', it's the result of someone not being fairly compensated for their work.
What you're calling 'wealth transfer' is the result of money accumulating towards the top, which results in the wealthy having to either pay more to support the bottom percent or let them die. Software engineers generate many more times their income in value to the companies that employ them. Which means money floats to the top as companies try to depress wages to maximize profit margins.
Considering I grew up in abject poverty, I'm sorry but I'm not going to let remarks like that fly. That doesn't deserve a pass.
B) The inability to produce enough to sustain yourself is the basis for defining poverty.
And I grew up in poverty too. My first real paid job paid three dollars an hour for farmwork -- in the 90s, and I thought I was living like a king.
That's not how banks work. You go in and deposit a check they give you a receipt which tells you what day the deposit will post and when the full amount of the funds will be available. You are, again, functionally complaining that a checking account can't be used to force a bank to give you an interest free loan and justifying it by saying "desperately need [...] food or basic amenities."
Your economic model is simplistic. People with no marketable skill or knowledge are not having the value they create stolen from them. The value that comes from the businesses they work at comes from the founders, the investors, the people who had the idea, who developed the product and so on.
You could turn the tables and say that the lower and middle classes subsidize employment terms that are favorable to the wealthy. To tax the top 40% because some subset of the top 40% can't pay the bottom 60% a living wage is just a way for the wealthy to extract further wealth from the middle class.
I'd say that both perspectives are valid ways to look at it, and won't pretend that either of them is "objective reality", but with a growing wealth gap it seems obvious to me who benefits most from this system.
EDIT: And 40% of the wealth in the USA as of 2017.
Low-income rental housing tends to be quite exploitative.
https://www.citylab.com/equity/2019/03/housing-rent-landlord...
They don't have wealth arguably because it's taken by those with considerably greater leverage.
Asymmetric parameters like avoiding regulations regarding 'full time employment' (i.e. Uber) is one very common way that employers keep workers down.
It's not always obvious either - just as H1Bs can create a lot of value, in many cases, they are point blank just used to suppress wages.
Consider many wealthy folks pay a lesser net tax rate than others due to income from capital gains - of course there is some rhyme and reason behind the fact capital is taxed at a lower rate than income, but one might argue that on the whole, this isn't really fair at all and is one of the primary drivers of inequality.
I don't think inequality is inherently a bad thing, but too much of it is bad, and we should always be looking for ways to get people 'empowered' into positions wherein they can create real value and grab a fair/share piece of the pie. And we have to remember there are always people who won't be able to do that, and that we have a responsibility towards them as well.
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How?
I get that there's a lot of waste and inefficiency in those industries. Whenever zoning laws prevent a developer from building new housing, that's a third party actively preventing someone's basic needs from being satisfied. Whenever med-school admissions hold the number of new doctors below that needed to service all the uninsured, that's a third party actively preventing basic needs from being satisfied. Whenever food just gets thrown out because nobody bought it or it didn't meat the supermarket's quality standards, those were peoples' basic needs that could've been satisfied.
But in most cases this inefficiency happens because of a quality/quantity tradeoff that society has collectively made in the past. When the Bay Area was first settled in the 1930s-50s, it was common for workers to move here, setup tents, and then go to Orchard Supply Hardware, buy some lumber, and build their own houses. Can people do that today? Absolutely not - we have building codes, year-long permitting processes, zoning requirements. Much of that original housing stock still remains, and is a disaster waiting to happen in an earthquake.
Similarly, a common response these days to the shortage of health care and the need to provide affordable health care is for nurse practitioners to get certified (often via online courses) to be a physician's assistant, and to use PAs for much of the routine medical care (coughs, colds, rashes, etc.) that takes up the bulk of a doctor's time. I have several doctor friends who have railed at length about this practice. They have an obvious self-interest in doing so, but they also have a compelling argument: children will die. For most visits, the PA just needs to tell you to take some ibuprofen, but in some rare cases, those recurrent bloody noses are actually a sign of a serious medical condition that needs treatment ASAP. A doctor will have run across those conditions in their training & practice and know what to look for, but a PA is very likely to miss it. Thus, you are literally killing children if you relax the regulations that set the bar for becoming a licensed MD.
Many of our current societal ills come because "the perfect is the enemy of the good". Unrestricted capitalism is very effective at "good enough" solutions, where the product is good enough for you to buy but may be a little rough around the edges or have corner cases that, well, kill you if you get unlucky. To mitigate the corner cases, we've added a lot of regulations that generally prevent suppliers from killing their customers through negligence, but a side-effect is that it's dramatically reduced the population of people who could be potential suppliers. That lets those few trained practitioners dictate the terms of supplying the service, so they can raise their prices until only the wealthy can afford to pay.
Throwing money at problems usually means that the people providing the solutions make more money. It does not necessarily mean that the problems get fixed. In many cases, it means that those people now have more resources to ensure that the problem does not get fixed, so that the government will keep throwing money at them to mitigate it.
In many cultures this is standard. For example, families taking care of their less fortunate family members (as long as they don't do something really stupid). Or another example, in many cultures, historically, the status came from being able to support weaker members of society. Especially in tribal societies the status would frequently be tied to how well you can make sure your tribe prospers as a whole.
The thing about lazyness & cynicism is that it's viral. When everybody sees everyone else around them pitching in to the best of their ability, they're inclined to pitch in as well. When one person starts enjoying the benefits of this without contributing, contributors start getting angry. When multiple people start doing this but there's no way to either punish or evict them from the group, contributors get depressed, and often switch their worldview. Why bother working hard for other people when the other people are not working hard in return?
Empirically, this seems to happen at a few thousand people, well below the size of a modern nation-state. The cultures you cite all have internal subdivisions (villages, tribes, clans) of around this size. Beyond it, the complexity of society grows to the point where freeriding cannot be detected & punished other than by institutional means (money, contracts, lawsuits), and so there's an incentive for everyone to freeride.
It doesn't even require malicious intent. Take the health care example, and imagine you're a physician's assistant. 99% of the patients who come to you just have a cough that they could've taken care of with bedrest & fluids. After seeing 99 patients, most of whom come from the more well-to-do if neurotic segments of society and none of them needing actual medical treatment, you start thinking "Man, all these folks don't have any actual problems, but they keep coming for medical care because it's free. What's the point in doing anything other than sending them home for rest & fluids?" The 100th person has aggressive lung cancer, but you send them home for bedrest and fluids, where they die. The PA's malpractice insurance covers the inevitable lawsuit, so they don't face any consequences for their cursory examination. They do, however, end up even more bitter about patients who are not only lazy but litigious too. The family of the deceased tells all their friends that the healthcare system is irretrievably broken, but there's nothing they can do about it - since it's a government institution, it's not like there's anywhere else they could go. Instead, it trickles down into how they do their own jobs: they get just a little bit more cynical about how much everyone else is pitching in to the common good, and decide they're going to pitch in a little bit less to keep the score even.
Knocking 2 or 3 years off would be easy. Right now, the first step to becoming a licensed MD is to get a BS or BA degree. Any degree will do the job, though it is expected that certain classes will have been taken. This is taking 4 years, but meeting the legitimate needs for medical school should only take about 1 or 2 years.
I'll work it out, based on what Yale specifies:
These are bright people, so assume that they have AP credit for all 3 basic sciences. That leaves 1 semester of organic chemistry and 1 semester of biochemistry. That's it. Checking prerequisites at UCF, biochemistry requires Organic Chemistry II. We could thus be looking at 3 semesters. Do the biochemistry over the summer, and it's just one year.
Despite this, Yale requires attending at least 3 years for an undergraduate degree. Yale doesn't care at all what the degree is. It could be music history, military science, creative writing, or whatever. You just need to put in the time, a minimum of 3 years. To help you waste time, not even a "5" on the AP tests will be accepted by Yale.
All we're accomplishing here is a supply limitation. We jack up the time and expense to become a licensed MD. We also shorten the resulting career by 2 or 3 years.
People are already complaining about inequality of status and partners. Why is inequality of wealth less just than those other things?
> Inequality does not mean we need to have people who can't satisfy their most basic things
I honestly don't understand why and moral arguments are not convincing.
Here's one to get you started: When a very small number of people have everything and a great many people have nothing, not even what they need to survive, those hungry desperate masses will have nothing to lose and every incentive to take what they need by using any and all means.
Next, try to think about what might be potentially lost when large numbers of people are needlessly dying. What contributions great or modest those lives might have made if they'd been able to survive.
I'm not suggesting you should be personally responsible for providing for every person's basic needs, but it doesn't take a great amount of creativity or insight to come up with pragmatic reasons why we might be better off collectively if we work collectively to minimize the number of people around us who are struggling with the basic necessities of life and well-being.
So if you argument is that we should increase taxes so another Mao doesn't exist, I'd rather just kill Mao.
You're probably right to not be afraid, but things can kick off when the circumstances are right for it. And we haven't arrived at this historical moment by being nice.
You might not be sympathetic to your fellow animals, but you can bet that if a bunch of them frightened, angry, and hungry start circling because they see you as all that stands between them and survival they won't be very sympathetic to you either.
We already make a number of concessions to preserve a polite society. Keeping your fellow animals fed and making sure they have a chance to advance (something to work for) is a small price for security and stability because otherwise those things are impossible.
You can think of it as ransom, but I prefer to think of it as an investment in and routine maintenance of society itself and ultimately we all benefit and see returns on that investment.
The fact is, however, that modern society doesn't fit everyone. Since we won't allow people to withdraw from society that means we're actively forcing people to live a specific way of life that some simply cannot handle.
Simply putting more pressure on those groups will result in the forming of parallel societies and in the long run that means that those parallel societies will form a separate culture and try to secede. If we stop that there will be conflict. History tells us such conflict will be very bloody, no matter who ends up on top.
This is a cycle that Western Civilization has dealt with for thousands of years. Personally, I wouldn't mind trying to break it this time.
Sometimes (although far less often than some people would like to assume) the person who withdraws is perfectly capable of handling the demands we force on people in our society, but they simply prefer to not participate. These people usually aren't sitting around all day collecting welfare checks, often they are the career homeless or living in isolated shacks in mountains. I can't really fault them if that kind of lifestyle is actually preferable to them.
We shouldn't assume it applies to anyone just because it applies to some indivuduals though.
Those rabid unproductive people are rabid and unproductive because society can't provide basic necessities such as 'housing' or 'food' or 'water'. They are being made rabid by people that would deny them the basics needed to survive.
Your argument is essentially 'Let them eat cake' and if you're at all familiar with history, I need not mention the possible origin of that phrase. When you create a desperate class of people willing to do anything to survive, you shouldn't be surprised when they show up at your doorstep seeking to drag you out into the streets.
I would lose money.
> boils down to "i don't care about them".
Exactly, I don't care about the poor. The only reason we fetishize them is because of Christian influence on society. You go to Japan and Singapore and we always praise them for clean streets. They don't treat the poor well.
If we raise taxes I don't think the people I would be giving money to have similar beliefs or values as I do, I don't think we would ever be friends and given the age we live in, I don't think they are part of my community, even if we live in the same country. Given we have so little in common I'm more sympathetic to people living in abject poverty (that don't live in the US) who truly have no chance of succeeding in this world without help.
If you want the poor to live in hell, move to the UK, the bottom end of the class system is exactly that even with free healthcare.
Where do you draw the line on unproductive? Hitler was a bum until he got into politics after trying and failing to 'be productive' in art. Your metric does not protect you from poverty, you can become ill and unproductive yourself, nor does it protect you from Mao/Hitler. They all became "productive" at some point.
The poor will always be with us, it's not actually possible to draw the line such that they leave.
I disagree. I'd argue the amount of money you "lose" due to redistribution is actually MUCH less than the additional value you are able to output due to social stability. You cannot be entirely decoupled from your environment - and that environment is rapidly globalizing. That's not to say that balance can't become skewed in the future, or that other communities haven't had bad balances elsewhere otherwise. But, its not a one or the other, its more of a balancing act. Some redistribution is likely good - too much is definitely bad.
Specifically, sister comments are arguing redistribution is likely net-positive for everyone at least up to the point of providing basic needs (food, water, shelter) exactly because without those things people become disruptive. To argue that "I/we can fight anyone becoming disruptive" ignores the fact that that fighting takes away from other productive ventures (and not to mention is a wee arrogant).
EG: I can make 100$ of value a day if I don't have to constantly fight for me and mine. Forfeiting 30$ of it makes sure that everyone around me is happy enough not to threaten me. If they were starving and began threatening me (or my tools), my output drops to 10$ because i spend most of my efforts in looking out for myself/mine rather than collaborating. I'm now MUCH worse off than if i participated in some well-moderated redistribution.
If you disagree with the $100-$10 output reduction, i recommend you go try to do the same job you do now in a war-torn or economically repressed country (odds are you won't be able to find it, or it'll pay much, much less). I believe every developed nation has social safety nets precisely because of the economic sweet spot it enables.
When people are inhibited from meeting their basic needs legally by structural impediments to their progress like severe inequality, they sometimes try to meet their needs via methods that are destructive to society, like crime, whether petty or violent. That behavior is usually damaging to people, property, or the fabric of society.
This is a reason why such crime is strongly correlated with areas of endemic poverty.
People have a strong will to survive, one way or another. We can provide them the tools and resources to do so in a prosocial way, or spend the resources defending ourselves against the crime that results from poverty stricken circumstances.
> We should provide them the tools and resources to do so in a prosocial way.
The reason why you default to this instead of simply defaulting to suggesting crushing any dissent (probably what was the default since the dawn of the modern era, and is the default in countries such as China) is because of moral values you have had instilled in you from your surroundings since birth.
>The reason why you default to this...is because of moral values you have had instilled in you from your surroundings since birth
Yes, like many people, I was priveleged to be raised to believe in justice, empathy, decency, and fairness. But I understand full well that those are not fundamental properties of the universe, but instead very useful fictions some societies have created. Do you not have a moral framework? Or is it perhaps:
> crushing any dissent (probably what was the default since the dawn of the modern era, and is the default in countries such as China)
Also, I've had stuff stolen from me and property damaged by people who probably wouldn't have done so if they had a better alternative.
We should note that there is such things as free shelter and food for homeless and anything above that is "wants" rather than "needs". Taking care of equal opportunity is fair, but doing anything else to accomodate individuals otherwise inclined to crime is not fair at all.
"This is a reason why such crime is strongly correlated with areas of endemic poverty."
I agree with the correlation, but I go further to say that poverty just accomodates crime (i.e. troublesome individuals having it easier in those areas for encountering less action towards prevention and countering deliquent behavior), and thus is at most an indirect factor to crime, not a direct one.
What you call competition, others call being useful to your fellow human beings by providing a good or service others find valuable.
I understand why we should provide basic needs for those that can't "compete", but why should we provide for those that simply don't want to? Why should someone have the right to not provide something of value to their fellow humans while still enjoying things of value (food, shelter, medical care) provided by their fellow humans?
If you can contribute and don't contribute, then you shouldn't get any contributions from others.
It’s deeper than that. Inequality is unavoidable as long as people are allowed to own some proportion of the fruits of their labour.
We do have to keep in mind that right now nothing enhances one's ability to compete for property more than already having property.
It always runs the same way. First, you think of some political opinion you want to support. Then you come up with a mathematically trivial toy model that throws away 99% of the structure of the problem, whose few dynamical rules are artificially chosen so that they obviously will produce the result you want. (Though this part may look intimidating, it's not once you know how the game is played; I can easily cook up a toy model that "proves" any given political opinion upon request.) Then you put a lot of energy into solving the model in all kinds of cases, showing off your mathematical skills.
The end result of all such social models is a set of predictions that are only tenuously linked to reality. A common example of such a claim is "X follows a power law". But the models are usually too weak to actually calculate the power in the power law, and the data too tenuous to even show you have a power law at all. (Most of the time this is done by showing a fuzzy cloud of points on a log-log plot with a tiny range, drawing a line through it (ignoring the fact that literally anything can be fit with a line if you zoom in enough) and declaring victory.)
The point of mathematics is to make your postulates and predictions precise. If your postulates are obviously unrealistic, and your predictions are too vague to be meaningful, then the mathematics isn't serving any purpose -- except for giving your work a false authority.
Once you have that, there's no need to slap on some model that says, like people are a frustrated antiferromagnetic spin lattice on a random small world graph. It doesn't add anything. If you want to explain the results of the measurements, you can do it just as well with words.
Take for instances infectious disease models, often a very simple set of ODEs that are capable of capturing the wide ranging dynamics that we observe. One of the crucial parameters in these models is the transmission parameter, which determines the rate at which susceptibles become infected upon contact with an infected. Transmission is a function of a long string of physical, chemical, biological, social and economic variables. I am not sure how feasible it is to determine from first principles this parameter and so it is obtained from fitting the model to data. So in this case, one does not directly measure the parameter, but infer it from the data conditional on the model.
I've often thought about the "it's expensive to be poor" adage. What's interesting is he takes in this risk preference idea, in which you naturally expect the poor to have to be cede certain opportunities in order to secure further existence. I've played a lot of poker where you see this dynamic where the big stack guy can take chances and still win, and the cards (and skill) don't matter that much.
I don't find the model itself especially compelling as a broad model of the economy myself, though it's nicely written exposition of how variance can wipe people out and largely agrees with my biases. The fact that a curve with three arbitrarily-set parameters can be made to fit empirical Lorenz curves doesn't particularly impress me, and the concept of rich people enriching themselves through wiping out poor people in zero sum trades as opposed to having the ability to transact with a lot more people in positive sum trades doesn't ring especially true of a modern economy.
Interesting!
I think Eastern philosophy has a balanced view on this. There're Yin & Yang. The system eventually needs to find a balance. Stop swinging, start living.
> Stop swinging, start living.
Swinging is living. Life is constantly changing, or "swinging". It is inevitable.
My goodness! This completely shocked me. I wonder if we are all complicit in allowing this to happen. I know wealth buys power and vice versa, so it likely would be hard to change but aren't we all indirectly allowing this to happen?
https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-ric...
Everytime we shut up in meetings when dumb sleezy managers come up with dumb ideas.
Everytime we implement those ideas. And let someone else sell them and use them.
Everytime when we pretend that our jobs are just a paycheck.
So yeh if we don't throw them under the buss no one will.
#underthebuss
Some of the shifts in wealth inequality are changes in how much money people are saving/investing.
It seems like about 19% of all Americans have zero net worth, and something like 44% of single American retirees are dependent on Social Security for 90% or more of their income, implying they saved very little throughout their entire lifetimes.
Some people have other interests that gathering power and money. So why is it fair we build a world only for the powerfull and wealthy?
In the same way, should pensions be counted as part of savings?
And if you run the calculations that way, what does it do to the distribution of wealth?
Note well: I am not saying that this is the right way to run the calculations. But I think it could be a somewhat informative alternate way to do them.
Therefore, that is subject to change at the whim of those in charge of changing the laws. Sure, it's politically ugly to reduce/eliminate, but a severe recession could easily change that.
Yes, it's a tax (though they don't call it that). No, it's not a savings account. And yet...
This is why some people call social security a pyramid scheme - built into the system is an assumption that the number of workers will always increase or that interest rates will make that moot.
... but the trust fund is spending more than it's taking in. So current taxes are generating less than current recipients receive. Clearly that is unsustainable. And when the trust fund runs out of money, current taxes will have to equal current benefits, and one side or the other will have to give.
https://en.wikipedia.org/wiki/Superannuation_in_Australia
The pros are obvious but the cons are significant; it can be a very poor investment for some people. It's also criticised for locking up a lot of savings in an unproductive way.
In our labor system, a small number of individuals are by definition going to be payed, as employees, a small amount of the value that they add in order to make their boss wealthier.
Over time, the employees get paid a constant amount of money that they need to spend for living expenses, but the employer wealth will compound and accumulate over generations.
It's a system that comes directly from medieval serventry, designed to concentrate the wealth in the hands of the noble.
Take for example a large surface supermarket, with 100 employees making minimal wage. If those same persons would each own their small family shops and serve the same amount of customers, you would have 100 families well off making way more than minimal wage.
Serve those same customers through a supermarket, and most of the wealth will be concentrated in the hands of the supermarket owner, while the employees make only scraps.
Prices would increase (no economies of scale). 100 persons would have to deal with 99 problems (accounting, supply, marketing, ...) they didn't have before. And risks and competition.
Most people don't want to deal with all those problems. Even if it pays better.
It depends, if raised on a family of shop owners with the values that you should have your own business, that would simply be seen as part of life.
Those problems are not that hard, its not that hard to run a small shop. I think anyone could do it.
I mean, if the % of poverty decreases, then economy is moving in a good direction, in spite of inequality, right? Suppose you had one million, and somebody else has one thousand millions, there would be a large gap, but I wouldn't consider it as negative.
If there are arguments against what I wrote I would gladly read them and consider them.
Because outside of extreme poverty that is rare in the West, relative deprivation seems to be a more significant source of experienced disutility and other social dysfunction than absolute deprivation.
Anyway, if the problem is relative deprivation we should focus on that, instead of focusing in inequality. I believe it would be more productive to improve things. Is inequality the "cause" of relative deprivation? I believe there are more important causes, like corruption, for example.
edit: I mean, the cause of poverty is not that some people are rich, because if world trends of poverty are decreasing while the rich are getting richer, there isn't a correlation.
Of course if some rich people get their riches by corruption or some other harmful activity, yes, that may cause poverty. But I would not say that the existence of rich people in general is the cause of poverty. That would imply thinking about wealth as a fixed size cake, where some have to lose for others to win. But it may be that it's rather like increasing the amount of cakes. Nobody loses if we have more cakes.
From the article: > Relative poverty, an important but often neglected policy target, is measured by the resources needed to maintain the social and economic lifestyle that is widely accepted by the society in which one lives,
Who is "the society"? This sounds like saying that people feel bad when others have something they don't have, even if they aren't poor. Should everyone have the same? Trying to achieve that never worked. That may work only when thanks to technological advancements we reach a post-scarcity economy, I believe.
From the article: > A large empirical evidence base for most countries suggests that low socio-economic status and resulting feelings of relative deprivation lower both objective and subjective well-being, as measured by indicators such as health and happiness.
Feeling envy lowers well-being, yes.
“Absolute deprivation” is having less access to material goods and services than some fixed standard.
“Relative deprivation” is having less access to material goods and services than others in one’s social milieu.
Relative deprivation is an inherent aspect of inequality; the two are inseparable.
> Is inequality the "cause" of relative deprivation?
No, it's not the cause in the same way that being a triangle isn't a cause of three-sidedness; it's more closely linked than causation.
> I believe there are more important causes, like corruption, for example.
Corruption can be a cause of (or mechanism of perpetuating) inequality, and thereby contribute to relative deprivation, but it's not a cause of relative deprivation independent of inequality.
I cannot buy a yacht, while some rich guys can. Therefore I'm relatively deprived, according to that definition. That's not a problem.
On the other side, people are suffering right now. If we agree that reducing this suffering is the correct measure, then we must ask ourselves what steps can be taken right now to lessen it.
If we were in an intellectual vacuum, then we could argue all day about the pros and cons of wealth redistribution (and whether or not it is theft to apply such a tool). But what many (including myself) feel to be true, is that now more than ever, a lot of the productive capacity of money is being needlessly accrued by relatively few people who, on average, don't possess the the knowledge or will to apply that capacity to society's problems. Under those conditions, the potential for growth and productivity in the future is needlessly limited.
It is one thing to say that the gatekeepers of society's wealth function as a storehouse of capital for future contingencies, but this largely ignores that our global monetary system is primarily a fiat one, and as such, the integrity of the society itself and peoples' trust in the system is of paramount concern.
TL;DR The productivity of today's capital is being hindered by accumulation because the long-term benefits of more equitable distribution are philosophically real, but hard to understand.
> now more than ever, a lot of the productive capacity of money is being needlessly accrued by relatively few people who, on average, don't possess the the knowledge or will to apply that capacity to society's problems. Under those conditions, the potential for growth and productivity in the future is needlessly limited.
The people who accrue a lot of money is able to do that because either they profit by selling some useful product or service that others desire and buy, or because they invest some land or form of private property they bought or inherited, or because they steal or acquire by illegal means that harm others (like corruption). I don't believe that we should consider equally the rich businessmen who became rich providing something useful to the world, and the corrupts. If the good businessman is punished with taxes or confiscatory laws he would be less able to produce something useful and demanded by society. If the corrupts are punished, everyone wins.
Edit: by involuntary I mean if person can't choose. Not talking about businesses
Also, for example, I don't like some study programs and I really like some of them. Problem is - I can't choose which ones to subsidize for students. If that's the case - I wouldn't subsidize any of them, but I am forced to do so. Even if I think its harmful.
I think this problem arise/will arise in many different places: North vs South Italy, Catalonia vs Spain, young people to carry aging population and etc.
For instance, the GINI coefficient ranges between 0 and 1, where 0 means everyone has the same amount, and 1 means one person at the top has everything. Depending on how it's measured, the US is somewhere between 0.4 and 0.5.
You don't want to be at either extreme, so some level of inequality is desirable. Is there an appropriate amount of inequality that is generally accepted? Has anyone tried to identify the appropriate target level?
They're entirely egalitarian either, perhaps that's why you say they're not communist, see for example the luxuries that a captain has that crew do not and the preferences (larger quarters) that accrue with seniority.
It's both a story-telling crutch and obstacle. It's a crutch in that they never have to explain how they provide for the entire crew while out in space. They just transform energy into matter.
It's an obstacle as they can't really tell a story that involves a limited resource unless they explain why it can't be simply replicated. Now, sometimes, they say just that. But it's always something they have to acknowledge.
And we have to bow to the fact that Star Trek is entirely fiction. We don't really know how a post-scarcity society will function. So we will wind up still projecting contemporary mores on them. So the captain gets a special office and larger quarters.
DS9 has replicators, but they're also trying to be the "wild west frontier" Star Trek, so they're not available to everyone and there are non-Federation societies present. And those societies aren't post-scarcity, so money exists. (And then there are the societies that are both technically post-scarcity, yet still materialistic which is just weird)
Voyager has replicators on the ship, but their solution is to remove the ship from the Federation and handwave the fact that for the most part, starships don't require fuel in a traditional sense. I think the fuel for starships would be antimatter, but it's never an issue on the show unless it needs to be.
However, without getting bogged down in the details of the implementation, I think GINI-1 would result in a society where no one has incentive to work because one person gets all of the benefit of that work.
Whereas with GINI-0 everyone benefits from their work, and anyone who produces more value than most others is still incentivized to work because they will still see a marginal gain in wealth, albeit reduced from what they would normally earn in a higher inequality system since it is somehow redistributed equally to everyone.
Perhaps the goal is not GINI-0 but as close as possible to it.
If you worked really hard to create an extra $1,000,000 in value, where shall we send your family literally the additional penny?
Combined with what you'd outlined, differences in individuals / differences in efforts / and luck seem impossible to ever fully equalize.
How can anyone hope to normalize these differences?
In society A, let's say that the gap between the poor and the rich was high, but the poor had their basic needs being met. In society B, let's say that the gap between the poor and the rich is 0, but the standard of living of everyone is worse than the poorest in society A. In this case, most would agree that society A is better off despite having a non-zero Gini coefficient.
Obviously we want a society where everyone is equal AND their standard of living is as high as it could possibly be, but wars have been fought over figuring out how best to organize society to achieve that.
Oh, this is not obvious at all!
Due to the natural variety in persons' behavior, skills, and preferences, some will build or collect a different mix of things. Those things will then get valued as "wealth" or "income" of different magnitudes that violate the `gini=0` constraint.
So, you'd need constant additional violence to re-level the holdings against peoples' individual actions.
A more marginal reward would result in more marginal motivation. A significant reward would provide significant motivation.
And if the laziest [or unluckiest] person is reliant to some degree on receiving byproducts of the less lazy people's output, then they might be better off in absolute terms from that non-zero Gini coefficient incentivising the less lazy people to work harder.
[the magnitude of the amount likely matters in real world situations too. The answer to whether you'd consider working as hard as people in your company who are less lazy than you probably depends on whether you're being offered an extra dollar or extra million dollars to do so]
So the natural stable distribution of that dynamic system is certainly some type of power law, aka Pareto Distribution. It will almost certainly always trend towards such a distribution given its historical efficacy. The question then is, at what alpha value do we achieve some desired outcome?
I like this line of thinking, and I'd like to see GINI index or the Pareto distribution alpha value tested as a predictive economic indicator for things like growth.
I would prefer a measure that describes general level of satisfiability of peoples' basic needs, the measure of peoples' suffering. Are people suffering or not?
Having measure of envy for much wealthier class seems less concerning to me.
Edit: I think parent edited their post to add a few more clarifying statements, so this post makes less sense now.
Even with the new added bits I still disagree; having one class that owns everything, even if the rest of the country has their basic needs met, could describe a system of principled slaveholders. Wanting a more-or-less equal distribution of money/power doesn't necessarily boil down to envy over wealth.
Look at the table: https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
You have Ukraine which has fantastic GINI of 25%, much better than 41% of US.
Other countries that have GINI in neighborhood of US? Senegal, Madagascar, Angola?
What kind of measure is that?
Centralization of power improves (potential) competitiveness through ability to make and implement decisions.
For example, China was able to progress very quickly from a very poor to superpower by implementing unpopular changes, breaking what we think as "human rights", etc.
One could say that "on average" Chinese people are better off having strong central government for the past half century than if they had ineffective democracy.
Again, "on average" Chinese family might not care that their communications are being monitored, that they are being lied to or that they have no rights. What they might care is that they have electricity, food, education and work.
The democracy is not a solution for fast short term progress and wealth. Democracy was meant to maximize freedom and the chance to keep it in a long run. So it all depends on what you value. Freedom seems to always cost and if society is not ready to pay a little bit for it it might just end.
I wonder how this could be tracked - it's not quite like the cost of a "bundle of goods" because some parts of that bundle might be automatically supplied by the government.
i.e. (yearly income | total assets | net worth | passive income) vs. population percentile?
I can't seem to quickly find raw data to make an example.
I think the goal, especially within an economy modeled loosely around capitalist principals, should be to have a low GINI prior to taxes and transfers, something South Korea can claim to have one of the lowest in the world at around 0.350 and they've had some of the fastest economic growth on earth over the last couple decades, in addition to having one of the most highly educated populations on earth, especially among young people. They also invest the highest percentage of their GDP on R&D.
Switzerland, Norway, and Denmark also still have one of the lowest levels of inequality before taxes and transfers at around 0.400. As such you have created a much more stable society, where you do not divide society into groups who either are deeply concerned about inequality or feel as if they are being taxed too much.
If you want a target measure for the economy, let's do it this way. GDP per capita should be as big a number as possible. Wealth distribution should be correlated with productivity. A measure of productivity should be some combination of output, competence, and effort.
Basically, if everyone controls their envy, the good kind of inequality that improve the worst off in absolute terms only really happens if you are tolerant of inequality by condemning acts of envy.
One could argue that at least two Judeo-Christian values have lead to the stability and prosperousness of the Western World. Not envying your neighbor is one. The second is forgiveness, which prevents society from getting trapped into feuds with one another indefinitely and wasting resources on perpetuating conflict.
Actually, I am not against some inequality, as long as there is some kind of limit to it.
You could, but the textile industry freed women from endlessly spinning thread and making cloth. Pretty much nobody does that anymore. I don't want to spend my life making cloth the pre-industrial way. Do you?
In colonial America, archaeological bone evidence shows the colonists worked like dogs and died young. Not very romantic.
If you have 3 (or 10) times as much as I have, and we both invest all our money in the same interest bearing account, then after N years you will still have 3 (or 10) times as much as I have.
So, according to your model, the initial wealth distribution should not change. (Of course, you can argue that those with more wealth consume a smaller part of it, and that gives rise to inequality, but that's an issue beyond "compound interest").
EDIT to remove a typo
Anyway, if I started with 100k dollars and you started with 1M dollars (a 900k difference) and we both grew 50%, now I have 150k and you have 1.5M - a 1.35M difference. Still 9x, but way more $.
Right, it's linear relative to other interest bearing accounts, but GP's point was that existing wealth of an individual grows exponentially.
taxes do a lot to flatten the distribution.
Even a wealthy person can lose their money if they don't make an effort investing it properly. How do people build wealth from the ground up? They work hard each and every day and that effort COMPOUNDS. They get smarter, more opportunities present themselves, they get better creating value for others. When you make strangers happy, they reward you with their money- a fair exchange! This is how wealth is made - compound effort.
The more insidious version of this is arguing over whose labours have more "market value". And there's something to that, but I can't get away from the feeling that it's deeply unfair how a software professional can coast for weeks on the occasional flash of insight or burst of productivity, while a housecleaner works two full time jobs and still is one unexpected car repair from insolvency.
If you drive a truck for ten years to save up enough to buy your own truck, and then drive it eight hours a day while you pay two other people to drive it the other sixteen hours a day, you're making more money than them for the same work. But it's only because you saved instead of spent for ten years, and the only reason they have a job driving a truck is that you have a truck. They have neither a truck nor the money to buy one, so without you they're standing on a street corner with no job.
If I have nothing, I have a couple of days to live - I need water, food, shelter. I cannot afford to be picky in the means of getting these. I find a manual labor task. It's hard, exhausting work, but I get paid and can buy water, food, and shelter. Through work and cleverness, I can improve my situation. And "improve" almost always means LESS work, LESS exhaustion, MORE security.
If I have $10,000, I can have at least a few months of water, food, and shelter. I can be picky in how I obtain employment. I can afford to travel distances to find better opportunities (better = LESS work, LESS exhaustion, MORE security). Should something happen (illness, transportation troubles, etc) I can arrange to work around it.
Just having that initial wealth creates an imbalance that is unrelated to my level of effort.
If I have $5 million, I can live modestly off the interest. My "effort" is finding an investment that outstrips inflation enough to let me live off the remainder. This is effort, sure, but it is not 40+ hour work weeks. It is not holding down multiple jobs. It is not skipping paying for car insurance or car inspections or oil treatments because you need one more month to make the payments.
Sure, there are millionaires spending 60+ hours/week trading and dealing. And they are successful. That's fine, but that's not the whole of existence. (it is also very selective - how many people work hard - that hard or harder - and aren't millionaires? That's not the model I want everyone striving towards. That's not success, that's just obsessive wealth.
It starts with "effort leads to results", and then mixes that with "effort is virtue" and concludes "people who have results, must be virtuous". Then turns it around and says "people who don't have results must not be virtuous, and therefore deserve their lack of results".
"Effort leads to results" is based on the Just World idea that if you do what the winners do, you must get the results the winners got. It's only fair! If you invest "properly" then you must get good results. If you don't get what the winners got, you must not have been doing what they did well enough, and you only have yourself to blame. Nevermind the post-hoc definition of "properly" where, if it worked it was proper, and if it didn't work, it must have been improper.
Reinforced by Survivor Bias - you can't see how many people invested like Warren Buffet, but didn't get results, so somehow their effort doesn't count. Same reasoning as "proper" earlier - if it worked, it counts, if it didn't work, it doesn't count. Just World where successful people deserve it, and unsuccessful people deserve it too.
It falls apart again when you look at lottery winners - their results were disconnected from their initial effort. That single counterexample is enough, the problem is not that they got money unfairly, the problem is that you or I cannot do what they did - choose a winnint ticket - and get the same results they got. For the mindset to work, there must be a path going from effort to success, but here there is not one. You can't defend the way they got success as any kind of virtue, so it has to be put down to luck, and luck has to be outside the system, so the Just World can be upheld.
It must be true that rich people were hard working, people who got smarter and created value for others, because if it was luck, we can no longer sell people the pipe dream "you can do what they did, and achieve what they achieved", and use it to manipulate and guilt and shame them.
It must have been hard work that made Amazon successful (survivor bias: don't look at any other internet company, any other shop, any other investor choices, they clearly didn't deserve success because they didn't get success, by definition). It can't have been luck that Jeff Bezos was born who he was, where he was, had the ideas he had, got the investors he got, in the dotcom boom he was in... all that was effort.
But in a fatalist, determinist view, there's no place for luck or effort. He got what he got, because he was who he was, in the place he was in, in that part of universe configuration space. You can't have what he had, because you can't do what he did, because you aren't him, in his environment, in his area of spacetime, anymore than you picked the right lottery ticket.
I don't know what room there is for free will in this view, whether people can still choose to add effort to things, but:
"investing it properly" - there is no properly. Some investments work, some don't. Whether they work after the fact can't be the determining factor in whether they were proper.
"How do people build wealth from the ground up?" // "They work hard each and every day and that effort COMPOUNDS." - those two can both happen, but correlation is not causation.
"They get smarter" - disconnected virtuous thinking. People generally don't consider there is any way to "get smarter". Because they got wealthy post-hoc, doesn't mean they must have become smarter (read: better) people.
"they get better creating value for others" - logically inaccurate; they might get better at extracting value not creating it, they might get better at manipulating people to see value where there is none, they might get wealth through large groups of people speculating others will see value where none ends up existing.
"When you make strangers happy, they reward you with their money" - sometimes yes, sometimes no, correlation isn't causation, sometimes the two aren't even correlated. I have made strangers happy and received no monetary benefit on many occasions.
"a fair exchange" - in the sense that you want wealth and wealth creation to be seen as virtue, maybe.
"This is how wealth is made - compound effort" - wealth is made by magicking money into existence through debt, and giving it to someone. Almost all "wealth" in the global economy is fictional credit, not backed by material anything, not directly correlated with creating human happiness. Holding wealth isn't virtue and is disconnected from compound effort and largeyl disconnected from doing useful things for others. With so many trillions of dollars in the global economy, you'd think everyone would be ecstatic 24/7 now!
"One's ability to accumulate additional wealth scales exponentially with their level OF EFFORT.*" - How much EFFORT did Warren Buffet put into Berkshire Hathaway compared to a coal miner or a partner in a law firm working 16 hour days, or a startup founder working 16 hour days but being squashed by a bad faith third party? How much EFFORT did Elon Musk put into Tesla and SpaceX compared to the other smart, hardworking, long-hours-pulling engineers designing Tesla cars and SpaceX rocket engines? Did Betsy DeVos put into marrying rich?
Then, accept this, and one "must wnat to reward the poor and lazy", which is bad because they're clearly digusting inferior humans who must be lazy because they are poor, and therefore deserve what they have. But that isn't the only conclusion of accepting this reasoning is awful, another is that if wealth doesn't reliably, repeatably, come from effort, people without wealth can't be labelled untouchables and exploited by their betters, and need to be seen as equally deserving humans in disadvantaged situations - including familially, educationally, genetically, nutritionally, and other ways - as well as geographically.
It does make me feel a bit of despair at the prospect of humanity ever reaching an agreement that would make everyone satisfied. I guess having most satisfied will have to do, but regardless, it's rough.
Getting people to agree on anything is a massive effort. Getting the entirety of humanity to agree on something that will satisfy everyone will take until everyone is dead and there are few enough people it can be done.
This sounds like a delightful utopia. Let's have more of this.
your feelings don't matter- Get to work.
This sounds like an appalling dystopia. Let's have less of this.
Zero effort, compound growth, risk bordering on zero.
*Edit : a typo
Its not like everyone has access to something that offers that..
Then there's this:
You might, of course, wonder how this model, even if mathematically accurate,
has anything to do with reality. After all, it describes an entirely
unstable economy that inevitably degenerates to complete oligarchy,
and there are no complete oligarchies in the world. It is true that, by itself,
the yard sale model is unable to explain empirical wealth distributions.
To address this deficiency, my group has refined it in three ways to make it
more realistic.
Given how complicated real economies are, we find it gratifying that a simple analytical approach
developed by physicists and mathematicians describes the actual wealth distributions
of multiple nations with unprecedented precision and accuracy. Also rather curious is that
these distributions display subtle but key features of complex physical systems.
The authors can fit data better by adding parameters, which is no surprise. But these models omit an important feature of the real world: growth. "Yard sale" models are zero-sum.
[1] http://nbviewer.ipython.org/url/norvig.com/ipython/Economics...
Is it possible to enforce that 8 billion people be and have exactly the same? Seems pretty obviously absurd.
The answer to all is you can't because it's inherently utopian. You can set a legal framework and follow and that's the best you can do. That can involve programs that are designed to help the poor or redistribute but the notion of trying to micromanage everyone into being equal or even close is absurd.
Some are great at collaboration, others love confronting difficult challenges. Some are great at squeezing suppliers and others good at pushing people to adopt the next wave of technology. Some know exactly what people want and others are incredibly creative. Some never stop learning.
Some do none of the above and only want everything defined for them with no risks or growth required.
How could anyone analyze all of this incredible variability and decide whether people get too much money for their contributions?
Income inequality rewards the development of all of those qualities.
North Korea, Soviet Union, Zimbabwe, Venezuela, etc all have income inequality. I don't think anyone would say their economies are/were functioning properly.
> Income inequality rewards the development of all of those qualities.
Not necessarily.
Your statement would be true if every generation started a 0, on equal footing and the system/environment was fair. Would you say that income inequality in Confederate South was a result of rewarding "talents, ambition, tolerance for risk, vision"?
Income inequality is a very complex subject. People who try to frame it in a simplistic black and white worldview really do it a disservice.
Then what policy conclusions are we supposed to draw?
- Social mobility must exist: income inequality is available for everyone based on their merits, not coupled to things like circumstances at birth.
- Wealth inequality must only exist for the generation that earned it. Passing on your largesse to your children is just as bad as the plutocracies that the founding fathers tried to escape. They should be rewarded for the value they create, not the value I created.
- The bottom line is pulled up to the extent that you can live a comfortable life even if you fail.
so if world is a casino, where everything is a bet for utility with someone else, since the best strategy is not betting (or betting the less %) the richer is always in an advantageous position, and on the long run will have anything: this is intuitively true, but it has to be said that this passive force is way inferior compared to the active skill of a good better, that can completely override this force (that on a single life span would be like 1% of the force coming from skills). Basically the system is too chaotic to even notice this little force.
Interesting idea, but this one from margrit kennedy https://vimeo.com/71074210 is even better, here it's another passive force, but with way more impact than that, can be considered a real case of the general idea that "inequality" is a natural phenomena (that is a quite lazy concept cause it makes humans totally dumb and with no free will, like, sure, even war is natural, and murder, etc etc). honestly these ideas are so basic that shouldn't have names on them, and surely they are not the first people to have notice that.
My experience, being born on the African continent and with my (known) family having lived on the African continent for 10 generations, teaches me that this question is not a matter of philosophy but of pragmatism. The impression I have, whether illusory or not, is that the more fundamental human endeavor is towards Mazlo's pyramid of needs. One example that I can give is that often those that "defend" the position of the rich are not rich themselves, but rather believe in the value of personal property ownership.
And with regards to those in developing countries in general, I think the feeling is that you simply want to better your life up to a point of some kind of perception of equal access to opportunity (whether attainable or not). My point is thus that inequality in wealth is perhaps like inequality in everything else, including inequal distribution of personal preferences (in everything). It's easy to say this as a person with access to education and opportunity and pretend to say it on behalf of others, and could of course be misguided, but I don't know if relative spread of opportunity is important in the way that absolute spread of opportunity is.
Inequality is the core concept which keeps everything in balance on this planet. Humans are destroying this planet by trying to achieve a utopian world of perfect equality. The only equality that we should strive for is equality of opportunity, but we can't aim for equality of distribution of resources as this would lead us into eating up our entire planet.
If everyone in this world would get the medical care to live until 100, if everyone would get fed with the same amounts of fish, meat, eggs, fruit, vegetables, etc. then we would pretty quickly end up in the tens of billions of human beings consuming everything around us until nothing will be left and we have killed ourselves.
Resources are limited and unless we can build more planet Earths at random will, then resources will always remain scarce and the only fair way to distribute these resources without looting everything to its extintion is to let all animals on this planet (including humans) compete for it. The strongest lion will catch the Zebra, the smartest human will afford a big mansion, etc.
Humans need to become comfortable with accepting the laws of nature which kept our planet flourishing for so many million years or we will put an end to it very quickly. No human has a right to anything. Whatever you are given is what you have either earned, stolen or you've been given out of mercy, but never because of entitlement. The sooner everyone can accept that fact the better things will turn out for us as a species.
Also it's important to understand that what's good for humans (today) is not necessarily good for humanity. It's good for humans to burn fossil fules like mad people to keep our homes warm in the coldest areas of the planet or to install energy wasting air cons in hot places which we want to inhabitate, but in the long run this is damaging our environment and bad for humanity. It's good for humans to fly everywhere and drive everywhere today, but it comes at a cost for humanity at some point in the future.
Humans are ego centric, self entitled and selfish animals which think that what's good for them today is good for us tomorrow, but it's often quite the opposite. The truth is, the more we live in animalistic conditions like survival of the strongest, the better it is for us as a species in the long run.
I know there are some people who are willing to work harder than me, and I don't mind if they have more wealth. I also know there are people who don't want to work as hard. (This isn't meant as judgement, I'm just saying I'm somewhere in the middle.)
But let's not be black and white about it. I'm OK with some variation, but with some kind of limits. It wouldn't be reasonable for someone to receive a million times the reward for working twice as hard.
And although I'd prefer a better term, many people seem to use "inequality" as concise term for that. I don't love the choice of terminology (too prone to misinterpretation), but I can handle it.
it's a known and inituitive result that a random walk on a lattice eventually reaches every point. This has no practical meaning whatsoever. it's not an interesting result because, just like the random walk on a lattice, after one person becomes an oligarchy, eventually a different person will also become an oligarch.
why did you choose to stop when the first became an oligarch? to make a click baity title?
people need to understand probabilities to read through bullshit like this article.
the expected time to exit "oligarchy" states should be pretty small. the whole discussion is completely meaningless, they intentionally asked a misleading question.
Yes, you can estimate the time to leave this fixed state by invoking an analogy to a classical mechanics problem, where the time to leave is proportional to the exponential of the action.
once an agent achieves "oligarch" status in their model, the flow of wealth towards them accelerates rather than decelerates such that the remaining agents have no ability to exchange wealth with anyone other than the oligarch. so intermediates between the lowest level with nothing and the oligarch are temporary at best.
We are not born equal. Some people are smarter, some people are better-looking, some people have more energy, are more motivated (or the opposite).
We can try and do everything we can so that everyone has the same opportunity to succeed, but if you want the same outcome you'd have to limit the smarter, better-looking, more energetic people so that their outcome is lowered to be the same as everyone else, and I don't think this would be positive for anyone.
Globally, poverty is on the decline.
What's the problem with wealth distribution, exactly? Besides jealousy.
How so? To equalize outcomes for all parties, you must take from those that performed better?
so you're saying your children should not inherit any wealth, and must be taken away to a state institution to be raised like everybody else?
I think inequality being inevitable isn't bad, as long as the floor is at an acceptable humane level.
Why does it matter if 1 person owned 99% of all the world's wealth, if the remaining 1% is enough to give basic human needs?
Yes, and smarter/more driven/more socially adept too.
> They will naturally out-compete the others for resources
Only if they feel it is necessary to compete. A hungry animal will risk injury to for food. A sated animal rarely does.
> And once they have those resources, they will then use them to accumulate even more wealth, buy off politicians and institutions to siphon even more off
Only if their greed is boundless and unchecked.
I understand these cynical sentiments (having felt this way myself) but it is a product of the abnormal system we temporarily inhabit, not the inevitable or natural state of things.
Wealth is less equally distributed than income or Tinder likes, because it's an antiderivative of income distribution, also completely natural. And also because of the generational factor: you are very unlikely to get swiped right because of who your dad was, but your dad could have left you some cash or connections.
And yes, income is less equally distributed now than in 2008 exactly for the same reason as millenials having less sex on average than X-ers had in 2008: because we now have Tinder and it makes picking best partners a lot easier, resulting in top 1% best having sex with everyone with just scaps left for others. Money follows the same way due to the same factor of the smartphones and the Internet in general: success has become infinitely scalable.
It's extremely hard to do anything at all about it. Maybe we just need to know about this as a fact of life and build social constructs to contain the resulting pressures.
[1] https://medium.com/@worstonlinedater/tinder-experiments-ii-g...
I would like to see this simulation run where the agents are also creating wealth into the system.
What if 1 person owned all the money and everybody else worked for the promise of money ? Would that be enough inequality ?
My point is that to organize coordinated work there must be some way to persuade people to comply and endure hardships, like working at nights. I see roughly three: slavery (inequality in offensive power?), "economic inequality" in capitalism, and spiritual leadership (inequality in wisdom). I like the latter the most, but it's hard to scale, and I prefer economic inequality to slavery any day.
Is it structural? Oh hell yes it is.
The worst form of inequality is to try to make unequal things equal. – Aristotle
https://webcache.googleusercontent.com/search?q=cache:u4UoSf...
The authors claim people make a "mistake". In a very small amount of transactions, this may be true, but you cannot base a model on every transaction containing a mistake. But let's look at the math. The authors use an example where every transaction that costs $1 nets either $1.2 or $.83. Over ten transactions, the net is less than $10. But this assumes that the person puts their whole net worth on every transaction. This is false. Each transaction costs a $1. So, the first one costs $1, and the second costs $1, etc. You cannot accumulate the past values of the previous transactions into the current one. This is the coin toss fallacy. If you flip a coin and get 99 heads in a row, the coin toss fallacy says the odds are greater the next flip will be tails. But, each flip is independent of the previous flips, so the 100th flip has a 50/50 chance of being tails, regardless of the results of the previous 99 tosses. So there is no "loser" in every transaction as the authors posit. Both parties win, or the transaction would not occur.
Their next claim is that becoming a billionaire is just "luck" and could happen randomly to anyone at any moment. Bill Gates is a billionaire because he created Microsoft. Mark Zuckerberg is a billionaire because he created Facebook. John Smith a fast food worker in Hoboken, Nebraska doesn't just wake up a billionaire one day by luck.
And what is bad about being a billionaire. Gates and Musk are doing wonderful things with their money that disbursing it to a million people would not accomplish. The authors never give a reason why income equality is bad. In fact, inequality is the natural order. They never mention the Pareto Principle, popularly manifested as the Bell Curve, which is found everywhere in nature.
The authors claim income equality is destabilizing and must be corrected by redistributing all the wealth in equal amounts. However, as stated, income inequality is the stabilized form. It might be increasing slightly now due to faster movement of information, but class mobility is highly dynamic. Yesterday's billionaires are not today's, and today's billionaires might not be tomorrow's. Income inequality is the stable distribution of scarce assets in a free market economy.
Evolution itself would not exist without inequality. Yes, some animals were better than others at certain tasks and evolutionary pressure did it's thing over time.
I suck as a dancer. I suck as a painter. I suck at a lot of things. And yet, I am a better than others at certain things and I am massively better than others in other areas. My life and that of everyone around me has inequality as a positive element rather than a negative. This is why I hire a plumber and an electrician and don't do everything myself.
EQUALITY OF OUTCOME IS A FANTASY.
Equality of opportunity is important and should be promoted far and wide. Trying to force equal outcomes is just silly, sorry.
Hence the Pareto distribution. It's real and it is a fact of nature everywhere you look. There is no such thing as equally distributed outcomes in but the most esoteric corner cases (having trouble thinking of one example).
As for the scale of inequality. That's another red herring.
The way I live today is beyond the equivalent of a rich person a hundred years ago. It is WAY beyond the super-rich before that. Kings did not live this way centuries ago. And yet I don't have Bill Gates level money. Not even close.
The average person today lives far better than the wealthy lived not too long ago. They certainly have greater access to amazing medical advances as well as technology. There are over FOUR AND A HALF BILLION people world-wide using the internet. When you consider that, in rough terms, about two and a half billion out of the 7.7 billion on the planet cannot use the internet (too young or too old) that means that approximately 87% of those able to use the internet use it. You start slicing that further and you might just discover the percentage is much higher than that. For example, my father certainly falls under the category of not too old to be counted as a potential internet user. However, he has less than zero interest and doesn't use it. My mother, on the other hand, is on the 'net every day.
Anyhow, the point is that this business of vilifying the "1%" is just silly. It has no bearing whatsoever on how people live. In other words, they are not taking oxygen out of the room, quite to the contrary.
We do need to raise even more people out of poverty, with some areas of the world notable for a desperate need for improvement. Nobody is saying we can't and should not do better, we always can. What isn't sensible is the constant finger-pointing to this mythical "1%" as the problem. Every year we raise millions of people out of poverty. Life, in general, has been getting better and better over time. Even in places where people have difficult lives you'll find they wear clothes and have things that are markedly better than what was available to them just a decade or two ago.
If we want to make things better for more people we just need to continue to focus on growing economies through free market capitalism. It's the only force in known history that has elevated so many people out of the dark ages. Everything else is a formula for disaster and misery, also a historical fact.
OK, I'll duck now. Let me have it.
Estimates place the illegal immigrant population of the US somewhere in the 25 million range (as a conservative estimate). Assuming half of them are of working age, that is, in rough terms, over 10% of the portion of the US population that is working (about 108 million).
The vast majority of the people who enter the US in this manner do not have college degrees or high-value professions. Which means their earning potential will be severely reduced.
Take 10% of the workforce in any Nordic country, replace it with people who are educationally challenged and the numbers will look very different.
Please note: I am NOT, by any stretch of the imagination, arguing that we should not try to do better. However, certain things are simply inescapable realities that simply take tons of time and effort to improve. Not to go too far, the US is famous for spending more money per student than, dare I say, most nations in the world, and yet our educational results in mathematics, language and other areas don't rank very well at all when compared to nations with much less to spend.
Inequality at work. Money isn't the only variable.
Perhaps that's the real thing that bothers me about these discussions about inequality. These are complex multivariate problems and these discussions make it sound like the only variable worth considering is how much money the top 1% have. It isn't. In fact, I would venture to guess that this factor or variable might not even make the list of the top 100 factors if we were to make such a list from a framework of being brutally honest rather than political.
Simple example of this: Brutal dictatorial regimes hold back their population, cause misery, suffering and inequality. That's a big one. Places like Latin America, North Korea, the Middle East and a good deal of Africa are afflicted by this. Do we, the "civilized world" in the name of creating equal opportunity and access to better outcomes, invade all of these countries, depose all tyrants and institute one hundred years of external benevolent control?
This is crazy, of course, but it is also reality. As a single example, I researched the Paris Accord in great detail and learned that dictators were enriching themselves, their families and associates with the money put into the system by the US and Europe. Money that was supposed to be devoted towards these nations becoming "greener" ended-up buying the ruling class new jets, cars and other "energy efficient" luxuries. So, yeah, the "do we invade and rule" scenario isn't too far fetched if we truly care about creating equality of opportunity and elevating millions out of truly deplorable conditions.
Not an easy problem. Not a single variable problem. And the "richest 1%" thing is a complete red herring.
Also keep in mind many of the proposed redistribution efforts fall squarely in the "equality of opportunity" column which you claim to support. For example, free or very cheap higher education. If we want to be as educated as the Nordic countries this would go a long way. Or taxpayer funded healthcare. This would both reduce the total cost of healthcare and also greatly improve access. It's hard to pull yourself up by your bootstraps when you're sick and can't afford to see a doctor.
Perhaps let me turn this conversation around. Rather than throwing up your hands and saying "it's complex", what specific policies would you support to improve equality of opportunity?
Eligibility for benefits happens via children and partners. The group of people thus receives benefits that are then shared.
Via this mechanism, families containing non-citizens consume more benefits than families composed purely of citizens.
Extreme inequality undermines this by allowing those who already have significant wealth to put their finger on the scales (lobbying, anticompetitive practices, etc.)
Sure, Jeff Bezos has a lot of wealth, but really what he has is a lot of shares of Amazon. It's Amazon that really has the money. Even if Bezos is the CEO, he has a duty to the other shareholders to act in their interests. He can't just donate all the company's assets to charity even if he wanted to.
The real problem is that corporations are too big. The fact that this makes their founders very rich is more of a side note. Increasing the capital gains rate isn't going to make Apple or Microsoft smaller or give them more competition. It isn't even going to collect more money from the largest shareholders until they sell their shares, which many of them never actually do.
This is a competition problem, not a wealth problem. If there were ten times as many companies then there would be ten times as many founders who each had a tenth as much money -- or less, if the added competition directed more of the money to the customers and workers.
Bezos may not be able to donate Amazon’s assets to charity, but he can donate his assets - in this case his shares of Amazon.
He can equally well sell his Amazon shares and buy something else with the proceeds, so the wealth that is attributed to him really his his.
Of course there is a point at which Amazon’s value might be impacted if Bezos sold his shares, but he could probably realize well over 50% of his holdings before that became an issue.
Think about it this way. Alphabet owns Google. When that happened, did it create an additional company out of whole cloth with the value of Google, on top of the value of Alphabet? No. That's double counting. The value only exists once. Moreover, unless Amazon is dissolved, the corporation controls that value (and is required to act in the interests of all the shareholders), regardless of who owns the shares at any given time.
He could decide $N Billion was enough and give the shares away to all employees tomorrow. Or, we could go mediaeval and have a revolution and violently rest control of that wealth from him, and others.
I guess the trick with oligarchy is to keep things just the right side of violent revolt, just enough sharing of benefit to give hope to the great unwashed [amongst whom I count myself, in case you think I'm being pejorative].
There doesn’t need to be anyone with the cash available to pay the entire price of Amazon.
If Jeff Bezos wants to purchase something, he can trade Amazon stock for it.
The corporation doesn’t have any control over whether he does that or not.
It is exactly equivalent to money.
By this logic Google has an infinite amount of money because it has the ability to issue new shares. It can create a zillion dollars of new shares and sell them in the market and now it has a zillion dollars higher market cap because it has an extra zillion dollars in cash.
But it's not actually infinite, for two reasons. First, the money (or whatever you're exchanging the shares for) still has to come from somewhere. There isn't unlimited demand. It's not possible for every billionaire to sell their shares at once because then there would be nobody to sell them to. If they all tried to at once, the share prices would crash into the floor.
More importantly, if Bezos sells some shares in Amazon, it doesn't cause Amazon to have less capital. The company is still the same size. All you've changed is who owns it -- and unless the price he sells it for is dramatically lower than its current market value, it has to be some other rich people because nobody else has the money to buy it from him. The only way for a rich person to reduce their holdings in a corporation in order to spend the money is for some other rich person to reduce their spending by the same amount and use the money to buy the shares in their place -- and then the corporation is in control of that person's wealth, in the same amount as the original shareholder's.
The things that cause corporate officers to control less wealth are things like corporate spinoffs, taking existing public companies private (which then puts actual control into the hands of the owner), competitors eroding the incumbent's market share, corporate bankruptcies, etc. Two rich guys trading shares for real estate doesn't do that. At the end the corporation still has the same amount of wealth and the two rich guys have the same amount of wealth, you've just changed which one has their wealth in stock vs. land.
You are right that Bezos selling shares does not change the amount of capital Amazon has.
The fact that nobody has enough money to buy all of Amazon from Bezos is also completely irrelevant.
You are right that Bezos exchanging stock for real estate doesn’t reduce his wealth unless the real estate is overpriced.
When you buy something with money, the same thing happens - the amount of wealth held by both parties doesn’t change unless the goods are overpriced or are consumed.
You haven’t refuted anything I said in the previous comment.
Bezos can use Amazon stock to buy whatever he wants, the same way you and I can use money, and the corporation has no control over this.
Bezos’s wealth is exactly what it looks like. He can indeed use it just like money.
Your logic is that shares are money, but companies can print shares, which would imply that they could print money.
The shares are only valuable because they represent the company. The value in the shares isn't independent or duplicative of the value of the company. If the company burned to the ground then the shares would be worthless too -- it's the same wealth, and as long as the resources are invested in the corporation, it's the corporation that has control over it.
You're trying to make a lot out of the fact that the owners could sell their shares, but there are two reasons that doesn't do it. The first is, that doesn't come into play unless they actually do sell their shares. But if they did that in practice and spent the money (not just move it to another investment security) then we wouldn't be having this debate because then they would no longer be billionaires.
And the second is that they can't actually do that at scale, because in order for that to happen, you would need somebody else to buy the shares from them, which would mean that that person would have to commit an equivalent amount of resources which then couldn't be used for some other purpose. As long as Amazon exists, it necessary that somebody be foregoing their own use of an Amazon-sized quantity of wealth.
> When you buy something with money, the same thing happens - the amount of wealth held by both parties doesn’t change unless the goods are overpriced or are consumed.
The most relevant part of that being consumed, because that's what the disposition of resources is really about. Trading one investment for another is still investment -- and investment in corporations is giving control of your resources to someone else. Actual spending is consumption. You burn fuel or use electricity. You pay a person to do a job and their time is consumed and can't be used for something else. You occupy some land that then nobody else can use at the same time. Those are the things that actually matter to people and affect the world, not whether Jeff Bezos owns shares of Amazon and Larry Page owns shares of Google or vice versa.
What I'm getting at here is that if you want to reallocate resources from adtech to something else, it is actually necessary to deallocate it from adtech, not just sell your shares in the adtech company to somebody else so that the same total amount of resources are allocated to adtech but now it's somebody else's name on the documents. If the same amount of labor continues to be spent on targeting ads, that labor is not being spent on curing cancer, regardless of whether ownership of the shares changes hands.
That is not my logic. You have made that up our of nowhere.
Obviously printing more shares leads to dilution and doesn’t increase the overall value of the outstanding shares.
But that’s just like money too - printing more money leads to devaluation of the currency.
So you are wrong, and clearly shares can be used just like money.
I agree with you that selling AdTech/Google shares doesn’t anything to reduce the resources that Google can spend on targeting ads.
But that’s not what our conversation has been about.
How about if all the workers in Amazon eco-system shared the money equally (according to the retail price index in their locality, perhaps), and reduced the cost of goods to ensure that the per-employee share matched the median societal wage (or something similar)? Still a big fat corp, but not contributing to societal inequality or unfairness (but still a problem for over-use of resources and such); how would that fit with your analysis, would it still be "these corps are too big"?
Of course, because you'd still have a single entity in control of hundreds of billions of dollars in resources. The CEO still has the same amount of money to lobby the government to relax environmental rules or suppress wages or competition or fix prices or whatever problematic thing Abstract Evil Corp does when they're too powerful. They still have the same huge pile of cash to undercut competitors with until there are none left. The size of the company is problematic independent of where the profits go.
It's also somewhat of an implausible hypothetical, because paying significantly above market wages is uncompetitive. If Amazon pays market wages then nobody can undercut them on price because they have better logistics. If they paid significantly above market wages then someone else could pay market wages and undercut them. The only way out of that is to get market wages up and consumer prices down to the level you're talking about -- which is what happens when there are more employers competing for labor and customers.
This is so important and seldom mentioned in internet discussions.
> Extreme inequality undermines this by allowing those who already have significant wealth to put their finger on the scales (lobbying, anticompetitive practices, etc.)
There is a number os scholars who will point that as we currently stand, those things, including the extreme inequality, are consequence of the current system.
One of the most obvious examples in America right now is a house in a desirable part of the country. Buying a house has always been a major investment; however, housing prices are now so high relative to income that many people will never be able to purchase a house in one of America's modern cities.
I don't know where the line is, but if you say the basic right is just "house", and that gets enforced, someone's going to try to draw that line as low as they can. Probably a few developers try to argue that if everyone gets a house then zoning laws need to be relaxed so they can afford it, and (hyperbole) we're back to windowless apartments with one room per family and one bathroom per floor.
For example, if a group of billionaires bought up all of the property in New York City that would then mean that there wouldn't be any left for anyone else.
Whether that makes it a "right" depends on your stance on things like positive versus negative rights. I'm arguing that a system that doesn't provide that to regular people is broken regardless of whether it is a right or not.
[1] By goals in life I do not mean things like "I want to own my own island" or "I want a penthouse in Manhattan". Rather I mean something along the lines of "I want to live somewhere that I can go hiking everyday" or "I want to live in a cosmopolitan city".
I'm familiar with what commodities brokers are and don't see anything wrong with it. I'm quite happy for the existence of modern financial markets.
You seem to have a very simplistic worldview.
It's a statement that doesn't actually represent reality.
That's just the repetition a rather circular dogma: the market is assumed to be right (typically demonstrated by some oversimplified textbook example), so right is whatever our market does.
If you want to use Bezos's wealth to justify the value he's created, you should at least try to make an independent estimation of that value.
Unless your socialist, most people agree that more productive people should earn more. I think most discussions today around inequality center around the top 0.001% where earnings and production seem unrelated. I am not of the following opinion, but some people take issue that one can "own" a corporation and your return be greater than any individual producer for that corporation for effectively doing nothing.
I believe there comes a point where a person has enough wealth and needs to re-distribute it somewhere else to produce/innovate more.
That touches on an important principle actually. The value of a comment on HN is the expected value of its subthread.
https://news.ycombinator.com/item?id=21347871
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
(Just to be clear, I'm using EV as a pseudo-technical metaphor. But it's a surprisingly good one, and could maybe be turned into a real model.)