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Comment by Barrin92 | Hacker News Reader

There's only one aspect in the entire piece that I think is somewhat accurate, which is the division of society into hinterlands and centres. That really is happening, however not only between the property owning class and everyone else, but with much more nuance in between.

Everything else however is I think pretty far off the mark, comparing this era to feudalism doesn't make much sense.

The article posits extraction of resources from the poor to the rich, including globally, and this is just wrong. We've seen a great convergence in global equity which one can see with their own eyes if they travel to China or Poland.

Lack of property or wealth also doesn't imply 'serfdom'. In today's age property isn't really a guarantor of personal autonomy any more, in fact if anything the opposite is true, the biggest benefits today fall on people who can move. Owning a house doesn't really do most people any good any more, in particular not if it's in a place that has its economy turned upside down.

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I'd argue that the major change is that people often aren't allowed to benefit from their property the way they used to. That places us in a situations were we are limited in a manner that I guess could be compared to feudalism. I'd say it's a completely new thing though, humanity hasn't really done what we're currently doing before.

This time around it's the middle class that's taking the hit. Our consumption fuels the process that does result in a certain re-distribution of wealth, and yes, some of that does indeed reach the poorest. That's good. Most of the cash flows up though. The richer do become richer, and the middle class is probably going to be a thing of the past in 30-40 years. If we continue down the pre-COVID path then the middle class will be replaced by a consumption economy powered by debt, and where the richest own the debt and the rest will have to live a life constant work in order to pay their debt.

Mind you, this won't necessarily be a horrible existence; people will still have access to modern technology, will still have streaming services, phones and whatnot. Compared to how average people lived 500 years ago it will most likely be quite a step up.

The former middle class, on the other hand, will have much more limited freedom, and far less influence on their own situation compared to today.

Time to re-read "The Space Merchants" again.

> Compared to how average people lived 500 years ago it will most likely be quite a step up.

What about the clear regressions we’re seeing in quality of life for poor communities in America? Flint, MI hasn’t had clean drinking water for several years now. The quality of aggregate healthcare in states like Texas is being compared to countries like Russia. Access to affordable healthcare is a major issue for millions of Americans today.

Nobody cares that life will be better than it was 500 years ago, people care that it’s worse than it was 40 years ago, and wealth inequality is major driver of this decline in quality of life.

> people care that it’s worse than it was 40 years ago

Agreed. And since we're currently in an unprecedentedly long period of prosperity it's only a matter of time before some people will be taking quite a few steps back.

My largest worry is that society will simply cease to have a purpose for some groups of people, while still preventing those people from trying another path. In the past such situations usually triggered large migrations of people, but at the moment, there isn't really anywhere for them to go. It's a situation that needs to be resolved within the next 10-20 years if we want to avoid civil unrest in the future.

> Nobody cares that life will be better than it was 500 years ago, people care that it’s worse than it was 40 years ago, and wealth inequality is major driver of this decline in quality of life.

It's not worse than 40 years ago, it's worse than 5 years ago, but short intervals aren't that good in predicting larger trends. Flint, MI seems to be a unique issue, as far as I'm aware, it's an outlier and not the rule in the US.

> Flint, MI seems to be a unique issue

As many as 20% of Americans have been exposed to unsafe drinking water at least once in the past decade[0], Flint is in no way an outlier. The cost to upgrade old pipe systems is completely out of reach for poor communities throughout America.

Between the flight of manufacturing overseas hollowing out jobs in cities from the Northeast all the way through the Midwest and Southern US and the introduction of the private equity model, life is indeed worse for millions of Americans. Just look at the political climate we’re currently in, that anger is coming from a very real place. Spend some time in Detroit or the Rust Belt, it’s a profoundly sad experience.

0: https://www.usatoday.com/story/news/2017/08/14/63-million-am...

Oh, I wasn't aware of the water delivery systems being too old in that many counties, though it does say "potentially unsafe", e.g. one incident was "not building a cover for one of its water reservoirs". Still, it's obviously a problem that's going to cost a lot of money.

I don't know how good it was in rural towns 40 years ago, though. Detroit was certainly doing better, but I'd also assume that testing and requirements have changed since then, so you might still have a similar quality today, but it's not considered safe today.

Whether that's responsible for the political climate, I don't know. We've seen lots of changes in Europe as well and we don't face infrastructure issues of that magnitude and our dying industries are a bit more spread out over the country, so you get fewer pockets of absolute desperation.

Not long ago, 90% of humans were exposed to unsafe drinking water every day.

20% of Americans exposed at least once in the past decade does not sound too bad. Does that include people drinking from streams while hiking?

Middle-class in developed countries, and largely specific to the United States. The Chinese middle class grew from 29M (2% of population) to 531M (39% of population, and almost double the total population of the U.S.) between 2000 and now.

> Middle-class in developed countries, and largely specific to the United States

From what I've seen, it's a phenomena in most of the Western World, and not just in the States. But you are right, of course, and as I mentioned there are more people who are living under decent conditions now than 500 years ago and that applies world-wide. I have no doubt that we'll keep going in that direction for some time yet.

However, as save_ferris pointed out above, the groups that don't stand to gain from this won't care. They will be forced into a lifestyle that might not be terrible and which will be far better than their ancestors had 200 years ago, but which they cannot opt out from and which will still be far worse than their parents had.

But, considering the pandemic and the amount of war-mongering going on at the moment, I guess we should all consider ourselves lucky if we don't have to pay our food with bottle caps in 20 years...

The Fedualism he described can happen even if China and Poland are coming along.

First off this kind of 'Feudalism' may be happening at a national scale even more greatly in China than elsewhere.

Second, property is still a huge differentiator between classes. In a time of cheap interest rates, one of the greatest drivers of inequality is home ownership. Those with the most massvive homes are able to leverage even greater. In Canada, people's 'retirement plan' is literally their home.

--> The average home increased last year in value more than the average worker's income. Just contemplate that for a moment. Society is valuing the arbitrary ownership of a non-value creating entity - a plot of land - more than literally an entire year's worth of average labour. In fact much more, due to taxation. Another way of saying this is that there is in fact massive inflation going on, but it's in housing.

Over the last 20 years, the ratio of income to house prices has risen quite rapidly, indicating very real inflation for most people - the less leverage they have, the worse the inflation.

The Feudalism actually makes sense in the context of globalism - it makes huge sense for Sweden to 'back IKEA' instead of regulating them to try to create 'more competition among furniture makers in Sweden' for very obvious reasons.

Instead of 100 different national economic pyramids, we're converging into one big massive pyramid where it's 'winner takes all' so it's a big fight for global ownership.

I think the essay is definitely fodder for thought at very least.

I think that what we are seeing with respect to economic equality is a Simpson paradox of sorts. Globally we are becoming more equal because globalisation is causing countries to come closer (maybe because developing countries are being benefitted from the law of comparative advantage? Not sure), but each individual country, and especially more developed countries, are suffering inequality growth.

I have been wondering lately what motivated Japan to join the Plaza Accord. (Germany seems clear: a strong DM made reunification cheaper) A hypothesis of mine is that the "Lost Decades" are only apparent aggregating over the GDP of JP, but that if we slice japanese society finer we would find that some japanese have indeed seen higher growth. Anyone have suggestions on how to go about checking this hypothesis?

according to https://eml.berkeley.edu/~saez/moriguchi-saezREStat08japan.p... even affluent japanese didn't get much out of the lost decades. why did they sign?

Uh, what? There's no "convergence in global equity[sic]". See https://inequality.org/facts/global-inequality/

Inequality is rapidly increasing, and the speed of the spread is accelerating.

And given that housing still accounts for somewhere between 20% and 45% especially for the lowest income quintile, yes, owning a house makes a huge difference.[1] https://www.oecd.org/els/family/HC1-2-Housing-costs-over-inc...

I respect you have a different opinion, but if it's contradicting available data I'd appreciate a source for that belief.

No, parent poster is correct. World Gini coefficient has been consistently dropping since hitting its peak of 0.80 in 1988:

https://en.wikipedia.org/wiki/Gini_coefficient#World_income_... (see second chart)

This is also reflected in one of the graphs ("The Global 1% Captured Twice as Much Growth as the Bottom Half") from your link, with the decline in the top 1% since 2009 and the slow increase in the bottom 50% since 2002.

The graphs you show are largely broken down by country, and reflect an instance of Simpson's Paradox. [1] Within each individual country, income inequality is rising. However, globally income inequality is falling, because an increasing share of global income is moving from rich countries to poor countries. The super-rich in the U.S. are rapidly outpacing the poor in the U.S., and the super-rich in the China are rapidly outpacing the poor in China, but a large fraction of the huge number of poor people in China are rapidly approaching the middle-class standard of living formerly reserved for the U.S, much more than the number of people that have fallen out of the U.S. middle class.

[1] https://en.wikipedia.org/wiki/Simpson%27s_paradox

>Inequality is rapidly increasing, and the speed of the spread is accelerating.

Inequality within countries is rising (in some countries), but the average standard of living between countries is converging.

That aside wealth inequality isn't a good measure for economic equality in a meaningful sense . Take a look at life expectancy and education gaps, urbanisation, female participation in the workforce and absolute poverty, there has been an undeniable convergence over the last few decades[1]

If wealth inequality wood be a good measure of economic prosperity then Sweden would be one of the world's worst places to live.

[1] section: Global divergence followed by convergence

Your source appears to have bias issues and on top of that their graphs are misleading We don't care about wealth share based on arbitrary buckets, we do care about purchasing parity and how it ties into quality of life - and how that figure has changed over time.

In the hinterland there are many (relatively poor) owners (of small businesses, farms, shops). In the centers, there are salaried employees that are often richer than the hinterland's owners and very rich mega-owners, that are few. The divisions of interest of these classes are roughly represented in the blue/red map of the US.

> The divisions of interest of these classes are roughly represented in the blue/red map of the US.

Real interests, or perceived affiliative values?

Example: for several things "hinterland" areas are generally underserved by markets alone (hospital/medicine, broadband, delivery). Currently, the party generally stronger in those areas, though, seems more interested in eroding public solutions to those problems rather than building them out...

I think it's condescending to point out to people what their real interests are. People have agency.

It's a fact that human beings make choices other than those that optimize or even satisfy their personal self-interest. Sometimes we do it because we value something else more highly than our own self interest, sometimes we do it because we're mistaken or even defrauded. In the former case, maybe that's even laudable, in the latter case, it's human.

Perhaps you're correct those on the rural side of the urban/rural divide know their business very well. Maybe you're even right that some would consider it even more important to avoid affronting anyone's status by suggesting any other possibility -- though of course if that's true, it says something about the place that status as a value has in the discussion versus, say, actually articulating the picture of the business that they know very well.

Either way, no one seems to have challenged the fact that rural areas are poorly served in areas like medicine by the policies of the political faction they appear to support. Which people are free to do, naturally, but speculating about why doesn't make for condescension by itself.

> no one seems to have challenged the fact that rural areas are poorly served in areas like medicine by the policies of the political faction they appear to support.

Rural areas are poorly served, in almost exactly the same ways, no matter which (of the two) political faction(s) they decide to support, which is why they overwhelmingly support politicians who promise to dismantle the status quo. This is one of the qualities that both candidate Obama and candidate Trump shared. The actions of both in government ended up following the Reagan orthodoxy, though their rhetoric was different.

I don't think that a lot of these people take elections seriously anymore as a method for accomplishing change (with good reason[1]), and now are just voting for the person whom the most complacent like the least.

[1] https://www.cambridge.org/core/journals/perspectives-on-poli...

I think that can be true, but people can be wrong about their own interests or who or what will actually help them.

I live near a lake side villa in India. It's spread in 21000sq feet.

Very sparsely populated.

It has a few shops and hospitals within a kilometre.

Ofc, there is no way I can afford same land in middle of city but a lot of people don't have choice between living in a city Vs living somewhere peaceful / scenic.

Their jobs are in city so they can't just move to somewhere clean and beautiful.

There are things in city which is mostly services available at walking distance.

I am YouTuber - I need the land my channel and also don't really need extra services which city offers.

Once a month, I take the truck to city and hall all the stuff I need for channel.

This. In 2007 and 2008 we saw what having a mortgage meant: it meant being unable to move. Having a mortgage is akin to renting capital, but unlike renting property, moving is made difficult by having a mortgage -- much more difficult if it's under water. Sure, owning outright is nice, but for young people it's neither a realistic possibility (not having accumulated enough capital yet) nor desirable for the same reason as above: young people need to be free to move wherever the opportunities are.

I think you're missing the mark on property. Property ownership is now done by the capital class. They own property and can move. They've pushed rents and real estate prices up globally and have so much money they can leave their properties empty. If you're in the position that you can buy a property but then can't move because the property takes up all your spare income then you are closer to serf than capitalist.

> We've seen a great convergence in global equity

Our wealthiest cities in the U.S. are packed with homeless people, sometimes lining entire streets with tents [1]. Denying the enormous divergence between the wealthy and the poor at this point is just straight denial.

> Lack of property or wealth also doesn't imply 'serfdom'

Yeah, tell that to the homeless.

[1] https://en.wikipedia.org/wiki/Skid_Row,_Los_Angeles

In the past, homelessness was quite a bit more rare - people simply starved to death.

Did you know one of the major issues facing homeless in Portland is Type-2 diabetes? And that's a genuine concern and one we should address - but the presence or lack thereof of homeless is not an indicator of wealth disparity.

> the presence or lack thereof of homeless is not an indicator of wealth disparity.

What a load of crap. The U.S. has the greatest wealth disparity of any OECD nation, and the most homelessness. So yea, I'd say homelessness is a pretty strong indicator of wealth disparity.

The mental gymnastics people go through to justify homelessness is appalling.

Correlation isn't causation.

Egypt, Nigeria, Zimbabwe all have more overall homeless populations. Sweden, New Zealand and Ireland have more homelessness per capita.[^1]

So clearly homelessness isn't an indicator of wealth disparity at all. I'm sorry reality doesn't align to your belief system.

[^1]: https://en.m.wikipedia.org/wiki/List_of_countries_by_homeles...

Not to mention all the economic and HDI growth in the developing world

This comment is getting downvoted for its rhetorical nature, but I think that each point is worth addressing.

- The first point is missing the point, because it is ignoring the Simpson's paradox critique that a few users have already pointed out. It's possible for global wealth inequality to decrease, while at exactly the same time, wealth inequality within nations is increasing. Wealth inequality in the US is growing, and has been, for some time now. Nobody in this thread is disputing that.

- I am on board with the second point. The user that JSavageOne is responding to is pulling a bait-and-switch. They wrote that "Lack of property or wealth also doesn't imply 'serfdom'", and then followed it up with a paragraph explaining why real estate is a bad investment. They never said anything about wealth. But lack of wealth is basically serfdom by definition. Before you start strawmaning me, I'm not suggesting that everyone needs to be Warren Buffet to qualify as a non-serf. I mean something like this: if you A) Don't own anything and B) Don't make enough money to save in eg a 401k (this is a form of wealth) you are in a precarious situation. Whether or not we want to call it "serfdom" is just a matter of semantics. Moreover, I think that society should be trying to minimize the number of people in the situation. (Aside: I recently relocated to Sweden and I find the pension system here impressive. Making it easy (and in fact, mandatory) for people to start locking up money in index funds feels like a realistic, if imperfect, way to level the playing field in a world where wealth, and not income, is how you make money.)

> The article posits extraction of resources from the poor to the rich, including globally, and this is just wrong.

You might consider looking at the study reported here https://www.theguardian.com/global-development-professionals...

> In 2012, ... developing countries received a total of $1.3tn, including all aid, investment, and income from abroad. But that same year some $3.3tn flowed out of them. In other words, developing countries sent $2tn more to the rest of the world than they received. If we look at all years since 1980, these net outflows add up to an eye-popping total of $16.3tn – that’s how much money has been drained out of the global south over the past few decades.

No comments on how good the study is, because I am not an economist.

this addresses a fundamentally different issue. The article concerns outflow of capital surplus from the developing world to the developed world.

The fact aside that the "16 trillion since the 80s" which sounds staggering is one year of economic activity by China, this isn't about someone forcibly extracting wealth out of the developing world. It's the newfound class of wealthy people in the developing world transferring export surpluses and wealth to places they consider more safe. (which if anything is an indication of their total increase in prosperity).

from the article

"But by far the biggest chunk of outflows has to do with unrecorded – and usually illicit – capital flight. GFI calculates that developing countries have lost a total of $13.4tn through unrecorded capital flight since 1980."

>this addresses a fundamentally different issue. The article concerns outflow of capital surplus from the developing world to the developed world.

The report is about the total flow of money, the article just highlights capital flow. Why is this a different issue than the "extraction of resources?"

because rich people in China moving their money to the US is a matter of accounting, not a transfer of resources from one nation or citizens, to another. The same person still owns the same stuff. This has nothing to do with extractive feudalism, or extractions of any kind.

Both foreign and domestic companies are doing this, so some portion of that is a direct transfer of resources to a different country. Even when domestic companies are the ones engaging in this, the impoverished nations are losing the tax on the money and their banks are losing the capital to provide loans.

BTW, the number's quoted do not include China for reasons contained further in the paper than I read.

Something about that analysis seems suspect to me.

Imagine that I own a house.

You stay at my house for a night and pay me $1. Let's call it rent or whatever.

I then spend $3 on bricks and stuff and improve my house. My cash outflow is -$2.

The work done on my house improves the value of my house by $4 (consider this to be the "internal economy").

In that year then, my net worth has increased by $2.

That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away.

Am I missing something?

You didn't have the $3 you spent, so after you made $1 you had to borrow $2 and now have to pay interest on the debt until the balance of trade goes the other way and you can pay it back. If that never happens or takes too long, you've lost more than $2 to interest payments.

>That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away.

This would still be losing when compared to growing without giving away so much of it.

Besides, it was being used as evidence that resources are moving from the poor to the rich globally.

Yeah, but if you need the imports, that's not an option. If you own gold, I need gold, and there's none on my land, I have to pay you.

I'm not claiming there is no issue here, but rather that this situation seemingly can arise with no ill will at all assuming countries exist.

>but rather that this situation seemingly can arise with no ill will at all assuming countries exist.

No matter the reasons, this situation arising supports the claim that that global resources are flowing from the poor to the rich.

That said, even if that were possible it is clearly not what is happening. No country needs this capital flight.

It's mostly because everyone needs energy and they buy it in form of petroleum, gas and coal.

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