Evidence on Poverty Traps from Rural Bangladesh [pdf] | Hacker News Reader

Evidence on Poverty Traps from Rural Bangladesh [pdf]

lse.ac.uk

96 pointsSQL2219204 comments

Please note that this study is in the context of extreme poverty in populations such as rural villages in Bangladesh.

It’s an interesting study and worth reading if you’re interested in what it takes to lift these populations out of poverty. The authors propose that their extreme poverty is a meta-stable state that prevents them from accessing wealth-building opportunities. The authors show that time-limited wealth transfers of sufficiently large size can help these people escape the meta-stable poverty state and transition into a wealth-accumulating state.

However, the comments here rushing to project the conclusions on to the relatively wealthy (on a global scale) citizens of countries like the US and Europe are abusing the study’s conclusions. Similar wealth traps may exist in these countries, but the relative thresholds would be akin to a homeless person living on the streets trying to secure a job. Attempts to project these study results on to things like hiring practices at big tech companies, where anyone able to apply at all is already orders of magnitude more wealthy and privileged than the subjects of this study, are missing the point entirely.

I had the same reaction - Silicon Valley is not Bangladesh. I am moving my comment below to you.

Hans Rosling (RIP) did a great job of defining poverty and visualizing the changing nature of poverty. His area of focus was on child mortality - so it tended to focus on the mothers since they have the greatest impact on this statistic. Later he focused on other areas. Sanitation, water, transportation etc.

https://www.gapminder.org/dollar-street/?countries=bd

At the Bangladesh level of poverty, a productive asset is a goat that produces milk. The Heifer Project is doing useful work in giving low income families productive assets. https://www.heifer.org/

Finally there is the whole world of micro loans. I have not looked into this as much.

Rosling's Factfullness is a great book as well and his 'levels' of wealth really is a great way to look at poverty and past the 1st/2nd/3rd world mindset:

https://www.gapminder.org/factfulness-book/

Agreed.

It would also help to include Bangladesh somewhere in the title, since many people jump straight to the comment section (not saying this is the way to go, but it's the way it is).

Hopefully the OP sees this.

For developed nations there are many other studies.

As a starting point, here is infographic: https://www.visualcapitalist.com/ranked-the-social-mobility-...

Countries in the top 20 are "The Lands of Opportunity" where family background matters less compared to 21-40. Cheap, high quality education, healthcare, and inclusive institutions matter.

I find it hard not to come to the conclusion that similar mechanisms are at work when you see for instance the economic situation of Afro-Americans in the United States.

Being wealthy on a global scale does you no good when you’re in poverty on the local scale. It’s not as if you can move your shopping cart out of Houston and into Bangladesh, after all.

Here's interesting observation by by Nobel prize-winners Abhijit Banerjee, Esther Duflo:

"We have already seen, in the previous chapter, another example of people who had lucrative opportunities to save but did not use them: the fruit vendors from Chennai, who borrowed about 1,000 rupees ($45.75 USD PPP) each morning at the rate of 4.69 percent per day. Suppose that the vendors decided to drink two fewer cups of tea for three days. This would save them 5 rupees a day, which could be used to cut down on the amount they would have to borrow. After the first day with less tea, they would have to borrow 5 rupees less. This means that at the end of the second day, they would have to repay 5.23 rupees less (the 5 rupees they did not borrow, plus 23 paisas in interest), which, when added to the 5 rupees they saved that second day by again drinking less tea, would allow them to borrow 10.23 rupees less. By the same logic, by the fourth day, they would have 15.71 rupees that they could use for buying fruit instead of borrowing. Now, say they go back to drinking their two cups more tea but continue to plough the 15.71 rupees they had saved from three days of not drinking so much tea back into the business (that is, borrowing that much less). That accumulated amount continues to grow (just as the 10 rupees had turned into 10.71 after two days) and after exactly ninety days, they would be completely debt-free. They would save 40 rupees a day, which is the equivalent of about half a day’s wages. All just for the price of six cups of tea! The point is that these vendors are sitting under what appears to be as close to a money tree as we are likely to find anywhere. Why don’t they shake it a bit more?"

From "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty"

https://www.amazon.com.au/Poor-Economics-Radical-Rethinking-...

Two complicating aspects I just randomly thought up:

- the money lending business may not like the fact that their clients are becoming self sufficient and may increase the interest rate to punish such attempts

- crabs in a bucket phenomenon. Not every culture is like the US. In many places it's considered a bad thing to stick out from your environment, family, neighborhood etc. and in poverty you need the goodwill of those people. If you go the risky route, people may hate you, envy you, think you are crazy, selfish, etc.

If the money lending business had the power to unilaterally raise the interest rate, wouldn't it have done so already?

They need to keep it in the range that doesn't fully destroy people but also doesn't let them escape.

If you run a usury business, you want your clients to be spending a good chunk of the money on stuff like alcohol and cigarettes, so they keep coming back and it remains stable. Once your clients escape their trap, they may qualify for better credit options.

These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA), is so pervasive, bleeding into our corporate performance reviews and our pro-diversity efforts ("we hire only according to merit" <signed, Diversity Manager>). But it is so internally irrational. I'm reminded of this argument:

> The case against meritocracy can be put psychologically: (a) The abolition of materialist-elitist values is a prerequisite for the abolition of inequality and privilege; (b) the persistence of materialist-elitist values is a prerequisite for class stratification based on wealth and status; (c) therefore, a class-stratified meritocracy is impossible.

> The case against meritocracy can also be put sociologically: (a) Allocating rewards irrespective of merit is a prerequisite for meritocracy, otherwise environments cannot be equalized; (b) allocating rewards according to merit is a prerequisite for meritocracy, otherwise people cannot be stratified by wealth and status; (c) therefore, a class-stratified meritocracy is impossible.

Source: https://statmodeling.stat.columbia.edu/2007/12/04/meritocrac...

The idea that "innate" merit should be rewarded (this underlies what we consider meritocracy) is fundamentally a noncontinuable state. Above all we need to focus on delivering opportunity via improved circumstances and empowerment, irrespective of merit or success: that is the only path to actual equality.

When "meritocracy" was defined it was not used as an example of a good thing :-)

I don't see why you need a) and b) here. A class-stratified meritocracy being impossible is pretty much a tautology in itself.

"These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA)"

"Evidence on Poverty Traps from Rural Bangladesh" - are you suggesting the situation in rural Bangladesh is applicable to Silicon Valley?

Why wouldn't it? In the end this is a people problem, not a tech problem. And both Silicon Valley and Bangladesh have some form of "local" meritocracy. Meritocracy applied and working within your stratum but not across the boundaries.

Whether you're poor or in a lower caste you still get some form of meritocracy within your group to keep you content and motivated. But crossing the boundary to the next level, while not impossible, is designed to be highly unlikely because people in all layers like the security those boundaries provide them.

You don't think things like access to education, medical care, clean water, nutritious food, vaccinations, quality public schools, subsidized colleges, rule of law, minimal corruption, limited impact of religious identify, avaiable reliable housing might have an impact on the outcomes?

That's... absolutely not what I said, or implied. Access to all of that is the boundary between the layers. People in layer n will make sure people in layer n-1 are missing at least one thing so they can't compete on equal footing. People in layer n+1 will do the same to people in layer n.

If you don't have access to schooling and someone else does then that's something that will make you always start with a handicap when competing with them. The boundary, whether education or medical services, is there so one layer feels safe from the inferior one. People want it there even if this means they start off with a handicap compared to the superior layer. Most people are more afraid of losing what they have than they are keen on winning something they don't already have.

The paper identifies one threshold at ~500 USD. That is, in Bangladesh, those with more than 500 USD assets tend to accumulate more assets, while those with less than 500 USD assets don't.

As people in Silicon Valley have more than 500 USD assets (citation needed), I don't see how this paper applies to Silicon Valley at all. There can be another such threshold, but the paper doesn't provide any experimental support for one.

That's a bit pedantic, the principle is exactly the same showing humans operate on the same principles regardless of geography. OP clearly discussed "the idea of meritocracy", not "the exact threshold" and the study just pinpointed a threshold while confirming the universality of the mechanism.

Whether it's $500 in Bangladesh where Google tells me the "typical" salary is ~$150-$300, or $500k in SV where the typical pay might be $150k-$300k the principle is still very much the same.

Everyone claims meritocracy but in the end it's proven it's not individual merit we're actually looking for. We're looking to maintain barriers around our layer of society and allow some form of real meritocracy only within a layer.

Surely the human factors at play are not incomparable.. ?

Unequal distribution of rewards (i.e. according to merit) is fine and desirable (as a motivating force). The problem's roots are when the distribution of rewards becomes hereditary, that the children of the wealthy have near-guaranteed access to the best educational and social institutions, have near-guaranteed access to startup capital (i.e. from their parents), are usually provided with necessities (food, housing, clothing, incidentals) at no out-of-pocket cost by their parents for a considerable portion of their early adult lives, etc. It is the hereditary nature of wealth which is the largest contributor to long-term inequality.

Agreed -- it is certainly inheritance that mostly takes the blame here, since it allows massive advantages to accrue, unchecked. However, I do think that there's something to be said against even inner-lifetime accruement of obscene wealth, as that can warp merit as well. Where's the sweet spot? - the level at which there are sufficient rewards required to motivate the gathering of wealth without the risk of accruing such an advantage that would unbalance the playing board.

> It is the hereditary nature of wealth which is the largest contributor to long-term inequality.

Hereditary wealth is a specific form of rent-seeking which is something liberal economics has no explanation for. It's like one of those things that never left the feudal era whilst everything else did. But I wonder why some who follow this type of economics think this is the sole and most important issue? There are many examples of rent-seeking and this is far from the biggest contributor towards inequality.

Do you have any sources on what percentage of wealthy that inherit their wealth? From what I've gathered it's quite small and doesn't necessarily last more than a few generations.

In Europe, most of the wealthy are descendants from 400 years ago. There's a paper that comes up in the US media regularly.

What's fascinating is that most of the German name-brand companies that thrived under the Nazis are still owned by the same families.

I don't have an answer off the top of my head, but I did some searching for you.

A short article from inequality.org [1] suggests that most of the richest people in the world (Forbes 400) were born with significant financial advantages, if they weren't already wealthy.

Since there are many more rich people than the Forbes 400, that doesn't seem too representative of the usual rich person. It's hard to find anything conclusive - there are a few research memos put out by what seem to be wealth management firms claiming that most rich people are actually self-made. There's a clear conflict of interest here, so I'm not sure we can trust those results.

It seems understudied, and will take a lot more than 10 minutes of searching for relevant results.

1. https://inequality.org/research/selfmade-myth-hallucinating-...

Those “born on first base” — in upper-class families, with inheritances up to $1 million — make up 22 percent of the 400.[1]

I wouldn’t call 22% of the richest 400 people in the world having inherited more than $1M to be evidence inheritance dominates the causes of inequity.

I mean, another way to put it is “80% of the richest people in the world DID NOT inherit their wealth.”

[1] https://ips-dc.org/the_self-made_hallucination_of_americas_r...

That's not actually the only claim/result in that briefing; but yes, I agree that it doesn't seem representative for the question you're asking. Do you have any better citations? It doesn't seem like there's a conclusive answer from the academic community.

Not to mention that thanks to the government, $1M is a one bedroom apartment in SF. So these people want to give them more power over our resources?! crazy.

You've totally misread this. First base is the lowest category of wealth that the article describes.

22% received support and inherited up to a million, and a further 40% inherited at least a million - more than a lifetime's worth of income.

People outside these categories included those whose parents ran a successful business.

Distributing rewards according to merit may be beneficial, but the problems with unequal distribution go far beyond hereditary rewards. Consider the income distribution according to jobs. Some jobs are assigned greater monetary rewards than others even if they are essential to the functioning of society. Much of that comes from our notions of status. I would argue that distributing wealth according to merit only works as a motivating factor when one is being compared to their occupational peers, which is something rarely seen in lower income occupations.

Are you sure? I believe that rather than notions of status the main factor that determines salaries is supply and demand of workers.

How many nurses have seen their salary increase due to the shortage of nursing staff due to Covid?

https://edition.cnn.com/2020/11/24/health/covid-nurses-big-m...

https://work.chron.com/salaries-changed-nurses-23316.html

I don't understand your skepticism.

edit: corrected wrong second link

> Some jobs are assigned greater monetary rewards than others even if they are essential to the functioning of society. Much of that comes from our notions of status.

It does not. It comes from supply and demand, and how important that job is to the cash flow that will end up paying for it.

> Unequal distribution of rewards (i.e. according to merit) is fine and desirable (as a motivating force).

This assumption sounds nice but isn't backed by psychology research. Extrinsic rewards can motivate and demotivate - and in general contribute to anxiety.

It is natural to pass resources onto your children. You can’t expect people to just see their children as individuals who must go fend for themselves. A stranger might just regard your children as mere “people”, but a parent see’s their children as extensions of themselves, and have a vested interest in ensuring their happiness and well-being.

You can’t expect people to just see their children as individuals who must go fend for themselves

Why not? There's plenty of people arguing for exactly that mechanism when it's not about their own children. A 100% inheritance tax (with no loopholes through business or legal constructs) might force a lot of people to rethink how they vote -- because then, they can't use their wealth to shield their children from how society functions any more.

Basic r/K selection. We're a K-selection species: we have a few offspring and we invest our resources in them quite heavily, like most mammals, and the higher the mammal, the bigger the investiture.

As such, your suggestion is quite literally against human nature. We're not insects. This is the usual trap for people with Big Ideologies: they assume that we're all these tabula rasa entities onto which anything might be written (and should be).

Because there is a bias that cannot be shaken. Look its easy to not give a shit about other peoples kids. Let other people's dirty nasty misbehaved little shits get nothing free in this world. When it's their own children though, people begin to apply exceptions. And that's why we end up with hereditary based transfers of wealth, rather than say donating all your money to all of society upon death. Your own child that you raised from birth deserves your wealth more than the wretched society (basically other people's kids).

If someone else's child was run over and killed in a road, a person may pause to reflect on how sad and unfortunate the event was, but will quickly move on with their life and continue as they were. If their own child though was run over and killed though, they would be shattered, may not even be able to function well for quite some time.

> You can’t expect people to just see their children as individuals who must go fend for themselves.

Literally the whole premise on which the plot of Inception rests was to convince the child progeny of wealth to forgo it so as to prove that he could make a name for himself on his own merit and not by riding his father's coattails.

There's a very big difference between leaving a child to fend for himself (so to speak) and attempting to help a child develop his own sense of agency, including restricting access to a smaller-than-naturally-limited set of resources.

"Making a name for yourself" is overrated. No one really gives a fuck. And you can still make a name for yourself with any amount of resources anyway, probably even easier to do when you already start with a lot of wealth.

Then add in a tax system which aggressively taxes labor while leaving capital and inheritance untaxed, if we stopped taxing labor that might be enough to pull a whole chunk of labor out of poverty, just having work is no escape from poverty in a world of high rent and high income tax.

There is some truth to what you're saying, but also inheritance is massively taxed in most developed countries, especially in the US.

Estates are taxed at 0% up to $11 million dollars in the US. Moreover, that upper bound is indexed to inflation, unlike the minimum wage. I wonder why that is...

this is true, and 11 million dollars is a LOT of money. Id retire tomorrow if I had that kind of money.

But inheritance tax is 40% above that.

Which is culturally solvable, but would require require people to give up their children to be raised by the state and never be allowed to know who they are. That sounds horrible, but I submit that said horror is largely driven largely by a culture of possession and selfishness, i.e. people want to raise their own children because they want to shape who they are and ensure their genes have good survival odds. Assuredly there is a biological component that drives us to take an interest in our lineage, but we know that this can be directed towards similar goals via adoption and pets, so it is conceivable that a society could direct it not towards one's individual children but children in general. Of course, the whole 'raised by the state' thing is also a pretty uncomfortable thought to any society that has enshrined "freedom" and most people who lived through the soviet union, however I think it is possible that without the concept of genetically-bound inheritance of property and status that the corruption of such structures might be less likely.

Not that I suggest any of this in serious mind you, it's just the kind of thought experiment day-dream that gets me through my workday. What this one has taught me is this: nobody actually wants a meritocracy.

I'm reading this chain of responses and still haven't seen anybody saying the obvious: that poverty is not the same thing as not being rich. Instead, you keep digging in the misunderstanding, reaching absurd conclusions.

In most first world countries, there is basic free education and children can study for a job with enough pay to provide for a decent life style. That's not to say that there're no problems. There are. Often accomodating immigrants from poor countries. Also because declining population and pensions and all that.

But do you want to go full socialist because only rich family children get to the most expensive colleges? O_o

You should watch the documentary Children of the Sun, which describes attempts by early kibbutz movements in Israel to raise children communally and not directly by their parents. There were upsides (the children grew up with characteristics that we would think of as strong and independent) and downsides (clear early-childhood trauma, with unclear consequences).

"It is the hereditary nature of wealth which is the largest contributor to long-term inequality."

This is not true, because when you don't have hereditary nature of wealth, there is no wealth. Why would you be motivated to accumulate wealth?

Economically you want people to save money and invest, when there is no target to have wealth, people will over spend.

Spending means economically staying at same level as population, not improving.

The end of your comment seems to imply that meritocracy is intended to generate equality, but actually it's intended to do the opposite.

“ Above all we need to focus on delivering opportunity via improved circumstances and empowerment, irrespective of merit or success: that is the only path to actual equality.”

Please consider that you are advocating for communism. I hope you will consider reviewing the histories of China and the USSR, et al. after World War 2. The critique and solution you offer do not lead to “actual equality.”

That’s a ridiculous equivalency. You can provide high quality education to all without USSR style communism. In fact I’d argue the long term success of a capitalist system relies on it.

I’m not so sure about “high-quality” being possible for all. “Reasonable quality” I’d agree with, but truly high-quality education is incredibly labor and resource intensive to provide as it must be tailored to the student to a significant degree.

In my experience, providing “a high quality education for all” just isn’t possible, because it’s dependent upon what caliber of students are in the classroom. Stipulating an equal distribution of ability levels doesn’t raise all boats, it drags the most capable students down. What I don’t understand is why it’s often considered acceptable to disregard the needs of strong students. Don’t they also have a right to be challenged in the classroom?

In my experience education has been defunded for decades while wealth inequality has been exacerbated. One only has to look at the fact that the inheritance tax is indexed to inflation, while the minimum wage and teacher expense deduction aren't to understand where our national priorities are. I'm not willing to say "a high quality education for all just isn’t possible" until we've invested equivalent resources into education as waging war. Imagine if our education budget was $700 billion annually. What could be possible?

This is a logical leap i'm afraid. We have been trying to give people what they need using government welfare for a century now. It's not communism to correctly understand that some people need to be given opportunities to prove themselves in the market regardless of their race, wealth, etc.

I understand what you’re saying, and technically you’re correct. However, the quote I referenced is typical of the coded language being used to justify and advocate for much more extreme policies of redistribution that I’m not convinced many would agree with.

What you call "redistribution" is what others would call "returning stolen wealth to those who created it". The people who use what you refer to as "coded language" believe that as laborers, they create wealth which is stolen by those who don't labor but instead merely own assets. They believe that wealth and value are created through labor, not by ownership, and therefore labor deserve a larger portion of the wealth than they are getting right now. Therefore it's not "redistribution" of wealth at all, as those who currently hold this wealth had no right to it in the first place.

It's difficult for me to believe this observation is being trashed so hard.

No, meritocracy likely is not the best system. It just happens to be better than the others we've tried at scale so far-- including attempting to give everyone the same opportunities regardless of ability. What else is being described there, if not communism? What am I missing?

The real underlying problem is that we are strongly predisposed to naturally arrange into hierarchies. That's not something you're going to take out of people. When you try, they spontaneously form their own. In a system where you say you're giving everyone equal opportunity, people will still pursue acquiring power over others, and will try to hold on to it when they get it. We aren't likely to stop this behavior, and if we do, at that point I'd argue we would essentially be a different species.

+1. The grandparent's statement is a paraphrase of "from each according to ability, to each according to need", which is a classic communist slogan.

So, how do you decide who gets the rewards? Assuming not everyone can have every job/house/life.

Do you tell the people who get the rewards that they were given a chance at random (compared to their neighbor who was not) or do you let them believe they earned it?

For the record, I agree that merit is a bad system. Im curious to explore the ramifications of doing away with the system and how it would be different, if at all, from the current system.

For example, in a post-scarcity society, everyone has what they need, but some houses still have nicer views than others.

I suspect many who believe in meritocracy are already successful people who like to tell themselves they got there by merely being so much smarter than everyone else around them, dismissing the access, luck, (i.e. quality of schools they were born near), family wealth etc. almost entirely as a factor.

I am not sure how getting there by being smarter is any better. It's not like anyone spent any effort to be smart, it's just genetic lottery.

How is "being smart" a genetic lottery? Are you serious? That brings up all sorts of implications with race and whatnot. "Being smart" is often a proxy for the things the GP mentions: strong stable family, access to good schooling, and a sprinkle of luck.

Heritability of IQ is >50%, and IQ is a good measure of smartness.

The previous comment's argument appears to be that heritability of "being smart" is not strictly limited to genetic factors, that measures of "smartness" such as an IQ score also measure other factors that are not strictly related to genetics

Heritability and genetic factors are overlapping but distinct things - for example, socioeconomic status influences many aspects, is hereditary but not genetic.

Heritability is in fact entirely genetic. It is estimated by comparing monozygotic twins with dizygotic twins.

Their parents likely spent effort (in assortive mating, proper nutrition, early stimulative interactions, etc.)

You could call placing 99 green balls and 1 red ball into a bin and picking out 2 green balls a “lottery”, I suppose.

I personally just think everything works better when the best people are in charge and rewarded for being the best. Yes, there's tons of luck, and it's not fair in any "everyone deserves a shot" sense. Still a better strategy, because most people are bad at most things. We should take care of them, but we should not pretend they're competent if they're not.

> I personally just think everything works better when the best people are in charge and rewarded for being the best.

The problem is that they're not necessarily the best i.e. some poor person if given the same resources, education, access etc. might in fact do a lot better with what they have, we'll just never know.

I mean if you look at the state of today's world, handling of COVID, shams like Nikola etc. are these really the 'best' people humanity has to offer?

Anecdata that agrees with you follows.

Meritocracy is still a factor but the bar is currently very low. My own father came out of the impoverishment of war torn Bangladesh to be a successful real estate developer in the west. Why did his elder brother not have the same results? Very simple: the elder brother was responsible for the family. The family has rewarded the elder brother by taking care of him for years now and he is the happiest old man I know. He will die satisfied.

The truth that no one wants to admit is that we have to put (very minimal) resources behind the youth to become independent of their families so they can grow.

For all his faults, my father understood this for everyone except me (long story) and funded the education of a few people back home. For two boys I'm aware of, that was about $5-7K/year. The two boys lived in a one room shack that routinely got flooded. One is now an accountant, the other is a working chef. Trust me, neither of them are particularly smart.

What's needed is so minimal but the problem we have is too much grifting occurs. Levels and levels of middleman bullshit.

I would start experimenting with Kiva-style microloans if you want to make a difference, tbh.

My wife did her bachelor thesis on Grameen bank, Muhammad Yunus and microfinancing. That was like 2009.

Is microfinancing still a thing in Bangladesh? What are the effects since then?

This is all well and good to argue around a very literal meritocracy, but I don't think anyone actually argues for this. It's not just "lol, 1 - 1 = 0, meritocracy is impossible".

The underlying principal, as I understand it, is that it's unreasonable to think for example, that mark zuck literally does millions of time more work than say, a senior software dev at a middle size company, or a farmer. Yet zuck is compensated as such. We can recognize the "unique" value facebook creates by giving unique compensation, but should that compensation really be x1m times more than the farmer?

Reworking wealth distribution is the goal - not rewarding everyone equally for everything in some meme level paradox.

> it's unreasonable to think for example, that mark zuck literally does millions of time more work than say, a senior software dev at a middle size company

Careful not to confuse work and value. Sheer labor is worth minimum wage, the value of someone is far more than their hourly labor.

A well connected person can bring many many times the value to a company of someone without connections.

The right strong personality can be a performance amplifier for the rest of the company, Steve Jobs can be argued to be an example of that.

The long and short of it though is a person who makes the people beneath themselves work more valuable is worth that added value, and arguably deserves a proportional portion of said added value.

> Careful not to confuse work and value. Sheer labor is worth minimum wage, the value of someone is far more than their hourly labor.

I am. It's not me being careless. We reward both by the same means - money. Not my fault it's this way. I think it's perfectly reasonable of me to work from the means of compensation outwards, when making comparisons.

> The long and short of it though is a person who makes the people beneath themselves work more valuable is worth that added value, and arguably deserves a proportional portion of said added value.

In my opinion, this is nothing more than business based, pyramid scheme level, cult-like thinking. I'm a well paid webdev. The company is fairly flat, there are only two distinct levels above me - engineering management, and founder-ceo(s).

My day to day work is designing and building out random systems, and handling tech debt. I would be doing this in a vacuum too, and to the same standard. The personality and input of the ceo has little to no bearing on my performance. Me and my team would perform equally well under any given non-maniac. CEOs are not like, high level gods or something. They aren't remotely as rare a set of personality traits as the voodoo-thinking of SV seems to think. C-tier management is not literally multiplying my output. Sensible feature requests from users and sensible filtering by product managers has ten times the impact that C-tier has on my work.

> deserves a proportional [...]

> Steve Jobs can be argued to be an example of that

The resignation and subsequent death of Jobs had, in the macro perspective of apple's stock prices, literally no impact on the value of the company. Apple stock is currently over x10 what it was when he was there. An essentially infinite number of things took place that were far more important than Job's personality, which lead to the success of apple. He was more like a train driver railing down the tracks than some maverick cutting through the jungle. At least Bill Gates has the introspection to realise this. General luck, and luck of timing is what generated nearly all of that value, and the rest was generated by labour. Somewhere in there is some ephemeral and unquantifiable sliver of value coming from the specific personality of the founders / ceos.

So, what proportion do we dole out? Who do we compensate for luck? For all of the endless work done before that wasn't compensated to the moon but was absolutely required for this moon-level capital generation? It's all too up in the air to try and rationalise that CEOs should earn one million times what a farmer earns and think that makes any kind of sense at all.

Think of all of the wealth, (generational too) that came from equally traited men setting out for oil. Literal random chance would go on to create mega-empires that have lasted a hundred years. Our current system of compensation, is pretty close to being nothing more than a load of bollocks, when it comes to this kind of thing.

Public services in my country (like teacher, police, nurses etc) have salary coefficients (job complexity ratio) depending on qualifications and duties. Not sure what the proper terminology is in english and if it's the same in other countries. There are socialists in Europe supporting the max 1:12 ratio between minimum & maximum income. Although, there is an old saying in my country: "They couldn't pay me so little that I couldn't work even less" (not sure about the rough translation), so that's definitely a danger of such schemes.

Aside from that, I don't really believe in the musks and zucks of the world. Our society shouldn't rely on charismatic leaders, who for all we know could be fronts for the NSA/CIA operations. Shock workers or strike workers could be used to motivate and promote labor (https://en.wikipedia.org/wiki/Udarnik).

You are so focused on economic inequality that you ignore the greater picture: there will still be a hierarchy. There will still be humans dominating other humans and asserting themselves above them. Maybe in the far future humans will create a social technology to live in true equality but in the immediate future this is clearly not happening.

As long as there is a hierarchy, you cannot really have equality, sorry. You make humans more economically equal and you create an even worse situation where human hierarchy is based on family name, connections, genetics or just plain violence and social mobility would be even worse than it is now, where it is dictated by income and wealth.

Also your definition of meritocracy is contentious. For example you are saying, it is not meritocratic that a boy does not achieve his maximum potential because his parents could not afford to give him the best opportunities. But what if instead of comparing just one generation, we compare two or three? What if we compare their grandparents and their parents? Maybe the grandparents of the poor boy were better off but for whatever reason the wealth did not tickle down in sufficient quantities. Whereas maybe a boy who is richer today had poorer grandparents who worked really hard to make sure their grandchildren had the best opportunities. That looks like meritocracy to me.

> As long as there is a hierarchy, you cannot really have equality, sorry. You make humans more economically equal and you create an even worse situation where human hierarchy is based on family name, connections, genetics or just plain violence and social mobility would be even worse than it is now, where it is dictated by income and wealth.

This sounds like a bit of a stretch. Let's try and make people a bit more equal first.

Why limit Elon Musk - who is arguably ensuring the long-term survivability of our species - for some arbitrary target like absolute equality? Why is a powerful bureaucrat with no money more desirable to you than a rich entrepreneur that had to prove his value before attaining reward? What is wrong with the youth have little-to-no savings and the elderly/about-to-retire having significant wealth and assets?

Because he's as much of a nutcase as you are.

> Why is a powerful bureaucrat with no money more desirable to you than a rich entrepreneur that had to prove his value before attaining reward?

Because the "value" they have proven is so often criminal and fraudulent in nature - best case scenario it's down to luck. The world is not even close to the meritocracy you think it is.

How am I a nutcase? For what its worth, I'm successful and happy so I don't take offense. Lions don't worry about sheep.

>I'm successful

Yes, as you've told us in a few comments.

does that bother you, itsoktocry?

Is Elon Musk doing that? Or the engineers who work for him?

Elon Musk carried a lot of the financial risk to get the company into the position it is in now. The engineers did not. Funny how risk is always completely neglected in these "entrepreneur bad, engineers good" narratives.

Ah yeah, much like the bankers of the world, the money-men always claim they are the ones "at risk" with their billions of dollars.

Elon Musk is the second richest person in the world and has raised tens of billions of dollars of outside money to fund his companies. You talk like he's footing the bill; he put less than $10 million into Tesla. It was a brilliant decision, but hardly "risky".

>The engineers did not.

So the engineers who went to work for a project that may not have panned out were taking no risk huh.

It would be less embarrassing for you if you understood basic risk concepts before making snarky comments on the internet. The "bankers" you refer to, for instance, don't personally own the money they disperse but are middle-men for it and consequently don't usually own the risk. Elon, on the other hand, invested $100 million of his own money into SpaceX in the beginning of the company, way before he was a billionaire. AFAIK that was most of what he got out of PayPal.

That is the root meaning of risk - if things didn't pan out, he would have been (financially) ruined. Engineers would go ahead and get another job from somewhere else. If you can't see the difference here, I can't help you further.

Okay, let's take a look at risk. Elon invested $100 million dollars of his own money. If he loses it all he ends up.... just like the rest of us, with nothing. How exactly is that a huge risk? For us, that's daily life. He'd probably end up much better off in reality though. I'm sure he owns his house, for starters. So he'd invest $100 million, lose it all (was it all of his PayPal money, or just most of it? That's important because if he had even $1M left over that he intended a cushion that's not much of a risk at all really, to lose out and end up a millionaire? Not a risk.), and at the end of the day end up living in a house bigger than most of us could ever afford. He could sell that, go from "financial ruin" to being a liquid multi-millionaire. Or he could have asked one of his PayPal millionaire friends for a "small" loan of X million dollars. Or he could have done what you propose those engineers do and just get a job from somewhere else. I just don't see this massive "risk" here that justifies him now being the second most wealthy person on the planet worth more than billions of people combined.

But let's look at risk further. What about the people strapping themselves to the top of Musk's rockets and propelling themselves into outer space? They are literally risking their lives. All Musk did was put in $100 million dollars. Has anyone ever died from investing $100 million dollars? On one side you have a guy would lose a lot of money and land comfortably on his feet. On the other you have someone strapping themselves to a column of rocket fuel and blasting off to outer space, something many people have died doing. Surely if risk determines reward, and Musk is worth $150 billion dollars, these astronauts must at least be billionaires. Right?

Obviously that's a litter hyperbolic, but it's to prove a point. If we're going by risk/reward, why is financial risk the only thing considered? What about scientific risk? Musk's enterprises are premised on mountains of scientific and engineering work that came before him, work that is mostly publicly funded and for which the original pioneers (taking risks) will never be compensated. Take Tesla's much hyped "autopilot". Did Musk come up with that himself? Did Tesla engineers even come up with it? No, that research came from the government, namely DARPA through their autonomous Grand Challenges robot competitions. In 2005 during the first Grand Challenge the robots were running off the road and crashing into each other. By 2007 they were reliably navigating urban environments. This was after millions of dollars and thousands of person-hours were poured into the research. Did Musk fund that research? Did Tesla? No, you and I did as taxpayers, and we put in much more than the $100 million Musk did. The people doing that research on the ground were risking their careers and forgoing paychecks to do that work. Many of the people doing the actual coding on those robots were being paid $20k per year as graduate students. Who is now benefitting from that research? Musk. Tesla. Private interests.

Or look at the Kennedy Space Center. I just watched a SpaceX launch a rocket from there. It was the most amazing thing I've ever seen. Who built that? I mean physically, who put hammer to nail there and built that thing. It's huge. "It took 1,500 engineers to design the buildings and launch pads. The drawings alone produced by architects and designers weighed more than a hundred tons" [1]. Did Musk take the risk building that? No, the public did, and now it's there for him to use and benefit from. But the people who built that for him with public money won't be seeing a return on investment proportional to the benefit it today generates. Those benefits are privatized largely into Elon Musk's pocket.

[1] https://www.wesh.com/article/looking-back-at-the-constructio...

The first part of your rant makes it clear you are confused of the topic at hand.

The second part does follow some sense - but then, how many engineers did it take to build the US road system? Why aren’t you screaming at car companies, logistics companies, taxi drivers or all other appropriate parties for taking advantage of infra built with public money?

Frankly, its fairly obvious you have a massive distaste for Musk, which is fine - I or nobody else should dictate your opinion on him. What I’m extremely tired of is this new ”social democratism movement” which is some very thinly veiled weird combination of utopian socialism and at times vitriolic hatred against the entrepreneurial populace.

Yes, there are bad actors in the current system. But what is it exactly you are advocating as the alternate system?

>who is arguably ensuring the long-term survivability of our species

Do adult humans honestly believe that going to Mars is a reasonable way to "save our species"?

Do you have another suggestion? Do you not see any value in developing the technology necessary to get to Mars - in order to travel elsewhere?

And to answer your question, yes. Successful, accomplished, professional, adult scientists - like myself and my friends - do honestly believe that.

>Do you have another suggestion?

You could start with investing heavily in this planet, which is significantly more habitable than mars. Electric vehicles were a great start, but there's a lot more than EVs and reselling battery and solar equipment from China that can be done.

>Do you not see any value in developing the technology necessary to get to Mars - in order to travel elsewhere?

I see some value, and if Mr. Musk wants to pursue it, great. But let's not pretend he's saving humanity here; the God complex of SV is already bad enough.

Do you have a comparative analysis of the ROI of these initiatives? Or is it just baseless conjecture?

Do you not believe that there comes an inevitable day where the Earth is no longer inhabitable by any form of life and that, if humans are to escape that outcome, we must become interplanetary and then interstellar? (I think it's still a long shot, but I know with certainty that the "stay on Earth" outcome is exactly the extinguishing of human life.)

> Why is a powerful bureaucrat with no money more desirable to you than a rich entrepreneur that had to prove his value before attaining reward?

Because the bureaucrat had to prove their merit among the whole population while the rich entrepreneur just had to prove their merit among other kids that were privileged enough. Just think of Bill Gates that went to probably the only school that had a computer in the world.

In ancient China they even went so far to castrate bureaucrats to prevent cross-generational cronyism.

> Why limit Elon Musk

Because he is using cool goals like travelling to mars to motivate his workers to work themselves to exhaustion while ignoring safety measures? He acts exactly like capitalists of the industrial age. The difference is that his workers do not lack money for sustenance, but a purpose in life.

let's say someone is born into extreme poverty, and through decades of hard work becomes wealthy enough to give his child a great education and a 1 million dll inheritance. is it not his right to use his money on his child?

then lets say this child turns this education and inheritance into 1 billion dollars worth of wealth. does this have no merit??

ive seen many people squander privileged upbringings, i think if you 10x what was given to you, you have some merit regardless of where you stared from.

I don't understand why people go to such great lengths to give current injustices the benefit of the doubt ad infinitum, even constructing ridiculously rare and hypothetical scenarios like that.

The real outrage here is the millions and millions of people squandering their talents in some shite job due to lack of opportunity, not the handful of billionaires that started from nothing and whose children might now be taxed somewhat.

I don't know man... I dont think its that rare for someone to climb out of poverty. Maybe I just see it this way because I did it myself (born in a 3rd world country, single mom, step father with bad addiction issues, barely graduated HS)

Now that Im a father myself, Im of course trying to give my child the best opportunities, but also trying to raise him to be grateful and disciplined.

So I'm not talking about the billionaires. Im talking about regular people who can now grant their children not private jets, but just a good private school.

What would be fair in this scenario? How can we make things equal/just in this case?

Also I dont think its rare or hypothetical at all, that rich kids never learn to work hard and squander their good fortune.

-- EDIT, i completely agree its absurd and completely wrong that 1% of people have 50% of the wealth, that should not be that way.

I also have a working class background, but in Sweden. The last thing I would like to do is to pull up the ladder that enabled me and so many others a better chance to a secure and comfortable life. The inheritance tax was actually recently abolished here, but not due to some popular uproar but because right-wing parties got into power.

> let's say someone is born into extreme poverty, and through decades of hard work becomes wealthy enough

That seems more luck than hard work to me. Just read the paper.

Even if that was possible. Do you want in a world where people with merit call the shots or a world in which people that cheated their way to wealth or simply inherited wealth call the shots?

Money can be transferred, gained through stealing and luck which all does not require merit. It is not a good proxy for merit.

Your so focused on your own take on human nature that you ignore obvious evidence disproving it, namely that Scandinavia isn't a hell hole.

Hierarchy is not an all-or-nothing phenomenon. We can reduce levels of inequality without producing the negative outcomes you fear.

I’m not sure whether this applies to you (I’m not implying that it does), but I continually find it interesting to hear Americans expressing the fear that acting to reduce inequality will somehow limit social mobility, as if they don’t realize that much of the developed world has greater social mobility than their country (or that many countries also rate higher in measures of social welfare, despite having greater social mobility and lower inequality).

In every instance I've seen, redistribution does limit mobility - as well as introduces a middleman (the redistributors that steal/war/lie/oppress), corruption, politics, and extreme inefficiencies. You keep harping on the US, but it is one of - if not the most - upwardly mobile societies in history. One of my favorite anecdotes is how the 'unclassy american tourist' is a product of us being the first society to afford sending our middle/lower-class abroad for fun. And I'm proud of that.

> In every instance I've seen, redistribution does limit mobility

Much of Western-Europe show you otherwise, I'm not sure how you could have missed that?

No it doesn't. It validates exactly what I said. Not sure how you could have missed that.

I have certainly missed how for example Scandinavian countries fits with this:

> In every instance I've seen, redistribution does limit mobility - as well as introduces a middleman (the redistributors that steal/war/lie/oppress), corruption, politics, and extreme inefficiencies.

Care to explain? Or are you just being childishly contrarian which your last sentence seem to suggest?

> In every instance I've seen, redistribution does limit mobility

Please enumerate these instances and support the claim that in each of them mobility is reduced due to redistribution.

Without that, this sounds like subjective impression shaped by ideological preference being presented as if it were evidence for the ideological preference that produced it.

> In every instance I've seen, redistribution does limit mobility

> You keep harping on the US, but it is one of - if not the most - upwardly mobile societies in history.

The data doesn't support your conclusions. The US has lower social mobility than many of its (more redistributive) peers in the developed world. [1]

1 - https://www.weforum.org/reports/global-social-mobility-index...

Economic inequality within a developed nation is one of the least important kinds of inequality. I'd trade one standard deviation of income for one standard deviation of pretty much anything else, such as intelligence or attractiveness. The average person in a developed nation lives better than the kings and emperors of the past in material terms. They had a bigger dwelling, but I'd much rather live in a modern apartment than in a medieval castle. A rich person today can buy a $1200 phone, and a poor person has to make do with a $200 phone. That extra $1000 only marginally improves the quality of the phone. The $200 phone today is still better than the $1200 phone of 10 years ago. The medieval king had no phone, heck, he probably didn't even have running water. The food he ate was worse. We can eat bananas every day, the king perhaps only saw a banana on one of his paintings. The healthcare he had access to was way worse. The transportation he had access to was way worse. The entertainment he had access to was worse.

sexual/romantic partners though. if youre living in a shitty apt with a 200 dollar phone, good luck getting interest from potential partners.

whereas the king was swimming in booty, and at the end of it all, that's what moves most of us mostly.

id argue few ppl really want a lambo for the engineering of it as a machine, they just want to be seen riding in it. 500 years ago a lambo was a fancy horse drawn carriage.

I'm married now, but I had what seemed like roughly an average amount of dating difficulty that wasn't significantly changed when I got a better apartment or better phone.

You're right, the king probably had more booty. Remember though that the king's wealth is many standard deviations above average, so we have to compare him to somebody who is many standard deviations more attractive than average.

In the modern world, one standard deviation of physical attractiveness matters way more for attracting sexual/romantic partners than does one standard deviation of wealth, especially so for genuine attraction.

i agree with this.

The standard of living in these developed nations is due to exploitation that is outsourced to other nations. For example, regarding that $1200 cell phone? This is on the front page right now: https://9to5mac.com/2020/12/29/iphone-workers-forced-labor/

Those bananas? Well you can thank children in Ecuador for those: https://www.hrw.org/news/2002/04/24/ecuador-widespread-labor...

We have the best medical care, but results are uneven. If you are so poor that you are rationing your medicine to the point it doesn't work, what does it matter how good it is?

Was the food the king ate really worse? Today's poor eat sugar disguised as "food" that leads to obesity, heart disease, and diabetes. You can say what you want about medieval diets but at least they didn't have an obesity epidemic. I'm not sure who is better off.

At any rate, even if what you say is 100% true, that doesn't really change the fact that homelessness, hunger, and poverty are solvable problems today. To say that things were worse before and therefore the moral failings of society today are tolerable is just baffling to me.

That's really irrelevant. Inequality is the bad thing. Less of it please.

Hierarchy? In so far as it currently exists, who cares?

It is not the existence of hierarchy that is the problem. It is the type of hierarchy and the effects of that hierarchy. The parent and the study argue that we should give greater resources to those with the least resources in such a way as to broaden access to opportunities.

You can argue that is not worth the expense (it costs X to produce Y outcome and redistributing X would lead to negative impact Z. Y + Z results in a net loss to society). But it seems hard to argue that inequality or hierarchy is inevitable so we should not even try to ameliorate the negative effects of that structure or imagine different ones.

To me, the “inequality inevitable” mindset seems like a frequent way those who benefited from the existing system rationalize not sacrificing anything to help less fortunate people. I am very sympathetic to arguments that redistribution is not effective, but the debate should be about what is or is not effective. “Inequality inevitable” sidesteps that and asks that we just give up before even trying or imagining different possibilities because we’ve failed in the past. It is hard to not see such arguments as a misguided effort to rationalize one’s self interest.

> “Inequality inevitable” sidesteps that and asks that we just give up before even trying or imagining different possibilities because we’ve failed in the past. It is hard to not see such arguments as a misguided effort to rationalize one’s self interest.

I don't agree with this. I tend to agree that inequality is inevitable, but where I think I disagree with you is on the definition of equality.

If we create an even playing field in the environment, then we've just shifted the goalposts from "How wealthy were your parents?" To "How good are your genetics?". Some people will be born smarter than others, and excel. Some people will be born with learning disabilities and relegated to the bottom of the social hierarchy.

Judging based on innate ability also means discriminating against people who innately lack that ability. If you were born dyslexic, you're going to have to work twice as hard to achieve as much. The dyslexia is as innate as IQ advantages.

I just don't see a way that hierarchies aren't inherently unequal. You're always judging who has more of a particular thing, so people with less of that thing are worse off. Right now, that's largely money. Is using the genetic lottery a more equal means of doing this? I don't really think so.

I would rather focus on reducing the difference in lifestyle between the haves and have nots. If we can't stop inequality, we can at least lessen the effects.

Complaint about people rising to the top who lack the qualities we want to see in leadership suggests [to me] that we [collectively] already have a complete picture of the qualities we admire. Our problem isn't in measuring the qualities but in rewarding the ratios. On a personal level we know how to pick a breeding partner. Collectively selecting the dna cant be all that different. It seems culturally disturbing to reward beauty for example but if beauty > reproduction is good why not beauty > wealth > reproduction? We already have greed > wealth > reproduction, intelligence > wealth > reproduction and inheritance > wealth > reproduction. Those seem just as lame upon close examination. You play chess for your life vs someone with 3 times the intellect? Or monopoly where the opponent starts with all the money and all the streets?

The phenotype is a confusing angle. We should do some honest objective conversation about it collectively. Do we want people to be their natural self or do we prefer it if one goes out of his way to become something? Do we genetically optimize for the biggest possible struggle or for the slacking? We seem to look at the flexibility as a positive quality but does it really make a healthy breeding stock?

As a human I have to constantly challenge myself mentally and physically or I decay pretty rapidly. I had a sick cat one time that slept on my sofa for 4 years only getting up to eat. Then one day another cat came into the house and she leaped 3 meters off the sofa and ran after it. If I sleep for 4 years I doubt there will be any walking, definitely no running, jumping is out of the question and getting into a fight is unimaginable. We might have really good brains and a good digestive system, the rest of the body could do with some updates.

When people say that inequality is a problem in society, they are not saying everyone in society should be equal. They're saying maybe it's not a good state of affairs if 1% of the people own 50% of the wealth.

One thing I think about is the quality of domination, if I may say it this way.

Someone with a better understanding is a normal authority, it might 'dominate' others in the sense that they have to follow his lead and maybe not feel it's right but in the end it's the best path.

On the other hand there are so much bad authorities that percolate through luck, appearances, bullying, networking.. and it will be 1) very clear their ways are detrimental .. sometimes almost absurdly, 2) very difficult for people below to change this.

That is not what meritocracy is - it is rule by the cognitive gifted.

The argument for meritocracy is that meritocratic societies (and by extension businesses) kick the butts of all others. It might not be fair, but it works better than all the other alternatives.

"It's always puzzled me that this idea of meritocracy,"

Nothing puzzling about it. It's a "just so" story designed to make successful people feel good and justified about their success.

> It's always puzzled me that this idea of meritocracy, especially in tech (notably USA), is so pervasive,

This study looks at some of the poorest villages in Bangladesh with some additional data from other very poor countries.

Anyone who even has a shot at applying to a USA tech company is already wildly more wealthy than the type of poverty discussed in this study. In fact, they’d be firmly past the threshold the study identified as the minimum wealth necessary to engage with wealth-building jobs.

The conclusions don’t really apply at all to situations like a US tech company, unless you’re trying to understand why homeless people living on the streets aren’t able to get jobs at an Amazon warehouse or other entry-level jobs. Trying to project this on to hiring practices of educated candidates into high paying tech jobs is ignoring the core focus of the study.

(a) Allocating rewards irrespective of merit is a prerequisite for meritocracy, otherwise environments cannot be equalized; (b) allocating rewards according to merit is a prerequisite for meritocracy, otherwise people cannot be stratified by wealth and status; (c) therefore, a class-stratified meritocracy is impossible.

This is a disingenuous argument. (a) and (b) are not talking about the same kind of rewards:

(a) : when talking about the equalization of environments, the "rewards" are allocated to areas and groups of people, not to individuals.

(b) : the stratification of wealth is talking about "rewards" to individual people.

These two concepts are not the same, the mechanisms are not the same, and the justification for them is not the same. They're only grouped together as "rewards" so they lead to the false conclusion (c).

Why is absolute equality a more desirable state than the merit-based system now in place?

I'm not suggesting we should have absolute equality but is system we have in place really merit-based?

Last I checked, about a fourth of millionaires inherited their wealth and the vast majority had the opportunity to become wealthy due to factors completely out of their control (where they were born, to whom they were born and natural cognitive abilities).

> These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA)

Just to be clear this paper’s about peasants in Bangladesh.

> "we hire only according to merit" <signed, Diversity Manager>

What you would consider a better policy? Hiring according to a fair dice roll?

> "we hire only according to merit" <signed, Diversity Manager>

There doesn't have to be anything contradictory here. Diversity efforts can work to offset biases and enable getting closer to meritocracy. For example hiring the best in your network coming from a high-class university doesn't mean you're hiring the best overall. The diversity effort may be for example to make sure that the job offer is visible to the brilliant person who wouldn't even find it otherwise. Or it may be an effort to ensure a less biased review (masking names?) Or it's making sure that people do behave well internally, so the company isn't avoided by the best people for hiring racist assholes for example.

It's not just about "rewarding", or giving out high paying position to who we want to.

There are real and difficult things to do in the world that some other people need. They (employers, clients, customers) decide that this work is so important to them that they exchange money for it.

Then the person can use that earned money to improve their life.

For example if a top surgeon flies to a different country to do a difficult operation, I'd want them to be able to enjoy a relaxing VIP lounge, bigger legroom and direct taxi. Rather than flying low cost and standing in the bus for 3 times longer than the taxi ride.

We want to allocate resources to people who accomplish important things for us. Not just as reward or motivation, but in our own interest, we invest in the most capable and competent to have more of our stuff taken care of.

Jobs aren't just about sitting in a chair and taking cash and we just pick who gets to sit in which chair to enjoy that cash. It's doing things. And we want those things to be done well.

This is the idea behind meritocracy. Not that we praise people for their genetics.

I'm not saying this is how it works currently, just that this is what we mean by meritocracy that we should move toward.

Agree with everything you said on the surface. Sounds reasonable. Of course we want the surgeon to be prepared for his job. It's important.

But then there are those in this thread arguing that Elon Musk's reward should be unlimited because he's "arguably ensuring the long-term survivability of our species." Wow, that sounds very important. I guess he should have the most money then.

Nevermind the fact that the majority of his wealth is literally gained by "sitting in a chair and taking cash". That's the job of a capitalist after all - they don't work for their money, they sit in a chair and let the ownership of assets make them money. I mean, sure he's "doing things" but are the things he's doing worth $140 billion? What has he "done" in the last 9 months that made him $88 billion richer? Is the planet saved yet?

I think inheritance and unchecked wealth accumulation work against meritocracy actually.

There are things that make people more efficient as a homo sapiens and we want them to enjoy those things and not to worry and stress various annoyances so they can concentrate on what they are best at.

But as you say it's obviously not like that for CEOs of big companies. Just because Bill Gates was good at selling software doesn't mean he should hold this immense power in the world and decide how to allocate resources between vaccines and cancer research etc. It has nothing to do with his meritocratic expertise (of course he pays his own experts, but he does maintain the high level control). Some would argue that this value was all created as additional value by him via the efficiencies enabled by the software and that it wasn't merely captured out of existing value. It's obviously a combination, but based on ideology people estimate it differently. We know that rent seeking and dark pattern business practices exist, as do lobbying and other forms of corruption.

The billionaire examples aren't examples of meritocracy but of rewarding luck. Nobody would say that as a human Elon Musk is literally that much more competent than, say, the best senior engineer at Tesla.

But also, beyond a certain point rich people aren't people any more, more like institutions. They just channel that wealth in different directions, they cannot "enjoy" a significant potion of it as a human being. All that money gets rotated back into salaries of others, else it would remain just numbers in databases. It cannot meaningfully accumulate. Just like if you burn a bag of cash, you induce minuscule inflation effects and everybody else's money increases in value a little bit. If a billionaire sits on his cash, it's as if he didn't have it. But when he uses it, he pays salaries and makes people do stuff. The problem is when this stuff is "the wrong thing".

I think the main argument against billionaire power is that the distributed wisdom of crowds and markets are better at allocation and deciding what's worth doing than centralizing it without limit. It's good to centralize it as long as it's about merit and related to expertise or capacity, but not beyond that. Billionaires are way beyond human scale regarding that.

Providing up-front funding for crazy ideas like electric cars and reusable rockets when everyone else is too stupid and shortsighted to is itself productive activity. In fact it is the most important productive activity: figuring out what to do, what is a good idea, and being willing to bet the returns of your previous labour on it and wait.

The return on investment is the payment it is in our self-interest to give for this activity, because we want and need such work to be done (so that we can make use of the fruits of such ventures, instead of getting nothing at all when wealth is squandered on bad ideas or just plain old consumption).

But how do we know who will come up with good ideas about what to do? Why Musk? Because he managed to earn a lot through PayPal? Does that business skill (and luck) carry over to decisions about rockets and populating Mars and developing AI?

Why not give a billion to a random business owner to come up with what to do?

Why Musk what? The point is that it's not about Musk. We're talking about whether Musk "deserves" his billions in profit and the answer is it's not about Musk, and it's not about "deserve". It's about all the people who benefit because of the existence of spacex/tesla/etc, who wouldn't benefit if we refuse to pay for the work of intelligent investment (by, say, seizing profits), because that would prevent their existence in the first place.

Certainly, if you think you can identify people who are particularly qualified to pick good ideas and make investments in them, it's not a bad idea to give them some money (but where do you get that money? hopefully not somewhere with negative externalities such as stealing it from different random business owners). Although structurally it's better if the billion itself is given as an investment instead of a gift, because then the person giving the billion has "skin in the game" themselves. Which is basically what I think VCs do, although I don't know how effective they usually are.

(Yes, this whole thing assumes a regulatory framework where businesses that have negative externalities or are otherwise bad for the world do not make profit. Indeed, companies that use dark patterns or rent seeking tactics to make profit should be legally punished, and if such punishments make them bad investments it's a good thing, because it means they were on net bad for the world.)

> It's about all the people who benefit because of the existence of spacex/tesla/etc

No one benefits by the mere "existence" of SpaceX/Tesla. People benefit only from what those companies produce, and the things those companies produce only come into this world by way of people selling their labor to design, engineer, and manufacture the rockets/cars. We can go all the way down the supply chain and say that people only benefit from Tesla due to the people mining lithium in other countries. And yet the CEO of Tesla believes that the people mining his lithium deserve to have their government replaced by a US-backed coup to be more friendly to his corporation.

The point isn't that we should "seize profits". The point is that the guy at the top isn't producing as much value as he thinks he is compared to everyone below him. They are producing the real value, they should be getting the wealth. Maybe Musk still comes out of the equation the richest one of them all. Fine. But he doesn't have to come out a demi-god with more money than he could spend in 100 lifetimes. There's no reason that needs to happen.

I don't think that "innate" merit should be rewarded. I think that applied merit should be. You could be the smartest, most capable person in the world, but if you won't work to apply that, you're useless to me and the world. If you do apply it effectively, you are likely to be rewarded for that, which seems eminently reasonable.

Wasnt the study performed in Bangladesh? Since when is Bangladesh considered a meritocracy?

If there's someone with "Diversity Manager" anywhere near hiring at a company it means it has deep issues.

> We find that in the absence of credit constraints only 2% of households would be best off doing wage labor, while 97% of households are exclusively reliant such work at baseline. Conversely, only 1% work in livestock when 90% would do so if they had access to the same asset wealth as the middle and upper classes. Overall, this implies that 96% of households are forced to misallocate their labor.

So the authors suggest that currently 1% of the labor pool is working in livestock, but an optimal allocation would be 90% of the labor pool? Ridiculous.

This study primarily focused on rural poor in Bangladesh.

Trying to project the conclusions on to relatively wealthy (on a global scale) societies like the United States isn’t going to make much sense.

I don't think that's what it said. It's not a recommendation, just a summary: 1% do it now, but 90% would do it if they had the chance.

No, the authors are debunking the popular theory that poor people are poor because they don't have the skills/gumption needed to not be poor. Turns out that when you give them a productive asset (a cow) that lets them be not-poor, they're perfectly capable of staying not-poor.

In the US: "graduate from high school; get a full-time job; don’t have a child before age 21 and get married before childbearing", this gives you %75 chance of being middle class, about %89 chance of not being poor. This isn't good enough, but seems possible!

https://www.vox.com/2015/7/24/9027195/haskins-sawhill-norms-...

> this gives you %75 chance of being middle class, about %90 chance of not being poor

It doesn't. Those numbers are descriptive, not prescriptive. You're basically giving the advice to be more middle-class in order to be more middle-class.

The conclusion of this study is that people above a certain wealth threshold are able to accumulate wealth while those below a certain wealth threshold cannot.

The authors argue that sufficiently large, time-limited assistance to these people can bump them over the threshold to where they can start accumulating wealth.

Note that this study was about rural villagers in Bangladesh and other such extremely impoverished populations, so stretching the conclusions to middle class people in the US is an extreme abuse of the study conclusions. However, it’s not hard to imagine that giving similar time-limited boosts to people such as funding free public college opportunities could help more people achieve the middle-class stability noted above.

However, it’s clearly not entirely a matter of external intervention. Some of the life choices require active participation of the people involved, such as choosing to delay having children (in conjunction with good access to birth control and reproductive education) and choosing to engage in the educational opportunities available to them.

Exactly, social class is bred in childhood. It's really the children or grandchildren of a given person who can enter a different class.

http://willskinner.com/class.html

> A first indication of this is seen in Figure 1a which shows a kernel density estimate of the distribution of productive assets pooling all wealth classes. The distribution is bimodal, with a mass of households around 0.25 and 6.5, and hardly anyone in between.

This is an important result in understanding how to get people out of poverty in undeveloped countries, but I suspect it won't translate well to industrialized countries like many in the comments are suggesting. The key result seems to be dependent on the bimodal wealth distribution. (Giving a cow to someone in the lower bucket was enough to push her into the next bucket.) Income distributions from industrialized countries look like the cleanest log normal distributions you've ever seen, so there just isn't evidence of a great repulser in higher income countries that you could push poor people over like they do in this study.

Caveat: They imply that income and consumption are bimodal, but never plot them, only wealth. Wealth is notoriously hard to measure, and I can only find good histograms of income for the USA. Income and wealth should track each other, at least over a log scale, but I am not comparing exactly the same thing.

Poor people should just sell some of their stock options or properties.

For those who want a TL;DR, below is an extract of the summary. I think they did a good job, the article was well written.

Poverty traps are one of the most fundamental concepts in development economics. The contri- bution of this paper has been to provide evidence for their existence using the combination of a randomized asset transfer and an 11 year follow up in rural Bangladesh. Our key finding is that people stay poor because they lack opportunity. It is not their intrinsic characteristics that trap people in poverty but rather their circumstances. This has three implications for how we think about development policy.

The first is that big pushes that enable occupational change will be needed to address the global mass poverty problem. Small pushes will work to elevate consumption but will not get people out of the poverty trap. The magnitude of the transfer needed to achieve occupational change may be much larger than is typical with current interventions though importantly it can be time limited. Therefore the fiscal cost of permanently getting people out of poverty through a large, time limited transfer might actually be lower than relying on continual transfers that raise consumption but have no effect on the occupations of the poor.

The second is that big push policies can have long-lasting effects. Our analysis of long-run dynamics indicates that the asset, occupation and consumption trajectories of above threshold beneficiaries diverge from those of below threshold beneficiaries over time. This finding is impor- tant as it indicates that, by engendering occupational change, one time pushes can have permanent effects.

The third is that poverty traps create mismatches between talent and jobs. We have shown that misallocation of labor is rife amongst the poor in rural Bangladesh. Indeed, we show that the vast majority of the poor in rural Bangladesh are not engaged in the occupations where they would be most productive. They are perfectly capable of taking on the occupations of the richer women but are constrained from doing so by a lack of resources. The value of eliminating misallocation is an order of magnitude larger than the cost of moving all the beneficiaries past the threshold. This is important as it implies that poverty traps are preventing people from making full use of their abilities and indeed it is the mass squandering of people’s abilities that is the key tragedy of mass poverty.

If only there was some person or some group to realign society and correctly place everyone according to ability.

For those that are inevitably about to argue and downvote the above... It seems the economy is returning, smartly, towards keynesian models because we've seen first hand how destructive the past 50 years of austerity and free market economics has become. Its clear to me that we need to have a strong government to save the economy from market failures, including but not limited to job guarantees echoing those of the new deal in the 30s. Don't have to be a marxist to see that.

I agree that there were great policies established under the new deal. I would caution advocating for blanket rescuing of the economy from market failures, though. The recent stimulus provided by the US congress to the airline industry is a perfect example of executives taking advantage of taxpayers. I would also push back against the idea that the last 50 years have been destructive economically.

An example of a market failure is climate change, or at least many market failures are contained within this problem. Are you suggesting the government take a hands off approach to that? At the end of the day the government is necessary to the functioning of capitalism, we need to help people out of poverty so that among other things the economy can actually improve. That's all I'm arguing for, and I think there is undeniable proof of it at this point.

I completely agree with you on your point about climate change. I’m also not arguing for completely unregulated capitalism. I just think we need to be both smarter and more realistic about policy making. The 1% and corporations play both sides of the equation. At the same time, pulling down those who have been somewhat successful does nothing to fix poverty.

Since central banks were created, there was no more a fully free market. (this video explains it, subtitles recommmended https://www.youtube.com/watch?v=lljmiLNoEtw )

How much of this is due to over-population? If the population of Bangladesh was 80 million instead of 160 million - giving each person access to theoretically double the amount of resources and land - would the net improvement be greater than 2x?

What about 40 million - would the improvement be 4x?

The solution may ultimately be a one-child policy, as demonstrated successfully by China.

China's policy wasn't all that successful

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

Population control is a very outdated idea, we have enough resources for the population, we just don't know how to distribute them using free market models.

"we have enough resources for the population, we just don't know how to distribute them using free market models. "

That strikes me as improbable. Globally, you might be right - there is, for example, enough fresh water on the planet for many more people than are alie today.

But moving a lake from thinly populated Canadian wilderness to Niger or Burkina Faso, where the needy populations are, is not technically possible.

And vice versa, Sahara would be a perfect place to generate solar electricity, but the North European populations that would gladly consume it in the winter are too far away.

It's a big topic to get into, but what I really mean is there are certain resources that we either throw away or don't distribute that wouldn't require relocation, and could be given to people without needing to police them for having kids or whatever. Do you not think Nigeria and Bangladesh have this problem as well? It's not just the developed world. Underdeveloped countries have resource allocation problems and definitely have excess resources in some cases.

> we have enough resources for the population,

How is this calculated? Are there enough resources for 8B people go to Tahiti or equivalent destinations for their honeymoon?

Because that’s where the conflict comes in. There might be enough resources to feed everyone some basic meals everyday, but is there enough for everyone to have their own single family detached house with a yard and a couple personal vehicles? Is there enough to ensure everyone can fly around the world to see their relatives or vacation? Is there enough desirable land for people to move to from their currently undesirable land (due to weather/accessibility/availability of fruits and good food)?

Liveable necessities like water, food, and housing, that are either wasted on inefficient food production methods or given to rent-seekers (by the economic definition of the term). No one is claiming we are post-scarcity and that everyone can have the standard of living of a millionaire, though I would argue that one having a standard of living like this could take away from other people's standard of living.

Basically my argument, since this thread is quite far down now, is that over-population is not robbing the globe of resources in any amount worth worrying about and therefore population control is not going to solve inequality since it's a distribution problem.

I would say the irreversible damage being caused from pollution of what we in the developed world would call “modest” lifestyles shows that we are at a limit, at least if people all over the world are aspiring for the single family detached house with a couple personal vehicles lifestyle.

Basically, I’d like to see what quality of life we would have if resources were distributed evenly. I imagine it wouldn’t be acceptable to most people who are used to their spoiled due to the inequality.

There are missing women even in Australia and Canada - son preference is cultural.

https://www.smh.com.au/healthcare/the-missing-girls-never-bo...

"mothers within some key migrant communities are recording sons at rates of 122 and 125 for every 100 daughters in later pregnancies."

The solution is for migrant-receiving countries (ie. the West) to place a limit of 49% males from any one country on any type of visa. This will dramatically boost the intake of females (for some visas and countries eg. India, the intake is 75% male) and thus their value to society in their home country.

Alternatively male migration could just be banned altogether from countries which practice systematic sex-selective abortion.

> The solution may ultimately be a one-child policy, as demonstrated successfully by China.

It turns out that most Chinese couples were allowed 2 children:

https://en.wikipedia.org/wiki/One-child_policy

But there's wide reporting of females being scarce, so some families were involved in female infanticide, which will cause long-term demographic issues.

China is currently facing famine, so we'll see how that affects the population. (It turns out that although China is a communist country, they didn't/don't provide welfare for the flood victims, tens of millions of whom are farmers.)

A more regional problem is that China is damming the Himalayan head waters, so the downstream countries (India, Pakistan, etc.) will face drought on a large scale. Usually that leads to war.

Was searching for this. Thank you for writing.

Adult education is shit for poor people and many people had enough of education when getting out of school/university.

We need to show people that life long learning can be fun and we have to make it affordable.

Even in Germany, were studying is essentially free, poor people have to stay in bad jobs because they couldn't afford to pay their rent when getting a degree.

For those that believe people are poor because they did not work hard, I am curious what importance you attribute parenting to the outcomes of children?

Every parent I know invests a significant amount of time and often money in raising their children, and there is a significant amount of empirical evidence that parents play a significant role in how children develop. Do you simply believe the evidence to the contrary? It does exist, I am aware. It often seems to measure obviously superficial interventions, in my opinion, but I understand the debate.

What is the level of parenting beyond which there is no additional return in terms of economic outcome?

Because from what I understand, parents play a significant role in not only cognitive development (reading at an early age, for example) but also in terms of setting expectations for their children.

> There is a significant amount of empirical evidence that parents play a significant role in how children develop.

I would like to see this. As I understand, Judith Harris wrote The Nurture Assumption in 1998, and it still stands.

These conclusions apply to the third world, not the rest of us. Here in Europe for example, anyone can study and become an entrepreneur (I did it, with pretty much 0 wealth in the family).

Does this mean that poverty, in the first world at least, is a solved problem and being poor is a choice for those remaining in poverty?

No, obviously some people are forced to stay poor by special circumstances, but in many cases it's just life choices (trade-offs) or ignorance.

Many people don't like to work hard, and that's alight.

Depending on what you mean by poverty, mostly yes for Western and Norther Europe if you do not count immigrants, who are in a more special situation.

The unemployment benefit is usually enough to cover material living costs and to have all the basics, like shelter, food in a fridge, electricity, running water, even entertainment like TV, phone, computer.

People have vastly different understandings of poverty and if you define it relative to the median income, you will by definition always have poverty.

> anyone can study and become an entrepreneur

Let's say I want to become a doctor and not an entrepreneur?

Sure, if you're diligent enough, there's nothing stopping you, there's no wealth barrier - studying medicine is a reasonable option for students from poor families.

Is it not the case in USA? I have read about doctors coming out of med school with lots of debt, but I had presumed that these loans are reasonably available and would not prevent someone from a poor family from studying there.

A doctor can be an entrepreneur too. After studying, you can opt to work in a clinic or start your own business. The latter is usually the faster path to wealth.

Let's say that you are a homeless 40-yearold, where can you study and start a medical career?

In Austria you could if you graduated from secondary education. But since you aren't born a 40-year old homeless person, I'll have to question that person's life choices and missed opportunities.

I've been poor all my life, the thought of having money laying around scares me, I should invest, but giving it away like that scares me even more. I'm moving next week and part of my reserves will be gone, and weirdly enough I'm relieved that someone else will take care of it. I don't feel fit to handle it.

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