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Comment by paulpauper | Hacker News Reader

>. I'm just saying the observed increase in wealth inequality in these nations goes away when you abstract from land. So capital is not the problem. Let's deregulate building.

Yeah cuz the fortune 500 list is dominated by land-owners such as Facebook, Microsoft, and Google. Wealth inequality arises from capital concentration, of which land is just one of several forms of concentration. But the ability of large, powerful companies to protect intellectual property and harness network effects to derive large, reliable recurring revenues, which are passed on to shareholders, are other contributing factors. Tyler is a smart guy but is he like a fire hydrant at time that spews out things that are wrong or incomplete.

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The work Tyler cites demonstrates that inequality in the US is almost entirely a function of real estate. Let that sink in. This implies that the vast majority of inequality comes from owning land.

Big Tech companies are not a real estate business. To believe that they are indicates extreme confusion about what a company like Netflix does. To shoehorn them into culpability for rent seeking in the housing market is to substantially miss the point.

Yeah, that explanation calls on its face because it cannot explain low interest rates. If land owners have excess savings that drag the interest rates down why aren't they spending them to buy more land until interest rates rise? If they don't have excess savings why aren't they borrowing more money to buy land until interest rates rise?

The weird part is that if we assume that land owners are the only ones with the inequality, this is a self reinforcing cycle that keeps growing stronger to take over the entire country but yet somehow balances itself to keep interest rates and inflation low. They somehow control the entire economy and yet they don't have any effect on it at the same time.

If land owners are taking over the economy how come corporations were increasing their savings since 2000? https://fred.stlouisfed.org/series/B057RC1Q027SBEA

> Wealth inequality arises from capital concentration

No. Wealth inequality is capital concentration. What you're saying is that rain causes rain. In actuality what causes wealth inequality is corruption. The financial sector has been extracting wealth from the people since the 70s. That's what causes wealth inequality.

> What you're saying is that rain causes rain.

It's a little ironic to use that as an example, because rain actually does cause rain. Falling water droplets induce a down draft which causes other water droplets to fall out of the sky as well. This is why water precipitates rather suddenly rather than as a constant gradual drip.

Well, that's interesting to know. I still wouldn't say rain causes rain. Rain may be self-reinforcing, but there is generally some other far more significant catalyst. Regardless, I hope you got my point.

I would say wealth inequality is comparable to rain in that regard, as it seems to be reinforcing itself. Wealth inequality leads to more wealth inequality as the rich are able to highly leverage their wealth to get richer?

> In actuality what causes wealth inequality is corruption.

wealth inequality -> corruption -> more wealth inequality and so on.

I can't really say what is the root cause - but corruption IMO is a function of wealth inequality in action. Rich and powerful exerting influence to get more wealth and power.

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