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Comment by zafka | Hacker News Reader

1) No fallacy, if the the Pie gets bigger, but a small percentage of people get an increasingly larger percentage of that pie, inequality is increasing. 2) The author did state that more and more people are going to college. Thus if you have a fixed size of "Ivy League schools" a smaller percentage of the total will get into the top schools.

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But the passage I'm citing isn't about inequality increasing, as you're discussing. It's about people at lower levels getting less, in an absolute sense. Which is a fallacy.

I'm not sure I see how this is a fallacy. Can you explain even anecdotally?

“Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.” -Milton Friedman

I just googled "Fixed pie fallacy" - I was assuming (probably wrongly) that most people were familiar with it. I'm not even certain Friedman was the first to identify it.

The first thing I come up with on Google is [1]. It's a decent overview.

[1] http://mjperry.blogspot.com/2006/12/fixed-pie-fallacy.html

Harvard is not fungible.

Right, but top-quality education is fungible.

Not everybody needs to go to an Ivy League, just like not everybody needs to own a 75-ft yacht.

I'm OK with that.

If the quality we're interested in is "being Harvard," then no, Harvard is not fungible. But if the quality is "providing a college education," the Harvard is extremely fungible in many cases.

People don't seek Harvard for the education only. They seek it or lots of things: access to wealth, access to knowledge and network, increased status, increased reputation.

Otherwise why would there be exceptional demand (and price) for harvard?

Sure, there's no disputing that the fixed pie fallacy exists, but you have not made a convincing argument that this situation is an instance of the fallacy.

1. You're attacking a straw man, which actually is a fallacy.

2. Even if the passage you cited were about "getting less in an absolute sense", there's still no fallacy. zafka already pointed this out in his #1 above. What's so hard to comprehend?

Please stop.

Inequality is only bad inasmuch as populists use it to rile people up. Let's say I have $100 and you have $50. Then someone gives me another $100 and gives you $5. Inequality has increased, but is the situation worse? Is anyone worse off?

If that happens to everyone in the marketplace, then inflation just occurred. The market had a total of $100 + $50 and now has a total of $150 + $105. The cash in the market increased by 58% so all the price of all goods will also increase by 58%.

This means that the money I have is now worth less than before, and I am now poorer than before.

Actually the hypothetical actors will have $200 and $55 respectively. To reinforce your point, if price of goods does go up 58%, the actor that started out with $50 will be 30% poorer in real terms (now having $55 and his $50 basket of goods now costing $79), whereas the actor that started out with $100 will be 26% richer (now having $200 and his $100 basket of goods now costing $158).

Okay, I oversimplified - but you are doing so as well. Societies as a whole can become wealthier over time. The difference between the 90th percentile and the 10th might be higher today than it was 200 years ago, but the 10th percentile today is also probably better off than the 90th 200 years ago in absolute terms.

Edit: s/dollars/utilons/g

Yes, it is true that we are all much better off than we were 200 years ago. This is due to both economic and technical progress. For instance, I can light and heat my house economically.

However, the 90th percentile might be even better off today if there was more equality - we could more efficiently share the fruits of our technical progress.

PG makes an effective argument that such equality would reduce the benefit and thus the motivation to innovate and create the present level of comfort / economic success : http://www.paulgraham.com/inequality.html

Overall, equality is a complex beast. I think that we need some level of inequality to ensure that there is sufficient motivation to succeed. We also need to do our best to help those who 'fall behind'

As far as I can tell from skimming it, pg is arguing against optimizing for economic equality in that article.

Certainly true given the analogy as stated, but if the overall quality/quantity of goods available has gone up by a factor of 3, then both are better off than before.

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