Hacker News Reader

Comment by nivenkos | Hacker News Reader

Income inequality is good, and fighting markets is like trying to stop the tide.

It's accumulated wealth that is the problem (and leads to the corruption of free markets and democracy).

Policies should be focused on that - taxing wealth rather than work, and encouraging profitable investments rather than sitting on assets.

Whereas now the so-called "left-wing" policies are awful - rent control is popular in Europe despite being an unfair disaster in Sweden. There are high taxes on income and high VAT, whilst inheritance, land and wealth taxes have been abolished, greatly hurting social mobility while benefiting established, inherited wealth.

Same with a lot of focus on patching up symptoms - like not prosecuting low-value shoplifting, allowing squatting on "empty" properties, etc. rather than trying to improve market conditions, education and training and the housing market, etc. to ensure that everyone could get a much better salary to begin with.

View on HN

Your comment is quite a ride to read. I, like some other commenters, had an immediate negative reaction to the 'income inequality is good' statement.

Having read the whole thing a few times I generally agree with your position. Differences in salary reflect differences in demand for certain roles, or the value you can bring to them. It's a real time signal. They can act as an incentive to draw more people to that position or signal when one is saturated. The system is abused a bit when finance jobs pay a lot despite dubious value to society, and teachers are underpaid relative to their importance, but as a general rule it works.

Wealth inequality is the major issue. It might be 'natural' in the sense that each generation of parents passes advantages to their kids, but I also think its a mark of civilization to be able to keep it in check. If you earned it, great, but when you die lets not burden the future with your family dynasty of rich but useless descendants.

All people can't be born equal if your financial situation is determined five generations before you were conceived.

> dubious value to society

I am curious if you know a system that can rank and precisely tell me the respective values to society for each action, job, hobby etc humans engage in.

There isn’t one. Whether you intended to or not this is a very typical capitalist strawman that claims that because central planning failed (of course it did), we can say literally nothing about value and therefore anything goes to the lowest bidder.

The problem is that as it stands, the set of oligarchs currently holding their positions (see recent work from Stanford etc showing the US at least is clearly and oligarchy) are the ones doing all the planning.

However it’s in the form of “investments” and the accompanying regulatory capture.

So this idea of a “free market” with perfect information not only isn’t possible - as economists agree - but it’s not even DESIRABLE as power law in such a system dictates that profit will ALWAYS be the paramount virtue subordinate to any other.

Of course there is. We are using it every day to decide how much a loaf of bread and an hour of work should cost. We couldn't function without it and economies that tried to abolish it failed to even feed their citizens.

No one other than ivory towers academics is dreaming about "perfect information". The rest of the world is using those "imperfect" free markets just fine.

Dude what? You personally have effectively zero control of pricing other than deciding what to buy from a small group of planners

Those planners are called “buyers” and they choose the products that live on the shelves and in online shops.

They don’t put anything for sale on your behalf, everything everywhere all the time is meant to push you into making a purchasing decision that is marginally related to your personal best interest.

Nobody asked for a Dorito taco yet these companies successfully have slowly propagandized millions of people into thinking that this collection of sugar fat and starch at massive scale is a good decision for society and we just sit back and pretend like people are evaluating these products equivalently with their best substitute.

Read up on the Law of Supply and Demand. I evaluate countless products every day, with an incredible diverse offering from huge box stores to tiny mom&pops and farmer's markets.

I have never heard of somebody being made to buy those Dorito tacos. Do you think you know better than millions of people? Are they the ones being brainwashed while you are the only one with a clear perspective?

Yep. It’s called the market place.

The market place hates real long term vision and maintenance.

That's why teachers are so poorly paid even though everyone does the lip service of thanking them.

Teachers are well paid in Finland and Denmark (for example).

Private markets are just fine with long term visions. Job's Apple and Elon Musk's SpaceX and Tesla come to mind.

But, of course, free markets also decide whose visions to adopt. And that is unbearable to leftists who want nothing more than to impose their vision of how society should work on us.

Ahahahahaha sure, if P=NP https://arxiv.org/abs/1002.2284

Yet, "inefficient" as they are, free markets are the only system we found for this purpose. And it's being proved every day, over and over again. If you know of another, please do write about it here.

> encouraging profitable investments rather than sitting on assets

A difficult distinction to make, since profitable investments are also assets that one would presumably like to sit on for a while.

The majority of “investments”, as in loans granted by banks, are people with fixed assets buying more fixed assets, such as real estate. The innovators, mom & pops, farmers etc who take a loan for a venture are the minority. Makes sense for the capital holder. Why take risks when cornering markets is much safer?

I think he's referring to "rent seeking behaviour"

Income inequality isn't good or bad, it doesn't necessarily imply a working model as I gather you believe...nor does it suggest extractive behaviours, and people's aversion to it is absurd and ideological - see other replies to you.

Absolute poverty is the real enemy, but it is possible to have high inequality and low poverty.

Where I disagree with you is in accumulated wealth being the problem...it isn't generally bad or unproductive, but this is asset dependent, land-wealth is a sink and Georgist measures could significantly improve productivity and capital acceleration.

But the so called "left-wing" you describe seems intent on punitive taxation as opposed to productive...

> Income inequality is good,

Yeah I don't agree with that.

> It's accumulated wealth that is the problem

I do agree that wealth inequality is the bigger problem, and I should have used that term instead.

It doesn’t sound nice when phrased that way but I think OP is correct. The fact that doctors make 500k per year in the US is a good thing, because it takes a decade of dedicated study and long hours to become good at it, the reward is that high salary. A world where doctors and McDonald’s workers are compensated exactly the same is one where something major is obviously broken.

As long as the McDonald’s worker has some kind of decent safety net underneath them, I think having a large disparity in pay between the two jobs is just fine.

I don’t think when people say “income inequality is bad”, they mean doctors and McDonald’s workers should be paid the same. That’s a straw man.

How can you be so sure? That's what it literally means. The onus is on them to better understand and convey their own position, if that is in fact their position.

One, because it’s absurd, so in making this assumption, you are painting them as absurd.

Two, because they are willing to tell you if you spend some time talking to them.

Most people mean that the gini coefficient is too high, not that it should be zero. Income/wealth inequality is a floating point scale somewhere in the range of 0..1 and neither extreme is likely to be possible or optimum.

But that is a fucking mouthful which is why normal humans just say things like 'wealth inequality is bad' -- until the internet's favorite pedantic muppets show up in the comments demanding clarification.

Why is it a "straw man"? Doctors and McDonald's workers are paid differently in a market economy because the supply of McDonald's workers is far greater than the supply of doctors. If you don't agree that income should be determined by the market, why should doctors make more?

It's a straw man specifically because no one is arguing for this. A straw man argument is where you take a version of your interlocutor's argument that is similar, but in some way absurd for critically flawed. Then you attack that critical flaw as a proxy for tearing down the entire argument.

Here's the crux of it: "A world where doctors and McDonald’s workers are compensated exactly the same is one where something major is obviously broken."

Yes, it is obviously broken. The implication here is that the person arguing that "income inequality is bad" is unable to see this completely obvious thing, and pointing it out wins the argument. Because the poster has now "shown" the other position to be obviously wrong and broken.

Except it started with a misrepresentation of the position in order to arrive at that obviously wrong argument. Therefore, strawman.

> If you don't agree that income should be determined by the market, why should doctors make more?

Point of fact, doctors salaries are not set just by the market, because there is an artificial limit on the supply of doctors. If the market truly set doctors' salaries, they might be a lot lower. So saying "income inequality is bad" is not the same as saying "market dynamics are bad"; because here, as in many sectors of our economy, a perversion of market dynamics have caused gross income inequality.

Is the life of a doctor more valuable than a McDonalds worker?

I’ll wait and maybe you’ll give me the fellicific calculus proof, or maybe the EA calculator.

But in the end it’s all made up to retain classes so that people have some way to “prove” that they are more deserving of things than others.

Except a lot of the time, the job market is a lot more complicated than that and years of study don't always correlate well with eventual earnings. I have a pretty basic bachelor's degree in computer science and I have never once struggled to find reasonably high-paying work wherever I am. I have a friend with two bachelors' and a master's who has studied far more and far harder than me, and she has struggled to find work anywhere in the country, and when she has, it's been far lower paid. My brother has studied at least as long and as hard as I have, and is as much an expert in his field as I am in mine, but because he got a vocational qualification in a less well-respected profession, he works twice as many hours as I do for half as much pay.

So while I broadly agree that there will always be some necessary income disparity, I think it's disingenuous to use such simple examples and present this as a "work hard; get paid more" situation. In practice, income equality has more to do with whether the skills you have are socially valued or not.

> Income inequality is good

[Citation needed]

To be clear, I'm not implying that it would be good to have absolutely everyone make exactly the same amount. I'm saying that income inequality at high levels is bad, demonstrably so, and inevitably leads to concentrations of wealth.

I'm also not sure why you think that high VAT and lack of inheritance and wealth taxes are "left-wing" policies. Those are all regressive, and exactly the kinds of things that the right wing is pushing for here in the US. At most, I would think that such policies would be compromises between a left wing that wants progressive income taxes alongside inheritance and wealth taxes, and a right wing that wants VAT and basically nothing else.

We need wealth limits for companies (which should be more like co-ops), proportional to the size of the company, with everything pasta threshold going back into UBI or something. Same for individual wealth accumulation.

People could do more projects/start more companies to earn more, but no one should be accumulating millions by doing almost nothing as is the case now.

> no one should be accumulating millions by doing almost nothing as is the case now

Outside of people who inherit this kind of wealth, who exactly is accumulating millions just sitting on their asses?

People who earn via investing for starters.

And then you have people earning millions, that at least when compared to the numerous workers being underpaid and actually doing the hard work that generates profit, basically do so little work they may as well be sitting on their asses.

You would effectively ban investment then? No one could earn any money from index funds?

black/white fallacy

Someone has a million in index funds and earns more than a Walmart worker by "sitting on their ass". Are you proposing a ban to that?

limit != ban

Capital gains taxes don't prevent an investor from making money.

They do disincentivize and thus reduce the investment in the area though. An area which helps the economy grow and in process creates good services and jobs for everybody.

You really need to learn how to respond to arguments without constructing strawmen. You can't get to a resolution of different viewpoints by misrepresenting the opposing argument

Your argument is a strawman - but yes, ideally this would come via additional taxation or regulation of investment (which we do now, but not well enough).

That would restrict access to early investment deals and opportunities for regular folks even more (today you have to be a "certified" investor) in turn increasing wealth inequality and social mobility.

a $10M portfolio with 10% annual gains (tweak the numbers as you’d like, it’s still fairly reasonable for the “wealthy”, I think)

I can't find the source, but I heard most of the newest crop of billionaires made all their money of financialized wealth (ie, not producing anything of value, just arbitraging something - probably mostly real-estate).

They're not exactly doing nothing but they're not producing anything of real value. This is a growing problem in the US.

I agree with your larger points, but also arbitraging away price differences is valuable for a society. It feels like one of the big advantages capitalism has versus planned economies

What wealth limit are you proposing and why wouldn't companies leave for another country?

> why wouldn't companies leave for another country

Haven't they already?

Besides, that might be a good thing, if corporate overreach continues to grow unchecked.

> why wouldn't companies leave for another country?

Solved by limiting the profit that can be transferred out to foreign companies/parent companies.

If a market is too big, as long as money can still be made even with a cap, a company won't leave - or if they do a competitor will spring up to take its place.

So capital controls? Like China? That has a ton of associated problems.

I mean, I'm not sure China is the role model for how to do anything like that really. Doesn't mean the idea is without merit though.

It kind of does because you can see the problems with capital controls in China.

Foreign investment drops off because, hey, who is going to invest if they can take their money back out?

It's also going to limit foreign investment outside the country.

It also screws with exchange rates and interest rates because of the Interest Rate parity law: https://en.wikipedia.org/wiki/Interest_rate_parity

You seem to be implicitly assuming that "foreign investment" == good. This is sometimes (or even often true) but it's not like it's without tradeoffs

How is foreign investment bad?

Coops are free to exist and do, unfortunately they cannot scale - you need to solve this before mandating all companies act as cooperatives.

Of course coops can scale.

https://www.theguardian.com/social-enterprise-network/2012/j...

That certainly shows that coops can be bigger than the cliched coop grocery store and the like, but even the largest coops on that list aren't particularly large as far as corporations go even if some have high revenue -- and look what industries they are in -- banking, lumber, insurance -- not exactly progressive role models.

> but even the largest coops on that list aren't particularly large as far as corporations go even if some have high revenue

And you think that's a bad thing?

The argument was whether they could scale, and they don't seem to be able to beyond a certain point (and even then only in fields of dubious value like banking). Whether or not scaling is a good thing or not is an entirely different thing.

I don't think it's an issue that they can scale, I see no reason they could not, I think it's because they don't have the appetite to do so.

There is nothing intrinsically limiting about the format of a coop that would prevent it from being as big as needed, IMO.

it's well established that expansion is the reason coops don't reach the levels of actually competitive entities, the largest of those in that list (retail notwithstanding) exist almost solely due to subsidisation.

Inability to expand is practically built-in to the structure of worker and consumer cooperatives.

That they're free to exist but don't dominate the marketplace (the total revenue of those 300 companies is still less than the revenue of the top 10 non-coops) should be evidence enough but you're welcome to exploree the literature yourself.

> That they're free to exist but don't dominate the marketplace

Why do you think not dominating the marketplace is a bad thing?

I'm saying consumer preference favours more competitive companies...ignore your distaste at the connotations of the word "dominate" and focus on the discussion - coops would be more commonplace, larger, and more successful...which is what you want no? Personally I'm indifferent to coops and their successes, they're a valid business model, they shouldn't be mandated, their structure limits them.

I agree about their being more competitive companies, but I disagree that co-ops prevent that.

What is it you think about their structure that limits them?

And regardless of your answer, whatever issues may or may not exist and be limiting, rules and limitations can be adjusted as needed. The fundamental principle is that workers would have more of a say to some extent, but more importantly receive more of the profit that their work produces.

Workers are currently able to purchase shares in their employer if their employer is listed, giving them a vested interest in its success. Lets stick to worker coops as I think that is the type you're most interested in.

A coop cannot pursue outside investment by issuing shares, it must rely on philanthropy, subsidisation, or loans for this.

Why would an employee-shareholder willingly reliquish their interest in the company to improve productivity and returns for their peers - such as automating away their own role? It necessitates make-work inefficiencies.

Increasing the size of the company doesn't mean an increased return for the employee-shareholders, they might even end up working much harder to just maintain their income - the larger the company gets the truer this becomes as they reach dimishing returns in their sector.

Successful coops get insular and wary of freeriders, as such they prefer to outsource where possible - Mondragon for example outsources labour.

Again the literature is plentiful and on a personal level I have no objection to them, but to believe they are without serious shortcomings is naive.

I really dislike your tone, I have to say, calling me naive in this comment, with your last one being condescending and making assumptions. Isn't HN meant to be better than that?

That aside, so your main complaint is people can't invest in coops? There is nothing limiting coops growth except the fact that the members are not trying to become global monopolies. And even if there were some limitation, the context of this discussion is some kind of improvement or alternative to the current system we have today. There is no reason what constitutes a coop could not be refined to eliminate any limitations.

Also, you vaguely claim 'the literature' supports what you are saying without naming anything specific, and I can do the same - there is plenty of literature arguing explicitly in favor of coops, addressing any of the things you claim as issues.

> Income inequality is good

I agreed with the rest of your comment but this is... strange. You might agree if it's rephrased as "extreme income inequality" is bad?

"Harrison Bergeron" was a straw man argument posing as a short story - don't let the similar strawman of "no income inequality" overshadow the more present and real threat to society of growing extreme income inequality. Some twitter posts accurately phrase this as the "too expensive to live" problem for some.

Reply on news.ycombinator.com