Technology and Wealth Inequality
blog.samaltman.com
blog.samaltman.com
I don't think this is the whole story. It's not just that it feels unfair, it's that it really is unfair. Rich people can buy political representation, and unlike wealth, representation is a zero-sum game.
Once you can employ people to work for your political ends (by directly engaging with congressional staff, by producing supportive research, by working a PR campaign...), you have a bigger voice than someone else, whether laws allow you funnel campaign cash by the shipping container or not.
My guess is that the only real way to balance this out is have more citizens talking to congressional staff.
I don't know really... But I think that might help weed out career politicians who rely on sources of dubious income.
Moreover, the the creation of wealth depends upon a functioning society with a working police force, fire department, transportation system, etc., not to mention the accumulative effect that inherited money brings to kids growing up in a supportive environment and going to the best schools. It is a myth that the wealthy earned their wealth all on their own, but one Americans love because of their (our) infatuation with rugged individualism and personal agency. I personally do not mind levying tons of taxes to level the playing field, but that's probably just my temperament. I want to live in a society in which there is equal opportunity, not a plutocracy with a handful of perpetual dynasties.
I've gotten into this discussion multiple times here and it amazes me how often people will fail to acknowledge that the 'birth lottery', as Warren Buffett describes it, is a huge factor in the vast majority of success stories.
This sort of thing may be the primary reason that there will likely be some sort of very uncomfortable upheaval in the next couple of decades.
"People are poor because they make bad life decisions" - usually comes from the right of the political spectrum
"People are poor because the system is stacked against them, it's not their fault" - usually from the left of the political spectrum.
Like most arguments, the truth is likely somewhere in the middle.
If someone is professing either of those things or something similar they may be missing the point.
People are not poor BECAUSE the system is stacked against them. But if they are poor (by birth, by screwing up royally, what have you), they have much less of a chance to become not poor, because the system is stacked against them.
Yes, they (often) are.
> But if they are poor (by birth, by screwing up royally, what have you), they have much less of a chance to become not poor, because the system is stacked against them.
But then that means that there children are very often poor by birth because the system is stacked against them; specifically, the same features by which the system which made it more difficult for X's ancestor(s) to escape poverty by circumstance mean that the system is stacked against X in a way which produced X's poverty.
My point was more that a given person is not poor because they are lazy (necessarily), because even if they are not lazy, if the system is totally stacked against them, they are screwed. The cycle continues forever and in that sense yes the system being stacked against them made them poor.
I didn't see it as a fundamental disagreement so much as highlighting an implication which seemed to be downplayed in your post.
Look at countries like India, they still have huge issues with poverty, but it's also clear that the focus on education has been instrumental in their growth in personal income. The issue with countries like the US is coupling poverty with a system that does not have the same broad level of commitment to education. The situation will continue to get worse, but it doesn't have to, that's the real tragedy.
Is it clear? The general opinion I see over here is that most education (beyond primary school) is useless, but you can't get hired without it anyway.
I'm also not sure why you'd characterize India as having a "commitment to education" greater than the US - education is far more available and far more common in the US. For example, while I'm harshly critical of the lack of accountability surrounding teaching in the US, teachers are at least required to show up to work.
As far as I'm aware, the general economic consensus about India is that economic liberalization is what has led the growth in income.
Yes, Indian parents focus on education but that is not what lead to growth in personal income. My father did not finish high school nor did he go to a college but we saw remarkable improvement in our life style thanks to overall economy improvement as there was more demand for his work. I know many people who are completely illiterate but were able to grow their business as there was no more red-tape by government. In 1991, government allowed private banks to open (before that all banks were state owned) which lead to better access to capital allowing tons of businesses to flourish. Reliance Industries [http://en.wikipedia.org/wiki/Reliance_Industries] is the the largest private sector company by revenue and ranks 107 in Fortune 500. The company was started by Dhirubhai Ambani who did not go to college but was able to grow his company many fold after economy was opened up.
Of the things that I see especially the poor is how their belief becomes a self fulfilling prophecy.
Most poor people I know, some of them close friends of mind. Even a few middle class people, and I see this among my cousins. There is a tendency to resign to one's fate. Its like they don't even want to try because it's just not going to work.
There are a few people who do try and break out of those shackles. But they are by and large considered to be lucky.
The question that comes to mind is whether you mind paying the taxes yourself, not what you think about foisting costs on others. It is very easy (and inexpensive) to say that every problem should be solved on someone else's dime; one might even care enough to vote with that in mind, but you are not taking any personal responsibility, or even using clever rhetoric to convince someone else to act.
It's not someone else's dime, full stop. The system misallocated the money in the first place by giving them a disproportionate amount. The mechanism for valuating people's contributions is self-serving and broken right now. A teacher contributes 1000000 times more to society than a hedge fund manager, despite what the hedge fund manager will tell you about the benefits of liquidity that his activities are supposedly bringing about.
Though I have never seen convincing evidence (either way) on this subject, I will accept it ad argumentum.
Using coercion to force someone else to pay for things I want is still a cheap and lazy way for me to achieve my ends. My point is that one should convince the hedge fund manager to donate money to important causes. Alternatively, you might contribute your own hard-earned money to achieve the ends you profess (or pretend) to value so highly.
Asking the parent to contribute their hard-earned money also seems sort of disingenuous. How do you know they are not doing so? Even if they did, if they are unable to contribute enough (for any number of reasons), it likely will not effect the issue in a large enough fashion.
A Democratic decision is not 'coercion'. If the public decides something is important enough to them to pass a law/change the tax code they are not coercing the rich to pay more. The wealthy could just leave (with all that would entail for both parties) and no longer make their money off/with said public... Or they could stay.
So if a state decides (through referendum or legislative measure(s)) to compel slavery or imprisonment of one race or another, through police or military action, that would not be "coercion"?
If we are reducing to absolute absurdity... This conversation is over. I have no interest in an HN fallacy battle. A 'democratic' decision to enforce slavery/commit genocide/etc is pretty clearly well outside of what was being discussed.
My example was based on the many governments which have treated certain races as sub-human; I agree it is not directly analogous, but I was trying to demonstrate that democracies are not always fonts of virtue.
You went and called me a "Randian" (without any demonstrated reason), I believe it was you who was enjoining a "battle" through unsubstantiated allegation.
Thirteen Colonies, 1705
Wood, Origins of American Slavery (1997), p. 92. "In 1705, almost exactly a century after the first colonists had set foot in Jamestown, the House of Burgesses codified and systematized Virginia's laws of slavery. These laws would be modified and added to over the next century and a half, but the essential legal framework within which the institution of slavery would subsequently operate had been put in place."
Germany, 1933
http://en.wikipedia.org/wiki/German_federal_election,_March_...
South Africa, 1948
http://en.wikipedia.org/wiki/South_African_general_election,...
In other words I had a trick question. You first have to ask what democracy is before you can even approach it....
Equate? No. But there are of course similarities.
(Yes, I know: Some stole it, some got it via government influence, etc. But in the majority of cases, what I said is true. Bill Gates, for instance: what system gave him a disproportionate amount? Did he earn it by paying substandard wages to Microsoft employees? Well, no, he didn't.)
(Also note that nothing in this comment is a justification for the appallingly poor rate at which we pay teachers.)
http://taxfoundation.org/blog/top-one-percent-pays-twice-inc...
edit: dragonwriter correctly pointed out that the numbers mentioned above are actually 'income tax', not 'total tax'. I apologize for my vagueness.
edit: the average total effective tax rate for one percenters is 27.9%, compared to the lower 99%, who pay an average of 27.5% TETR http://www.ctj.org/pdf/taxday2012.pdf
Do they actually end up paying that tax rate? Or is that before deductions and only the rate on their personal earned income. There are a lot more ways to game the tax system when you have a great deal of wealth.
What percentage of the wealth do they have relative to everyone else?
The quoted number was only their income tax rate.
http://blogs.wsj.com/wealth/2012/04/18/the-real-tax-rates-of...
Even assuming that there are no errors or misrepresentations in the material from the anti-taxes-on-the-rich propaganda outfit you cite, even they don't claim that. While they certainly count on people to conflate "effective income tax rate" with "effective tax rate" (or even "effective rate of taxation on income"), they carefully restrict their claim to "effective income tax rate".
Income tax isn't all of tax, or even (despite the name) the only (or, even, for most wage earners, the most significant) tax on income.
1. Mean vs. median. Here be dragons.
2. That roughly corresponds with my experience: it's easy for a USA'er to compute their federal effective income tax rate: the IRS's idea of your income is at the bottom of the first page and the "total tax paid" is about two-thirds of the way down the second. Mine was around 15% for many years; it has gone up lately, but I don't remember specific numbers any more.
Those people who would have to pay then could either take their wealth and attempt to leave with it (with all the consequences for both parties that might entail), or they can pay the share they are designated, and attempt to make more money with their wealth/connections/etc.
Greed is funny in that if you have a lot, you don't tend to see wanting more (or to pay out less) as greedy, while those who are denied the same amount, see those with a great deal (who do not want to contribute what the public believes is their fair share) as greedy.
This is how western democracies currently function, though it does not imply that the results are moral or even good.
>"Those people who would have to pay then could either take their wealth and attempt to leave with it (with all the consequences for both parties that might entail), or they can pay the share they are designated, and attempt to make more money with their wealth/connections/etc."
This statement basically says 'take it or leave it', which I suppose is fine, but does not mean that the state which implements high tax rates will achieve its desired results, and this does not speak to the morality of the average voter either.
You seem to ignore my point, which is that people who vote for higher tax rates and increased redistribution of wealth are not actually doing very much to solve any real problem. Voting to raise taxes on the rich demonstrates little personal responsibility, as the voter does not pay to solve the problem, and does not even try to convince others of their moral responsibilities.
This requires the assumption that the distribution of wealth that is being address is not a real problem.
> Voting to raise taxes on the rich demonstrates little personal responsibility, as the voter does not pay to solve the problem
Payment to solve the problem is a method to "demonstrate personal responsibility" because it is one method by which one exercises one's power to solve a problem one has perceived, but voting is equally so a method to "demonstrate personal responsibility".
> and does not even try to convince others of their moral responsibilities.
Well, sure, voting itself may not be an mechanism for trying to convince others of their moral responsibilities (then again, it may be, people have been known to cite drawing attention to an issue and raising awareness to be motivations for voting behavior on issues and candidates), but even where it is not it is often not an isolated behavior, people who based on a preference for a particular policy very often engage in advocacy around the policy, including advocacy based on the premise that it enforces a moral obligation.
My point was that voting is 'not actually doing very much', as it is easy to do, and unlikely to have any real impact.
>"but voting is equally so a method to "demonstrate personal responsibility"."
Voting is cheap, easy, and free from repercussions; I struggle to see how it involves any measure of responsibility.
>"people have been known to cite drawing attention to an issue and raising awareness to be motivations for voting behavior on issues and candidates), but even where it is not it is often not an isolated behavior, people who based on a preference for a particular policy very often engage in advocacy around the policy, including advocacy based on the premise that it enforces a moral obligation."
You may be correct, and I may be too cynical, but I see 'raising awareness' as the last refuge of the ineffective activist.
does not mean that the state which implements high tax rates will achieve its desired results, and this does not speak to the morality of the average voter either.
Agreed! Every situation is different and that is by no means a silver bullet.
If people voted for increased redistribution to redistribute wealth than they are doing something to solve the 'real problem' as they see it. You are correct that it may not be the actual problem... But I do not think that you can effectively bring 'morals' into the equation of tax codes or being rich/poor.
Personal responsibility means very very different things to any given person. I do not think you can find many extremely wealthy people who think they have a moral responsibility to help out their lesser man (feed the poor), while you can find many 'poor' people who think it should be their moral responsibility ('if you have so much more than you can ever use why can't you help those less fortunate' sort of thing).
Your vote is unlikely to have any real impact, (the same is true of mine,) so while the people may be 'doing something', this 'something' may be the least effective action one could possibly take. I vote in every election, but even I must acknowledge that I would be doing much more for my fellow citizens if I spent the same amount of time picking up garbage from the streets.
The people, through their votes, lend their power to a government that aggregates that collective power to accomplish larger societal objectives (financing wars, building bridges, educating generations, enforcing civil society, etc), that would not be possible if the maintenance of society was left to everyone's individual will.
Just as valid: peoples votes in elections after 9/11 gave the government power to compromise civil liberties in the name of security.
Does your city have a street sweeping service (which are usually publicly funded by taxes approved by ... votes)? Without one, in an urban/suburban environment, your street would be full of garbage in no time, probably too much for you or other like-minded people to clean up.
Votes aren't a solution for every large problem, but it's far fetched to say that don't have any impact. Much of what we take for granted in modern public conveniences happened because people voted for representatives that in turn supported those endeavors.
I agree with you entirely on how the system functions, though not all people want to grant all the powers which the government has collected over the years, and it should not be assumed that a vote is a tacit agreement to the current system.
>"Does your city have a street sweeping service (which are usually publicly funded by taxes approved by ... votes)? Without one, in an urban/suburban environment, your street would be full of garbage in no time, probably too much for you or other like-minded people to clean up."
You assume the street must be state owned and maintained; plenty of private communities do a good job keeping things neat and tidy (though I do not live in one).
>"Votes aren't a solution for every large problem, but it's far fetched to say that don't have any impact. Much of what we take for granted in modern public conveniences happened because people voted for representatives that in turn supported those endeavors."
I never said that elections are bad, but saying that you "voted for 'x'" means that you did very little to actually make it happen, because individual votes are insignificant.
That's a shift of the argument and discussion.
And the simple truth is that taxes are and always will be a form of mutual coercion, mutually agreed on.
So long as the taxes are levied based on the ability to pay and not on "what other definable societal subgroup are you a member of", then anyone who happens to win at the wheel of fortune (in the metaphorical, not game-show, sense) is equally included.
Taxes are the price of a civil society.
Whether you are, as Anne Richards used to say of a fellow politician, born on third base thinking you hit a triple, happened to be fortunate enough to have been living on top of a patch of sand that had half the world's oil squirreled away underneath it (if you want to see a phenomenal story of windfall wealth impacts, look up the story of a few clans of former date farmers and oyster divers who got lucky), or just happened be be born within the geographical boundaries of one of the G7 industrial nations (the US, Canada, UK, Germany, Italy, France, Japan, though much of western Europe could also be included), scored at startup bingo, and/or were ruthless enough to take on all challengers to claim your piece of the pie (see the recent story of "anti-poaching" collusion among Silicon Valley firms), there are tremendous inefficiencies in how "the market" allocates its rewards.
Engineering systems almost always include negative feedback loops to prevent runaway destructive trends. Its a concept foreign to much of economics. Not in the least helped by the anti-empirical faith-based fundamentalism of Libertarian dogma that seems to be growing in popularity.
You appear to believe that my birth in a high-tax country is tantamount to acceptance of a social contract with an arbitrary tax level clause (subject to change without notice). For a valid contract, three elements are required: offer, acceptance, and competent persons.[1] I would contend that at my time of birth, I was not a competent person, and even then, I doubt that I would have accepted the contract which you are proposing.
>"Engineering systems almost always include negative feedback loops to prevent runaway destructive trends. Its a concept foreign to much of economics. Not in the least helped by the anti-empirical faith-based fundamentalism of Libertarian dogma that seems to be growing in popularity."
The problem is that democracy has almost no feedback at all, as people have very little incentive to accept that the policies they voted for have caused real harms; in addition, there are high switching costs when it comes to political views.[2]
Libertarians usually resort to two arguments, economic efficiency, and the morality of coercion; I am not sure which of these involves the "dogma" you describe, but I will assume you speak of the economic arguments. You state that there is no feedback in markets, when I believe the opposite is true, as markets react to new information, though they may not always do it very well; the efficient-market hypothesis explains this, and is entirely compatible with feedback control systems theory, (especially the strong form EMH).[3]
[1] http://en.wikipedia.org/wiki/Contract [2] http://en.wikipedia.org/wiki/The_God_that_Failed [3] http://en.wikipedia.org/wiki/Efficient-market_hypothesis
However, to invoke your own logic, assuming you've reached age of majority, you've consciously accepted that contract of which you speak.
The problem is that democracy...
Indeed. Those liberal concepts are rather problematic in many ways. I disagree that they have no feedback, and arguably democratic forms of governance have far better feedback systems than others. Their chief advantage isn't that they achieve the best results, but as Plato observed: they avoid the worst.
Libertarian dogma is grounded in von Mises Praxeology, and its axiomatic refutation of empiricism.
You state that there is no feedback in markets.
No, I do not.
The efficient-market hypothesis is bunk. See Quiggin, Zombie Economics. Full chapter on the topic.
I have not agreed to the contract. I never have, and I never will. The only way that my actions can be interpreted as acceptance of the offer is that I have not left the nation I currently reside within; and this is not how contracts work.
>"taxes are and always will be a form of mutual coercion, mutually agreed on."
I never agreed.
>"democratic forms of governance have far better feedback systems than others. Their chief advantage isn't that they achieve the best results, but as Plato observed: they avoid the worst."
I agree with you entirely, that democracy is the best type of government available at the moment, but that is faint praise.
>"The efficient-market hypothesis is bunk. See Quiggin, Zombie Economics. Full chapter on the topic."
I doubt we will ever agree on this, and I accept that there are a number of valid criticisms of EMH; but if the market is inefficient, some people should be able to find the inefficiencies and profit from them, of which there are few examples (except ephemeral ones).
You're invoking a "no true Scottsman" fallacy. That is, in fact, how this contract works.
I never agreed.
Do you pay your taxes? You're agreeing. Possibly under duress or objection, but you're agreeing. And no, I don't subscribe to the whole Libertarian spiel about voluntary vs. involuntary participation.
if the market is inefficient, some people should be able to find the inefficiencies and profit from them
That is, in fact, one of the larger inefficiencies of the market: that socially or long-term nonoptimal conditions can be arbitraged for personal gain. Regarding the longer view, there are numerous failures, including how markets break down under more general social failure, volatility, and, as J.M. Keynes noted, the capacity for markets to remain irrational longer than any given investor can remain solvent. Smart cookie that man.
No it is not; valid contracts require explicit offer, and acceptance (lack of opt-out is not acceptance), without duress (i.e. deportation or imprisonment).[1]
>"Do you pay your taxes? You're agreeing. Possibly under duress or objection, but you're agreeing."
I said that I never agreed, and while I do pay taxes, I never agreed to it.
>"I don't subscribe to the whole Libertarian spiel about voluntary vs. involuntary participation"
Next time you get robbed, just remember that is an involuntary charitable contribution for the welfare of the thief; this would give me little comfort, but it seems you don't mind.
>"socially or long-term nonoptimal conditions can be arbitraged for personal gain. "
Please provide examples of the people or organizations able to arbitrage consistently, over time, without the use of government coercion (i.e. no government granted monopoly or bailout). If you do happen to find this, you may want to keep it secret, so that you may have a monopoly on the arbitrage.
while I do pay taxes, I never agreed to it.
And if I were to enter into a business relationship with an entity because there was literally no other choice (an email service provider as counterparty, a local monopoly, a services provider selected by my employer), then what? Willing or otherwise, you've agreed to the terms, which don't include "whistle while you pay".
Note that the State has also not consciously elected to support your ungrateful ass from the age of 0 to 18, prior to your age of majority, nor since. It simply does. That's its end of the bargain.
without the use of government coercion
I don't accept this limitation as it inherently ignores the fact that money is power, including political power, as well as the fact that all legal property is in fact a product of government coercion (as opposed to property by right of possession, might, moral suasion, tradition, or other constructs, which have their own origins).
Oh, and "property rights" aren't all that old a thing: https://books.google.com/ngrams/graph?content=property+right...
Please provide examples of the people or organizations able to arbitrage consistently, over time
Any holder of more productive land or assets (the substance of David Ricardo's lament in his Law of Rent), extractive oil producers, patent trolls, any party who writes or influences legislation to their advantage (as noted and strongly criticised by Adam Smith), market manipulators, technology and software vendors with positive returns to scale and lock-in effects (AT&T, IBM, Xerox, Microsoft, Google, Facebook) ... It's a long list, really. I'm not claiming that the power is unlimited or extends for all time, but while it persists it can be exceptionally difficult to dislodge.
The point is that initial leverage tends to multiply.
My view is certainly tinged by living in a country where taxes are high but public services are mediocre at best, but there's no use paying high taxes if your money is eventually used in a war with Somewheristan, making the owners and stockholders of military-industrial complex companies richer.
A big strategic one is access to education. Poor people do not have the same access to university education that rich people do. A big practical one is housing. Why do the children of well-off parents deserve access to education more than poor kids? Of course, in reality, there is no 'deserve' about it - it's just straightforward game mechanics.
But that's what public policy is all about - consciously deciding, do we like this? Do we like this business of limited numbers of people having it relatively easy, while large numbers of people continually face a whole other order of struggle, one that many just don't find their way out of? And heaven help the poor if even that conversation is captured by those who are already sitting pretty - especially those with moral conviction that the 'right sort of people' are already ok, and the only ones who fall through the cracks do so by moral failure.
It sucks for individuals who don't get the opportunity to get this ticket to OBNs plus a good education, but for society as a whole, it's good that not everyone gets to go to Harvard. Universities should be part of their communities, not ivory towers. Students should come out of them willing to help their communities, not move to NY or SF and cash out quick. For an individual that's great. For society, it's mixed: sometimes the individual cashes out because they ve found a cure for cancer or a better way to grow food, but sometimes, because they played Soros with a country's currency.
Are you referring to pg? I'm not otherwise familiar with the term.
As to wealth being zero-sum, there's a pretty convincing case to be made, so far as I can make out, that wealth translates almost directly into per-capita resource consumption, and that the arguments that "decoupling" has occurred are pretty weak, particularly when considered at the global scale.
At best, as total energy utilization increases, per-capita efficiency in wealth generation improves, but that's quite consistent with the principles of dissipative systems: that higher levels of internal organization are possible, but only with higher total systemic throughput.
See: http://www.reddit.com/r/dredmorbius/comments/1vlksg/economic...
In the same way people don't get the implication of the word "trillion" when they hear it on the news, people don't really lament Bill Gates's billions or the Walton family's billions. They lament cousin Jack who's making 300k/year while they're making 60k.
Of course, after taking a walk through my locale (Parbhani, India), I'm fairly unsympathetic to claims that relative status is what matters. Perhaps it was the man lifting his lungi to poop next to an open sewer. Maybe it was the auto driver sleeping on the job. It could be the garbage everywhere (taking off your shoes when you enter an Indian home isn't a cultural quirk). Maybe it's the fact that the very nice hotel I'm staying in would be shut down immediately in the US.
I could be wrong, but I suspect that most of the people around me would be happy to have these problems fixed, even if it resulted in the income of "rich" people (like Americans below the American poverty line) quadrupling.
Inequality is a first world problem.
Edit: You described inequality in your post given that so many have it so bad and some are incredibly well off by comparison.
As someone who once spent a considerable amount of time (just over a decade) supporting myself on a just-above poverty line income, I notice that a lot of people talking about the impossibility of living on minimum wage are implicitly assuming that everyone must conform to certain cultural norms (living alone, owning and maintaining a car, going out to eat or for entertainment, etc). Many of the financial stresses of low income are moderated by not conforming to those norms.
For example, take this story: http://www.forbes.com/sites/laurashin/2013/07/18/why-mcdonal...
A major criticism of the McDonald's budget is that it only allocates $600 per month for rent. Ok, well, I'll grant you that it's hard to find a single-bedroom apartment in most major cities for that little. However, it is quite easy (I know, because I have done it) to find a two bedroom apartment in a nice, safe neighborhood in Los Angeles (of all places) for about double that. Living with roommates may not be everyone's ideal (some prefer it), but I find it disingenuous to assume that everyone ought be living in some culturally-defined way. Living with (a) roommate(s) is just one example of a "lifestyle sacrifice" that does not harm your health or safety, and doesn't affect your autonomy as a person (much). But it does significantly reduce living expenses.
Another example is car ownership. Even Los Angeles' "famously bad" bus network will take you anywhere in the county (and there is Zip Car for when it's absolutely necessary to drive). Resisting social pressure (from friends and potential mates) to own a car reduces living expenses dramatically. Some people will look down on you for not having one, but who cares what they think?
Is it? I don't know about the state in India, but here in the United States, you hear a lot about "hostility" but I have not noted any real changes in behavior.
Breaking a Google bus window is pretty lame, as such things go. I'll start believing in "hostility" when someone sets Mark Zuckerberg on fire or I have to start paying for security forces (which is more likely, I suspect).
While that's true it's a very simplified picture of how money affects politics, which applies everywhere but is perhaps most conspicuous in the US. Different lobbies/pressure groups/unions also affect politics through large donations. As a small example, consider the California Teacher's Association: http://en.wikipedia.org/wiki/California_Teachers_Association.... Goes on to show that financial pressures in politics may work both ways.
This is insane!
People compare themselves to their peers - NOT to the richest people. We are envious of our successful friends and family members - particularly our brother in law ;)
Whether Zuckerberg has $1B or $5B or $50B makes literally no difference to us.
Also, people don't realize that relative wealth/income matters. When someone else gets richer and you stay the same (or increase at a slower rate), you're worse off. The increased average wealth/income increases demand and makes things more expensive for you. When LOTS of people around you get richer, and you stay the same, well, look at what's happening with the Bay Area's housing prices.
Take the above two claims, add in a scoop of "American Dream" mentality, and it's not hard to understand how so many Americans don't find the current situation troubling.
[1]: http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hop...
You are confusing wealth increasing and inflation.
The issue of the Bay Area housing prices is an issue of wealth (specifically, building permits) not increasing with population. That's Malthusian depletion, not inequality, and it would be a problem even if the newcomers to SF didn't have money.
I'm pretty sure you just made that up. One could easily argue that it makes things cheaper for you and everyone else, as rich people 'demand' things, e.g. a cellphone, economies of scale start to take over and make it more affordable for everyone.
This is not a considered analysis. It's perfectly possible for wealth distribution to widen without technological progress.
Where is the economics? Where is the history? Where is the politics? I've enjoyed Sam's posts before, but this strikes me as a flavor of SV hubristic reductionism.
Not every human issue revolves around technology, and technology is not the solution to every ill.
What about regressive government policies? The rich have more of an ability to influence policy in this country. Therefore they can get laws passed that are favorable to themselves, e.g. regressive policies.
It would be very surprising if you didn't see this, and if it were not a cause of huge income disparity.
But we don't have to look very hard to see it. For one, actually working for a living is taxed at a greater rate than letting your money sit around in various accounts. I'm glad Warren Buffett spoke out about this. Unfortunately it doesn't seem to have done much.
Another example of a de facto regressive policy is the employer-provided health insurance system. People in the middle class who work for corporations generally get health insurance for free and don't have to worry about it, while poor people went insured (hopefully this will be resolved by Obamacare; it's not clear to me how it will play out).
There is a vicious cycle between being sick and poor. People are poor because they're sick, not necessarily because they are lazy. And they are sick because they're poor and don't go to the doctor.
Also, I decided awhile ago that I think the minimum income idea is stupid. Being fed and healthy are basic human rights. Having $15,000 of cash every year isn't. We should get the former right first before even thinking about the latter.
This philosophy also doesn't have the motivation problem. You should be guaranteed the option to make money (i.e. by being healthy; sick people don't have the option to make money). But the first dollar you make should come from work.
But the minimum income idea might be a much better way of getting to where everyone is fed and healthy (or at least fed and has access to medical care). It's probably more efficient than the massive bureaucracies that run the massive programs that currently don't seem to manage to do a very good job...
It also varies widely based on location. I think this is a fatal flaw, and it makes the "basic rights" approach strictly better than "basic income".
Those houses in the pictures are probably perfectly good houses. We have the same situation in certain neighborhoods on the south and west sides of Chicago. Sturdy brick houses that will last forever but nobody wants to live in because crime in the neighborhood is too high.
It was not too tricky to dig the zip code out of the pictures on the blog. You can see the sort of crime that will make houses in your neighborhood basically worthless: http://www.trulia.com/real_estate/48204-Detroit/crime/
I don't believe Somalia sees a lot of immigration.
On a more serious note, this is a problem relatively unknown in most of Europe. Sure, there are some (poor) neighbourhoods with relatively more crime, but it's a different kind of crime. You might get mugged, but you won't get shot.
If you are starting a technology company you may want to rethink that idea.
As I work with a lot of independent artists (mostly musicians) b/c of my startup BandHub, I can feel how this is the profession of the future - not automatable away. Everyone has something to say - and there is a huge long tail of potential ( niche? ) audiences.
Things like Patreon are really cool. I wonder how we can really make it work for anyone, anywhere in the world.
It really has only been in the past century (or less) that artists have been able to accumulate great wealth for the most part. There are notable exceptions, but the idea of "art" being big business-- with non-artists pushing the business side-- is a pretty recent development.
We can't automate away the arts (yet) but it may not be a great solution for making enough to feed a family of 4. It will likely always be hard to be an artist.
This is maybe true for creation of art, but the most profitable aspect of art, distribution, has been completely automated a long time ago (for most categories). The only thing keeping most of the industry alive is politics, not lack of technological progress.
http://netart.org.uy/workshop/softart.htm - only mention of N-Generate I could find...
I suggest you discuss Van Gogh with an actual fine artist. I did recently with a coworker and they amazed me with their description of progression of his "style."
The artist made the point that his works are the result of his unique brain chemistry, the same that chemistry that caused all his personal problems.
I don't see how your claim is defensible.
It is either worth "something" (don't want to say worthless) or it is priceless, there's no real continuum for me if that makes sense.
I remember being dumbfounded upon learning that a guy wrote an algorithm that could mimic the style of Johannes Sebastian Bach so well, that classical music experts praised the musical output, until they learned it was generated by a computer. Suddenly, the music had no "soul", a wispy, intangible adjective. Further reading : http://www.computermusicjournal.org/reviews/29-1/handelman-c...
Inequality (of the social, political, wealth, access types in particular) can only get so widespread before someone gets the idea that they could do better for themselves leading a bunch of angry people with (metaphorical) pitchforks.
Perhaps (hopefully) the change wont be a violent upheaval though. There is the possibility that we've progressed enough to avoid that sort of thing.
Examples: violent neighborhoods, failing schools, housing blight and decay, lack of access to open space and parks, lack of preventative health care, lack of access to role models for children, lack of access to healthy foods.
Even if they have a smart phone and a flat screen TV, what do those things mean when you don't have the basics listed above?
I don't think the poor are as upset about differences in income as they are about the fact that they are pushed into, IMO, sub-human living situations.
The real question is, why have we made a high income the price of avoiding these terrible circumstances?
EDIT: Added a summarizing question.
There is also the "feedback" of wealthy individuals being able to more effectively lobby the government to pass economically favorable legislation for themselves. I believe this is a very strong factor in the shrinking middle class as well.
Although the author gives statistics showing the increase in wealth disparity, there seemed to be little evidence supporting the thesis of the article which is that technology is driving this phenomena. Also, more compelling data would also be showing a period in US history when the middle class was expanding and then began to decline. Then the author could give a better argument to what changed. Though, I guess technology is always "advancing" so in that sense, he/she would never be able to find a proper place in time. Maybe "the dark ages"? :)
tldr;? Liked the data showing the increasing wealth gap, felt the argument that it is fueled by technological advancements to be weak to nonexistent.
I am not disputing that wealth inequality in the states has already reached incredibly disturbing levels but making this argument about technology (without any actual support for it) is not only silly but distracting to the core point.
One of the first things you learn in engineering and life: nothing is free. There are trade-offs and costs to every decision. I could even describe the engineering process as mapping the valley of compromises between the mountains of constraints. Where is the optimal valley between total equality and total inequality? What happens when we end up too far in either direction?
Well -- I don't think that completely does justice to all of the concerns about this. What about inflationary worries? If it's taken as a given that everyone gets X dollars, doesn't that just encourage inflation, much like what has happened in education with the easy availability of student loans?
Right or wrong, that's an objection I've heard voiced before -- and it's more sensible/understandable than just greed or an intrinsic aversion to generosity towards the less well off as is painted in the quoted section.
Another comment mentioned inflation [1].
I'd like to bring up the possibility that globalization is the culprit.
If there's a large pool of workers in poor areas of the world willing to work for $1 / hour or less, then theoretically we should see a shift in capital and infrastructure spending trying to connect them to the global economy, and wages everywhere else will try to lower to that level. AFAICT that's more or less exactly what's going on.
Also, in the US, from c. 1960-1990 labor unions had a monopoly on unskilled labor in many domestic markets, which allowed the price of labor (i.e. wages) to move away from a competitive pricing model and get closer to monopoly pricing model. Globalization allowed companies to break the unions' monopoly on labor by moving operations to other countries.
The solution is simple and obvious: If producing X in country Y saves you D dollars due to lower wages, laxer safety/environmental regulations, lower taxes [3], etc., you should tax those goods by D dollars when they cross your border. However, the money that can be made by avoiding monopoly labor pricing means that the business community successfully bribes / lobbies politicians. Even educated voters are largely ignorant of economics, and politicians can usually come up with rhetoric to support just about any economic policy they want, so the voters don't provide enough political force to stand up for their interests in a way that's effective.
Warren Buffett talked some years ago about why we need to have tariffs [2]. In the State of the Union, Obama mentioned giving tax advantages to companies that locate their operations in the United States.
We'll see what happens, but I'm skeptical about whether there's any political will for meaningful policy change.
[1] https://news.ycombinator.com/item?id=7152014
[2] http://money.cnn.com/magazines/fortune/fortune_archive/2003/...
[3] Think of the case of small countries that don't have much of their tax revenue go toward military, but benefit from the relative peace and stability of the current post-cold-war geopolitical situation which is partially the result of much greater military spending by the US.
In modern countries, markets are the standard way of distributing finite or growth-limited resources (e.g. apartments in San Francisco). In these games the ONLY thing that matters is relative wealth.
As a result of this, poor people become measurably poorer as a result of other people getting richer.
1. Why aren't the footnotes hyperlinks -- or better yet, mouseovers? Sam, if you're reading, the minor effort needed to do that would pay for itself many-thousandfold as your readers are spared from having to scroll up and down over and over. Not doing that for them, intentionally or not, signals to your readers that you don't care. And it wrecks their train of thought as they're trying to follow along.
2. Why does footnote [1] show up in the text before footnote [0]?
Because Sam Altman is a hacker: http://en.m.wikipedia.org/wiki/Zero-based_numbering
Living on minimal wage is quite different in Detroit and San Francisco. I think author has debt for next 100 years thanks to elite college and $1M house.