Google’s Schmidt Says Inequality Will Be Number One Issue For Democracies | Hacker News Reader

Google’s Schmidt Says Inequality Will Be Number One Issue For Democracies

techcrunch.com

34 pointsmark_l_watson63 comments

This reminds me of a story I heard from a professor while I was studying public relations.

In her early career, my professor was a lobbyist faced with a seemingly impossible task: getting Republicans and Democrats to agree on a healthcare initiative. The nonprofit foundation that employed her wanted Congress to help provide care to more Americans who couldn't afford it. (This is unrelated to the more recent Affordable Care Act.)

Here's the interesting part: my professor didn't just start speaking with politicians. She interviewed and distributed a survey to congresspeople and their aids. The goal was to better understand what phrases attracted or turned off Democrats and Republicans, respectively.

She learned that, when it came to bridging gaps between people, both parties wanted similar things — but they discussed the issues in dramatically different ways. Democrats frequently used the word "inequality" and phrases like "leveling the playing field." Meanwhile, Republicans preferred phrases like "raising the bottom," the notion being that natural economic disparities exist among different groups.

Researching the parties' preferences and crafting different messages, my professor succeeded in passing the initiative.

The takeaway is that if you're trying mobilize people around this topic, be very cautious about the language you choose, especially the word "inequality." Liberals and conservatives both want to help disenfranchised people, but, at least among those with political power, language can be the dividing line.

>at least among those with political power, language can be the dividing line.

Yup, the emotional connotations of a word matters to people who are sensitive to that sort of thing. "Job Creator" vs. "exploiter of the proletariat" - Now, to me? my assumption is that both phrases refer to the same entity. They say a lot about the speaker, of course, but not a lot about what the speaker is speaking about.

My observation, though, is that the sort of people who are most conscious about choosing the emotional content of their words are also the most easily manipulated by others choosing words of different connotations.

it seems very weird to me that someone who manipulates others using a certain technique would also be more vulnerable than average to that same technique being used on them.

> they discussed the issues in dramatically different ways.

http://scienceblogs.com/clock/2007/05/31/more-than-just-resi...

While this article is about creationism (it was written as part of the "intelligent design" drama), it is still the best discussion of the key difference between (USA-style) left/right politics.

The key insight, summarized: while many people respond to logic and reasoning, others respond primarily to the phatic language of the speaker. This means that trying to convince someone who is strongly "conservative" of something, the usual approach of arguing facts and logic doesn't work. You have to break the language barrier first.

Technology, in the form of capital, will win over labor as the primary factor of production in the near future [1]. There is no shortage of STEM labor [2], only a shortage of extremely skilled knowledge workers willing to work at bargain basement prices.

The only workable solution involves a state redistribution mechanism, which depends heavily on the politics of your nation. Some nations already have excellent safety nets, others not so much. Best to prepare for the future now, than be caught in an ideological war between the wealthy as they decide the fate of the less fortunate.

Most readers here have the ability to emigrate to a nation with excellent social welfare systems. Look for low crime rates, healthcare, education opportunities and low costs of living.

Conversely, if you are an upcoming or current millionaire/billionaire, the world is your oyster. Just remember that death smiles at us all, so it may be worth giving Craig Venter (et al.) some money [3].

1. http://www.washingtonpost.com/opinions/review-the-second-mac...

2. http://spectrum.ieee.org/at-work/education/the-stem-crisis-i...

3. http://www.nytimes.com/2014/03/05/business/in-pursuit-of-lon...

The problem is that we're not talking about a safety net anymore, but a solution for a permanent reduction in the workforce. That's something entirely different, more daunting, and perhaps unsolvable.

> Most readers here have the ability to emigrate to a nation with excellent social welfare systems. Look for low crime rates, healthcare, education opportunities and low costs of living.

I don't think you can get all of that in the same place (especially not low costs of living, if you do get the rest). At least in Europe, the richest countries/cities also have the highest costs of living.

People say they want equal pay for equal work. But they don't like some people getting paid more, even though they do more work.

People who leverage technology to create and sell more value take home more money. Those that haven't figured out how to do that or don't care to, don't.

We have machines and systems that enable a person to multiply their efforts. Yes, we do. That's why some people make ridiculous amounts of money. They produce something and manage to deliver it to large numbers of people.

What amazes me is that people familiar with computers and startups still don't understand the effects of technology. Those who command technology have more power than those who do not.

And societies that fail to grasp that will fail to compete with those that do.

Your comment basically outlines the status quo. It's not working too well... you also make some assumptions that are debatable...

> People say they want equal pay for equal work. But they don't like some people getting paid more, even though they do more work.

teachers and firefighters? nurses? doctors? There is just no relation to wallstr. and the lucky startup guy... learning ruby on rails and implementing an idea is worthwhile, however I'm not sure if working hard as a teacher or other jobs is not more worthwhile for society at large... pay does not account for that.

besides that having basic necessitates covered e.g. health/hunger/living takes a lot of pain and crime out of a society.

> People who leverage technology to create and sell more value take home more money. Those that haven't figured out how to do that or don't care to, don't.

Technology will save us all! It's not true. It's where growth is at the moment, it's where money can be made. Everyone in your train to work that plays with his smartphone paid for it over the last years... some people got rich over it... this has nothing to do how to have a good society

> And societies that fail to grasp that will fail to compete with those that do.

Competition of societies is bullshit. Let's compete on public healthcare, on poverty and homelessness numbers? On social equality.. Who is the winner?

Everyone in your train to work that plays with his smartphone paid for it over the last years... some people got rich over it... this has nothing to do how to have a good society

But isn't that part of better society. People keep grinding on the fact that wages have been stagnant etc, but everyone has a smartphone and a wall-sized TV when before they didn't. Is it worth letting some people get obscenely wealthy if everyone gets to have a smartphone in recompense?

What really seems to be happening is a blind spot when it comes to housing and healthcare that's preventing those sectors from keeping up.

A defining characteristic of capitalism is that profits go to the owners of the means of production, not those who actually produce. It's not the person who uses the machine that multiplies their effort that make ridiculous amounts of money, it's the the owners of the machines that do. And as time passes, the set of people who own the machines and the set of people who built the machines will presumably only continue to diverge.

Taken to the extreme, you reach a point at which machines can run entire businesses. Profits will go straight to the owners of the machines.

To look at it another way - labor is not priced based on productivity of labor, but rather, supply and demand. As we continue to become more productive there's little reason to think that those who are becoming more productive are those who are earning more. Indeed, looking at a graph of real wages versus productivity over time (quick googling yields http://thecurrentmoment.wordpress.com/2011/08/18/productivit... ) it's hard to imagine that labor's share of wealth isn't decreasing. This is not a surprising result; as it's supply and demand that sets the price of labor, the impact of replacing people with machines is that there's greater supply on the job market (everyone who is out of a job) combined with less demand (as most industries aren't constrained on number of people they can hire).

It's not the person who uses the machine that multiplies their effort that make ridiculous amounts of money, it's the the owners of the machines that do.

The obvious solution to this is that the person who uses the machine should also own it. Which means that people who think of themselves as "labor" should be looking for industries where they can own the technology that multiplies their productivity. Such as, just an example off the top of my head, programming. :-)

I don't know about you, but my employer owns my work product via an intellectual property assignment agreement, that I signed as a condition of employment. In addition, our operation requires very expensive datacenters, which they clearly own, not any of the employees. Or even all of the employees, taken together.

So, I write programs, but I neither own them nor the systems that are required to run them. Taken collectively, the employees at my job have created a very profitable machine, in that it brings in revenue that greatly exceeds the market cost of building the machine. This profit goes to shareholders, not employees, and an employee by virtue of an employee will not receive any share of the revenue created by their work after they leave their company.

Yes, I am partially paid in stock, and this means I am at times part-owner. But this can be seen as a coincidence and doesn't really significantly alter the power dynamic. I say this because it is ultimately part of our compensation, and the fact that they choose to pay us some shares (and correspondingly less cash) is more of an accounting trick then a fundamental shift in the employee-employer relation.

I should have specified free-lance programming or programming in a startup, where you're a founder or an early employee. You're right that programming in a lot of companies doesn't have the same ownership structure.

I also agree with your remarks about being "paid" in stock instead of cash. I worked for a company (not an IT company) that "paid" us in stock options, and insisted that the "cash value" was equivalent, which was of course their excuse for not just giving us the cash. Of course, those options turned out to be worthless when the company's stock tanked. So yes, it was just an accounting trick.

That doesn't keep ypu from buying the means of production, a computer and doing programming on your own. And the what you produce will be yours if you protect it the way your employer protected the work that he paid you to produce for him.

"A defining characteristic of capitalism is that profits go to the owners of the means of production, not those who actually produce."

What about the worker that is employed and doesn't spend more than he earns? That which he accumulates is his profit.

We're talking about the profits generated by the business.

The worker sells their labor. There's no reasonable way of valuing what their labor "costs" to them, as it's ultimately the opportunity cost of being able to do anything else, so it's not really sensible to talk about selling your time as "profit" or not.

You can approximate what it's worth to them by the market, in which case the only people who clearly can be said to profit from their labor are those who are being paid above market rate. I suggest to you, that's relatively rare (note if you're outsourcing out your work at market and then doing some sort of QA, the delta between market and what you're paid is probably around market for the QA, else the employer would have outsourced the work themselves).

The profit I'm referring to is revenue minus costs for the corporation. All wages and salaries here fall under operating costs. The profit goes to the corporation, which is owned by the shareholders, not the employees.

It's misleading to re-characterize wages as profits, because the wages are what's purchasing the labor which is used to create the revenue. If I charge someone $10 (assume that's market rate) for a car wash and in turn pay someone $10 to wash the car, I have paid $10 in wages, have $10 in revenue, and have no profit. The person who washed the car sold a service worth $10 for $10, so they have broken even. Note that if what I'm doing is finding customers, I am adding my labor as well, and can and should earn a wage for that. If I'm doing nothing but letting the business run itself, I am not selling any of my labor, but I am still legally entitled to the delta between revenue and costs.

It's also the people who create the means of production.

And typically such people are also the ones who take the risk and invest in the machines. Every such investment is a risk and there is no saying which turn the economy will take (someone else may make a cheaper/better machine).

This point of view is appealing but doesn't match observation.

"Some people getting paid more, even thought they do more work" -- I don't see a correlation between hard work and high pay. Musicians and professional athletes only "work hard" compared to a bricklayer if you completely pervert the meaning of the words.

"those who command technology have more power than those who do not". The power brokers and very rich in our society are only tangentially connected to technology. There is no interpretation of the power structures in western society that could lead one to think that command of technology leads to power or influence.

I think stretchwithme meant to say "though they create more value"

You're probably right. It's hard to pin down what's meant by value though. To an economist it's economic contribution, so it becomes a tautology to say people who make more money or build bigger companies create more value.

It gets more interesting when the definition of 'value' is less technical and more common: providing some benefit or capital-g-Good to society. But those discussions are not well conducted over the internet, or anywhere in fact where scotch whiskey is unavailable. And in any event, most people would probably agree THAT definition of value is also unconnected to wealth.

No, I think people who work 80 hours a week making twice what someone who works 40 DOES bother some people.

And then there are people that worked for years to develop a capability and get paid for doing it for 20 minutes. Somehow that's supposed to be equal to 20 minutes of hamburger slinging.

People pay for value, not how long it took to produce it or whether it took years.

It is impossible for some authority to somehow do a better job of judging value than millions of people spending their own money on things they value. There many, many considerations and what others value is not ours to cast aside because we think particular deals don't make sense.

But that is the objective, to get government to somehow fix this "problem", as if all the interventions and subsidies and taxes towards that end don't even exist.

The economic conditions and market factors of running a business in the United States have also contributed to this system, allowing almost any citizen the opportunity to "make it". Many have benefitted from this system, some significantly.

The protections and opportunities afforded to these businesses and business people has as much to do with their financial success as it does with the amount of hard work they've put in to building their companies.

There is an argument to be made that these ultra wealthy citizens almost have a responsibility to give back to the lawmakers, regulators, officials, and economy of the country which has enabled them to rise to such economic heights.

upper limits to the number of people who can hold advanced STEM jobs

It's not that there is a limited number of people capable of doing work in STEM, it's that the economy doesn't offer enough jobs in STEM. There have been layoffs after layoffs in chemistry, pharmacology and biotech, math isn't the dream ticket to Wall Street any longer - in fact the only areas with job openings are computer science and petroleum engineering. Computer science is growing because investment there increases workers' productivity, and the jobs in petroleum are there because of domestic gas production. As soon as tech yields no more increases and as soon as the gas bubble pops the party will be over there, too. Eric Schmidt predicts public unrest and wants to get out of the way. A worrying thought.

"As soon as tech yields no more efficiency increases"

So like never, right?

Depends on what you mean by efficiency. Building a widget faster means nothing if there's no buyers.

It's not that there is a limited number of people capable of doing work in STEM, it's that the economy doesn't offer enough jobs

It's quite likely both.

There are absolutely people who can't (or won't) work with technology. And there are those who are qualified to do so who don't have the opportunity. Either way, opportunities for employment in the sector are limited.

I'm old enough to have seen a number of phases in high-tech career trends: highway construction (1950s & 1960s), nuclear power plants (1970s), defense (1960s & 70s) (a good family friend went through the trifecta of these three), consumer tech (1990s, 2000s), and Wall Street / technical trading (1990s - 2000s). Petroleum careers had their dark ages in the 1980s - 1990s oil glut. And there's the boom that never really materialized in biotech, which everyone and his kid brother's dog was pitching in the late 1990s / early 2000s, notably Larry Ellison and Tim O'Reilly.

Seems to me that Schmidt and company are just afraid of the poor masses or just wants good publicity. There is no other reason he would care. It's obvious from his "solutions" that they are solutions to his own problems, not those of the poor. Startups are not a solution to this problem. That's just ridiculous. Education and welfare are canned answers.

I posted this because this topic has become popular with my friends and family - most of us agree that this is problem number 1 for our society. Not everyone will be able to compete for future jobs and a stronger social safety net will be required.

Free men aren't equal, and equal men aren't free. This kind of talk always comes from people who like to tell other people what to do, and Schmidt is no exception.

Sorry, but what are you trying to say? What does this have to do with the linked article?

Inequality is not a problem. It's a symptom of a society where the decisions you make have an influence over your life. I should have thought that was obvious. Did you read the article?

"Number One Issue For Democracies"

As opposed to what? The inequality within aristocracies / theocracies?

This is stock standard "content-free information" that seeks to motivate (usually for political/economic reasons), using only hand-waving and implication as its main rhetorical tools.

I know one way Eric Schmidt and other billionaires could put their money where their mouth is...

Great idea! Take the 100 richest people in the US, say their wealth is worth $3tn. Distribute this amongst 300m Americans. Everybody gets $10 000. Congratulations! Even disregarding inflation, you'll be in exactly the same situation next year, except this time there will be no more billionaires...

This is, I think, an absurd extrapolation of the argument that the original commenter may have been hinting at. (And anyway, since the problem at hand is inequality - despite your belief that the situation will remain the same, which can be argued for or against - "no more billionaires" would mark this end as achieved.

ABSURDITY, n. A statement or belief manifestly inconsistent with one’s own opinion. -- The Devil's Dictionary

Touché!

That actually sounds like a worthwhile experiment. I doubt the 100 richest would be worse off or at a lack for opportunities to become rich again. And I bet giving $40K to a family of four (since you include children in your 300m count) in poverty would on average go to significant good use and provide excellent returns for many years to come, contrary to your condescending implication that non-rich people would waste the money.

Scarcity would immediately arise and that would determine who would end up with it. My predictions would be an immediate price increase of low cost housing and fast food (due to labor shortage.) Saving for education would mean moving downwards in the housing market.

I'd definitely suggest listening to this freakonomics podcast: http://freakonomics.com/2013/09/26/would-a-big-bucket-of-cas...

You could also make a similar point as the podcast by looking at the experiences of modern lottery winners. So I would say I'm pretty skeptical that something like this would be effective for the vast majority of people.

My comments were not a serious proposal. I was replying to a comment that lacked intellectual rigor and I proposed the opposite to point out some logical flaws.

That said, cash transfers can help bring people out of poverty. A flat redistribution of wealth is not the right way to get that effect, but some kind of direct cash assistance is not remotely a wasted effort.

Not the same thing, since most of the wealth of those billionaires would be in stocks and other illiquid investments/assets. Therefore someone would need to buy them in order to have cash to give out, and who would have that kind of cash available?

I didn't meant they would waste money, I implied that cost-of-living is minimally about $10 000 a year, so after one year, they're poor again.

That depends on how the money is used. If it is just consumed, then sure, but if it's invested then it can be a renewable source of income. For instance, what if that money makes the difference in buying a car to commute to a better job that couldn't be obtained without the car? Or farm equipment that increases productivity? Or training to get a better job?

That doesn't make sense. If the billionaires haven't returned, then the money is still more evenly distributed than before.

I have no ill will towards those who've earned their incomes through building legitimate businesses or have otherwise prospered through capitalism. I do find it frustrating however that this system has gone into overdrive, fueled by the banking, tech, and energy sectors, to the point where, even after recovering from the most devastating economic crisis the world has ever seen, the concentration of wealth in the United States has risen even higher, bordering on criminal proportions (http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-f...)

If you asked the Fed (or most people who understand economics) they would tell you giving people money does help stimulate the economy, but you're not solving any income inequality issues by doing so. Obviously your not seriously suggesting the solution above.

Listening to those who hold a substantial chunk of this concentrated wealth tell the rest of the world that financial inequality will soon become the biggest global concern hits a bit of an oxymoronic chord, wouldn't you agree?

No single human being, or family for that matter, needs the amounts of money the ultra wealthy keep in their bank accounts. The ultra wealthy who pose concern for the problems the ultra wealthy have created should do something proactive with their fortune instead of preaching from the pulpit.

Whatever form that proactivity takes is up to the individual. Eric Schmidt should ask Bill and Melinda Gates or Warren Buffett for advice on how to use his own wealth for good. On the sliding scale of responsible wealth holders, I think Eric Schmidt exists outside the realm of the Gordon Geckos of the world, so I don't mean to give him a hard time, but it is a serious problem when those who are uniquely qualified to help in this specific circumstance (the sole qualification here is being ultra wealthy) choose to spout doom and gloom instead of making a real and substantial positive contribution.

...Waiting for more Americans to comment. Please keep it fact-free, polemic and don't over complicate. Less is more. Bonus points for 'otherwis' ye speekin german right now' type of "arguments". Their wealth is your freedom.

Look, Schmidt is just another Obama-tomaton. We can clearly see that here: "Schmidt was a campaign advisor and major donor to Barack Obama and served on Google’s government relations team."[0] It's purdy darn clear that Schmidtty was going to be more useful outside of the government, safe inside of Google's bunkers.

Whatever Schmidty might say to the public, he's sitting on his nice little nest egg in the event that TSHTF[1]. He has an escape plan and possibly a security detail and a private jet to get the hell out. Probably has a few panic rooms built into that $22 million home of his[2].

>"His new home in Holmby Hills, an exclusive enclave that is one of three neighborhoods forming Los Angeles’ Platinum Triangle"[2]

'Enclave'? More like burbclave.

But let's stop beating up the scarecrow and look at his points directly:

>First, support startups. “When you look at the solutions to the problems that you’re describing, which ultimately lead to severe joblessness, they all involve creating fast-growth startups.”

Now, it don't matter if your startup is makin' moonshine and running from the Fed[3] to hacking a new way to disrupt the sectors of integrated customer service experiences, it's obvious that startups are focused on Silicon Valley right now -- where the money is. Maybe we oughtta spread those startups out a little bit?

>Second is “more education, more information, more connectivity.” He and President Obama have both pushed for more education in science, technology, engineering, and math to help fill unmet demand for tech jobs.

Yeah, but the damn problem is that your jobs ask for 99 languages with a decade of experience in each of 'em on top of a computer science degree. All of that time and all of that money for an entry-level position at a startup that can't pay a penny to keep a train from derailing. But guess what? You can make your own workers and get in on the college business, and brother, business is a-boomin'. So how 'bout we get Google there to make their own college and maybe take a shot at these ridiculous tuition costs?

Back on jobs, next to nothin' you got H1-B applicants out the ass takin' our jobs. But hey, there's a market opportunity to bypass those damn regulations[4] Look at that guy. He's wearing a suit and you can always trust a man in a suit.

>Finally, there are upper limits to the number of people who can hold advanced STEM jobs. Those who lose out will need government assistance. Schmidt argued that society needs a “safety net” for those who lose their jobs so they can “at least live somewhere and have healthcare.”

Last thing we need is a bunch of leeches on society ruining our labor motivation. People won't use that as a safety net, especially when Big Google is out to automate everything in the name of 'progress'. I don't care if I'm contradicting myself, damn it, I'm mad as hell and I'm not gonna take it anymore. As a red-blooded American, I don't want to be told I American't.

So you see, it's simple -- we kill the Silicon Valley.

[0]http://en.wikipedia.org/wiki/Eric_Schmidt#President_Barack_O...

[1]http://en.wikipedia.org/wiki/Shit_hits_the_fan#Trouble

[2]http://www.forbes.com/sites/erincarlyle/2014/02/13/a-look-in...

[3]http://www.moonshineheritage.com/blog/apple-pie-moonshine/

[4]https://www.youtube.com/watch?v=TCbFEgFajGU

[0x5f3759df]http://en.wikipedia.org/wiki/Poe%27s_law

Part of the inequality in income results from the inequality in representation. When the wealthy run the government, of course they are going to stack the deck in their favor.

Everybody is equal. But some are more equal than the others.

We are to our way to a utopian society, where there are no poor and no weak. Unfortunately, they seem to have died in the process.

Seems like Inequality is an old issue, which goes back to monkeys.

Why do all think that inequality is bad? Inequality is the way to evolution. Keeping the area from influence will create ghetto someday.

Two things to remember:

1) I don't think anyone is saying that inequality, as a general principle, needs to be extinguished from the earth (as if such a thing were possible). Rather, it's the degree of inequality that is troubling.

2) When we talk about equality, there is a major difference between equality of opportunity and equality of outcome. Many people are fighting for the former, not the latter.

Evolution is pretty much a brute-force solution to a really hard problem (survival over a ever-changing environment), while we humans should be capable to come up with different strategies and optimizations to solve problems, which means that we may just able to get more benefits from a equal and fair society ultimately.

> the way to evolution

Right. Which is why your society throws any deformed children of a cliff and you send them when they are five to live amongst the wolves for several years after which those that return become warriors.

It's nice to have someone from Ancient Sparta writing on these forums.

On a more serious note inequality has some very negative sides for those benefiting from it as well. Humans aren't totally emotionless creatures, that react to others suffering with cold disdain.

Thank god we are all equal in death. That's the only justice left in this world.

Don't worry, technology will solve that soon enough too.

> Why do all think that inequality is bad?

Because if you define "bad" as "produces human misery", inequality, in and of itself, has been shown to be bad. Relative deprivation has been demostrated to be a major source of disutility.

Inequality of opportunity is bad and what we should focus on. Difference in income between high and low earners is irrelevant as long as the folks at the bottom can be comfortable and can pursue happiness in their own way. Being envious of wealth is bad.

If high income earners can freeze out low income then it's very bad.

Equality doesn't have to mean everybody is exactly the same. It can also "simply" mean that when you argue that 1+1=2, it holds the exact same weight as when someone who is prettier or richer does. That is not a hindrance to progress, that is progress, and enables progress in turn.

The alternative is not being able to say that 1+1=2, or that Earth moves around the sun, or that mass surveillance and blowing up kids with drones are terrorism and not fighting terrorism, when some interests more powerful than you would rather not have you say it. We've been there, we are there, it sucked, it sucks. The costs of too much inequality outweigh the benefits; at least if you're concerned with intellectual honesty and human dignity over bling. If you just see that "these pyramids couldn't have built without slaves, and pyramids are so super shiny and useful!" your mileage might vary. But I don't see it that way.

And although I don't even see why evolution has to be the ultimate value (i.e. we have no proof that achieving star faring civilization is somehow "better" than ameoba swimming around in water, we just have our bias in the matter)... extreme inequality would mean one entitity exploiting and controlling all others: no more competition, and therefore no more evolution. So I guess the desirabe state is somewhere between everything and everyone being exactly the same, and one subset owning everything and forcing it into paralysis to fortify its own position of power.

he should worry.

Reply on news.ycombinator.com