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Comment by stegosaurus | Hacker News Reader

So do we keep bikeshedding and tweaking little levers or do we actually try and fix the fundamental problem?

I can't be the only one who is tired of seeing all of these snippets about small parts of a large system.

We need to deal with wealth inequality. We live in a world... hell, we live in countries, in cities with 10 orders of magnitude wealth difference.

A western person earns 10e6 - 10e7 over a lifetime, revenue.

A western person stashes away 10e0 - 10e7 over a lifetime, balance sheet.

Why? It is predominantly not about decision making and choices to save. Yes, people do make suboptimal decisions. But mostly, people are simply unable to save because the baseline of living sucks up all of their work.

In the UK a poor person rents instead of owning because we allow the group of capitalists to own all housing and restrict new building.

Until we deal with that we are just pissing around.

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Savings rates: US 17% India 32% China 51%. Apparently the Chinese manage to save without having that "baseline of living" sucking up all their work. Yet Chinese people earn far less than Americans .

How is that possible? It's almost as if your "baseline of living" is actually "living high on the hog as if tomorrow doesn't exist".

http://data.worldbank.org/indicator/NY.GNS.ICTR.ZS

Depends on how much disposable money you have not the absolute value plus cultural issues are in play eg putting savings into gold as you don't trust the banks

The average person in the UK cannot save 51% of net income. It is totally impossible. Difficult even for someone earning above the median wage.

Is paying the rent 'living high on the hog'? I don't get it. Rent alone on a studio flat in loads of places is 10K. If you move away you earn less than you save on the rent.

What's the suggestion? Live 2 to a room? Live in a car?

Theoretically possible if you're determined I suppose.

The 5'th decile in the UK earns a little under double what the 1st decile does. Since the people in the 1st decile aren't dying, that suggests that yes - someone in the 5'th decile could live like a person in the 1'st decile and save 50%.

http://www.theguardian.com/money/2014/mar/25/uk-incomes-how-...

Pretty much every story you could tell to explain this away (e.g., folks in the City earn 2x as much but cost of living is 2x higher) kind of undermine any real inequality story.

How does that follow?

A person working in London cannot live like a person working in Preston (for the same amount). The same quality of life costs more.

Surely you understand this? Do you work FT? I don't really know how to go further with this, it feels a bit like trying to prove that the sky is blue.

If that's the case, then you need to adjust your income/wealth/etc inequality numbers by that same factor. I.e., the inequality for a person living in London and earning 2x as much as someone in Preston might need to be adjusted down to perfect equality (assuming the cost of living in London is also 2x Preston). So why didn't you adjust your numbers in this way?

Also, if inequality is merely a matter of where one lives, why do you care?

As I said, this sort of observation seriously undermines basically every complaint about inequality.

Well, my argument is that most cannot save. Relevant amounts, anyway (a grand a year isn't going to really get you anywhere).

Your rebuttal was that the 5th decile earning twice as much surely can, because the 1st decile survive by spending less.

My argument is that the 5th decile are predominantly in higher cost of living areas and end up in roughly the same situation.

But let's just concede and say that they can. No doubt some can - there are people earning median UK wage in the north.

The bottom guys still can't save at all. Do they just not matter? Should 10/20/30/40% of the population be stuck renting for their entire lives? Is that reasonable?

I am not making the claim that a London worker earning double a Preston worker is a problem.

My claim is that people earning far more than that being able to build masses of capital whilst others cannot build capital at all is a problem.

It's not really about the numbers at all; it's more the idea that me "owning" 20 homes and forcing others to labour if they want to live in them is OK.

I dunno. I kind of don't have enough interest in continuing this, I gain nothing from convincing you. I know people who cannot save, many of them, they exist. They aren't intelligent enough to get out of that hole unless they won a lottery or similar. I don't need to convince you that they exist, because I can like, go and visit them. I want to fix that, you seemingly don't, best of luck.

>You are either a serf or a lord. It really is that simple...

No, that is the foolish narrative that keeps this mess going. No amount of money can compensate for parenting.

Parenting without money is disallowed.

>do we actually try and fix the fundamental problem? >I can't be the only one >We need to deal with wealth inequality.

Shill harder.

Reading my post again I can see why you would think that.

I just feel frustrated, that's all. It feels like the premise is just so obviously silly.... like these articles are just fluff. Am I insane?

Of course people with wealth do better at everything. It's definitional. That is what wealth is... better schools, better food, better holidays... bigger better more. I don't see the value in continually studying how bad the poor have it and how well the rich have it.

It feels to me like a textbook example of a fruitless endeavour. Like trying to make a human powered bicycle that's faster than a fighter jet, or something. It's just... daft! Even if you think of a way to do it it's bloody silly. Stick both people in the same vehicle.

That is what wealth is... better schools, better food, better holidays...

No, that's consumption. Wealth is ownership of stocks, bonds, REITs, and other investment vehicles. It provides no value whatsoever to the holder until it is consumed.

If consumption is what you are worried about, you should focus on consumption inequality, which is vastly lower than either wealth or income inequality and has not risen anywhere nearly as sharply.

http://www.voxeu.org/article/economic-inequality-during-rece...

You can't consume if you don't have any wealth to spend. Conversely, the wealthier one is the lower one's marginal propensity to consume. Very wealthy peoplewho literally have more money than they know what to do with end up investing the rest, but thanks to financialization (among other things) that investment doesn't generate as much demand for labor as it used to, making it harder for people without surplus capital to accumulate wealth.

I know you love to characterize poor people as living high on the hog but it's a bullshit characterization. The least educated are the most vulnerable to the constant imperative to consume with which people are confronted in western society.

Conversely, the wealthier one is the lower one's marginal propensity to consume.

I'm glad you agree that stegosaurus is wrong, and that increased wealth inequality isn't a strong driver of consumption inequality or educational inequality.

I know you love to characterize poor people as living high on the hog...

Since you are using the phrase "high on the hog", I think you actually meant to respond to my other post. But that post characterizes rich people (namely Americans) this way, not poor people (Chinese, Indians).

I'm confused about the 'high on the hog thing' from your other post (I just didn't feel like replying to both), because stegosaurus was talking about inability to save during the baseline cost of living, which you went on to suggest was treated very differently in the US.

I think you're equating the US being a rich society compared to others with all the people in the US being rich in absolute terms, disregarding their relative poverty within the US. But you know very well that absolute measures of wealth are pretty meaningless given the fact of geographic dispersion. If you're talking to someone who doesn't know how to get ahead in the US and feels pinched by a lack of disposable income, observing that they're far better off than a peasant in some other country isn't responsive to their problem, notwithstanding the truth of the matter. It's not like this person struggling with poverty in the US can just relocate to the peasant area and start leveraging his capital advantage.

I think that what yummyfajita is trying to get at is the idea that as societies the US, UK etc spend up to their limits rather than saving.

The problem is that this doesn't really generalise into individuals being able to opt out of the spending.

If everyone refused to pay 50% of their income on rent then rents would fall (unlike, say, food production, the homes won't just cease to exist).

But an individual can't affect that change. If they want to work in a city, they rent in that city.

There are a few oddball solutions that can work in unique cases. Living with parents works if they are willing and your hometown has a decent employment market. Living in a car might work in some places. House sharing might work if you can find reasonable housemates and you are well paid (if you have no hope of ever saving much, then it's pointless to inflict a crap life upon yourself for a future that will never come).

The idea that people spend loads on crap just doesn't add up to me though. When rent, energy, taxes and minimum food (e.g. 20pw rice and beans diet) add up to most of your income, does it really matter what you do with the small amount left over?

edit: Oh; and the capital advantage on moving doesn't exist. Most people have zero net worth.

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