Enough inequality allows information control. Enough information control allows government control.
Overall, if things were constantly getting better, I doubt people would care. But once things start stagnating for those at the bottom, they begin to consider not playing by the current set of rules.
I do agree with you, but I think it's worth nitpicking the examples. Is the Disney case an inequality problem? I'm not sure that it is. Suppose we waved a magic wand, and suddenly all of Disney's employees and shareholders were middle class people. Would that change Disney Inc's incentives around IP lobbying?
I think that rather than an inequality problem, cases like Disney are something like a "concentrated interests" problem. Even if every individual person had exactly the same amount of money in the bank, they wouldn't all be equally invested in the exact same things, and competing interests would still emerge. Disney's incentives follow just from the fact that it has shareholders, regardless of how much wealth those shareholders have. And for what it's worth, as a society, this is definitely the problem we want! Concentrated interests solve huge problems, like how to make a $100 million movie that everyone wants to see, but that no one person could fund on their own.
I'm not sure the shareholders are the actual issue, since it is Disney's concentration of wealth that allows it to change the laws (and gives it incentives to do so). It doesn't much matter who owns the wealth, since the chain from owner to actual employees carrying out the actions that change the laws ends up removing most impact of the share holders.
Oddly, that statement (which I completely agree with) has nothing to do with being rich or poor.
People in power want to stay in power - whether it's the US or a failing state like Venezuela, they use that power against others.
I'd much rather be in a rich but unequal society - it's much more peaceful.
You want a game in which early levels are easy enough that it won't take too much skill to get through. [Basics of society, access to housing, clean water, health care..]
As you get to higher levels, there will be challenges that some players can't get through [amassing enough money to buy a yacht], but that's OK.
Some players have cheat codes not available to other players [laws to help special interests] because they have an in with the game designers [government], and that's OK too as long as it doesn't go too far.
It's not a big deal if the most skilled players can get to really high levels - that's not the issue.
It's when the most skilled players make the game unplayable by the average player that you have a problem.
That's not true. Violence is caused by inequality. Areas where everyone's equally poor are about as peaceful as areas where everyone's equally rich. It's dramatic inequality that causes violence. This is true no matter whether you look at neighborhood level, city level, national level etc.
For one thing I don’t see how you can define areas where everyone is poor. Even looking at a place like North Korea, the top government officials are very well off compared to the average person.
In general, poorer countries are much less safe than richer ones. Poorer neighborhoods are much less safe than richer ones. I can see the point that even in those cases it’s often related to inequality, e.g. theres gang related violence because gang leaders are much richer than the average person in the area. But that’s a tautology, because there’s nowhere that has absolutely no inequality.
If you look at the graph on page 8, you can see obvious clustering of poor countries vs other countries. This study does not compare the overall wealth of the countries against crime.
The reason that is important, is that in a rich country, even poor people have many options. In a poor country like Venezuela, they don't. As a result, even if they had the same Gini coefficient, the crime would look much different.
So when you take that into account (which is what I tried to do in my statement, but probably could have worded better), then being in a "rich but unequal" society is much better than a poor country of either high or low inequality. I think the high clustering of OECD countries demonstrates this.
Yet the solution to income inequality is to increase government control of the means of production via confiscatory taxes and redistribution?
So some advocate increasing government's ability to take money from you a gunpoint through taxes in order to prevent the government from being able to control people?
> Overall, if things were constantly getting better, I doubt people would care.
Poverty rates in the United States have been between 11 and 15% consistently since 1965. However, worldwide absolute poverty has dramatically dropped over the past 100 years. There are 3 times fewer extremely poor people in the world today than in 1970. So things are absolutely getting better -- dramatically better in fact.[1]
If people were unaware of how much "rich" people have and just looked at their own ability to buy food, housing and small luxuries, wealth inequality wouldn't even be a thing worth mentioning. Why should it matter what my neighbor has -- as long as I have what I need.
This whole "income inequality" cause is little more than Marxist class warfare rhetoric [2] rebranded for a modern audience: people are jealous that some people make more than them. So what. No matter what policies are enacted, poverty in the United States is practically unchanged since 1965 and vastly lower than it was in the 1950s when it was first measured. [3] The same crowd that cares about inequality also happen to be the same people who demand governments address climate change by essentially changing the balance of the means of production. Nobody cared about climate change in 1986. The first mainstream book on the subject wasn't even published until 1989. However, the industrial revolution started a low time before that. Apparently the climate change wasn't a catastrophic threat until someone wrote a book about it being a catastrophic threat? Were scientists simply sleeping for the past 100 years until some far-left journalist wrote a book about it? [4] But 1991, it started becoming a big thing. What happened between 1986-1991? Hint: something to do with the Soviets. Interesting more still is that the Palestinian cause is also supported by those who care about climate change and wealth inequality -- and the Palestinian cause was supported in a very big way by the Soviet KGB.[5]
Interesting how climate change, income inequality, poverty and even the Palestinian situation all feature the same "cure" -- the end of US-dominated, global capitalism. Convenient how that all fits together so nicely.
Fascinating how everything that was important to the Soviets has become the lightning rod of the left wing of American politics -- but those causes weren't even on the radar before 1998. Actual environmentalists were trying to save whales and the rain forests in the 1980s and not trying to restructure the entire world economic system. Anti-Capitalism didn't become a semi-mainstream idea until mid 1990s. I honestly miss the Greenpeace of the 1980s.
Should the goal actually be 0% poverty? Is that even possible? If you took 100% of the wealth of the worlds 1000 richest people and distributed it equally among the poor -- it wouldn't make a dent. let's say that the world's richest combined assets were worth $2 trillion. And there are 2 billion people living in extreme poverty, that gives each of them about $500. But that's it. Because there'd be no more wealth to redistribute from those rich people because it would be all used up. So you go to the next 1000 rich people and so on until eventually everyone has just enough enough money to buy a pregnant chicken and five carrots -- with no pot to cook it in since nobody's going to bother making anything since it's just going to get taken away.
[1] https://ourworldindata.org/extreme-poverty/ [2] https://www.jstor.org/stable/2562423?seq=1#page_scan_tab_con... [3] https://poverty.ucdavis.edu/faq/what-current-poverty-rate-un... [4] http://environment.harvard.edu/news/huce-headlines/social-mo... [5] http://www.tabletmag.com/jewish-news-and-politics/103576/the...
There does seem to be an issue where the government having more power results in things going even worse when the government gets corrupted.
Is it better to have the FDA/DEA approve what drugs are legal which allows them to be abused by outlawing competitors, or is it better to not have the FDA/DEA able to ban drugs, which let's meth be sold freely where ever a business chooses to do so? Most everyone I've seen discuss this issue gets caught up in the trap of wishing for a happy medium that won't last. They want a government that does good but won't be corrupted to do bad.
>So some advocate increasing government's ability to take money from you a gunpoint through taxes in order to prevent the government from being able to control people?
In the end, we will always threaten each other with violence. I've yet to see an alternative, as even extreme libertarian solutions just give way to fertile ground for governments to rise anew.
No matter what you do, a group of people which binds together will have more power than the strongest person who doesn't, and part of that power will be dedicated to keeping the group bound together (as groups that don't will eventually fall apart).
>worldwide absolute poverty has dramatically dropped
Looking world wide isn't really relevant when people make decisions based off of local ideals. Countries where poverty is going down will likely not have issues, and countries where wealth for the lower class stagnates or even reversed will.
>This whole "income inequality" cause is little more than Marxist class warfare rhetoric
And you have to fight class warfare with class warfare. Consider those who supported a culture where sharing one's salary is taboo, while businesses share the salaries of their employees quite openly (at least to other businesses on the inside).
>However, the industrial revolution started a low time before that. Apparently the climate change wasn't a catastrophic threat until someone wrote a book about it being a catastrophic threat? Were scientists simply sleeping for the past 100 years until some far-left journalist wrote a book about it?
Well look at how child abuse wasn't a significant problem up until the 1900s either. I wouldn't consider that evidence that child abuse isn't actually a significant problem.
>And there are 2 billion people living in extreme poverty, that gives each of them about $500. But that's it.
What is $500 in terms of their actual income? I'm not advocating seizing the wealth of the wealthiest, but to think that for the world's poorest $500 is the same as $500 is to even a poor American isn't quite right.
What I will say is that rights and morals and laws are all social constructs, and the true reality is we have never left the jungle. People will continue playing at society as long as certain conditions are met, and one of them is for things to be continually improving over the long term. If that doesn't happen, people will use what ever power they have to change the system, often to the detriment of those at the top. This isn't right or wrong, this isn't moral or immoral, this isn't legal or illegal.
No. The idea of income inequality assumes that no matter the size of the pie, everyone should have a decent slice of pie that lets them live comfortably.
Industrialization was supposed to reduce the amount of hours we work and increase our quality of life. We seemed to have reached a floor at 40/50 hours a week and many many people are struggling to make ends meet, even if the richest countries in the world. There's a problem.
And in actuality, the poorest quintile in the USA is the quintile that works the least hours, not the most! Why do the top 20% of Americans work so much, then they could potentially work less and earn less? Perhaps that's the tradeoff that they as a group make?
http://www.epi.org/publication/ib348-trends-us-work-hours-wa...
The comparison of note isn't between the present and the past, but between the system in place and alternative possible systems; between the present/future that is, and the present/future that could be. (Somehow, the same folks who love to proclaim "It's Econ 101…" also always go on to compare present to past to somehow prove the poor are getting a grand deal, instead of thinking about "opportunity cost" for the poor compared to alternative presents under alternative choices for how to structure society's wealth.)
As for the idea that the poorest 20% in the US are voluntarily choosing to live in poverty out of work-shyness, while the richest 20% have contrastingly simply opted-in to their different status along some trade-off curve, this is both laughably ignorant and cruelly smug.
As "knowledge" workers if you were treated like minimum wage employees how many hours do you actually work?
5 or 6 is usually the answer given on HN.
Source: Until early teenage years grew up poor. Still fighting the specter of homelessness now.
If course it isn’t that simple, and there are other effects (google the labor s curve), but that’s the general idea.
But having a cellphone and a TV doesn’t provide someone a reasonable standard of living if they can’t also afford housing, basic medical care, nutritious food, childcare, schooling, transportation, wintertime heating, clothing, and the like. People who are lacking basic necessities like shelter and access to transportation, and who often additionally suffer from injuries, mental illness, chronic depression/anxiety, substance abuse problems, etc., and even more often face systemic discrimination (if only for gaps in their resume, poor hygiene, etc.), find it incredibly difficult to fix every problem in their lives by themselves and pull off a complicated and time-demanding middle-class lifestyle. Blaming them for their own predicament is cruel and counterproductive, even in those cases where there were a list of poor choices involved, and often has the effect of whitewashing situations where people ended up getting screwed by fraud and abuse (either systematic or personal). It is based on a fallacious world-view wherein people are inherently virtuous or sinful, and the sinful are both irredeemable and deserve whatever misery they get.
(Which is not to discount the benefits of gadgets: The prices of consumer electronics have been pushed down to incredibly cheap levels by massive economies of scale, people have a strong demand for communications and entertainment, and having access to such tools makes a big positive difference on people ’s lives. But it doesn’t replace food and shelter.)
You’re saying “poor people have a lot of difficulties.”
I also believe that capitalism is the reason for that improvement in standard of living, especially for the poor, which is why i make the point.
Maybe the US should be more like Denmark, maybe not. But when inequality comes up the socialists come out, so i make the point.
I took your initial posts as a sound argument I disagree with, now I think you're trolling.
In 2011, Bernie Sanders explained that "These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina..."
http://www.washingtonexaminer.com/bernie-sanders-jeremy-corb...
You argue in another comment that "you just want it to be said" that modern American poor are better off than the poor people in Laos in the 1800's. Congratulations, you've won that strawman argument.
Now you should move on to how to solve the actual current problems of the modern poor and the hollowing out of the American middle class rather than wasting your breath defending the current status quo and arguing against improving people's lives. It might be a better use of brainpower.
And as for capitalism, the core of it mandates a perfect information symmetry and rational actors, of which the latter is dependant on the former, and the former has never been actualised. The US (or any country really) doesn't have a fair capitalist market, nor does it need defending.
Homelessness has skyrocketed in the US. The poorest here have neither TVs nor refrigerators (except the few their salvaging for the scrap metal value). The homeless generally don't have paid employment (meaning ordinary waged employment) since their appearance keeps them from being hired by most businesses but being homeless is a hellish amount of work.
(edited)
I would be interested in seeing your stats. I worked while homeless. I did freelance writing and, later, resume writing. I have known homeless individuals with regular jobs.
I don't know what the statistics are. But I would be very interested in seeing stats on how many/what percent of homeless have some kind of earned income, if you know of any reliable data on the topic.
(Edit: Or maybe clarify your intent. I had earned income, though no job. We could quibble at length about what constitutes earned income. For example, does recycling for money constitute earned income?)
Thanks.
I don't have statistics and I suspect that getting statistics here is very difficult. A homeless person has little interest in answering a survey and certainly no one wants to appear homeless so just about any data source is going to be iffy.
The example you gave here suggests you don't know what a difficult life is like.
I don't believe this statement to be at all accurate. We did not make that decision as a society.
Millions of individual people made the decision to buy or not buy the phone based on its price and value. Millions of workers decided to work (or not work) for Apple/Foxconn based on their wages and the work. One of those workers was Steve Jobs, and the owners of Apple decided to pay him a certain amount for his work (and of course some of his wealth was derived from his ownership of Apple).
A free market is a special economic system in that it's made up of completely voluntary agreements. There was no coercion involved to make Jobs wealthy.
So "as a society" applies here, in the loose sense of government decision-making.
There's no market in the abstract - there are courts, tax laws, civil laws, and many other things that mediate.
I think the tax thing is a huge misconception that just isn't backed up by reality. The US still has a progressive tax system, even after taking into account the many rules (or the mysterious and nefarious "tax breaks" that everyone alludes to).
The top 1% have around 20% of the income, but pay 40% of the federal income taxes!
Real federal income tax rate paid:
Top 1% - 27%
Top 5% - 23%
Top 10% - 21%
Top 25% - 18%
Top 50% - 16%
Bottom 50% - 3.45%
https://taxfoundation.org/summary-latest-federal-income-tax-...
The top 5% pay 53% of all federal taxes including social security and Medicaid.[1]
PS: Social Security pays money for blind people who have never worked, it's in no way a just a 'retirement' fund and is simply general welfare under a new name.
The consumer does not have an option at the point of purchase to direct those dollars to specific employees. Their choice is to buy the phone and pay the executive the most, or to not buy the phone at all. You cannot buy the phone and direct the bulk of its purchase price to the guy who wanted to save the TRRS headphone jack.
Your option in that vein is to purchase enough stock in a public company to get a board seat, then propose that the workers be paid more, and the executives less. And hope you get enough votes. This is not realistically possible for any individual consumer.
The choice that "society" makes is to allow that company to continue to exist, and to operate itself as it sees fit. The decisions about the distributions of profits are overwhelmingly made by rich people alone, who unsurprisingly vote to direct the majority of profits to themselves.
(Though Wikipedia tells me it means something else:
https://en.wikipedia.org/wiki/Possession_is_nine-tenths_of_t...
My assumption has always been that the phrase meant that 90% of law is related to who owns what, basically.)
But the problem is that anyone can build whatsapp. It's not technologically sophisticated or difficult to do.
> but in today's world you can build 1 billion times the communication tools as someone else.
Which depends on market access, free time ( wealth ) and most importantly - access to capital. Most people in the world don't have access to it.
> 2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie.
That is an argument. But it really doesn't matter if the pie grows if a small fraction of the population gets a greater share of the larger pie.
> 3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you?
Yes, if yachts = power. The problem in america is that money = power and more importantly, now money = speech.
> Would you rather live in a poor equal country or a rich unequal country?
Neither? You are offering a false dichotomy. It's the same argument posed by monarchists centuries ago. Either we have divine right monarchy or anarchy/complete chaos. How about democratic representative government?
You are offering us two extremes and falsely claiming those are our only two options. It isn't. Extreme poverty and extreme economic inequality are both terrible systems.
yes, if you are playing an ideal, rational, competitive economic game, one strategy is to "grow the pie" and as a result capture larger economic gains even if your proportion of the market remains the same (or even shrinks).
but when it comes to the real world, with all its complexity, we consider many more consequences than just the economic one (the profit motive).
to answer the false dichotomy (the last question), we care about both. we want fairness (not perfect equality) and we want less poverty. and yes, that's entirely possible and should be pursued rigorously and with singular focus.
Housing prices in the neighbourhood go up, because potential buyers have a large piece of the pie. This causes average house prices to rise, which causes taxes to rise.
Suddenly the original piece of the pie is no longer enough to afford the house you always lived in.
What happens when the next difference is not yatchs, but something substantially different like access to longevity medicine, bionic instrumentation, genetic engineering, armament, whatever.
The great problem of some people being subdued to others clearly stems from the difference in power between them. Marx accounts that an English capitalist of his time could command 3 thousand servants, and as soon as he took them to america, literally all of them scrambled because they didn't have a dependency on him any more.
Not only that, but, there is a big question on why is this happening at all. Is it because the upper classes are better at tax dodging? Is it because its just how capitalism normally works and provides the best results? Is it because we have a crushing difference on how the State benefits one over others?
These are open questions, even Capital by Piketty doesnt have clear answers.
Also, it’s relative positioning that determines happiness—i’d much rather live in a place where I can look my neighbor in the eye than one where I can leverage my privileges to provide myself many times a better life than my neighbor. I’m american; my quality of life could plummit without affecting my happiness much at all. But I have no idea what could compensate for someone living on my stoop in a tent.
2. Wealth isn't a fixed pie, but power is (also, real estate).
3. In fact, happiness correlates more strongly with relative income than absolute income.
As an aside, I think that multigenerational wealth is particularly corrosive to society - I would be happy to accept extremely high inequality as long as it couldn't be inherited.
No. It simply says group A has a big pile of stuff, whereas B has a small pile. Which is factually true.
It's about piles, not pies.
Sorry for the awkwardly mixed metaphors.
With software nowadays, you create the first product, and then with the push of a button, can duplicate and distribute it to billions, almost instantly, almost for free. What this means is you are not really making a commodity any more. Which means that in those parts of societies where this mode of production prevails, you're not even really working within a system of capitalism any more. The system of production outgrows the economic system it is in, just like town trade and manufacture outgrew feudalism centuries ago.
2/3) The helpful thing is to look at what is actually happening, as in a scientific experiment. The real world is not people sitting on top of piles of money, like a dragon in some fairy tale. Those who get the fruit of other's labor by rentier means - landlords, lenders and most importantly stockholders and owners, can only spend so much on luxury goods. They also need only so much as that aforementioned stacks of Credit Suisse gold bars stored somewhere for a rainy day. Most of the money is reinvested.
Where is the money invested? New construction projects, new companies, new loans - or further capital for existing projects. At companies owned, San Francisco apartments etc., more and more of wages go to profit and rent, as that is necessary for inequality. So the worker has less money to buy commodities. But more and more capital is being spent to build more and more commodities. The workers/consumers can not buy these increasing commodities made by the more enriched investors. Credit can kick the can down the road for a time, but if things don't go back to equilibrium, things get worse (see the 2008 taxpayer TARP bailout of banks, 2000 dot-bomb crash etc.)
There's a documentary called the One Percent, where a conversation between Bill Gates Sr., Warren Buffett and Chuck Collins (Oscar Meyer heir) is retold. He is talking about the inheritance tax (now corporate spinned to be called the death tax) and says if things are as unequal as they are now without an inheritance tax, what will happen when one does happen?
I myself don't think there's some liberal, social democratic solution. Idle class heirs have this self-destructive tendency to pull more and more power to themselves, to the point where they begin to undermine their own long-term power. At some point a very radical change comes. That has been the history of the past centuries. The US depression of the 1930s was so long ago, it's hard for Americans to fathom it, and I would guess most people think it could never happen again, but it could. It could even be worse.
Maybe one of the downsides of living in a democracy is that the upper class needs to pay the lower class hush money to keep them from rioting or turning the economy into complete socialism.
This is incorrect assumption.
The idea behind too much inequality being bad assumes feedback loop. If you want to grow the pie, every non zero-sum investment into production and innovation must be matched by equivalent increase in consumption that creates the ROI.
Post industrial economies are 60-70% private consumption, rest is government spending. All busines-to-business earnings flow from these two if you follow the money. Every product and industry has their money flowing trough private consumption or government spending, including WhatsApp.
If too much of the money flows into the richest people, they only consume fraction of what they earn. Rest of their money is spend buying property or investments (increasing property prices or recusing P/E values). Economy turns into rent seeking, ROI decreases and the pie stops growing.
All innovations that grow economy must pay themselves by producing money flow goes into the private consumers or to the governments pay collecting taxes. If private consumption is reduced, then either governments must step up and pay welfare benefits and invest into stuff like military or else the real economy slows down.
Growth economy is not a pipeline that has the beginning and the end. It's a loop where money flows to other direction and products flow to the opposite direction. Income equality is not categorically bad. __too_much__ income inequality creates a stunt that directs too much money into capital goods and reduces the overall flow.
2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie. The question is phrased as, "What percent of the total income pie did the 1% take" and not "How much pie did the top 1% of people produce to make the overall pie bigger?". I don't think either mentality is totally correct, but both are vitally important to understand (and the second belief is non-obvious to many). Did Steve Jobs producing the iPhone (and becoming a billionaire) take any of the poor people's money, or did it increase the overall output of the country? Steve jobs making the iPhone certainly made the country more unequal, but it also made the economy bigger and the country better off.
3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you? Would you rather live in a poor equal country or a rich unequal country?