In particular, people don’t actually care about absolute inequality. They care about progress and opportunity. As you stated, the inability to provide for basic needs trumps the fact that you have an iPhone.
But the inability to provide for basic needs is not necessarily caused by wealth divergence. Medical care costs today have little to do with wealth, and more to do with the cost disease, regulatory morass/capture and transferring costs from the young to old.
Housing costs, another huge personal expenditure, are driven by local NIMBY restrictions and city zoning planners.
Education costs are clearly not driven by the wealthy, unless you believe Bryan Caplan’s signaling theory (which I personally do). But in that case, tax transfers don’t help either.
And so here is part of the nuance. Some of the wealthy are ‘stealing’ the money via power/regulatory capture etc. Others are not, they are growing real wealth. Yet others are destroying jobs via automation whole making products cheaper.
I’m personally less well off because my Dr. can charge 3x his value and my local city vigorously defends single family zoning at the expense of non property owners. But I’m not really worse off that Elon Musk is selling cars at a competitive price or Tim Cook is selling headphones at 550 a pop.
And that nuance is important. Equally punishing the growth with ‘theft’ hurts the economy and doesn’t fix any of the underlying problems.
All of these excess costs, make it very hard for people to stay afloat let alone build capital/wealth.
And those problems persist regardless if we transfer via taxes; housing markets are artificially constrained and tax transfers will just get sucked up to bid the price up. The medical system will find ways to suck up as much money as it possibly can. Giving people more money just to have it siphoned off isn’t a great fix.
So I, as a 1%er wouldn’t mind higher taxes. But we have to fix the underlying problems first. Otherwise your just taking my money to hand off to my Dr’s Porsche fund while the less well off get nothing in return.
People care about fairness. Hell, even monkeys care about fairness: https://www.youtube.com/watch?v=meiU6TxysCg
Extreme income inequality is unfair. Jeff Bezos is not 1,000,000,000% "more worthy" of wealth than Richard Feynman—and everyone knows it. Very little about financial capitalism is fair.
John Q. public could care less about Jeff Bezos unless they feel he is part of the 'theft' group listed in my original comment. People like winners that win fairly.
I doubt Feynman would have cared either. He was playing a different game.
https://fee.org/media/17509/prices2-1.png?width=645&height=6...
I don't agree with the argument FEE is trying to make: "Consider each product or service shown. College is heavily subsidized, regulated, and exclusionary, and the costs are soaring. The textbook industry is hobbled by extreme copyright regulation, and can depend on captive buyers. Childcare is one of the most regulated industries in the country. Not just anyone can enter. Every aspect of childcare provision is controlled by the state."
To me, the point is the things that people truly need have risen steeply whilst things that are luxuries have decreased greatly in cost and I believe that's a failing of government to not correct where the market would not. If you're surprised that things like healthcare and childcare are regulated, you've likely never been anywhere they were not, but that doesn't mean the costs to end users have to be so exponentially exorbitant as time marches on.
Childcare is constrained by the fact that each childcare worker by law (for better or worse) can only look after so many children at once. This ratio varies by state but it's usually around 4 children per childcare worker. The result is that it has to be expensive because (short of having robot caretakers) it always takes 1/4 of a person's labor.
Education is similar, but has gotten worse in the past few decades w.r.t. labor requirements. While class sizes have remained relatively constant, there are more administrators, special needs educators, counselors, etc. servicing the same group of students.
This isn't to say they shouldn't be regulated, or that there isn't room for improvement. College tuition and textbooks could certainly use some downward pressure.
Textbooks are now distributable by e-books, easily scalable. Yet somehow capitalism has utterly failed to deliver it's supposed benefits.
College tuition is now distributable by remote learning, theoretically massively reducing costs. Again, capitalism has utterly failed to deliver it's supposed benefits.
Housing has massively advanced, with cheaper construction, high rises, etc. but laws have been crafted to ensure that doesn't happen to protect rentiers. No taxes on unoccupied land, restrictions on where you can build, massive consolidation of available land without any desire to actually build anything but expensive condos. Again, capitalism has utterly failed to deliver it's supposed benefits.
The cost of tuition is not primarily in where or how people attend classes, it's the labor of developing curriculum, mentorship, and research.
The cost of housing is not primarily in construction, it's the scarcity of land. High density construction does address this, but you even mention that laws are obstructing this. How is this capitalism's fault when democratic governments enact laws that are literally stopping it from functioning freely?
I put the quotes there because (arguably obviously) it's also thanks to capitalism that intellectual property is extended so obscenely.
Anyway, no university (or higher-ed institution) is forced to use textbooks. They do it because they can. Because there's no market force pushing prices down, because captive audience, because the signaling value of degrees is still high (because nobody got fired for hiring the candidate with more degrees - that also happens to have a wealthier background, and maybe even also happens to be white). But it's changing (due to market forces).
Similarly, housing is not a market problem. It's about "preserving the character of the neighborhood", and most neighborhoods happen to be favoring those who happen to be wealthy and against building.
see: https://www.forbes.com/sites/carolinesimon/2017/09/05/bureau...
"Education and healthcare are notable examples of sectors seemingly stricken by constantly rising prices ... At the same time, home appliances and telecommunications have become much cheaper. Why?"
[1] https://www.mercatus.org/publications/healthcare/why-are-pri...
That's because we govern as if public luxury is the supreme law. Luxus populi suprema lex.
Curtis Yarvin talks about it here: https://graymirror.substack.com/p/4-principles-of-any-next-r...
This strikes me as a problem that escapes simple scapegoats.
What makes that especially awesome is that Apple and the telecoms have gotten into the business of supplying credit to consumers who would otherwise have no business (literally and figuratively) owning a $1,500 phone when a $250 phone would do.
I would argue that yes, in the first world a smartphone is almost required, but there are plenty of great <$200 Android phones that do everything one would deem essential. $1500 smartphones are now simply a status symbol alongside Nike's and Rolex's, and have been for some time.
Some things have functional advantages even if they also signal status. The working class has at least as much need for functionality as anyone else. A $400 phone vs a $200 one could easily be more useful to a poorer person than a richer one. Same with $100 vs $25 shoes.
My Seiko tells time as well as a Rolex (though not as well as an even cheaper quartz watch would). But even here, where status is definitely a factor, it’s not like the Rolex has no additional value: it has resale value, and aesthetic value.
Sure - but what should the wealth ratio between the top 1% and everyone else be? Perhaps if the ratio were lower, everyone would be able to afford great phones.
Also, who ‘deems’ what is essential?
It's not just iPhones. Even access to food is dramatically better thanks to technology. We no longer have wide-scale famines that we used to have in the past that would kill thousands. Even in the US, to my knowledge, food insecurity is much less of a problem today than it was in 1960.
So I don't see the point in implying that technological progress is worthless.
I do think it's correct that the rich benefit from societal structures more, but I'd rephrase: the rich are more capable of leveraging societal structures. Which in and of itself isn't a bad thing, so long as others are allowed a shot at utilizing those structures, too.
In other words, the fact that more money gives you more benefits isn't something to be sneered at. It's kind of the whole point of money. It should make your life better. Otherwise it fails as an incentive. What shouldn't be the case, however, is that people are unfairly barred from being able to make more money in the first place.
I think we focus too much on equality of outcomes, and not enough on the three important questions:
- It doesn't matter who can leverage societal structures the most. Kudos to the people who can. What matters tax-wise is, who is stressing societal structures the most? An example for illustration's sake: if Amazon is placing an insane burden on the road system and causing more maintenance work, theoretically they should pay more for that than the rest of society does.
- Why don't people have more opportunity to make money? Is our educational system failing them? Are there laws and regulations that are keeping people down? Is rent-seeking behavior edging people out? Etc. This idea that people can't make money because rich people are "taking it all" is silly and not the real problem.
- How can we raise the floor? How do we make it so being poor in America isn't so terrible, and ideally, is okay? We have so many problems with rising healthcare and educational and housing costs, segregation, crime, etc. Collecting more taxes doesn't seem to solve this. Look at SF. One of the most tax-rich cities in America. But do we even know how to deploy that budget effectively to curb homelessness? It doesn't seem so.
Their TV is bigger, but they're also much more stressed about their security...
Is the market actually shrinking or just shifting?
The best way to demonstrate inflation is to index historical prices to another asset like gold.
Sheesh, I know what you mean.
It was such a drag in the 1960's having to save every penny you could working minimum wage, and it still took a year or two before you could afford to pay cash for a new Ford Mustang or F-150.
By the 70's gasoline had skyrocketed to 50c per gallon too, so then you could only afford to drive across the country once or twice a year.
Motel 6's had already gone up to $8, that's just how bleak it was.
While those with trust funds never had to worry about these types of limitations.
Instead they say that because things are better now, then you cannot complain.
A second hand or refurbished iPhone SE is probably the best deal out there. It replaces a land line, especially for lower income folks who move a little more, has built-in internet access (a gateway to accessing government services, jobs, healthcare and knowledge) and built-in navigation, making navigating confusing public transit easier. And Apple supporting hardware forever means that it won't be left out without updates after two years like most lower-priced handsets.
I have the new SE and knowing that it will likely be supported (and repairs, if needed, are accessible) I until the next SE comes out. I’m very excited the next SE will probably be the form factor of the 12 mini or very close to that.
"The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal loaves of bread."
https://www.taxpolicycenter.org/statistics/historical-highes...
The iPhone is a luxury product within a category of luxury products. No one needs a smart phone to be successful in life - you don't need it to educate yourself, to find jobs, to do work, to entertained, etc. It could be used for all those things, but it isn't a prerequisite or the only way. But the fact that the vast majority of adults in the US can afford the disposable income to acquire such a luxury, a device that we could scarcely envision 15 years ago, is a sign of how healthy capitalism is. But leaving America aside - consider as well that globally, extreme poverty has plummeted under capitalism (https://fee.org/articles/extreme-poverty-rates-plummet-under...).
People today have greater purchasing power, standards of living, and life expectancy than ever before, at every income level. To claim that people somehow cannot afford the basics in a country where immigrants regularly show up, live frugally, grind, save, and find a way to thrive, seems disconnected from reality. Instead of blaming the system fully, some blame must also be apportioned for those who don't show the personal responsibility required to manage their life well. That's not insulting, it's just common sense in my opinion.
> Asking the wealthy to pay a greater share to improve society is perfectly reasonable.
How is this not explicitly unfair and discriminatory?
It's the same way you don't need a car either, but you're going to struggle.
I take it as a sign of the deflationary nature of technology and economies of scale.
Capitalism is a very fuzzy word. I'd say markets and the price mechanism clearly work better than barter. Poorly regulated capitalism is unhealthy.
The balance of wealth is insulting when we have so many basic needs not being met for those at the bottom
"Stealing" is a word that gets knee jerk reactions. But the more polite way to phrase it is that the rich benefit from societal structure 1000x more than the poor and are able to acquire wealth at an accelerated pace because of these structures. Asking the wealthy to pay a greater share to improve society is perfectly reasonable. The fallacy in complaining against taxes for the rich that are already higher than their proportional of wealth is ignoring the fact that so much of taxes goes towards systems that just increase the rate of wealth accumulation. The wealthy reap the benefits of power in compounding ways.