7 ms·

The last paragraph was the whole point: >I worry that if we don't acknowledge this, we're headed for trouble. If we think 20th century cohesion disappeared bec

The last paragraph was the whole point: >I worry that if we don't acknowledge this, we're headed for trouble. If we think 20th century cohesion disappeared because of few policy tweaks, we'll be deluded into thinking we can get it back (minus the bad parts, somehow) with a few countertweaks. And then we'll waste our time trying to eliminate fragmentation, when we'd be better off thinking about how to mitigate its consequences. A few people making rules didn't cause this to happen. It was the entire world reacting to things the entire world did for the past hundred years. A few people making rules can't stop that kind of force, even if they have good intentions for everyone else. >What we're looking for is just more equality in economic opportunities and esp capital and that distribution of capital to be more fair across all the classes and not to be a privilege only for rich people and highly connected people... That's how we envision the solution to fix this problem He mentions this: >You can mitigate this with subsidies at the bottom and taxes at the top, but unless taxes are high enough to discourage people from creating wealth, you're always going to be fighting a losing battle against increasing variation in productivity. I think you're looking at a lower scale than pg. From how I read it, he's saying that yes, you can do a little bit to ease the inequality, but you're not going to fix it unless you stop all technology from happening or you stop paying people their market rate. He's saying income inequality is a feature of technology allowing people to be paid their market value and that you can't 'fix' that; the most you can do is take from people at one end and give to people at the other end.

shawn-furyan 11y ago
> he most you can do is take from people at one end and give to people at the other end But he argues before that point that tax rates and tax receipts are very weakly correlated. This would seem to be a limiting factor governing how effectively a government can flatten inequality through wealth redistribution.
- cma 11y ago
  Seems more like a confusion over how much income to the top comes from wages vs. capital gains. Looking Graham's own income sources, he should have pointed this out. The capital gains rate under Eisenhower was only 25%, while the top bracket was 91%. And the corporate tax rate under Eisenhower was only 50%. Very few of the great sources of dynastic wealth in America were built by accumulating wages under normal income rates.
curun1r 11y ago
> He's saying income inequality is a feature of technology allowing people to be paid their market value and that you can't 'fix' that. The thing that I worry about is whether this feature is destroying the conditions that allowed it to become a feature in the first place. He mentioned the example of Apple and IBM, which I see as illustrative in another way. Would personal computing devices have become popular in a highly fragmented world? According to Wikipedia, the Apple II cost over $5k, accounting for inflation. Absent a healthy middle class, which was created by the era of conformity and relative income equality, would there have been enough consumers to create a market for a $5k computer? As we see income inequality rise, are we not also going to see the opportunity for wealth creation diminish as capital congregates in the hands of a class that largely conserves it? I think we're already seeing this. As an exercise, try to think of something non-niche that costs around $5k, the price of the Apple II, for which there isn't some form of financing (auto/home/college loans and such). I'm hard-pressed to think of something and I believe it's because there's an increasingly small number of people that can afford such a product. We're already losing the conditions that allowed Apple to introduce the personal computer. There's a long ways that this trend can go before it becomes untenable, but the end result of income inequality will be an environment where it's quite difficult to get paid your market value because the market that funds the employment market will have dried up.
- randallsquared 11y ago
  > As an exercise, try to think of something non-niche that costs around $5k, the price of the Apple II, for which there isn't some form of financing (auto/home/college loans and such). I'm hard-pressed to think of something and I believe it's because there's an increasingly small number of people that can afford such a product. If someone can afford something with financing, they can afford it without. The difference here is not wealth or income, it's spending and savings habits.
  - quadrangle 11y ago
    So, someone who needs a car to get to work at their new job but has no existing wealth can afford the car equally with or without financing, just based on spending and saving habits???
deleted 11y ago
[deleted]
gotchange 11y ago
> A few people making rules can't stop that kind of force Can you elaborate please on what kind of force at work? Market forces? Also, do you have any idea why he's bringing up the subject of "social cohesion" repeatedly throughout the piece? Is social cohesion a hot button issue in the US now that warrants more attention from the general public? Because I believe that as long as the country is not at war with or in a national state of emergency or in other words, citizens are facing any kind of existential threat, the talk about social cohesion is meaningless and could be divisive as the term is tainted with not so favorable concepts from nationalism, nativism and the likes. > unless taxes are high enough to discourage people from creating wealth I don't want to discourage rich folks from creating wealth. I just want them for now to pay their fair share of taxes and close all the loopholes that fuel this income inequality gap and distribute more resources to the least privileged and most disfranchised groups in the society to alleviate their situation. As for technology has an inequality bias to it, I have to disagree with this assertion and point out that the availability of capital or lack thereof is the main catalyst in this equation not technology.
- landryraccoon 11y ago
  > the availability of capital or lack thereof is the main catalyst in this equation not technology. You mean if you can't afford a computer and an AWS account you can't get started? Sure, maybe not, but it's a far cry from the capital you needed in the 1960s to get started. I bet a lot of the readers of this forum know people personally that have made a million dollars or more with their laptop (to a first order approximation).
  - MawNicker 11y ago
    Most of those people received educations costing upwards of $60,000.
    - deleted 11y ago
      [deleted]
  - bespoke_engnr 11y ago

shawn-furyan 11y ago

> he most you can do is take from people at one end and give to people at the other end But he argues before that point that tax rates and tax receipts are very weakly correlated. This would seem to be a limiting factor governing how effectively a government can flatten inequality through wealth redistribution.

cma 11y ago
Seems more like a confusion over how much income to the top comes from wages vs. capital gains. Looking Graham's own income sources, he should have pointed this out. The capital gains rate under Eisenhower was only 25%, while the top bracket was 91%. And the corporate tax rate under Eisenhower was only 50%. Very few of the great sources of dynastic wealth in America were built by accumulating wages under normal income rates.

curun1r 11y ago

> He's saying income inequality is a feature of technology allowing people to be paid their market value and that you can't 'fix' that. The thing that I worry about is whether this feature is destroying the conditions that allowed it to become a feature in the first place. He mentioned the example of Apple and IBM, which I see as illustrative in another way. Would personal computing devices have become popular in a highly fragmented world? According to Wikipedia, the Apple II cost over $5k, accounting for inflation. Absent a healthy middle class, which was created by the era of conformity and relative income equality, would there have been enough consumers to create a market for a $5k computer? As we see income inequality rise, are we not also going to see the opportunity for wealth creation diminish as capital congregates in the hands of a class that largely conserves it? I think we're already seeing this. As an exercise, try to think of something non-niche that costs around $5k, the price of the Apple II, for which there isn't some form of financing (auto/home/college loans and such). I'm hard-pressed to think of something and I believe it's because there's an increasingly small number of people that can afford such a product. We're already losing the conditions that allowed Apple to introduce the personal computer. There's a long ways that this trend can go before it becomes untenable, but the end result of income inequality will be an environment where it's quite difficult to get paid your market value because the market that funds the employment market will have dried up.

randallsquared 11y ago
> As an exercise, try to think of something non-niche that costs around $5k, the price of the Apple II, for which there isn't some form of financing (auto/home/college loans and such). I'm hard-pressed to think of something and I believe it's because there's an increasingly small number of people that can afford such a product. If someone can afford something with financing, they can afford it without. The difference here is not wealth or income, it's spending and savings habits.
- quadrangle 11y ago
  So, someone who needs a car to get to work at their new job but has no existing wealth can afford the car equally with or without financing, just based on spending and saving habits???

deleted 11y ago

[deleted]

gotchange 11y ago

> A few people making rules can't stop that kind of force Can you elaborate please on what kind of force at work? Market forces? Also, do you have any idea why he's bringing up the subject of "social cohesion" repeatedly throughout the piece? Is social cohesion a hot button issue in the US now that warrants more attention from the general public? Because I believe that as long as the country is not at war with or in a national state of emergency or in other words, citizens are facing any kind of existential threat, the talk about social cohesion is meaningless and could be divisive as the term is tainted with not so favorable concepts from nationalism, nativism and the likes. > unless taxes are high enough to discourage people from creating wealth I don't want to discourage rich folks from creating wealth. I just want them for now to pay their fair share of taxes and close all the loopholes that fuel this income inequality gap and distribute more resources to the least privileged and most disfranchised groups in the society to alleviate their situation. As for technology has an inequality bias to it, I have to disagree with this assertion and point out that the availability of capital or lack thereof is the main catalyst in this equation not technology.

landryraccoon 11y ago
> the availability of capital or lack thereof is the main catalyst in this equation not technology. You mean if you can't afford a computer and an AWS account you can't get started? Sure, maybe not, but it's a far cry from the capital you needed in the 1960s to get started. I bet a lot of the readers of this forum know people personally that have made a million dollars or more with their laptop (to a first order approximation).
- MawNicker 11y ago
  Most of those people received educations costing upwards of $60,000.
  - deleted 11y ago
    [deleted]
- bespoke_engnr 11y ago