6 ms·

Why I Don’t Celebrate Income Inequality

64 points by bvanvugt 11y ago

alain94040 11y ago
Mark is a great straight-talker. He says very simply and clearly some great truths.
WalterBright 11y ago
> But I have also seen close up situations where tech executives (although it’s not specific to tech) have laid off large amounts of people to try and move a company close to profitability in order to quickly sell the company reaping the executive team with a large payout – again in lower taxes – while junior employees are made unemployed. This only works if you manage to trick the people buying the company that that is not what you did. Buyers do "due diligence" when they buy a company, meaning they carefully look over the books. A recent large layoff is a huge red flag that the company's situation may be misrepresented.
WalterBright 11y ago
An issue not mentioned is that capital gains taxes apply to illusory "gains" resulting from inflation.
- msandford 11y ago
  Holy cow man, I never even realized! But that's definitely a real thing. I know the tax code will never get amended this way, but it seems like you should only have to pay capital gains on profits in real terms, not notional. It'd really just push the fight of "what is the real inflation rate" into something that has substantial reasons every year for everyone to want to get right, not just those with a lot of capital. And it'd give the government even more incentive to understate it.
- WalterBright 11y ago
  An issue rarely mentioned with capital gains taxes is that the higher they are, the less investments are allocated to high productive investments. This is counterintuitive, but consider calculating whether it is worth selling a low performing investment and reinvesting the proceeds in a better performing investment. The capital gains taxes will reduce the proceeds reinvested, and due to compounding can mean the net returns are less with the reinvested than if they remain with the lower performing investment. To belabor the obvious, encouraging people to stick with lower performing investments is not good for the economy. One of the good things about Reagan's tax deal, where he got rid of tax shelters in exchange for lower tax rates, is the tax shelters tended to be low productive investments, and the deal incentivized investors to switch to more productive investments. I've never seen any discussion of this.
WalterBright 11y ago
> I have libertarian biases [...] But I also have a social conscious Being a libertarian does not in any way imply having no social conscience. Nothing whatsoever about libertarianism implies you should not be helping those less fortunate than you - only that you shouldn't be forced to. For example, Bill Gates' philanthropic activities are entirely congruent with libertarian ideas (although I don't know Gates' political leanings).
- edent 11y ago
  > Nothing whatsoever about libertarianism implies you should not be helping those less fortunate than you - only that you shouldn't be forced to. Think of it as an ROI. The state invested heavily in you - schools, roads, doctors, police, fire brigades, clean air, etc. etc. We expect repayment from all members of society in order to continue providing those benefits to them and those around them. If, when you reach the age of maturity, you don't feel that you want to be part of the social contract, you have a few choices available. 1. Leave. Go off to Somalia or some other place where the state won't force you to contribute taxes. 2. Lobby your elected officials (or become elected) to explain why we should stop supporting society. Remember, all those libraries were erected because people in your society saw the value in collectivising to enhance public education. 3. Opt out of society as far as possible. Generate your own electricity and grow your own crops. Just don't impinge on our rights to live in a safe(r) environment. But, by and large, the Libertarians I've encountered don't think like that. They have the misguided idea that all their successes are down to personal endeavour and that they shouldn't be responsible for contributing at all. They see tax as theft of their hard work, not as a investor extracting their fair share. Of course, you're right that Libertarianism itself doesn't imply having no social conscience - but many of its adherents simply don't.
  - WalterBright 11y ago
    Andrew Carnegie's philanthropy was a major force behind the library system in America. https://en.wikipedia.org/wiki/Carnegie_library https://en.wikipedia.org/wiki/Carnegie_library > but many of its adherents simply don't. To the extent that is true is irrelevant in complaining about libertarianism - it's a variation of the ad hominem logical fallacy. It's also true that many self-described libertarians have only a hazy idea of what it is.
ArkyBeagle 11y ago
It's much ( and I mean very much ) more difficult to actually prove that money corrupts the political process in any significant way. And it may be even more difficult to show that this is expressed as (or causes then) an increase in inequality. I could easily be quite wrong, but most articles I read of income inequality are simply descriptions of (perceived) social ills caused by systems which follow a Pareto distribution. Pareto distributions have exactly one parameter - the "alpha". US income is distributed by two Pareto distributions added together - a bimodal Pareto distribution. One has a sort of offset such that its median is around $100K. If inequality is increasing, it is because the distribution representing the higher income scale is growing - its alpha is increasing. Nothing else need change except that, to change inequality. I understand "the map is not the territory" but I write this just as a description of the process in a shorthand form, not to imbue the distributions with powers of anything more than description. The underlying process need be no more than increasing numbers of people in a "higher energy state" of the economy. Those in the lower energy state could probably not even "feel" this except through reports, and possibly changes in the prices of certain things.
striking 11y ago
Another opinion piece about social consciousness and privilege. Of course, there's no suggested resolution. Nobody celebrates income inequality in and of itself. I agree that we shouldn't write puff pieces about founders that speak solely about their determination when there are other factors at play. But even then, that's not really a celebration of income inequality. (it's also a really small issue, compared to income inequality itself) It reads like a critique of capitalism, but with several acknowledgements as to the fact that getting rid of capitalism wouldn't help anyway. And I abhor the acknowledgement of privilege (which I understand is not a popular opinion) because it reads like an acknowledgement of some kind of insoluble Original Sin. Why do you feel the need to mention that you were never physically abused? How does that make you privileged? It seems to be completely unrelated to the rest of your piece. Some people are dealt a really crappy hand by life. We don't live in a just world. And I agree that we should give people an equal opportunity to succeed. But without a resolution, this piece is probably no more meaningful than the latest startup puff piece. It's fairly obvious that the poor have a disadvantage. So how are we going to fix it?
- narag 11y ago
  Haven't you read Paul Graham's essay yesterday? This seems a direct answer. The abuse thing is, among other cited circumstances, what could make a person not develop natural talents. In other words: some people are set in the bad part of the deal since their childhood. So there's a lot in the inequality problem that's not caused by relative merits.
  - striking 11y ago
    (Haven't read the essay.) That's true. So what can we do to fix that? And is fixing this particular cause (child abuse) the best possible investment to guarantee equal opportunity/ undo the unfairness of economic inequality?
    - narag 11y ago
      Some days or weeks ago a report about inequality was released showing it's growing. I guess there has been a lot of concerned opinions in the media. So pg's essays (there were a couple of them) have tried to present a contrarian opinion: inequality is not good in itself but it's kind of a natural state or a good sign or something... I couldn't finish reading the essay. As much as I like most of his writings, this one seems terribly wrong to me.
jkot 11y ago
Socialism and communism has even greater income inequality than capitalism.
- collyw 11y ago
  Scandinavia being proof of that? In fact looking at this, they all seem pretty capitalist in nature: http://www.businessinsider.com/most-unequal-countries-in-the-world-2011-10?op=1 http://www.businessinsider.com/most-unequal-countries-in-the...
  - jkot 11y ago
    Scandinavia is a democracy, not socialism
    - ionised 11y ago
      Democracy can be socialist in nature and theirs qualifies.
- ionised 11y ago
  Socialism and communism are not the same thing.
vadym909 11y ago
I believe this is how a majority of tech people feel and Mark just said it very succinctly. Surprised that PG who I respect as a great writer opted to go 'extremist' with his opinion instead of highlighting the nuance.

64 points by bvanvugt 11y ago

Mark is a great straight-talker. He says very simply and clearly some great truths.

> But I have also seen close up situations where tech executives (although it’s not specific to tech) have laid off large amounts of people to try and move a company close to profitability in order to quickly sell the company reaping the executive team with a large payout – again in lower taxes – while junior employees are made unemployed. This only works if you manage to trick the people buying the company that that is not what you did. Buyers do "due diligence" when they buy a company, meaning they carefully look over the books. A recent large layoff is a huge red flag that the company's situation may be misrepresented.

WalterBright 11y ago

An issue not mentioned is that capital gains taxes apply to illusory "gains" resulting from inflation.

msandford 11y ago
Holy cow man, I never even realized! But that's definitely a real thing. I know the tax code will never get amended this way, but it seems like you should only have to pay capital gains on profits in real terms, not notional. It'd really just push the fight of "what is the real inflation rate" into something that has substantial reasons every year for everyone to want to get right, not just those with a lot of capital. And it'd give the government even more incentive to understate it.
WalterBright 11y ago
An issue rarely mentioned with capital gains taxes is that the higher they are, the less investments are allocated to high productive investments. This is counterintuitive, but consider calculating whether it is worth selling a low performing investment and reinvesting the proceeds in a better performing investment. The capital gains taxes will reduce the proceeds reinvested, and due to compounding can mean the net returns are less with the reinvested than if they remain with the lower performing investment. To belabor the obvious, encouraging people to stick with lower performing investments is not good for the economy. One of the good things about Reagan's tax deal, where he got rid of tax shelters in exchange for lower tax rates, is the tax shelters tended to be low productive investments, and the deal incentivized investors to switch to more productive investments. I've never seen any discussion of this.

WalterBright 11y ago

> I have libertarian biases [...] But I also have a social conscious Being a libertarian does not in any way imply having no social conscience. Nothing whatsoever about libertarianism implies you should not be helping those less fortunate than you - only that you shouldn't be forced to. For example, Bill Gates' philanthropic activities are entirely congruent with libertarian ideas (although I don't know Gates' political leanings).

edent 11y ago
> Nothing whatsoever about libertarianism implies you should not be helping those less fortunate than you - only that you shouldn't be forced to. Think of it as an ROI. The state invested heavily in you - schools, roads, doctors, police, fire brigades, clean air, etc. etc. We expect repayment from all members of society in order to continue providing those benefits to them and those around them. If, when you reach the age of maturity, you don't feel that you want to be part of the social contract, you have a few choices available. 1. Leave. Go off to Somalia or some other place where the state won't force you to contribute taxes. 2. Lobby your elected officials (or become elected) to explain why we should stop supporting society. Remember, all those libraries were erected because people in your society saw the value in collectivising to enhance public education. 3. Opt out of society as far as possible. Generate your own electricity and grow your own crops. Just don't impinge on our rights to live in a safe(r) environment. But, by and large, the Libertarians I've encountered don't think like that. They have the misguided idea that all their successes are down to personal endeavour and that they shouldn't be responsible for contributing at all. They see tax as theft of their hard work, not as a investor extracting their fair share. Of course, you're right that Libertarianism itself doesn't imply having no social conscience - but many of its adherents simply don't.
- WalterBright 11y ago
  Andrew Carnegie's philanthropy was a major force behind the library system in America. https://en.wikipedia.org/wiki/Carnegie_library https://en.wikipedia.org/wiki/Carnegie_library > but many of its adherents simply don't. To the extent that is true is irrelevant in complaining about libertarianism - it's a variation of the ad hominem logical fallacy. It's also true that many self-described libertarians have only a hazy idea of what it is.

ArkyBeagle 11y ago

It's much ( and I mean very much ) more difficult to actually prove that money corrupts the political process in any significant way. And it may be even more difficult to show that this is expressed as (or causes then) an increase in inequality. I could easily be quite wrong, but most articles I read of income inequality are simply descriptions of (perceived) social ills caused by systems which follow a Pareto distribution. Pareto distributions have exactly one parameter - the "alpha". US income is distributed by two Pareto distributions added together - a bimodal Pareto distribution. One has a sort of offset such that its median is around $100K. If inequality is increasing, it is because the distribution representing the higher income scale is growing - its alpha is increasing. Nothing else need change except that, to change inequality. I understand "the map is not the territory" but I write this just as a description of the process in a shorthand form, not to imbue the distributions with powers of anything more than description. The underlying process need be no more than increasing numbers of people in a "higher energy state" of the economy. Those in the lower energy state could probably not even "feel" this except through reports, and possibly changes in the prices of certain things.

striking 11y ago

Another opinion piece about social consciousness and privilege. Of course, there's no suggested resolution. Nobody celebrates income inequality in and of itself. I agree that we shouldn't write puff pieces about founders that speak solely about their determination when there are other factors at play. But even then, that's not really a celebration of income inequality. (it's also a really small issue, compared to income inequality itself) It reads like a critique of capitalism, but with several acknowledgements as to the fact that getting rid of capitalism wouldn't help anyway. And I abhor the acknowledgement of privilege (which I understand is not a popular opinion) because it reads like an acknowledgement of some kind of insoluble Original Sin. Why do you feel the need to mention that you were never physically abused? How does that make you privileged? It seems to be completely unrelated to the rest of your piece. Some people are dealt a really crappy hand by life. We don't live in a just world. And I agree that we should give people an equal opportunity to succeed. But without a resolution, this piece is probably no more meaningful than the latest startup puff piece. It's fairly obvious that the poor have a disadvantage. So how are we going to fix it?

narag 11y ago
Haven't you read Paul Graham's essay yesterday? This seems a direct answer. The abuse thing is, among other cited circumstances, what could make a person not develop natural talents. In other words: some people are set in the bad part of the deal since their childhood. So there's a lot in the inequality problem that's not caused by relative merits.
- striking 11y ago
  (Haven't read the essay.) That's true. So what can we do to fix that? And is fixing this particular cause (child abuse) the best possible investment to guarantee equal opportunity/ undo the unfairness of economic inequality?
  - narag 11y ago
    Some days or weeks ago a report about inequality was released showing it's growing. I guess there has been a lot of concerned opinions in the media. So pg's essays (there were a couple of them) have tried to present a contrarian opinion: inequality is not good in itself but it's kind of a natural state or a good sign or something... I couldn't finish reading the essay. As much as I like most of his writings, this one seems terribly wrong to me.

jkot 11y ago

Socialism and communism has even greater income inequality than capitalism.

collyw 11y ago
Scandinavia being proof of that? In fact looking at this, they all seem pretty capitalist in nature: http://www.businessinsider.com/most-unequal-countries-in-the-world-2011-10?op=1 http://www.businessinsider.com/most-unequal-countries-in-the...
- jkot 11y ago
  Scandinavia is a democracy, not socialism
  - ionised 11y ago
    Democracy can be socialist in nature and theirs qualifies.
ionised 11y ago
Socialism and communism are not the same thing.

vadym909 11y ago

I believe this is how a majority of tech people feel and Mark just said it very succinctly. Surprised that PG who I respect as a great writer opted to go 'extremist' with his opinion instead of highlighting the nuance.