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> Further, there are an abundance of studies that show that reducing economic inequality (even through redistributive means) actually boosts overall prosperity.

by danhak 11y ago

> Further, there are an abundance of studies that show that reducing economic inequality (even through redistributive means) actually boosts overall prosperity. To me, this sentence and the ones that follow are by far the most salient point. How many Zuckerbergs, Gates, Brins, Pages and Bezos are we missing out on due to the fact that huge swaths of our country do not have the ability to fully explore and develop their talents? How many trillions in lost GDP does that amount to? To me, this entire debate is a missed opportunity to discuss inequality on the basis of shared wealth, growth and prosperity. Instead we tend to debate these things on a moral dimension which immediately politicizes and polarizes the matter. See renewable energy for another example of how that works.

zappo2938 11y ago
I can't think of anything more democratic than using money to vote on how to best allocate resources. The reward for doing well is to get more money to decide how that should then be allocated. This system works great until it crosses a threshold when the most talented consolidate the ability to decide how to best allocate resources into a small group of people. A small group of billionaires deciding how to allocate resources is better but not by much than a small group of people at the Gosbank in the Soviet Union deciding how to allocate resources. Progressive taxation is a good solution. We just need to tweak it until it works effectively. Unfortunately, we have gone in the wrong direction for past couple decades. I grew up in a scientific community. People innovated and did research because they were passionate about knowledge and learning. Of course, some of them went on to create startups like Biogen but money was never the biggest motivator. I don't buy the argument that taxing the wealthy slightly more than now stifles innovation.
- dragonwriter 11y ago
  Using money to vote on how to. allocate resources is plutocracy, which is pretty far from democracy.
  - js8 11y ago
    Exactly. Democracy is designed to prevent the positive feedback loop where people who happen to have more resources can vote for things that gives them even more resources next time. If a system has this feedback loop, it's definitely not a democratic one.
    - douche 11y ago
      Democracy's weakness is a susceptibility to allowing the people to vote themselves bread and circuses.
      - js8 11y ago
        I don't see anything wrong with bread and circuses (although I think I prefer pork and porn ;-)). This actually reminds me of Chomsky, who said that if people are really allowed to vote, they might decide to spend more on education and universal health care, rather than on nuclear weapons. Oh, the horrors!
- jrochkind1 11y ago
  > A small group of billionaires deciding how to allocate resources is better but not by much than a small group of people at the Gosbank in the Soviet Union deciding how to allocate resources. How is it better even at all, even not by much? If we imagine that the small group of central planners were actually democratically elected (in the Soviet Union they were not, although they ideologically pretended to be), it's unequivicably _more democratic_ to have them making decisions compared to unelected billionaires who are not in any way accountable to voters. I'm not quite sure what you mean by 'democratic' when you say you can't think of anything more democratic than those with more money having more political power. I don't see how there's some specific threshold where this becomes more or less true than it was at smaller level of inequality, although it's certainly _less_ democratic the greater the level of inequality, it seems fairly proportional to me rather than there being a 'threshold'.
  - zappo2938 11y ago
    It seems ridiculously simple to me. Let's define wealth equality as 100 people all with 100,000 dollars a piece. Rather than having a small group of people either in a board room on the top floor of 85 Broad St. or a small group of communists allocate resources, let everybody use their money as a vote to decide how to allocate resources. People need to eat so some money will be spent on food. Most people will need transportation so money will spent on cars and trucks. In order to prevent running out of money people will invest some of it. Several people will purchase farm equipment and start growing food, individual small businesses. Others will create an organization and pool their money together to build a factory to make cars because without cooperation none have enough to cover the startup cost. People are rather stupid so there will be losers and some are smart so there will be winners when it comes to return on investment. There needs to be inequality, it's natural. Nobody needs to starve but people who are better at deciding how to allocate resources should be given more even if they decide to invest in a bigger house and a boat. This works until that small group of people in the board room at the top of the building at 85 Broad St. decide to allocate all the resources to build more houses than everybody else needs and bigger houses than they have resources to maintain. They are able to do that because they consolidated all the voting power of money into their control once a threshold is passed. Keep the inequality. Some people will make better decisions and then others. The people who make better decisions for example investing the money into research should be rewarded with money and the ability to decide how to best further allocate it including buying a bigger house for themselves or hire a house cleaner because they are busy innovating. There are no problems with that. The problem happens when they become too powerful. The way to prevent that is a progressive tax. In this case, make it very hard but not impossible to get above controlling 1,000,000. No one person and no small group of people are better at making decisions than a large group of people. That is what I mean by wealth equality is democratic. Perhaps, it is better to say there needs to be a wealth equilibrium rather than wealth equality.
- zo1 11y ago
  Progressive taxation is a perfectly acceptable solution. Somewhere, there was some notion that said: "Already-rich people probably make money faster than the less well-off", therefore: "We should tax them more to even things out a little and have an upward push for the less well-off. And on the upside is we have a bit more funding for the state/infrastructure/services.". The problem now comes that society in general are not happy with the outcomes of the above. It's now less about how to provide for a stable, secure society and infrastructure, and more about how will we "fix everything". I believe the very existence of a state means people will want it to fix things, because it's there. And now, someone needs to pay for all the "fixing".
  - danhak 11y ago
    But taxes on inheritance and investment are totally regressive (and have become even more regressive), which undermines the benefits of a progressive system for earned income.
    - zo1 11y ago
      There are arguably much more "regressive" things out there, that are completely avoidable. Inheritance tax, on the other hand, usually has a "lower-bound" that prevents the very poor from being affected. Taxes on investment? You mean, capital gains? Or something like dividends?
    - throw_away 11y ago
      I don't understand how estate and capital gains taxes are regressive. Estate taxes (in the United States at least) only kick in on inherited assets > $5M or so (< 0.2% of estates). Capital gains are AFAIK assessed as normal income for short-term gains (so, progressive) and as a flat (neither progressive nor regressive) rate for long-term gains, and even then, only for people with actual investments, which excludes probably the majority of the poor. When I think regressive taxes, I think things that are flat fees, or else things like fica, which cut out after a certain income.
      - danhak 11y ago
- Frondo 11y ago
  One thing that is more democratic than using money to "vote" is using actual voting to vote, whether on policy directly or on politicians who will determine policy.
- malandrew 11y ago
  I've generally agreed with this sentiment and usually sum it up with the thought "One million people will usually better allocate one million dollars than one investor allocating one million dollars". That said, this isn't a hard and fast rule. There are certain types of "moonshot" projects that will never get built under such a scenario because you'll almost always fail to allocate enough money to such projects. Moonshot doesn't even have to mean something like sending a human to the moon. Moonshot can also be relative to an economy locally, like the decision to invest in power plants and transmission lines in many parts of the developing World that are underserved with regards to electricity needs.
  - douche 11y ago
    A million people with $1 apiece will buy a million McDoubles or coffees. Or a million Candy Crush credits...
arkaeologic 11y ago
It seems to be that people are reacting to a potential threat to an axiom of their's. That is: "Income inequality is bad because A,B,C, and should be prevented at all costs." I'm not saying no part of this is founded in reasoning and evidence, but you are right that the author does not actually respond to PG's sentiment. Rather, his reaction is automatic.
thanatropism 11y ago
> How many Zuckerbergs, Gates, Brins, Pages and Bezos are we missing out on due to the fact that huge swaths of our country do not have the ability to fully explore and develop their talents? But this has nothing to do with inequality. It has to do with "too many people below economic level X". If this seems related to inequality it's because you've already bought into the pie fallacy.
- danhak 11y ago
  No, it has nothing to do with the pie fallacy. Yes, even the poorest in America lead better lives in absolute terms than most people have throughout history. But regardless of the absolute "economic level x" of the poorest, the wealthiest among us will enjoy disproportionate access to the latest technology, education, healthcare, influence etc.
  - douche 11y ago
    > the wealthiest among us will enjoy disproportionate access to the latest technology, education, healthcare, influence etc What exactly do you intend to do to change that? If you start everyone at a baseline level, some of them are going to be smarter, stronger, savvier or whatever, and will be more successful, and thus wealthier, and thus have greater access to whatever benefits that wealth can buy. Even if you zero everyone out each generation, genes matter. Unless you are artificially suppressing people from rising above mediocrity, you will have some that do better than others.
    - danhak 11y ago
      It seems to me that there is probably some optimized point between total economic equality and extreme inequality. I believe we are drifting further away from that point. In concrete terms, I don't believe those with pre-existing access to capital should receive privileged tax treatment. I'm im favor of lowering taxes on earned income and raising taxes on inheritance and investment income.
      - 11y ago
mhaymo 11y ago
Sounds like you're saying the problem is poverty. That is also what PG is saying. If you want to increase the opportunities for the population as a whole, attacking the income of the rich is not obviously a good solution.
- danhak 11y ago
  Making it less easy for the wealthy to accumulate wealth exponentially !== attacking income of the rich. Poverty is always relative and is inextricable from the issue of inequality.
  - mhaymo 11y ago
    How are the issues you listed relative? How does Mark Zuckerberg being super-rich contribute to "huge swaths of our country do not have the ability to fully explore and develop their talents"?

by danhak 11y ago

zappo2938 11y ago

I can't think of anything more democratic than using money to vote on how to best allocate resources. The reward for doing well is to get more money to decide how that should then be allocated. This system works great until it crosses a threshold when the most talented consolidate the ability to decide how to best allocate resources into a small group of people. A small group of billionaires deciding how to allocate resources is better but not by much than a small group of people at the Gosbank in the Soviet Union deciding how to allocate resources. Progressive taxation is a good solution. We just need to tweak it until it works effectively. Unfortunately, we have gone in the wrong direction for past couple decades. I grew up in a scientific community. People innovated and did research because they were passionate about knowledge and learning. Of course, some of them went on to create startups like Biogen but money was never the biggest motivator. I don't buy the argument that taxing the wealthy slightly more than now stifles innovation.

dragonwriter 11y ago
Using money to vote on how to. allocate resources is plutocracy, which is pretty far from democracy.
- js8 11y ago
  Exactly. Democracy is designed to prevent the positive feedback loop where people who happen to have more resources can vote for things that gives them even more resources next time. If a system has this feedback loop, it's definitely not a democratic one.
  - douche 11y ago
    Democracy's weakness is a susceptibility to allowing the people to vote themselves bread and circuses.
    - js8 11y ago
      I don't see anything wrong with bread and circuses (although I think I prefer pork and porn ;-)). This actually reminds me of Chomsky, who said that if people are really allowed to vote, they might decide to spend more on education and universal health care, rather than on nuclear weapons. Oh, the horrors!
jrochkind1 11y ago
> A small group of billionaires deciding how to allocate resources is better but not by much than a small group of people at the Gosbank in the Soviet Union deciding how to allocate resources. How is it better even at all, even not by much? If we imagine that the small group of central planners were actually democratically elected (in the Soviet Union they were not, although they ideologically pretended to be), it's unequivicably _more democratic_ to have them making decisions compared to unelected billionaires who are not in any way accountable to voters. I'm not quite sure what you mean by 'democratic' when you say you can't think of anything more democratic than those with more money having more political power. I don't see how there's some specific threshold where this becomes more or less true than it was at smaller level of inequality, although it's certainly _less_ democratic the greater the level of inequality, it seems fairly proportional to me rather than there being a 'threshold'.
- zappo2938 11y ago
  It seems ridiculously simple to me. Let's define wealth equality as 100 people all with 100,000 dollars a piece. Rather than having a small group of people either in a board room on the top floor of 85 Broad St. or a small group of communists allocate resources, let everybody use their money as a vote to decide how to allocate resources. People need to eat so some money will be spent on food. Most people will need transportation so money will spent on cars and trucks. In order to prevent running out of money people will invest some of it. Several people will purchase farm equipment and start growing food, individual small businesses. Others will create an organization and pool their money together to build a factory to make cars because without cooperation none have enough to cover the startup cost. People are rather stupid so there will be losers and some are smart so there will be winners when it comes to return on investment. There needs to be inequality, it's natural. Nobody needs to starve but people who are better at deciding how to allocate resources should be given more even if they decide to invest in a bigger house and a boat. This works until that small group of people in the board room at the top of the building at 85 Broad St. decide to allocate all the resources to build more houses than everybody else needs and bigger houses than they have resources to maintain. They are able to do that because they consolidated all the voting power of money into their control once a threshold is passed. Keep the inequality. Some people will make better decisions and then others. The people who make better decisions for example investing the money into research should be rewarded with money and the ability to decide how to best further allocate it including buying a bigger house for themselves or hire a house cleaner because they are busy innovating. There are no problems with that. The problem happens when they become too powerful. The way to prevent that is a progressive tax. In this case, make it very hard but not impossible to get above controlling 1,000,000. No one person and no small group of people are better at making decisions than a large group of people. That is what I mean by wealth equality is democratic. Perhaps, it is better to say there needs to be a wealth equilibrium rather than wealth equality.
zo1 11y ago
Progressive taxation is a perfectly acceptable solution. Somewhere, there was some notion that said: "Already-rich people probably make money faster than the less well-off", therefore: "We should tax them more to even things out a little and have an upward push for the less well-off. And on the upside is we have a bit more funding for the state/infrastructure/services.". The problem now comes that society in general are not happy with the outcomes of the above. It's now less about how to provide for a stable, secure society and infrastructure, and more about how will we "fix everything". I believe the very existence of a state means people will want it to fix things, because it's there. And now, someone needs to pay for all the "fixing".
- danhak 11y ago
  But taxes on inheritance and investment are totally regressive (and have become even more regressive), which undermines the benefits of a progressive system for earned income.
  - zo1 11y ago
    There are arguably much more "regressive" things out there, that are completely avoidable. Inheritance tax, on the other hand, usually has a "lower-bound" that prevents the very poor from being affected. Taxes on investment? You mean, capital gains? Or something like dividends?
  - throw_away 11y ago
    I don't understand how estate and capital gains taxes are regressive. Estate taxes (in the United States at least) only kick in on inherited assets > $5M or so (< 0.2% of estates). Capital gains are AFAIK assessed as normal income for short-term gains (so, progressive) and as a flat (neither progressive nor regressive) rate for long-term gains, and even then, only for people with actual investments, which excludes probably the majority of the poor. When I think regressive taxes, I think things that are flat fees, or else things like fica, which cut out after a certain income.
    - danhak 11y ago
Frondo 11y ago
One thing that is more democratic than using money to "vote" is using actual voting to vote, whether on policy directly or on politicians who will determine policy.
malandrew 11y ago
I've generally agreed with this sentiment and usually sum it up with the thought "One million people will usually better allocate one million dollars than one investor allocating one million dollars". That said, this isn't a hard and fast rule. There are certain types of "moonshot" projects that will never get built under such a scenario because you'll almost always fail to allocate enough money to such projects. Moonshot doesn't even have to mean something like sending a human to the moon. Moonshot can also be relative to an economy locally, like the decision to invest in power plants and transmission lines in many parts of the developing World that are underserved with regards to electricity needs.
- douche 11y ago
  A million people with $1 apiece will buy a million McDoubles or coffees. Or a million Candy Crush credits...

arkaeologic 11y ago

It seems to be that people are reacting to a potential threat to an axiom of their's. That is: "Income inequality is bad because A,B,C, and should be prevented at all costs." I'm not saying no part of this is founded in reasoning and evidence, but you are right that the author does not actually respond to PG's sentiment. Rather, his reaction is automatic.

thanatropism 11y ago

> How many Zuckerbergs, Gates, Brins, Pages and Bezos are we missing out on due to the fact that huge swaths of our country do not have the ability to fully explore and develop their talents? But this has nothing to do with inequality. It has to do with "too many people below economic level X". If this seems related to inequality it's because you've already bought into the pie fallacy.

danhak 11y ago
No, it has nothing to do with the pie fallacy. Yes, even the poorest in America lead better lives in absolute terms than most people have throughout history. But regardless of the absolute "economic level x" of the poorest, the wealthiest among us will enjoy disproportionate access to the latest technology, education, healthcare, influence etc.
- douche 11y ago
  > the wealthiest among us will enjoy disproportionate access to the latest technology, education, healthcare, influence etc What exactly do you intend to do to change that? If you start everyone at a baseline level, some of them are going to be smarter, stronger, savvier or whatever, and will be more successful, and thus wealthier, and thus have greater access to whatever benefits that wealth can buy. Even if you zero everyone out each generation, genes matter. Unless you are artificially suppressing people from rising above mediocrity, you will have some that do better than others.
  - danhak 11y ago
    It seems to me that there is probably some optimized point between total economic equality and extreme inequality. I believe we are drifting further away from that point. In concrete terms, I don't believe those with pre-existing access to capital should receive privileged tax treatment. I'm im favor of lowering taxes on earned income and raising taxes on inheritance and investment income.
    - 11y ago

mhaymo 11y ago

Sounds like you're saying the problem is poverty. That is also what PG is saying. If you want to increase the opportunities for the population as a whole, attacking the income of the rich is not obviously a good solution.

danhak 11y ago
Making it less easy for the wealthy to accumulate wealth exponentially !== attacking income of the rich. Poverty is always relative and is inextricable from the issue of inequality.
- mhaymo 11y ago
  How are the issues you listed relative? How does Mark Zuckerberg being super-rich contribute to "huge swaths of our country do not have the ability to fully explore and develop their talents"?