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I feel like PG is missing part of the point. The problem isn't "wealth inequality". The problem is EXTREME wealth inequality. I'm not super rich (or even non

I feel like PG is missing part of the point. The problem isn't "wealth inequality". The problem is EXTREME wealth inequality. I'm not super rich (or even non-super rich), but I do well enough that I don't really suffer. My mother, though, she's got a ton of debt, working a 35k/yr job without benefits, and no real retirement plan. Thanks to Obamacare she can buy insurance, but it has such a high deductible that it doesn't really do anything. She has no home, and can't even rent because most places refuse her if she has more then 5k in debt REGARDLESS of cosigner. And we know that she's so much better off than some others: She has food, isn't crippled by medical issues (yet), no one else to care for, and I'm providing a roof. When you go from an extreme different between the top 1% and the bottom 10%, then have a few decades where that 1% has vast, rapid growth and the bottom 10% has things stay steady or get worse, THAT's your problem. To say that wiping out inequality will stifle innovation...well, that's not really the discussion at hand. Wiping out EXTREME inequality shouldn't have that effect, because it didn't have that effect historically. The difference between the top and the bottom can still be quite pronounced. If/When we achieve that we will still have some people complaining that they can't get their kids the latest $1k/ea toy fad, but that's an entirely different problem I'm willing to tolerate. PG goes on to say that financiers aren't the problem he's talking about...but that is the problem that many others are talking about. PG's original essay seemed quite defensive, and this one does too. He's trying to convince others that he's right, but not noticing that he seems to be talking about the impact of an entirely different discussion.

apsec112 11y ago
The problem you're describing is poverty, not inequality. How much money Larry Page or Bill Gates has doesn't make your mother's life any better or worse. Graham addresses this in the last paragraph: "Decreasing poverty is not identical with decreasing economic inequality. Some measures for decreasing poverty could well increase economic inequality. For example, if you gave every child in America the same quality of education Bill Gates had, that would surely decrease poverty. [5] But you would then create a lot of new Bill Gateses as well. These kids wouldn't all stop short at middle class. The more ambitious ones would shoot right out the other side."
- ergothus 11y ago
  You're right, I'm also slightly mis-stating the problem. Poverty is bad. Institutionalized Income inequality is also bad, but neither of the authors are much addressing that problem. That said, I'm pretty sure the Ezra Kleins of the world would much prefer to have those multiple Bill Gates. And in a world that had so many innovators, I doubt you'd have the wealth concentrations we tend to see, but that's certainly an arguable point. Nonetheless, I feel PG's essay was defensive about points that aren't being generally attacked, and his response addresses the individual points without ever correcting his initial mistake.
- the_gastropod 11y ago
  This is an argument PG uses, and one I keep seeing crop up in discussions about his post. It's malarkey! Wealth didn't just appear in Bill Gates bank account—it came from people less wealthy than him buying his company's products. It's indirect, but wealth accumulation at the top necessarily comes from those below them.
  - tomhoward 11y ago
    wealth accumulation at the top necessarily comes from those below them That's the fixed pie fallacy [1], which is the biggest source of misapprehension in this whole debate. In a healthy economy, entrepreneurs get rich when their customers get rich, in the form of an improved standard of living. Apple, Microsoft, Google, Ford, Samsung, Southwest Airlines are all examples of companies that have become successful because they made the lives of ordinary (and in some cases, low-income) people vastly better through, respectively, affordable computers, software, knowledge, cars, phones/televisions and air travel. In some cases, they enabled many more people to become financially richer too (eg, the many people who now make a very good living writing software). And that's not to mention the flow on effects like medical discoveries made possible by the use of computers, and lower cost manufacturing parts and processes thanks to the automotive industry that benefit more niche industries. In all these cases, the income captured by the entrepreneurs is a small fraction of the benefit they deliver to society. This is not to say that there are no negative effects from the activities of these companies or the related income disparities (job losses, housing affordability, environmental harms, etc). But this is the key point: attack the negative effects, not the generators of the innovations from which we all benefit. [1] https://mises.org/library/why-larry-summers-doesn%E2%80%99t-understand-economic-inequality https://mises.org/library/why-larry-summers-doesn%E2%80%99t-...
ZenoArrow 11y ago
> "I feel like PG is missing part of the point." I'm starting to think PG is intentionally missing the point. Comments similar to yours about the differences between inequality and excessive inequality have been the leading response to the last three articles he's written on the topic, yet he only addresses it in passing, if at all. He also continues to make grand claims such as 'Eliminating great variations in wealth would mean eliminating startups.' without providing any form of supporting evidence. There was a subtle dig at the end of this article that some may have missed... "By definition perfect social mobility would seem unfair to anyone with a mistakenly high opinion of their abilities. Indeed, I suspect this phenomenon is already a factor in people's opinions about economic inequality even with the imperfect social mobility we have now." To give an added perspective on the implied meaning... https://twitter.com/paulg/status/672112234521231361 https://twitter.com/paulg/status/672112234521231361 Putting both together, it appears that criticism from technically minded people who haven't struck it rich just comes from insecurity about their abilities, regardless of whether they're interested in being a millionaire or not. I suspect that's why he's not listening, because he's ignoring the views of 'losers' (his term, not mine).

apsec112 11y ago

The problem you're describing is poverty, not inequality. How much money Larry Page or Bill Gates has doesn't make your mother's life any better or worse. Graham addresses this in the last paragraph: "Decreasing poverty is not identical with decreasing economic inequality. Some measures for decreasing poverty could well increase economic inequality. For example, if you gave every child in America the same quality of education Bill Gates had, that would surely decrease poverty. [5] But you would then create a lot of new Bill Gateses as well. These kids wouldn't all stop short at middle class. The more ambitious ones would shoot right out the other side."

ergothus 11y ago
You're right, I'm also slightly mis-stating the problem. Poverty is bad. Institutionalized Income inequality is also bad, but neither of the authors are much addressing that problem. That said, I'm pretty sure the Ezra Kleins of the world would much prefer to have those multiple Bill Gates. And in a world that had so many innovators, I doubt you'd have the wealth concentrations we tend to see, but that's certainly an arguable point. Nonetheless, I feel PG's essay was defensive about points that aren't being generally attacked, and his response addresses the individual points without ever correcting his initial mistake.
the_gastropod 11y ago
This is an argument PG uses, and one I keep seeing crop up in discussions about his post. It's malarkey! Wealth didn't just appear in Bill Gates bank account—it came from people less wealthy than him buying his company's products. It's indirect, but wealth accumulation at the top necessarily comes from those below them.
- tomhoward 11y ago
  wealth accumulation at the top necessarily comes from those below them That's the fixed pie fallacy [1], which is the biggest source of misapprehension in this whole debate. In a healthy economy, entrepreneurs get rich when their customers get rich, in the form of an improved standard of living. Apple, Microsoft, Google, Ford, Samsung, Southwest Airlines are all examples of companies that have become successful because they made the lives of ordinary (and in some cases, low-income) people vastly better through, respectively, affordable computers, software, knowledge, cars, phones/televisions and air travel. In some cases, they enabled many more people to become financially richer too (eg, the many people who now make a very good living writing software). And that's not to mention the flow on effects like medical discoveries made possible by the use of computers, and lower cost manufacturing parts and processes thanks to the automotive industry that benefit more niche industries. In all these cases, the income captured by the entrepreneurs is a small fraction of the benefit they deliver to society. This is not to say that there are no negative effects from the activities of these companies or the related income disparities (job losses, housing affordability, environmental harms, etc). But this is the key point: attack the negative effects, not the generators of the innovations from which we all benefit. [1] https://mises.org/library/why-larry-summers-doesn%E2%80%99t-understand-economic-inequality https://mises.org/library/why-larry-summers-doesn%E2%80%99t-...

ZenoArrow 11y ago

> "I feel like PG is missing part of the point." I'm starting to think PG is intentionally missing the point. Comments similar to yours about the differences between inequality and excessive inequality have been the leading response to the last three articles he's written on the topic, yet he only addresses it in passing, if at all. He also continues to make grand claims such as 'Eliminating great variations in wealth would mean eliminating startups.' without providing any form of supporting evidence. There was a subtle dig at the end of this article that some may have missed... "By definition perfect social mobility would seem unfair to anyone with a mistakenly high opinion of their abilities. Indeed, I suspect this phenomenon is already a factor in people's opinions about economic inequality even with the imperfect social mobility we have now." To give an added perspective on the implied meaning... https://twitter.com/paulg/status/672112234521231361 https://twitter.com/paulg/status/672112234521231361 Putting both together, it appears that criticism from technically minded people who haven't struck it rich just comes from insecurity about their abilities, regardless of whether they're interested in being a millionaire or not. I suspect that's why he's not listening, because he's ignoring the views of 'losers' (his term, not mine).