4 ms·

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. Graha

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-...
- punee 11y ago
  What happens to people's wealth when they buy products from Bill Gates's company?
moonchrome 11y ago
>How much money Larry Page or Bill Gates has doesn't make your mother's life any better or worse. I dislike egalitarianism but this is fundamentally not true, the whole point of economy is resource allocation and the more money you have the bigger the role you have in allocation - so "big players" like Bill Gates and Larry Page have a considerable impact on prices/availability of things to everyone else (even when considering economy isn't a zero sum game and new value is created to get rich). It's plausible that a more egalitarian society would make basic things like housing more affordable say at the expense of R&D like developing new tech and medicine.
Brakenshire 11y ago
> The problem you're describing is poverty, not inequality. Poverty and income inequality are more strongly linked than a lot of people seem to accept. In most economies, when the average income goes up, you also get increases in living costs. Poverty is struggling to pay housing costs, medical costs, food costs, utility costs, and so on, and all of these depend to one extent or another on changes in income in the rest of the population. If your income goes up by 3% over a decade, but living costs go up by 10%, there's no use in saying 'a rising tide lifts all boats'.

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-...
punee 11y ago
What happens to people's wealth when they buy products from Bill Gates's company?

moonchrome 11y ago

>How much money Larry Page or Bill Gates has doesn't make your mother's life any better or worse. I dislike egalitarianism but this is fundamentally not true, the whole point of economy is resource allocation and the more money you have the bigger the role you have in allocation - so "big players" like Bill Gates and Larry Page have a considerable impact on prices/availability of things to everyone else (even when considering economy isn't a zero sum game and new value is created to get rich). It's plausible that a more egalitarian society would make basic things like housing more affordable say at the expense of R&D like developing new tech and medicine.

Brakenshire 11y ago

> The problem you're describing is poverty, not inequality. Poverty and income inequality are more strongly linked than a lot of people seem to accept. In most economies, when the average income goes up, you also get increases in living costs. Poverty is struggling to pay housing costs, medical costs, food costs, utility costs, and so on, and all of these depend to one extent or another on changes in income in the rest of the population. If your income goes up by 3% over a decade, but living costs go up by 10%, there's no use in saying 'a rising tide lifts all boats'.