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It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry tal

It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry talk about what they know (IT).

delish 11y ago
I agree. Paul Graham's essays on income inequality expressed my views on income inequality more clearly than even I was thinking them. I appreciate this, but now I need to hear a critique by someone who understands the issue how I understand it and disagrees with me. I've been looking, but I've found ad hominem attacks.
- deleted 11y ago
  [deleted]
- UK-AL 11y ago
  The problem is that for every economist who disagree's, you'll probably find another one who agrees.
- sparky_z 11y ago
  Does O'Reilly's critique not qualify?
- spangry 11y ago
  Although I basically agree with PG's essay, the one plausible critique I can think of is this: 1) We don't care about wealth distribution per se. What we actually care about is utility maximisation (in other words, maximising the sum of 'human happiness'). 2) Once we get pass some basic wealth level, to meet some set of basic needs like food and shelter, a person's utility is a function of relative wealth rather than an increasing function of absolute wealth. 3) If you accept points 1 and 2, we therefore should care about wealth inequality in and of itself. There's also probably another argument to be made along the lines of 'decreasing marginal utility with respect to wealth'. Which is a fancy way of saying: a poor person derives greater utility from an additional $1 in wealth than a rich person does. This would mean that the sum of human utility is increased by taking $1 from the richest person and giving it to the poorest person.
- shadowsun7 11y ago
  @delish: have you seen this? http://praxtime.com/2016/01/12/paul-graham-inequality-cowens-laws/ http://praxtime.com/2016/01/12/paul-graham-inequality-cowens...
  - delish 11y ago
    That was worth my time. Thank you. I wrote down Cowen's laws for future reference.
  - deleted 11y ago
    [deleted]
spangry 11y ago
I'm an economist (sort of), with some IT domain expertise. I've been thinking about the below issues for some time now: 1) As productive capital becomes increasingly digital, it becomes cheaper to acquire or create. If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result. 2) Additionally, digital capital often enables production at near 0 marginal cost (e.g. it costs facebook virtually nothing when a person registers a new account). Markets where the marginal cost of production is near 0 are generally 'winner-takes-all' markets (e.g. natural monopolies, network monopolies etc.), due to always increasing economies of scale. So the returns to capital become larger, as monopolists can capture more 'consumer surplus' as profit. In addition, the more a monopolist can price discriminate (i.e. set different prices for different consumers, based on how much those consumers value the product), the more they can convert consumer surplus into profit for themselves. The net result of the previous two points: significantly more wealth becomes concentrated in fewer hands 3) Digital capital is highly mobile. For example, AWS instances can be moved to another country almost instantaneously and without cost. This makes it hard for governments to tax returns to digital capital, barring some global tax agreement, as raising the tax rate on capital returns will simply cause it to relocate to lower taxing jurisdictions (e.g. Ireland). So governments have limited scope to redistribute this increasingly concentrated wealth using taxation. I think that we badly need to have a global conversation about this: do we consider these good or bad things? are we ok with the resulting society? what should we do (if anything) about this?
- hackuser 11y ago
  > If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result. I see how that would cause ownership of a specific asset (e.g., one program) to become more concentrated, but wouldn't the lower barrier to entry cause ownership to become less concentrated market-wide?

It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry talk about what they know (IT).

delish 11y ago

I agree. Paul Graham's essays on income inequality expressed my views on income inequality more clearly than even I was thinking them. I appreciate this, but now I need to hear a critique by someone who understands the issue how I understand it and disagrees with me. I've been looking, but I've found ad hominem attacks.

deleted 11y ago
[deleted]
UK-AL 11y ago
The problem is that for every economist who disagree's, you'll probably find another one who agrees.
sparky_z 11y ago
Does O'Reilly's critique not qualify?
spangry 11y ago
Although I basically agree with PG's essay, the one plausible critique I can think of is this: 1) We don't care about wealth distribution per se. What we actually care about is utility maximisation (in other words, maximising the sum of 'human happiness'). 2) Once we get pass some basic wealth level, to meet some set of basic needs like food and shelter, a person's utility is a function of relative wealth rather than an increasing function of absolute wealth. 3) If you accept points 1 and 2, we therefore should care about wealth inequality in and of itself. There's also probably another argument to be made along the lines of 'decreasing marginal utility with respect to wealth'. Which is a fancy way of saying: a poor person derives greater utility from an additional $1 in wealth than a rich person does. This would mean that the sum of human utility is increased by taking $1 from the richest person and giving it to the poorest person.
shadowsun7 11y ago
@delish: have you seen this? http://praxtime.com/2016/01/12/paul-graham-inequality-cowens-laws/ http://praxtime.com/2016/01/12/paul-graham-inequality-cowens...
- delish 11y ago
  That was worth my time. Thank you. I wrote down Cowen's laws for future reference.
- deleted 11y ago
  [deleted]

spangry 11y ago

I'm an economist (sort of), with some IT domain expertise. I've been thinking about the below issues for some time now: 1) As productive capital becomes increasingly digital, it becomes cheaper to acquire or create. If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result. 2) Additionally, digital capital often enables production at near 0 marginal cost (e.g. it costs facebook virtually nothing when a person registers a new account). Markets where the marginal cost of production is near 0 are generally 'winner-takes-all' markets (e.g. natural monopolies, network monopolies etc.), due to always increasing economies of scale. So the returns to capital become larger, as monopolists can capture more 'consumer surplus' as profit. In addition, the more a monopolist can price discriminate (i.e. set different prices for different consumers, based on how much those consumers value the product), the more they can convert consumer surplus into profit for themselves. The net result of the previous two points: significantly more wealth becomes concentrated in fewer hands 3) Digital capital is highly mobile. For example, AWS instances can be moved to another country almost instantaneously and without cost. This makes it hard for governments to tax returns to digital capital, barring some global tax agreement, as raising the tax rate on capital returns will simply cause it to relocate to lower taxing jurisdictions (e.g. Ireland). So governments have limited scope to redistribute this increasingly concentrated wealth using taxation. I think that we badly need to have a global conversation about this: do we consider these good or bad things? are we ok with the resulting society? what should we do (if anything) about this?

hackuser 11y ago
> If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result. I see how that would cause ownership of a specific asset (e.g., one program) to become more concentrated, but wouldn't the lower barrier to entry cause ownership to become less concentrated market-wide?