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> If you really mean globally, then inequality is in fact falling. No. Inequality is decreasing between nations as the developing world catches up with the we

by nmrm2 11y ago

> If you really mean globally, then inequality is in fact falling. No. Inequality is decreasing between nations as the developing world catches up with the west. But inequality within nations -- even developing nations -- is increasing. It's possible for inequality to increase as the the developing world catches up to the west; in fact, that's exactly what's happening. So the old geographical distributions are very slowly eroding, but they are being replaced by obscene levels of inequality within individual borders. This trend is exacerbated -- especially in Europe -- by tax evasion and avoidance managed (and practiced) by large fintech companies. So the author's fear that concentrating power in the hands of a few large fintech firms would exacerbate global inequality -- and lessen nation states' ability to combat inequality with policy -- is well-founded in global trends. edit: Instead of downvoting, go read François Bourguignon's "Inequality and Globalization: How the Rich Get Richer as the Poor Catch Up", which states exactly the thesis outlined above and contains pointers to the data sets used to arrive at these conclusions.

blowski 11y ago
Exactly. On a global scale, the very poor are getting richer, but so are the very rich, while the middle-classes are getting (relatively) poorer. If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling. See https://publications.credit-suisse.com/tasks/render/file/?fileID=BCDB1364-A105-0560-1332EC9100FF5C83 https://publications.credit-suisse.com/tasks/render/file/?fi... - p35 is particularly relevant in this conversation.
- nickik 11y ago
  False. You kids might not make as much money but in realty their living standards jave grown quite a bit.
  - nmrm2 11y ago
    I think this is pretty debatable, at least in the US. Being born during the middle or late-middle of the 20th century was extremely lucky if you managed to stay out of manufacturing and could put your retirement into funds that came close to matching public markets. A lot of people doubt we'll ever see that kind of economic growth in the first half of the 21st century. Don't under-estimate the impact of three-four decades of financially comfortable retirement on "living standards".
- sokoloff 11y ago
  > If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling. The charts you reference are for wealth, not income. The chart on page 36 suggests about a 1/8 chance for a reduction in pyramid tier and about a 48% chance for an increase in tier. (Now, that's also a blended chart, but I don't see anything particularly dire in that data for North Americans.)
gizi 11y ago
> and lessen nation states' ability to combat inequality with policy Ok, one person is a great programmer making good money and another person is not interested in any of that and makes less money. I do not see any inequality here that needs to be combated with policy. One possible result of such policy would be that both will turn out to be less interested. You cannot turn the losers into winners, but you can certainly alienate the surviving winners and convince them to build their next factory in China instead, or do their next startup from a beach in the Philippines. Instead of reducing inequality, the outcome will become very biased by profits made in China or the Philippines, and therefore lead to even more inequality. Lather, rinse, repeat. At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter. Your policy will obviously not outsmart them. Therefore, if your policy has any effect, it will inevitably be exactly the opposite of what it was meant to be.
- blowski 11y ago
  > At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter Quite a bit is also caused by the undue influence rich people have over the policy-making process, helping them to ensure they remain rich by constructing 'glass ceilings'. Saying "well unless we give in to their demands otherwise they'll take our jobs to China" is simply not a good enough response. As a middle-income web developer in the UK, I have more in common with a middle-income web developer in Bangalore or Shanghai than I do with a multi-millionaire in London or California.
- smt88 11y ago
  > quite a bit of inequality is caused by the fact that some people happen to be smarter Why does someone deserve to have a worse life because they weren't born that smart? Why do they deserve to be uncertain how they'll be able to pay medical bills, unable to send their children to great schools, and unable to afford healthy food? In theory, "meritocracy" only favors the lucky -- for example, those born with a love of programming in the year 1985. In practice, "meritocracy" doesn't exist and never has.
- b2384912 11y ago
  >convince them to build their next factory in China instead No, the government doesn't do this, the shareholders do this (this includes the CEO). It's a huge red herring that delays automation from happening. Even China nowadays invests heavily into automation. >At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter Everytime I hear the word "talented", "bright" or "smart" on HN I don't even know what it's supposed to even mean anymore. Somehow you deserve to be called a genius because mommy got you a contract with IBM and you decided to buy off an OS from some random guy for $50,000 and then made it run on IBM's computers. There was also that guy who screwed over his cofounder with some social network. Yeah sure they are now two of the richest humans on this planet but I don't think their success can be attributed to their "talent" alone. They very likely are not capable of pulling it off a second time.
xixi77 11y ago
But, aren't "obscene levels of inequality" only obscene related to a few decades post WW2, which many people seem to take as a normal, but which is really rather unusual? The statement talks about "highest inequality ever", and I really don't see how any society can be much more unequal now than it was even 100 years ago -- not to mention any time before then...

by nmrm2 11y ago

blowski 11y ago

Exactly. On a global scale, the very poor are getting richer, but so are the very rich, while the middle-classes are getting (relatively) poorer. If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling. See https://publications.credit-suisse.com/tasks/render/file/?fileID=BCDB1364-A105-0560-1332EC9100FF5C83 https://publications.credit-suisse.com/tasks/render/file/?fi... - p35 is particularly relevant in this conversation.

nickik 11y ago
False. You kids might not make as much money but in realty their living standards jave grown quite a bit.
- nmrm2 11y ago
  I think this is pretty debatable, at least in the US. Being born during the middle or late-middle of the 20th century was extremely lucky if you managed to stay out of manufacturing and could put your retirement into funds that came close to matching public markets. A lot of people doubt we'll ever see that kind of economic growth in the first half of the 21st century. Don't under-estimate the impact of three-four decades of financially comfortable retirement on "living standards".
sokoloff 11y ago
> If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling. The charts you reference are for wealth, not income. The chart on page 36 suggests about a 1/8 chance for a reduction in pyramid tier and about a 48% chance for an increase in tier. (Now, that's also a blended chart, but I don't see anything particularly dire in that data for North Americans.)

gizi 11y ago

> and lessen nation states' ability to combat inequality with policy Ok, one person is a great programmer making good money and another person is not interested in any of that and makes less money. I do not see any inequality here that needs to be combated with policy. One possible result of such policy would be that both will turn out to be less interested. You cannot turn the losers into winners, but you can certainly alienate the surviving winners and convince them to build their next factory in China instead, or do their next startup from a beach in the Philippines. Instead of reducing inequality, the outcome will become very biased by profits made in China or the Philippines, and therefore lead to even more inequality. Lather, rinse, repeat. At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter. Your policy will obviously not outsmart them. Therefore, if your policy has any effect, it will inevitably be exactly the opposite of what it was meant to be.

blowski 11y ago
> At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter Quite a bit is also caused by the undue influence rich people have over the policy-making process, helping them to ensure they remain rich by constructing 'glass ceilings'. Saying "well unless we give in to their demands otherwise they'll take our jobs to China" is simply not a good enough response. As a middle-income web developer in the UK, I have more in common with a middle-income web developer in Bangalore or Shanghai than I do with a multi-millionaire in London or California.
smt88 11y ago
> quite a bit of inequality is caused by the fact that some people happen to be smarter Why does someone deserve to have a worse life because they weren't born that smart? Why do they deserve to be uncertain how they'll be able to pay medical bills, unable to send their children to great schools, and unable to afford healthy food? In theory, "meritocracy" only favors the lucky -- for example, those born with a love of programming in the year 1985. In practice, "meritocracy" doesn't exist and never has.
b2384912 11y ago
>convince them to build their next factory in China instead No, the government doesn't do this, the shareholders do this (this includes the CEO). It's a huge red herring that delays automation from happening. Even China nowadays invests heavily into automation. >At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter Everytime I hear the word "talented", "bright" or "smart" on HN I don't even know what it's supposed to even mean anymore. Somehow you deserve to be called a genius because mommy got you a contract with IBM and you decided to buy off an OS from some random guy for $50,000 and then made it run on IBM's computers. There was also that guy who screwed over his cofounder with some social network. Yeah sure they are now two of the richest humans on this planet but I don't think their success can be attributed to their "talent" alone. They very likely are not capable of pulling it off a second time.

xixi77 11y ago

But, aren't "obscene levels of inequality" only obscene related to a few decades post WW2, which many people seem to take as a normal, but which is really rather unusual? The statement talks about "highest inequality ever", and I really don't see how any society can be much more unequal now than it was even 100 years ago -- not to mention any time before then...