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I'd agree that risk capacity (or element of ruin, as it's known in gambling circles) is a big factor in rising inequality. But there are many other advantages t
by vannevar 7y ago
I'd agree that risk capacity (or element of ruin, as it's known in gambling circles) is a big factor in rising inequality. But there are many other advantages that the wealthy enjoy that may also explain the divergence. The wealthy can borrow money at much more favorable rates, they can meet minimum investment thresholds in ventures or funds that provide higher rates of return, they benefit from economies of scale in large businesses, the list goes on and on.
And just as there is no one major cause, there is no one major solution, like a wealth tax. Rather, we need to overhaul much of our financial and business regulation to favor decentralization. Limits on corporate and real estate ownership, corporate board participation, and business advertising would all go a long way toward reinvigorating small business and creating a healthier, less homogenized economy.
- fuzz4lyfe 7y agoI see the solution in another direction. For every monopoly I see I also find a government enforcing that monopoly. Limit government power, not private ownership if you wish to improve the lot of the average person.
- vostok 7y agoA lot of the monopolistic/oligopolostic cartel-like behavior in my industry seems to be the result of free markets. Of course certain instances of government intervention have also encouraged cartel-like behavior. I think you have to take it on a case-by-case basis and you can't make a general claim. On balance, free markets have probably caused more cartel-like behavior in my industry but abandoning free markets would be strictly worse than the mix that we have now.
- vannevar 7y agoYou confuse cause for effect. Emerging monopolies gain the power to warp regulations in their favor by virtue of the concentration of wealth and power. That concentration is an inevitable consequence of the wealth-income feedback loop. Without limits on wealth, capitalism collapses in on itself like a black hole.
- fuzz4lyfe 7y ago> Emerging monopolies gain the power to warp regulations in their favor by virtue of the concentration of wealth and power. Exactly. And no civilization on earth has yet solved the "Power tends to corrupt; absolute power corrupts absolutely." problem at scale. In what society does power not exist in some form? In even the most primitive of human societies the first and best portion of the meal would be given to those who had the most political favor. We have control of a single vector in this equation, the size of the government. I see no other way.
- SantalBlush 7y agoWhen our government was much smaller, it committed genocide of American Indians and recognized slavery. Similar things can be said of some other countries with small governments. I'm not convinced that government corruption is much of a function of its size.
- vannevar 7y agoI see no other way. You're not looking very hard. As I suggested above, we can pursue government policies (largely independent of government size) that favor decentralization. We don't have to throw up our hands in defeatism. We have perfectly good processes to implement these policies and improve our society. The only real obstacle, frankly, is the kind of fatalistic passivity you're proposing.
- desc 7y agoGovernment enforcing and supporting monopoly is government not doing its job. Look to the individuals responsible, particularly those who've constructed the incentives for other parts of government to support such monopolies. Left to themselves, corporations acquire monopolies. The market gravitates towards nasty local maxima when there is information asymmetry, or when people simply don't have enough spare resource to compare options properly (attention asymmetry?). The primary organised force against corporate opportunism is government. Government does of course have its own failure modes, democracy regardless (for similar reasons) against which corporations and the free market operate. Claiming that either half of the system is remotely capable of self-regulating is moronic.
- harimau777 7y agoWhat evidence is there that limiting government power would improve the average person's situation? Moving from feudalism to democracy clearly improved life for the average person, I'm not sure it's clear after that fact.
- WalterBright 7y ago> they can meet minimum investment thresholds in ventures or funds that provide higher rates of return On the other hand, anyone can invest in FAANG stocks and get a higher rate of return.
- WalterBright 7y agoFor example, if you'd bought some MSFT when Nadella became CEO, you'd have a 5x rate of return.