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Is Inequality Inevitable?

• vfc1 7y ago
  It's inevitable and a direct consequence of the labor system that we live in. The internet makes it worse but its not the problem of the internet, its a problem of the system. In our labor system, a small number of individuals are by definition going to be payed, as employees, a small amount of the value that they add in order to make their boss wealthier. Over time, the employees get paid a constant amount of money that they need to spend for living expenses, but the employer wealth will compound and accumulate over generations. It's a system that comes directly from medieval serventry, designed to concentrate the wealth in the hands of the noble. Take for example a large surface supermarket, with 100 employees making minimal wage. If those same persons would each own their small family shops and serve the same amount of customers, you would have 100 families well off making way more than minimal wage. Serve those same customers through a supermarket, and most of the wealth will be concentrated in the hands of the supermarket owner, while the employees make only scraps.
  • dorgo 7y ago
    >If those same persons would each own their small family shops and serve the same amount of customers Prices would increase (no economies of scale). 100 persons would have to deal with 99 problems (accounting, supply, marketing, ...) they didn't have before. And risks and competition. Most people don't want to deal with all those problems. Even if it pays better.
    • vfc1 7y ago
      > Most people don't want to deal with all those problems. Even if it pays better. It depends, if raised on a family of shop owners with the values that you should have your own business, that would simply be seen as part of life. Those problems are not that hard, its not that hard to run a small shop. I think anyone could do it.
• mikorym 7y ago
  This question only worries me in the context of philosophy or in the context of the developed world. My experience, being born on the African continent and with my (known) family having lived on the African continent for 10 generations, teaches me that this question is not a matter of philosophy but of pragmatism. The impression I have, whether illusory or not, is that the more fundamental human endeavor is towards Mazlo's pyramid of needs. One example that I can give is that often those that "defend" the position of the rich are not rich themselves, but rather believe in the value of personal property ownership. And with regards to those in developing countries in general, I think the feeling is that you simply want to better your life up to a point of some kind of perception of equal access to opportunity (whether attainable or not). My point is thus that inequality in wealth is perhaps like inequality in everything else, including inequal distribution of personal preferences (in everything). It's easy to say this as a person with access to education and opportunity and pretend to say it on behalf of others, and could of course be misguided, but I don't know if relative spread of opportunity is important in the way that absolute spread of opportunity is.
• growlist 7y ago
  Obviously there needs to be a balance. Too little inequality and we end up with communism, destruction of incentives for innovation, and a 10 year wait to drive a Trabant - if you're lucky! Too much inequality and there's too small a market to sustain the extraction of wealth by the elite.
• sytelus 7y ago
  It's a simple side effect of money creates money. If you have X dollars, it almost automatically can create Y dollars in time T. Integrate over time and you have exponential growth. People starting with low initial number will have exponentially growing differential.
  • duxut_staglatz 7y ago
    So why has inequality not grown exponentially? There are many periods where it is about constant and/or declining.
• dustinmoris 7y ago
  Unfortunately I cannot read this article, because of the pay gate, but I can confidentily say that inequality is most certainly inevitable. Inequality is the core concept which keeps everything in balance on this planet. Humans are destroying this planet by trying to achieve a utopian world of perfect equality. The only equality that we should strive for is equality of opportunity, but we can't aim for equality of distribution of resources as this would lead us into eating up our entire planet. If everyone in this world would get the medical care to live until 100, if everyone would get fed with the same amounts of fish, meat, eggs, fruit, vegetables, etc. then we would pretty quickly end up in the tens of billions of human beings consuming everything around us until nothing will be left and we have killed ourselves. Resources are limited and unless we can build more planet Earths at random will, then resources will always remain scarce and the only fair way to distribute these resources without looting everything to its extintion is to let all animals on this planet (including humans) compete for it. The strongest lion will catch the Zebra, the smartest human will afford a big mansion, etc. Humans need to become comfortable with accepting the laws of nature which kept our planet flourishing for so many million years or we will put an end to it very quickly. No human has a right to anything. Whatever you are given is what you have either earned, stolen or you've been given out of mercy, but never because of entitlement. The sooner everyone can accept that fact the better things will turn out for us as a species. Also it's important to understand that what's good for humans (today) is not necessarily good for humanity. It's good for humans to burn fossil fules like mad people to keep our homes warm in the coldest areas of the planet or to install energy wasting air cons in hot places which we want to inhabitate, but in the long run this is damaging our environment and bad for humanity. It's good for humans to fly everywhere and drive everywhere today, but it comes at a cost for humanity at some point in the future. Humans are ego centric, self entitled and selfish animals which think that what's good for them today is good for us tomorrow, but it's often quite the opposite. The truth is, the more we live in animalistic conditions like survival of the strongest, the better it is for us as a species in the long run.
• classified 7y ago
  This question isn't decided by market theories but by human nature. And human nature, sadly, makes inequality inevitable. Or, to put it another way, avoiding inequality will always be an ongoing struggle.
• Glosster 7y ago
  Reading through the comments, I was hoping that someone actually pasted the article itself... because it's behind a paywall. But it seems that most comments can be TLDR'ed as the title of the post.
  • rozularen 7y ago
    I was hoping the same.... Why tf people post these articles?
• nkkollaw 7y ago
  Inequality is inevitable. We are not born equal. Some people are smarter, some people are better-looking, some people have more energy, are more motivated (or the opposite). We can try and do everything we can so that everyone has the same opportunity to succeed, but if you want the same outcome you'd have to limit the smarter, better-looking, more energetic people so that their outcome is lowered to be the same as everyone else, and I don't think this would be positive for anyone.
• hagreet 7y ago
  Do people not mind the paywall or do you just not get it?
  • rozularen 7y ago
    I'm tired of these...
• rozularen 7y ago
  Finally found a cached version of the site without a paywall https://webcache.googleusercontent.com/search?q=cache:u4UoSfLPWBYJ:https://www.scientificamerican.com/article/is-inequality-inevitable/+&cd=3&hl=en&ct=clnk&gl=us&client=firefox-b-1-d https://webcache.googleusercontent.com/search?q=cache:u4UoSf...
• tunesmith 7y ago
  Have there been any efforts to quantify what level of inequality is reasonable? For instance, the GINI coefficient ranges between 0 and 1, where 0 means everyone has the same amount, and 1 means one person at the top has everything. Depending on how it's measured, the US is somewhere between 0.4 and 0.5. You don't want to be at either extreme, so some level of inequality is desirable. Is there an appropriate amount of inequality that is generally accepted? Has anyone tried to identify the appropriate target level?
  • jlongr 7y ago
    Why shouldn't the coefficient be zero? I'm curious what your reasoning is.
    • tunesmith 7y ago
      I'm more reflecting the general consensus. That's communism, which is generally seen as a failed economic system, and difficult to practically enforce. Although maybe that all changes in a post-scarcity economy, like is Star Trek technically communist? Should the goal actually be GINI-0?
      • endtime 7y ago
        Star Trek isn't communist; capitalism and communism are both approaches to the allocation of resources. Neither really applies in a post-scarcity society.
        • pbhjpbhj 7y ago
          Which Star Trek is post-scarcity. They all [within the Federation] have trading and limitations of resources, no? They're entirely egalitarian either, perhaps that's why you say they're not communist, see for example the luxuries that a captain has that crew do not and the preferences (larger quarters) that accrue with seniority.
          • 7y ago
• deleted 7y ago
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• noja 7y ago
  Wrong question. Better question: why is the scale of inequality acceptable?
  • danhak 7y ago
    Because capitalism and free enterprise are predicated on fair competition and equal access. In theory, the best and most innovative ideas thrive and lead to economic growth. Extreme inequality undermines this by allowing those who already have significant wealth to put their finger on the scales (lobbying, anticompetitive practices, etc.)
    • AnthonyMouse 7y ago
      The thing that always irks me about this is that we keep talking about the individuals even though that's not the real issue. Sure, Jeff Bezos has a lot of wealth, but really what he has is a lot of shares of Amazon. It's Amazon that really has the money. Even if Bezos is the CEO, he has a duty to the other shareholders to act in their interests. He can't just donate all the company's assets to charity even if he wanted to. The real problem is that corporations are too big. The fact that this makes their founders very rich is more of a side note. Increasing the capital gains rate isn't going to make Apple or Microsoft smaller or give them more competition. It isn't even going to collect more money from the largest shareholders until they sell their shares, which many of them never actually do. This is a competition problem, not a wealth problem. If there were ten times as many companies then there would be ten times as many founders who each had a tenth as much money -- or less, if the added competition directed more of the money to the customers and workers.
      • zepto 7y ago
        This isn’t accurate. Amazon doesn’t ‘have the money’ that counts as Bezo’s wealth. It is the value of Amazon to others that produces his wealth. Bezos may not be able to donate Amazon’s assets to charity, but he can donate his assets - in this case his shares of Amazon. He can equally well sell his Amazon shares and buy something else with the proceeds, so the wealth that is attributed to him really his his. Of course there is a point at which Amazon’s value might be impacted if Bezos sold his shares, but he could probably realize well over 50% of his holdings before that became an issue.
• danhak 7y ago
  Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.
  • duxut_staglatz 7y ago
    Not if g >> r, of course.
  • zacharytelschow 7y ago
    And the more technology we have, the more the differences in the ability to produce wealth in the first place will be magnified.
  • FabHK 7y ago
    It scales linearly. If you have 3 (or 10) times as much as I have, and we both invest all our money in the same interest bearing account, then after N years you will still have 3 (or 10) times as much as I have. So, according to your model, the initial wealth distribution should not change. (Of course, you can argue that those with more wealth consume a smaller part of it, and that gives rise to inequality, but that's an issue beyond "compound interest"). EDIT to remove a typo
    • deleted 7y ago
      [deleted]
    • inerte 7y ago
      I don't think danhak compared 2 people. Anyway, if I started with 100k dollars and you started with 1M dollars (a 900k difference) and we both grew 50%, now I have 150k and you have 1.5M - a 1.35M difference. Still 9x, but way more $.
    • zeroxfe 7y ago
      > It scales linearly. > If you have 3 (or 10) times as much as I have, and we both invest all our money in the same interest bearing account, then after N years you will still have 3 (or 10) times as much as I have. Right, it's linear relative to other interest bearing accounts, but GP's point was that existing wealth of an individual grows exponentially.
• zacharytelschow 7y ago
  Absolutely - and that's a good thing. Those who produce more should earn more as well.
  • TurkishPoptart 7y ago
    Oh boy, where do I begin? Edit: Sorry, I should first ask with how you define "production". It seems to be a now dated and almost arbitrary term more suited for agrarian or industrial societies, which seems less telling in an information/service-driven economy. If a police officer patrols for 8 hours, arresting no one, did he "produce" anything? Likewise, if he patrols for 8 hours, and arrests 2 people, did he "produce" more than in the other example? The term "production" as a metric seems woefully outdated in our society.
    • wcarron 7y ago
      None of us know, so why don't you pick a place and actually begin? You know, contributing constructive dialogue instead of just posting a useless, condenscending rhetorical question.
      • billions 7y ago
        I think the author was expecting equal upvotes despite not making an effort to forward the discussion
  • FabHK 7y ago
    Right. And now that you have echoed Economics 101, it is time to look at these issues in a bit more detail. See for example John Kwak's Economism, in which he addresses this facile justification in some detail. https://economism.net https://economism.net
  • mikepurvis 7y ago
    Do you believe that that's the system we have? What did Adam Neumann "produce" that merited his $1.7B exit package?
• lordnacho 7y ago
  This is a lot more satisfying than just r > g, which although seeming to be well supported in a rather large book somehow is dissatisfying. Specifically, I was looking for some kind of agent model like what this author is presenting here. I've often thought about the "it's expensive to be poor" adage. What's interesting is he takes in this risk preference idea, in which you naturally expect the poor to have to be cede certain opportunities in order to secure further existence. I've played a lot of poker where you see this dynamic where the big stack guy can take chances and still win, and the cards (and skill) don't matter that much.
  • notahacker 7y ago
    r>g is broadly equivalent to the ζ parameter in this model I don't find the model itself especially compelling as a broad model of the economy myself, though it's nicely written exposition of how variance can wipe people out and largely agrees with my biases. The fact that a curve with three arbitrarily-set parameters can be made to fit empirical Lorenz curves doesn't particularly impress me, and the concept of rich people enriching themselves through wiping out poor people in zero sum trades as opposed to having the ability to transact with a lot more people in positive sum trades doesn't ring especially true of a modern economy.
    • lordnacho 7y ago
      I don't see zero sum as so important as much as risk preference. Or you could call it risk necessity. The game can be positive sum, but if you're poor you have to play it a certain way that keeps you poor.
      • notahacker 7y ago
        Agree with that, but that's better represented by modelling poor agents as systematically transferring small portions of their wealth to the rich rather than randomly losing or winning large portions of wealth.
        • lordnacho 7y ago
• michelinman 7y ago
  Animals on both ends of the bell curve. Serial Killer avg. 10 deaths? Last billionaire I met killed 17 and poisoned 30,000. Silicon Valley is essential viewing at the moment on that subject.
  • michelinman 7y ago
    Downvotes? At least explain.
    • anm89 7y ago
      This is totally incoherent. What are you trying to say?
      • michelinman 7y ago
        Apologies, I'll try again. At both ends of the human spectrum you have people who are so basic human life means nothing to them. In both respects these people want power over others. I suggest the least intelligent are the serial killer types but the most dangerous are the rich and powerful. Wiki commodities brokers.
        • anm89 7y ago
          Fair enough. I think people are people and good and evil are probably normally distributed between the poor and the wealthy more or less. There are certainly bad people at both ends. I'm familiar with what commodities brokers are and don't see anything wrong with it. I'm quite happy for the existence of modern financial markets.
          • michelinman 7y ago
            These are the public versions, I promise it's much worse; A little light reading for you: https://en.wikipedia.org/wiki/Marc_Rich https://en.wikipedia.org/wiki/Marc_Rich , https://en.wikipedia.org/wiki/Glencore https://en.wikipedia.org/wiki/Glencore , https://en.wikipedia.org/wiki/Trafigura https://en.wikipedia.org/wiki/Trafigura . Claude died.
• robomartin 7y ago
  Inequality is inevitable. It is baked into everything in nature, from the stars to ocean depths. When was the last time you looked up at the night sky and saw a uniformly spaced and evenly lit field of stars? Evolution itself would not exist without inequality. Yes, some animals were better than others at certain tasks and evolutionary pressure did it's thing over time. I suck as a dancer. I suck as a painter. I suck at a lot of things. And yet, I am a better than others at certain things and I am massively better than others in other areas. My life and that of everyone around me has inequality as a positive element rather than a negative. This is why I hire a plumber and an electrician and don't do everything myself. EQUALITY OF OUTCOME IS A FANTASY. Equality of opportunity is important and should be promoted far and wide. Trying to force equal outcomes is just silly, sorry. Hence the Pareto distribution. It's real and it is a fact of nature everywhere you look. There is no such thing as equally distributed outcomes in but the most esoteric corner cases (having trouble thinking of one example). As for the scale of inequality. That's another red herring. The way I live today is beyond the equivalent of a rich person a hundred years ago. It is WAY beyond the super-rich before that. Kings did not live this way centuries ago. And yet I don't have Bill Gates level money. Not even close. The average person today lives far better than the wealthy lived not too long ago. They certainly have greater access to amazing medical advances as well as technology. There are over FOUR AND A HALF BILLION people world-wide using the internet. When you consider that, in rough terms, about two and a half billion out of the 7.7 billion on the planet cannot use the internet (too young or too old) that means that approximately 87% of those able to use the internet use it. You start slicing that further and you might just discover the percentage is much higher than that. For example, my father certainly falls under the category of not too old to be counted as a potential internet user. However, he has less than zero interest and doesn't use it. My mother, on the other hand, is on the 'net every day. Anyhow, the point is that this business of vilifying the "1%" is just silly. It has no bearing whatsoever on how people live. In other words, they are not taking oxygen out of the room, quite to the contrary. We do need to raise even more people out of poverty, with some areas of the world notable for a desperate need for improvement. Nobody is saying we can't and should not do better, we always can. What isn't sensible is the constant finger-pointing to this mythical "1%" as the problem. Every year we raise millions of people out of poverty. Life, in general, has been getting better and better over time. Even in places where people have difficult lives you'll find they wear clothes and have things that are markedly better than what was available to them just a decade or two ago. If we want to make things better for more people we just need to continue to focus on growing economies through free market capitalism. It's the only force in known history that has elevated so many people out of the dark ages. Everything else is a formula for disaster and misery, also a historical fact. OK, I'll duck now. Let me have it.
• tkyjonathan 7y ago
  Yes, we are all different.
• bronzeage 7y ago
  I have to question the meaning of their result. it's a known and inituitive result that a random walk on a lattice eventually reaches every point. This has no practical meaning whatsoever. it's not an interesting result because, just like the random walk on a lattice, after one person becomes an oligarchy, eventually a different person will also become an oligarch. why did you choose to stop when the first became an oligarch? to make a click baity title? people need to understand probabilities to read through bullshit like this article.
  • bronzeage 7y ago
    If you want to judge a random walk in a meaningful way, you never ask "what's the probability of reaching X started?" you ask "how long do you stay in states like X". the expected time to exit "oligarchy" states should be pretty small. the whole discussion is completely meaningless, they intentionally asked a misleading question.
    • anotherone15 7y ago
      They are pointing out the existence of a fixed point in the oligarch state. Yes, you can estimate the time to leave this fixed state by invoking an analogy to a classical mechanics problem, where the time to leave is proportional to the exponential of the action.
  • cryoshon 7y ago
    they actually address your concern in the article. once an agent achieves "oligarch" status in their model, the flow of wealth towards them accelerates rather than decelerates such that the remaining agents have no ability to exchange wealth with anyone other than the oligarch. so intermediates between the lowest level with nothing and the oligarch are temporary at best.
• xyzzyz 7y ago
  That's an interesting model, especially with respect to how well it matches the reality. Since the transactions in the reality definitely do not look like the coin flip transactions in the model, it definitely warrants some more investigation as to why exactly it matches reality so well, despite not resembling reality as we see it.
• lmilcin 7y ago
  A lot of it misses the point. Equality is unavoidable as long as people are allowed to compete for stuff. If people are allowed to compete for property then those that are better at competing will have more property. It might be possible to have property equality when people have access to same things but compete for different things, for example status, choice of partners, etc. And the most important point people seem to forget: Inequality does not mean we need to have people who can't satisfy their most basic things. It is possible for people to be allowed to compete for wealth and at the same time ensure those that don't want or can't compete have their basic needs like food, shelter and medical care satisfied.
  • cryptonector 7y ago
    You make it sound as though the economic pie is fixed and economics zero-sum. But that's clearly not the case, otherwise we'd still be living with stone age per-capita GDP (i.e., ~0). And it's not just that "those that are better at competing will have more property". Every person is free to make a variety of choices for themselves, including how much they prioritize wealth creation. Since each one of us has only one life to live, and only one way to live it (i.e., the way each one of us choose to), and so many choices to make, there's no way we'll all make the same choices. Some will prioritize love, others family, others art, others business, or some mixture of these and other things. And that's just fine. We can't all pour ourselves into our work the way Elon Musk does, and we can't all only pick great ideas to pursue, and we don't all have the same talent or drive. > Inequality does not mean we need to have people who can't satisfy their most basic things. It is possible for people to be allowed to compete for wealth and at the same time ensure those that don't want or can't compete have their basic needs like food, shelter and medical care satisfied. Indeed!
    • lmilcin 7y ago
      I never said inequality is bad (by itself). Inequality is driving progress. Historically, people made little progress in circumstances where they could not amass and defend wealth. Property rights and working public institutions is what allows people to stop spending their entire time defending what little they have and instead figure out how to improve what they amassed (in other words progress).
• beefman 7y ago
  Peter Norvig did one of these.[1] The authors can fit data better by adding parameters, which is no surprise. But these models omit an important feature of the real world: growth. "Yard sale" models are zero-sum. [1] http://nbviewer.ipython.org/url/norvig.com/ipython/Economics.ipynb http://nbviewer.ipython.org/url/norvig.com/ipython/Economics...
• not_a_cop75 7y ago
  It would be interesting to document where equality is easy, where it is hard, and where it is impossible. Let's try first to achieve equality where it is easy. I doubt very much we've handled easy yet.
• selfishgene 7y ago
  Let's assume for sake of argument that "inequality" is in fact "inevitable." Then what policy conclusions are we supposed to draw?
  • _rpd 7y ago
    Policy goals change from "reducing X" to "reducing the harmful results of X."
  • username90 7y ago
    It is a conservative position, hence no new policies are needed. Some pushes that inequality is proof of injustice and therefore we must make policies against it, this is just a response to that position.
  • virmundi 7y ago
    E also have to philosophically proves it’s bad. If everyone has their needs met, should we care?
  • zhoujianfu 7y ago
    Universal Basic Income to even it out a bit I assume!
    • eeZah7Ux 7y ago
      ...which would significantly decreasing inequality - immediacy disproving the belief that inequality is some sort of inevitable natural phenomenon.
• miguelmota 7y ago
  Inequality will always be inevitable. Striving to better yourself by learning new skills and improving your abilities is to produce inequality because you're rising above the mediocre masses anytime you make an effort at anything. People should focus on equity, not equality. Equality of outcome is more fair than equality of opportunity.
  • aantix 7y ago
    >Equality of outcome is more fair How so? To equalize outcomes for all parties, you must take from those that performed better?
    • miguelmota 7y ago
      I might have phrased it incorrectly but the message I was trying to convey is that those that perform better and produce more results should be rewarded more (as expected) because they put in the effort to achieved better outcomes, rather than giving someone a head start because of their race or economic status (ie affirmative action) which is inequality.
      • chii 7y ago
        > rather than giving someone a head start so you're saying your children should not inherit any wealth, and must be taken away to a state institution to be raised like everybody else? I think inequality being inevitable isn't bad, as long as the floor is at an acceptable humane level. Why does it matter if 1 person owned 99% of all the world's wealth, if the remaining 1% is enough to give basic human needs?
        • miguelmota 7y ago
          You're pulling a strawman so not going to dignify your first statement. On the latter, you're right in that who cares how people spend their money but nobody should be obligated to give it away.
• bhupy 7y ago
  There's one glaring issue with this simulation, and it's that it keeps the amount of wealth static — it models a zero-sum world, which is not our reality. I would like to see this simulation run where the agents are also creating wealth into the system.
• pg_is_a_butt 7y ago
  As long as regulation stands in between producers and consumers, regulators will always amass power.
• n9 7y ago
  Is it inevitable? That indicates a teleology and feels to this reader like a bogus question. Is it structural? Oh hell yes it is.
• klaudius 7y ago
  ...
• NovemberWhiskey 7y ago
  My perspective on this might be too naive; but it seems wealth inequality (which is the topic of this article) is inevitable since a significant proportion of the population will spend their entire income and therefore never save. It seems like about 19% of all Americans have zero net worth, and something like 44% of single American retirees are dependent on Social Security for 90% or more of their income, implying they saved very little throughout their entire lifetimes.
  • thendrill 7y ago
    Yeh but there is a difference between saving for retirement and being "filthy rich" Some people have other interests that gathering power and money. So why is it fair we build a world only for the powerfull and wealthy?
  • AnimalMuppet 7y ago
    Hmm. If they depend on Social Security for 90% of their income, should Social Security be included in their savings? It's not conventional savings, and yet it's funding their retirement. In the same way, should pensions be counted as part of savings? And if you run the calculations that way, what does it do to the distribution of wealth? Note well: I am not saying that this is the right way to run the calculations. But I think it could be a somewhat informative alternate way to do them.
    • travisoneill1 7y ago
      Yes, to be more accurate the net present value of future social security payments should be considered part of "wealth."
    • turc1656 7y ago
      I would argue not to include SS benefits as savings purely because SS payments are a tax levied upon the rest of society rather than any sort of fund, trust, etc. that actually has money allotted to someone. It's basically just an IOU from Uncle Sam that they will tax other people to pay you. Therefore, that is subject to change at the whim of those in charge of changing the laws. Sure, it's politically ugly to reduce/eliminate, but a severe recession could easily change that.
• Empact 7y ago
  It should be self-evident that the accelerating inequality we’re witnessing is not the natural inequality of competition and the power law, easily explained by simple arithmetic. An accelerating and historically high broad societal effect is naturally a product of broad and unique properties of the current regime, rather than fundamentally consistent properties, which would naturally be seen across all time. What is more broad and far-reaching than manipulation of the money supply itself? “We have found that inflation (1) worsens income distribution; (2) increases the income share of the rich; (3) has a negative but insignificant effect on the income shares of the poor and the middle class; and (4) reduces the rate of economic growth” http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295.848&rep=rep1&type=pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295... It’s not difficult to see why - under an inflationary regime, those holding currency lose out relative to those holding assets, because the former’s wealth is not preserved; and low income wages are facing a constant headwind that their earners are less equipped to navigate. We in the US have been engaging in an experiment since 1971, which has resulted in a marked discontinuity and a shift in to whom productivity growth accrued: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ This is not necessarily the true or only explanation of our accelerating and historically high inequality, but it has the properties of a realistic explanation, in that it identifies a broad, historically distinct cause.
  • specialist 7y ago
    In the USA, inflation went down as inequity increased. https://en.wikipedia.org/wiki/File:US_Historical_Inflation.svg https://en.wikipedia.org/wiki/File:US_Historical_Inflation.s... I don't doubt that inflation is a factor. Duh. It's just a tax by another name. But it takes extreme incredulity to ignore the biggest policy change (pink elephant): shifting the tax burden from capital (assets) to labor (income). PS- Your cites note Bretton Woods. What's your position on the gold standard?
  • snagglegaggle 7y ago
    Very good links, thank you. Unlike a lot of people I never really saw the inherent utility in an inflationary currency system (but admit it could have existed: just that I never saw it in practice). But criticize the fed or offshoring and you're a bigoted racist who just can't grasp the bigger picture.
• ryeguy_24 7y ago
  > "388 individuals possessed as much household wealth as the lower half of the world's population combined" My goodness! This completely shocked me. I wonder if we are all complicit in allowing this to happen. I know wealth buys power and vice versa, so it likely would be hard to change but aren't we all indirectly allowing this to happen?
  • peterwwillis 7y ago
    Complicit implies a negative moral or ethical slant, but we are directly responsible, sure. We live in a representative democracy, so we can just ask for a bill to redistribute wealth and vote on it. The reason people don't is the same reason poor people support politicians that give the rich tax breaks.
  • mehrdadn 7y ago
    For reference, the 3 richest Americans hold more wealth than the bottom 50% of the country. https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-richest-americans-hold-more-wealth-than-bottom-50-of-country-study-finds/ https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-ric...
    • scarmig 7y ago
      In fairness, I have more wealth than 33% of the USA combined, given that something like a third have zero or negative wealth.
      • mehrdadn 7y ago
        Oh that's an interesting point I hadn't considered, thanks for mentioning that!
  • thendrill 7y ago
    We are. Everytime we shut up in meetings when dumb sleezy managers come up with dumb ideas. Everytime we implement those ideas. And let someone else sell them and use them. Everytime when we pretend that our jobs are just a paycheck. So yeh if we don't throw them under the buss no one will. #underthebuss
• Mikhail_Edoshin 7y ago
  What if there's a need for inequality? I.e. if everyone is about same as everyone else, how would the society organize any work that requires coordinated effort of many people? How would it maintain the required discipline?
  • Uhuhreally 7y ago
    what then is the optimum level of inequality ? What if 1 person owned all the money and everybody else worked for the promise of money ? Would that be enough inequality ?
    • Mikhail_Edoshin 7y ago
      Enough to get things going, I guess, but very inefficient, because he would have to make too many decisions himself and there would be no way to actually control the operations. This is the Soviet Union model where the recipe for a cake in Estonia had to be approved in Moscow and the level of falsifications in what should be reliable internal reports was unprecedented. My point is that to organize coordinated work there must be some way to persuade people to comply and endure hardships, like working at nights. I see roughly three: slavery (inequality in offensive power?), "economic inequality" in capitalism, and spiritual leadership (inequality in wisdom). I like the latter the most, but it's hard to scale, and I prefer economic inequality to slavery any day.
• Uhuhreally 7y ago
  No. It's because some people lie and cheat and exploit other people.
• tammet 7y ago
  A simple demo of the algorithm described in the article: http://dijkstra.cs.ttu.ee/~tammet/oligarch.html http://dijkstra.cs.ttu.ee/~tammet/oligarch.html
• SiVal 7y ago
  There is a popular political perspective that rules on campus these days that treats wealth as something that just magically exists and is simply "redistributed" by one means or another like, say, a phase change in physics where no magnetism/charge/energy/etc. is ever created or consumed. I waited for a point in their model where people actually produced wealth and consumed it, made something or ate it, in addition to redistributing it. Not part of the model. And the idea that things have a "true" value, the one put on them by enlightened campus philosophers, so a transaction not controlled by the wise and just will have a winner and a loser. I waited for the idea that I, shoeless but with ten loaves of bread, and you, hungry but with ten pairs of shoes, might reasonably value bread and shoes differently and BOTH win from the "redistribution" of bread and shoes, but it was not part of the model. But their model (which they claim "reproduces inequality with unprecedented accuracy") could also (they claim) be fitted to a variety of different observed power law distributions when its parameters were adjusted, and the more parameters, the better the fit became. Yes, and they could probably get their model to describe the frequency distribution of English vocabulary (also a power law), with remarkable accuracy which probably does say something about economics but maybe not as much as they seem to think.
  • deleted 7y ago
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  • tasubotadas 7y ago
    This will go in my "Hacker News Wisdom" folder for the future quoting :)
  • murftown 7y ago
    Totally agree that wealth creation is a thing distinct from distribution, and that it matters. However, I'm not aware of any metrics or markers for wealth creation - other than revenue / profit. So in other words, most of our attempts to study economics ignore this, just like the model in TFA. They look at successful businesses and growing GDP and infer that wealth must have been created. Another related concept - similarly murky and unaccounted for - is wealth destruction. If wealth is defined, say, as the capacity for people to live a good life, then how often is this capacity destroyed in the pursuit of growing business? We similarly have no markers for this factor in most of our economic models that I'm aware of.
• dnprock 7y ago
  I come from Eastern/Asian culture. I'm surprised to see Western culture swings. When I first got to live in Western culture, everyone was talking about equality as truth. There was equality everywhere: gender, income, race, marriage, geography. Now we talk about inequality as, maybe, the accepted truth. People talk about tail, asymmetric risk taking. I think Eastern philosophy has a balanced view on this. There're Yin & Yang. The system eventually needs to find a balance. Stop swinging, start living.
  • ativzzz 7y ago
    Because real life and philosophy are often in conflict with each other. On top of that, cultural values change and fluctuate with time. > Stop swinging, start living. Swinging is living. Life is constantly changing, or "swinging". It is inevitable.
• amelius 7y ago
  If a model shows that inequality is inevitable, then perhaps we can extend the model such that equality is achieved, e.g. by adding a certain amount of tax to the equation, where the tax is redistributed over the population. This could be called the "fairness tax", and of course would still allow inequality where wealth is created.
• peterwwillis 7y ago
  There's been hundreds of years of writing on this subject from political and economic theory, but the article doesn't touch on it at all; it's just a weird mathematical model. Then there's this: You might, of course, wonder how this model, even if mathematically accurate, has anything to do with reality. After all, it describes an entirely unstable economy that inevitably degenerates to complete oligarchy, and there are no complete oligarchies in the world. It is true that, by itself, the yard sale model is unable to explain empirical wealth distributions. To address this deficiency, my group has refined it in three ways to make it more realistic. So, they started with a model that made no sense, and modified it to make it match "reality", and finished with this: Given how complicated real economies are, we find it gratifying that a simple analytical approach developed by physicists and mathematicians describes the actual wealth distributions of multiple nations with unprecedented precision and accuracy. Also rather curious is that these distributions display subtle but key features of complex physical systems. Yeah... curious....
• anm89 7y ago
  Let's pose the opposite: Is it possible to enforce that 8 billion people be and have exactly the same? Seems pretty obviously absurd.
  • duxut_staglatz 7y ago
    No, but there is no reason to expect that we are at the optimal level on inequality either.
  • WilliamEdward 7y ago
    Is it not worth trying to get as close to that as possible, though?
    • tathougies 7y ago
      No, not at all. Some people are lazy, just want to destroy things, or believe they have an innate right to the fruits of other's labor. This is obvious to anyone who has gone to high school.
    • anm89 7y ago
      How do you even measure? How do you decide how effort and talent should factor in. What system should be used to enforce it? The answer to all is you can't because it's inherently utopian. You can set a legal framework and follow and that's the best you can do. That can involve programs that are designed to help the poor or redistribute but the notion of trying to micromanage everyone into being equal or even close is absurd.
• thayne 7y ago
  Why is this surprising? Wealth provides the means to acquire more wealth, so of course any initial inequality will tend to intensify without some mechanism to redistribute wealth among those with less wealth.
• adrianmonk 7y ago
  Inequality is a tricky word. At first I disliked it because, for me, it's a non-goal to have everyone equal. I know there are some people who are willing to work harder than me, and I don't mind if they have more wealth. I also know there are people who don't want to work as hard. (This isn't meant as judgement, I'm just saying I'm somewhere in the middle.) But let's not be black and white about it. I'm OK with some variation, but with some kind of limits. It wouldn't be reasonable for someone to receive a million times the reward for working twice as hard. And although I'd prefer a better term, many people seem to use "inequality" as concise term for that. I don't love the choice of terminology (too prone to misinterpretation), but I can handle it.
• jeromebaek 7y ago
  it's really simple. the world is exponential, not linear. wealth grows (or decays) exponentially. that's it. too bad very few understand exponentiation.
• sdfin 7y ago
  I don't get why lately the trend it to focus in inequality instead of focusing in poverty. I mean, if the % of poverty decreases, then economy is moving in a good direction, in spite of inequality, right? Suppose you had one million, and somebody else has one thousand millions, there would be a large gap, but I wouldn't consider it as negative. If there are arguments against what I wrote I would gladly read them and consider them.
  • pietrovismara 7y ago
    Because both inequality and poverty matter. Solving poverty is a matter of decency for all humanity and it would greatly improve our society. Solving inequality is as important, why? Because in a society where greed and profit motive trump any other ethic, we can't have individuals as powerful as states, thanks to the wealth they accumulated, partly, stealing from states. Earning billions and finding ways to not pay any taxes is equivalent to stealing for me.
    • zygimantasdev 7y ago
      If you are taxed involuntary - isn't that stealing? Well technically by law it is legal and enforced for everyone, but it still is stealing. For example: if everybody is under the immoral law and some people are better than others at avoiding the immoral law - is it morally okay for those people to avoid that law? Edit: by involuntary I mean if person can't choose. Not talking about businesses
      • pietrovismara 7y ago
        No it is not, for a very obvious reason: you get all the advantages of living in a society. Even just for infrastructure alone. Roads, sewages, electricity, internet. Last but not least, safety and order. Any income you might have developed is built upon this foundations. It is the very minimum that you pay back for it, especially if you have more than most others. The only thing I don't like is that we don't have a choice about it. We are born in nations and we're subjected to their laws, like it or not. But you can still give up everything and not pay taxes...
• RickJWagner 7y ago
  According to Dave Ramsey, 79% of millionaires inherited $0. Globally, poverty is on the decline. What's the problem with wealth distribution, exactly? Besides jealousy.
• WalterBright 7y ago
  Without inequality we would not have airplanes, transatlantic cables, jet engines, electric cars, SpaceX, cloud computing, radar, internet phones, steel, automobiles, the textile industry, fuel, plentiful food, fresh fruit year round, etc.
  • gpvos 7y ago
    I think we would develop these in due time, just slower. One could also argue that some of these (textile industry, cloud computing) are bad. Actually, I am not against some inequality, as long as there is some kind of limit to it.
    • WalterBright 7y ago
      > One could also argue that some of these (textile industry, cloud computing) are bad. You could, but the textile industry freed women from endlessly spinning thread and making cloth. Pretty much nobody does that anymore. I don't want to spend my life making cloth the pre-industrial way. Do you? In colonial America, archaeological bone evidence shows the colonists worked like dogs and died young. Not very romantic.
  • duxut_staglatz 7y ago
    So should we have more inequality to have more of all those things, then?
    • WalterBright 7y ago
      Someone is always going to be stronger, faster, taller, younger, better looking, have more things, etc., than you do. If you use the envy to improve your life, then it's good. If you use the envy to tear down others to your level, that's not so good.
      • duxut_staglatz 7y ago
        I am not sure how your point implies that the current level of inequality is either optimal or too low
• stretchwithme 7y ago
  Income inequality is a sign that an economy is functioning properly. For people vary greatly in their talents, ambition, tolerance for risk, vision. Some can lead, delegate and inspire, while others cannot. Some are great at collaboration, others love confronting difficult challenges. Some are great at squeezing suppliers and others good at pushing people to adopt the next wave of technology. Some know exactly what people want and others are incredibly creative. Some never stop learning. Some do none of the above and only want everything defined for them with no risks or growth required. How could anyone analyze all of this incredible variability and decide whether people get too much money for their contributions? Income inequality rewards the development of all of those qualities.
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  • woander 7y ago
    Income inequality can also be a sign that an economy is functioning improperly. North Korea, Soviet Union, Zimbabwe, Venezuela, etc all have income inequality. I don't think anyone would say their economies are/were functioning properly. > Income inequality rewards the development of all of those qualities. Not necessarily. Your statement would be true if every generation started a 0, on equal footing and the system/environment was fair. Would you say that income inequality in Confederate South was a result of rewarding "talents, ambition, tolerance for risk, vision"? Income inequality is a very complex subject. People who try to frame it in a simplistic black and white worldview really do it a disservice.
• arcticbull 7y ago
  Income inequality I'm totally in favor of as a reward for creating value. Outsized value, outsized reward. With that in mind, I have a few caveats. To function properly: - Social mobility must exist: income inequality is available for everyone based on their merits, not coupled to things like circumstances at birth. - Wealth inequality must only exist for the generation that earned it. Passing on your largesse to your children is just as bad as the plutocracies that the founding fathers tried to escape. They should be rewarded for the value they create, not the value I created. - The bottom line is pulled up to the extent that you can live a comfortable life even if you fail.
• pietrod 7y ago
  tl;rd if you always bet x% on a fair coin you are going to lose in the long run, ex. 0.95*1.05 = 0.9974999999999999 < 1 (you will win and lose the same number of bets) so if world is a casino, where everything is a bet for utility with someone else, since the best strategy is not betting (or betting the less %) the richer is always in an advantageous position, and on the long run will have anything: this is intuitively true, but it has to be said that this passive force is way inferior compared to the active skill of a good better, that can completely override this force (that on a single life span would be like 1% of the force coming from skills). Basically the system is too chaotic to even notice this little force. Interesting idea, but this one from margrit kennedy https://vimeo.com/71074210 https://vimeo.com/71074210 is even better, here it's another passive force, but with way more impact than that, can be considered a real case of the general idea that "inequality" is a natural phenomena (that is a quite lazy concept cause it makes humans totally dumb and with no free will, like, sure, even war is natural, and murder, etc etc). honestly these ideas are so basic that shouldn't have names on them, and surely they are not the first people to have notice that.
• teksimian 7y ago
  inequality is the natural state of things. The worst form of inequality is to try to make unequal things equal. – Aristotle
• anovikov 7y ago
  My point in favor of the present income distribution being "natural" is that statistically, income is even somewhat more equally distributed than Tinder likes. Both are indicators of how good you are/how much people want to deal with you: give you cash or have sex with you. If there is no 'trick' in either distribution, they must be distributed equally. They are. Income slightly more equally because of the minimum wage/social pressure on businesses to hire useless workers/government providing some crappy employment to useless people. Wealth is less equally distributed than income or Tinder likes, because it's an antiderivative of income distribution, also completely natural. And also because of the generational factor: you are very unlikely to get swiped right because of who your dad was, but your dad could have left you some cash or connections. And yes, income is less equally distributed now than in 2008 exactly for the same reason as millenials having less sex on average than X-ers had in 2008: because we now have Tinder and it makes picking best partners a lot easier, resulting in top 1% best having sex with everyone with just scaps left for others. Money follows the same way due to the same factor of the smartphones and the Internet in general: success has become infinitely scalable. It's extremely hard to do anything at all about it. Maybe we just need to know about this as a fact of life and build social constructs to contain the resulting pressures. [1] https://medium.com/@worstonlinedater/tinder-experiments-ii-guys-unless-you-are-really-hot-you-are-probably-better-off-not-wasting-your-2ddf370a6e9a https://medium.com/@worstonlinedater/tinder-experiments-ii-g...
• Mikeb85 7y ago
  Of course inequality is inevitable. Some people are bigger/stronger/faster than others. They will naturally out-compete the others for resources. And once they have those resources, they will then use them to accumulate even more wealth, buy off politicians and institutions to siphon even more off, etc...
  • mLuby 7y ago
    > Some people are bigger/stronger/faster than others. Yes, and smarter/more driven/more socially adept too. > They will naturally out-compete the others for resources Only if they feel it is necessary to compete. A hungry animal will risk injury to for food. A sated animal rarely does. > And once they have those resources, they will then use them to accumulate even more wealth, buy off politicians and institutions to siphon even more off Only if their greed is boundless and unchecked. I understand these cynical sentiments (having felt this way myself) but it is a product of the abnormal system we temporarily inhabit, not the inevitable or natural state of things.
• joshuaheard 7y ago
  This article has several fatal flaws. The first one is that there is a loser in every transaction. Generally speaking, economic actors will only voluntarily engage in a mutually beneficial transaction. A person generally does not enter into a transaction where they are injured. To do so on a consistent basis is self-destructive. A shoe maker makes a shoe and sells it to me for a value greater than it costs to produce. I buy the shoe because the value of having my feet warm and protected is greater than the price of the shoe. We both win. The shoe maker would not sell a shoe for less than it costs to produce and stay a shoe maker for very long. I would not pay for a shoe that did not give me enough value. The authors claim people make a "mistake". In a very small amount of transactions, this may be true, but you cannot base a model on every transaction containing a mistake. But let's look at the math. The authors use an example where every transaction that costs $1 nets either $1.2 or $.83. Over ten transactions, the net is less than $10. But this assumes that the person puts their whole net worth on every transaction. This is false. Each transaction costs a $1. So, the first one costs $1, and the second costs $1, etc. You cannot accumulate the past values of the previous transactions into the current one. This is the coin toss fallacy. If you flip a coin and get 99 heads in a row, the coin toss fallacy says the odds are greater the next flip will be tails. But, each flip is independent of the previous flips, so the 100th flip has a 50/50 chance of being tails, regardless of the results of the previous 99 tosses. So there is no "loser" in every transaction as the authors posit. Both parties win, or the transaction would not occur. Their next claim is that becoming a billionaire is just "luck" and could happen randomly to anyone at any moment. Bill Gates is a billionaire because he created Microsoft. Mark Zuckerberg is a billionaire because he created Facebook. John Smith a fast food worker in Hoboken, Nebraska doesn't just wake up a billionaire one day by luck. And what is bad about being a billionaire. Gates and Musk are doing wonderful things with their money that disbursing it to a million people would not accomplish. The authors never give a reason why income equality is bad. In fact, inequality is the natural order. They never mention the Pareto Principle, popularly manifested as the Bell Curve, which is found everywhere in nature. The authors claim income equality is destabilizing and must be corrected by redistributing all the wealth in equal amounts. However, as stated, income inequality is the stabilized form. It might be increasing slightly now due to faster movement of information, but class mobility is highly dynamic. Yesterday's billionaires are not today's, and today's billionaires might not be tomorrow's. Income inequality is the stable distribution of scarce assets in a free market economy.
• knzhou 7y ago
  I find the creation of physics-inspired sociological models distasteful. It's often a way of manufacturing certainty and authority through mathematical obsfucation. It always runs the same way. First, you think of some political opinion you want to support. Then you come up with a mathematically trivial toy model that throws away 99% of the structure of the problem, whose few dynamical rules are artificially chosen so that they obviously will produce the result you want. (Though this part may look intimidating, it's not once you know how the game is played; I can easily cook up a toy model that "proves" any given political opinion upon request.) Then you put a lot of energy into solving the model in all kinds of cases, showing off your mathematical skills. The end result of all such social models is a set of predictions that are only tenuously linked to reality. A common example of such a claim is "X follows a power law". But the models are usually too weak to actually calculate the power in the power law, and the data too tenuous to even show you have a power law at all. (Most of the time this is done by showing a fuzzy cloud of points on a log-log plot with a tiny range, drawing a line through it (ignoring the fact that literally anything can be fit with a line if you zoom in enough) and declaring victory.) The point of mathematics is to make your postulates and predictions precise. If your postulates are obviously unrealistic, and your predictions are too vague to be meaningful, then the mathematics isn't serving any purpose -- except for giving your work a false authority.
  • anotherone15 7y ago
    Would you rather sociological models not contain any physics or math? What do you propose?
    • knzhou 7y ago
      I would prefer an empirical approach, as some take in macroeconomics. Just parametrize things you care about in terms of measureable quantities, and go out and measure them. Once you have that, there's no need to slap on some model that says, like people are a frustrated antiferromagnetic spin lattice on a random small world graph. It doesn't add anything. If you want to explain the results of the measurements, you can do it just as well with words.
• clarkmoody 7y ago
  The question is not how to reduce or cope with inequality. Rather, the question is: why is there wealth in the first place? Why have billions of people risen out of poverty over the last few centuries?