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>Smith, Yagan, Zidar, and Zwick find that the 1 percent’s income is being driven by owner-managers, mostly of small and medium-sized companies—specifically S co

>Smith, Yagan, Zidar, and Zwick find that the 1 percent’s income is being driven by owner-managers, mostly of small and medium-sized companies—specifically S corporations, partnerships, and limited liability companies. These are talented managers: the researchers find that profits of companies run by these 1 percent-ers are far higher than those of businesses owned by people in the top 5-–10 percent >“The demand for top skill has outpaced its supply, with the returns to top skill increasingly taking the form of business income.” This really doesn't come off as a problem that needs solving and instead sounds like a purely political war cry. These aren't lords abusing powerless peasants, they're contributing members of society being disproportionately rewarded for their disproportionate contributions. Wealth inequality needs to be considered in the context of overall prosperity and despite the fearmongering you see online, most Americans are doing well. Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure - eating the evil rich and redistributing their wealth is unlikely to solve any of the major issues in the country, as we're already throwing tons of money at schooling and healthcare and the like.

FireBeyond 7y ago
> Even our poor have modern conveniences, access to emergency healthcare It'd be far nicer if even the poor had access to non-emergency medicine, too, though. Ironically, the poor tend to contribute a disproportionate amount of their income to things like taxes and infrastructure, being without the ability to shield their "wealth".
fzeroracer 7y ago
As a poor I certainly didn't have access to many modern conveniences. Especially when I had to deal with rotting teeth and dental abscesses without a way of affording the fix.
blunte 7y ago
> disproportionate contributions Do you really argue that the people in the top 0.01% are contributing to society at a rate hundreds or thousands of times higher than the rest of the people? And in the case of heirs, such as the Walton family, are they contributing so vastly more than the guy who mows people's lawns during the day and cooks their dinners in a restaurant at night? Or how about the Renaissance folks. They (whether fully legally or secretly illegally) reap huge rewards yearly, certainly using some advantages and situations most people do not have access to. Are they likewise contributing to society so much more than the average person? Oh wait, let's talk nurses and schoolteachers. They pretty clearly contribute very heavily to society, and they get paid pretty poorly. Are they really contributing less, by factors of tens or hundreds, than Larry Ellison?
- isoskeles 7y ago
  The comment was referring to 1%ers, not 0.01%ers.
- hailwren 7y ago
  Why should it be a linear relationship? If talent is normally distributed then supply should decrease exponentially. Assuming that a company can afford it, wouldn't this make a linear demand produce an exponential forcing on salary?
  - mistermann 7y ago
    I think the main point of contention here is how everything is divvied up at the end of the day. What you are discussing (supply & demand, and the specific outcomes that occur) I think can be fairly described as the result of pure nature itself, whereas the article is also taking into consideration ~"society's opinion" on how the fruits of what people produce should be distributed.
- ci5er 7y ago
  > Oh wait, let's talk nurses and schoolteachers. They pretty clearly contribute very heavily to society, and they get paid pretty poorly. Are they really contributing less, by factors of tens or hundreds, than Larry Ellison? On an individual basis, leveraged through his organization - I think that it is objectively clear that the answer is: yes.
- stale2002 7y ago
  > Do you really argue that the people in the top 0.01% are contributing to society at a rate hundreds or thousands of times higher than the rest of the people? Yes. That is because of of the impact of their actions. Let's take the example of a CEO of a major company. The difference between a good CEO, and a great CEO might only change the value of a company by 1%. But 1% of a 100 billion dollar company, is 1 billion dollars. So if you are effecting a large enough company or area, then only being a little bit better than everyone else, turns out to be massively valuable, and therefore this value needs to be incentivized.
anderber 7y ago
I guess I'd have to disagree with your assessment. But I respect your opinion. > they're contributing members of society being disproportionately rewarded for their disproportionate contributions Are they contributing for their level of wealth being rewarded? Are they contributing 5,400+ times the average American is? Our schools need funding (teachers are buying their own supplies), infrastructure needs funding (bridges are collapsing), and our healthcare is extremely expensive for the average person.
patja 7y ago
I agree that the aggregate standards and quality of life are much improved over 20, 40, or 60 years ago, but I don't share your satisfaction with the status quo. I would prefer we made some changes that enabled the poor to be housed and receive more than emergency room reactive access to health care. No man is an island, and a devotion to meritocracy can blind you to the reality that the accomplishments attributed to merit and hard work are often simply correlated to the ZIP code where you spent your childhood. In a nation with as much wealth as we enjoy, it is shameful how we relegate our neighbors to defecating on sidewalks, living in tents with no heat or plumbing, and raving in the streets due to lack of mental health care.
- coldtea 7y ago
  >I agree that the aggregate standards and quality of life are much improved over 20, 40, or 60 years ago Over 100 years ago sure. Over 40 or 60 has it really? People usually consider more stuff (access to cheaper and more gadgets, the internet, etc) as an improved standard of living or quality of life. In other words they conflate technology making some products cheaper for a better standard of living. But even more important factors, for a large part of society is access to healthcare, education, house, etc -- all of which have gotten more expensive. There was a time when a single earner could buy a house at 25 or 35 and get their kids to college. Now two earner families often struggle. Middle class jobs have also become more stressful and pressing, while many middle and working class wages, inflation adjusted, have stagnated for decades, despite the increased stress, working hours, and productivity gains.
happytoexplain 7y ago
Encouraging people to believe that their contributions are as disproportionate as their rewards is absurd, even dangerous.
Ididntdothis 7y ago
“Wealth inequality needs to be considered in the context of overall prosperity and despite the fearmongering you see online, most Americans are doing well. Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure - eating the evil rich and redistributing their wealth is unlikely to solve any of the major issues in the country, as we're already throwing tons of money at schooling and healthcare and the like.” This line is extremely condescending. Why don’t we tell the top 0.1% who seem to always need more to do their valuable service to society that they have it much better than any king had it a hundred years ago? So why they need more every year? why is this line only used against the little guy? Fact is that more and more wealth goes to a small group of people. In my view this is extremely damaging to a society in the long run. some level of inequality is probably helpful to motivate people but it shouldn’t be growing constantly.
- mam2 7y ago
  They dont "need" more nor even look for it so much in fact. What makes inequality increase is actually the mindset of poor people that their poverty is "someone else's fault" like this kind of comment ( and also that "the state should do something" like it is their mother ). The hard truth is that inequality increases because poor people dont fight against and do nothing about it except complaining. Its always the fighting that has brought any of the social improvements, not the goodwill of politicians or anykind of "fair invisible hand".
- pubutil 7y ago
  I also have a big problem with the reasoning of the quoted argument, at least from a United States point of view. Our poor do have modern conveniences, because that’s what the world does; it evolves with current technology. They have access to emergency healthcare, which will almost inevitably bankrupt them when they need treatment. “Generally safe food” is not good enough in what is supposed to be one of the top first world countries. Infrastructure? Sure. Depending on how poor you are you’ll have varying access to infrastructure. This hasn’t happened out of concern for our poor. The poor are getting society’s leftovers. I don’t particularly care if we’ve “thrown tons of money at schooling and healthcare and the like” when we spend exponentially more money on the US military. Teachers across our country are still underpaid, and our education system is still not taken seriously enough. The US is not in the top 10 most educated countries (K-12), despite being a top first world country. Admittedly, money wouldn’t fix all the problems with our education system, but it would make a big difference. It sounds like this was written by someone with a limited frame of reference.
mistermann 7y ago
> This really doesn't come off as a problem It doesn't "come off as" a problem, because that is how you have personally interpreted the situation. > that needs solving It doesn't in fact "need" solving - life will go on, one way or another, regardless of whether policies are changed or not. > and instead sounds like a purely political war cry. In may in fact be "a political war cry", but is it purely that, or might there actually be something here that deserves attention? > These aren't lords abusing powerless peasants This is true, but colorful, rhetorical characterizations like this are an excellent way to persuade people without sticking to cold hard facts. > they're contributing members of society being disproportionately rewarded for their disproportionate contributions This rhetorical device is effective in that it persuades readers to logically think of the issue as a binary rather than a continuum. The proper question is: is their disproportionate reward proportional to their disproportionate contribution? And even this improved statement of the situation is flawed in that is kind of implicitly assumes that the relationship between contribution and reward should be linear, which is inconsistent with the general societal decision that taxes should be progressive (the tax rate(!) increases as the taxable amount increases). And to be clear, I'm making no absolute claim that progressive taxes are "right", I am only stating that this is what society generally deems "proper". This aspect of the situation seems absent from your analysis, so it seems appropriate to point it out. > despite the fearmongering you see online This style of rhetoric is persuasive, and it may even have some truth to it, but it is orthogonal to a proper logical analysis of the actual issue and should therefore be avoided. > ...most Americans are doing well. Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure This style of rhetoric is persuasive in that it frames the issue according to one specific perspective (a subset of dimensions) on the overall (the entire subset of dimensions) issue. A loose (and uncharitable) restatement of this might go something like: "Because most people are "doing well", then therefore there is nothing to see here." I will note that this isn't actually what you are saying, I'm just pointing out the beauty of rhetoric - when done well, it invokes a style of thinking, which results in real-time generation of certain "facts", without actually having to explicitly say certain things (ex: dog whistling). It can cause the reader to change the way they conceptualize the situation, and therefore change their conclusion from that which it would be if they were to engage in a purely factual analysis of the situation in its entirety. This isn't to say that you are doing any of the above consciously and with intent to deceive, I'm simply pointing out some of the flaws that are ever-present in the way modern society, politicians, advocates, etc engage in communication. It's no wonder we've made such a mess of things. People believe they think logically, based on facts, because this is how it seems to each of us. Bu in such matters what people actually do is think in narratives, that are very loosely (and often incorrectly) based on "facts" (most of which are also narratives), and then only a subset of the entirety. This is by necessity, because outside of the hard sciences, systems are far too complex and interconnected to think about using pure logic and facts. However, it's not a necessity to think we think in facts - this we are capable of realizing, and many philosophers and psychologists have amply demonstrated this, but the realization of the importance of this has not made it's way into widespread knowledge, and certainly not into behavior in discourse, even that between highly intelligent people. I wonder if awareness of such complexities in communication was widespread throughout society, if we could improve the outcomes of our political process. I suspect we'll never know.
tracer4201 7y ago
This post reminds me of my leadership at a former employer who were insisting on releasing a game console that requires customers to download all content and games, regardless of the fact that unlike gigabit internet offered in our city, many Americans don’t have access to or cannot afford broadband. That leadership team only hanged course because the negative perception spread like wildfire and made them look extremely incompetent. They didn’t care about the customer - they only even changed course to manage their own careers but I digress. In some cases, these people are lords abusing powerless peasants. Most of America isn’t Seattle, Austin, NYC, or the Silicon Valley. People can work for WalMart in the town I grew up in or go unemployed because WalMart swallowed competition. They’re literally at the mercy of whatever WalMart wants to pay them. Our poor have emergency healthcare but will get bankrupted in the process. They have safe food insofar as they won’t die of typhoid or hepatitis like in the developing world, but they don’t have healthy food. They have access to various forms of packaged, refined sugars. A diet based on cheap access to these goods will only lead to longer term health problems - there’s scientific data backing that claim. Interesting how you frame your argument - that the poor aren’t as horribly off as perhaps in another century or in the developing world, and so it’s good enough. The same argument can and should be used to call out the endless greed, especially of the 0.1%. Don’t have they have enough? Are they they some of the richest folks in human history?
anoncake 7y ago
1. Outsized rewards don't imply outsized contributions, rent-seeking exists. The contributions don't even have to be positive, see Facebook. 2. Outsized contributions shouldn't result in outsized rewards. The marginal utility of additional wealth is much higher if you're poor. Inequality is inefficient. Also, if you are rewarded as much as you contribute, your net contributions are zero. > Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure. Dude. Emergency healthcare and generally safe food isn't something to be proud of unless you're a developing country.

FireBeyond 7y ago

> Even our poor have modern conveniences, access to emergency healthcare It'd be far nicer if even the poor had access to non-emergency medicine, too, though. Ironically, the poor tend to contribute a disproportionate amount of their income to things like taxes and infrastructure, being without the ability to shield their "wealth".

fzeroracer 7y ago

As a poor I certainly didn't have access to many modern conveniences. Especially when I had to deal with rotting teeth and dental abscesses without a way of affording the fix.

blunte 7y ago

> disproportionate contributions Do you really argue that the people in the top 0.01% are contributing to society at a rate hundreds or thousands of times higher than the rest of the people? And in the case of heirs, such as the Walton family, are they contributing so vastly more than the guy who mows people's lawns during the day and cooks their dinners in a restaurant at night? Or how about the Renaissance folks. They (whether fully legally or secretly illegally) reap huge rewards yearly, certainly using some advantages and situations most people do not have access to. Are they likewise contributing to society so much more than the average person? Oh wait, let's talk nurses and schoolteachers. They pretty clearly contribute very heavily to society, and they get paid pretty poorly. Are they really contributing less, by factors of tens or hundreds, than Larry Ellison?

isoskeles 7y ago
The comment was referring to 1%ers, not 0.01%ers.
hailwren 7y ago
Why should it be a linear relationship? If talent is normally distributed then supply should decrease exponentially. Assuming that a company can afford it, wouldn't this make a linear demand produce an exponential forcing on salary?
- mistermann 7y ago
  I think the main point of contention here is how everything is divvied up at the end of the day. What you are discussing (supply & demand, and the specific outcomes that occur) I think can be fairly described as the result of pure nature itself, whereas the article is also taking into consideration ~"society's opinion" on how the fruits of what people produce should be distributed.
ci5er 7y ago
> Oh wait, let's talk nurses and schoolteachers. They pretty clearly contribute very heavily to society, and they get paid pretty poorly. Are they really contributing less, by factors of tens or hundreds, than Larry Ellison? On an individual basis, leveraged through his organization - I think that it is objectively clear that the answer is: yes.
stale2002 7y ago
> Do you really argue that the people in the top 0.01% are contributing to society at a rate hundreds or thousands of times higher than the rest of the people? Yes. That is because of of the impact of their actions. Let's take the example of a CEO of a major company. The difference between a good CEO, and a great CEO might only change the value of a company by 1%. But 1% of a 100 billion dollar company, is 1 billion dollars. So if you are effecting a large enough company or area, then only being a little bit better than everyone else, turns out to be massively valuable, and therefore this value needs to be incentivized.

anderber 7y ago

I guess I'd have to disagree with your assessment. But I respect your opinion. > they're contributing members of society being disproportionately rewarded for their disproportionate contributions Are they contributing for their level of wealth being rewarded? Are they contributing 5,400+ times the average American is? Our schools need funding (teachers are buying their own supplies), infrastructure needs funding (bridges are collapsing), and our healthcare is extremely expensive for the average person.

patja 7y ago

I agree that the aggregate standards and quality of life are much improved over 20, 40, or 60 years ago, but I don't share your satisfaction with the status quo. I would prefer we made some changes that enabled the poor to be housed and receive more than emergency room reactive access to health care. No man is an island, and a devotion to meritocracy can blind you to the reality that the accomplishments attributed to merit and hard work are often simply correlated to the ZIP code where you spent your childhood. In a nation with as much wealth as we enjoy, it is shameful how we relegate our neighbors to defecating on sidewalks, living in tents with no heat or plumbing, and raving in the streets due to lack of mental health care.

coldtea 7y ago
>I agree that the aggregate standards and quality of life are much improved over 20, 40, or 60 years ago Over 100 years ago sure. Over 40 or 60 has it really? People usually consider more stuff (access to cheaper and more gadgets, the internet, etc) as an improved standard of living or quality of life. In other words they conflate technology making some products cheaper for a better standard of living. But even more important factors, for a large part of society is access to healthcare, education, house, etc -- all of which have gotten more expensive. There was a time when a single earner could buy a house at 25 or 35 and get their kids to college. Now two earner families often struggle. Middle class jobs have also become more stressful and pressing, while many middle and working class wages, inflation adjusted, have stagnated for decades, despite the increased stress, working hours, and productivity gains.

happytoexplain 7y ago

Encouraging people to believe that their contributions are as disproportionate as their rewards is absurd, even dangerous.

Ididntdothis 7y ago

“Wealth inequality needs to be considered in the context of overall prosperity and despite the fearmongering you see online, most Americans are doing well. Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure - eating the evil rich and redistributing their wealth is unlikely to solve any of the major issues in the country, as we're already throwing tons of money at schooling and healthcare and the like.” This line is extremely condescending. Why don’t we tell the top 0.1% who seem to always need more to do their valuable service to society that they have it much better than any king had it a hundred years ago? So why they need more every year? why is this line only used against the little guy? Fact is that more and more wealth goes to a small group of people. In my view this is extremely damaging to a society in the long run. some level of inequality is probably helpful to motivate people but it shouldn’t be growing constantly.

mam2 7y ago
They dont "need" more nor even look for it so much in fact. What makes inequality increase is actually the mindset of poor people that their poverty is "someone else's fault" like this kind of comment ( and also that "the state should do something" like it is their mother ). The hard truth is that inequality increases because poor people dont fight against and do nothing about it except complaining. Its always the fighting that has brought any of the social improvements, not the goodwill of politicians or anykind of "fair invisible hand".
pubutil 7y ago
I also have a big problem with the reasoning of the quoted argument, at least from a United States point of view. Our poor do have modern conveniences, because that’s what the world does; it evolves with current technology. They have access to emergency healthcare, which will almost inevitably bankrupt them when they need treatment. “Generally safe food” is not good enough in what is supposed to be one of the top first world countries. Infrastructure? Sure. Depending on how poor you are you’ll have varying access to infrastructure. This hasn’t happened out of concern for our poor. The poor are getting society’s leftovers. I don’t particularly care if we’ve “thrown tons of money at schooling and healthcare and the like” when we spend exponentially more money on the US military. Teachers across our country are still underpaid, and our education system is still not taken seriously enough. The US is not in the top 10 most educated countries (K-12), despite being a top first world country. Admittedly, money wouldn’t fix all the problems with our education system, but it would make a big difference. It sounds like this was written by someone with a limited frame of reference.

mistermann 7y ago

> This really doesn't come off as a problem It doesn't "come off as" a problem, because that is how you have personally interpreted the situation. > that needs solving It doesn't in fact "need" solving - life will go on, one way or another, regardless of whether policies are changed or not. > and instead sounds like a purely political war cry. In may in fact be "a political war cry", but is it purely that, or might there actually be something here that deserves attention? > These aren't lords abusing powerless peasants This is true, but colorful, rhetorical characterizations like this are an excellent way to persuade people without sticking to cold hard facts. > they're contributing members of society being disproportionately rewarded for their disproportionate contributions This rhetorical device is effective in that it persuades readers to logically think of the issue as a binary rather than a continuum. The proper question is: is their disproportionate reward proportional to their disproportionate contribution? And even this improved statement of the situation is flawed in that is kind of implicitly assumes that the relationship between contribution and reward should be linear, which is inconsistent with the general societal decision that taxes should be progressive (the tax rate(!) increases as the taxable amount increases). And to be clear, I'm making no absolute claim that progressive taxes are "right", I am only stating that this is what society generally deems "proper". This aspect of the situation seems absent from your analysis, so it seems appropriate to point it out. > despite the fearmongering you see online This style of rhetoric is persuasive, and it may even have some truth to it, but it is orthogonal to a proper logical analysis of the actual issue and should therefore be avoided. > ...most Americans are doing well. Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure This style of rhetoric is persuasive in that it frames the issue according to one specific perspective (a subset of dimensions) on the overall (the entire subset of dimensions) issue. A loose (and uncharitable) restatement of this might go something like: "Because most people are "doing well", then therefore there is nothing to see here." I will note that this isn't actually what you are saying, I'm just pointing out the beauty of rhetoric - when done well, it invokes a style of thinking, which results in real-time generation of certain "facts", without actually having to explicitly say certain things (ex: dog whistling). It can cause the reader to change the way they conceptualize the situation, and therefore change their conclusion from that which it would be if they were to engage in a purely factual analysis of the situation in its entirety. This isn't to say that you are doing any of the above consciously and with intent to deceive, I'm simply pointing out some of the flaws that are ever-present in the way modern society, politicians, advocates, etc engage in communication. It's no wonder we've made such a mess of things. People believe they think logically, based on facts, because this is how it seems to each of us. Bu in such matters what people actually do is think in narratives, that are very loosely (and often incorrectly) based on "facts" (most of which are also narratives), and then only a subset of the entirety. This is by necessity, because outside of the hard sciences, systems are far too complex and interconnected to think about using pure logic and facts. However, it's not a necessity to think we think in facts - this we are capable of realizing, and many philosophers and psychologists have amply demonstrated this, but the realization of the importance of this has not made it's way into widespread knowledge, and certainly not into behavior in discourse, even that between highly intelligent people. I wonder if awareness of such complexities in communication was widespread throughout society, if we could improve the outcomes of our political process. I suspect we'll never know.

tracer4201 7y ago

This post reminds me of my leadership at a former employer who were insisting on releasing a game console that requires customers to download all content and games, regardless of the fact that unlike gigabit internet offered in our city, many Americans don’t have access to or cannot afford broadband. That leadership team only hanged course because the negative perception spread like wildfire and made them look extremely incompetent. They didn’t care about the customer - they only even changed course to manage their own careers but I digress. In some cases, these people are lords abusing powerless peasants. Most of America isn’t Seattle, Austin, NYC, or the Silicon Valley. People can work for WalMart in the town I grew up in or go unemployed because WalMart swallowed competition. They’re literally at the mercy of whatever WalMart wants to pay them. Our poor have emergency healthcare but will get bankrupted in the process. They have safe food insofar as they won’t die of typhoid or hepatitis like in the developing world, but they don’t have healthy food. They have access to various forms of packaged, refined sugars. A diet based on cheap access to these goods will only lead to longer term health problems - there’s scientific data backing that claim. Interesting how you frame your argument - that the poor aren’t as horribly off as perhaps in another century or in the developing world, and so it’s good enough. The same argument can and should be used to call out the endless greed, especially of the 0.1%. Don’t have they have enough? Are they they some of the richest folks in human history?

anoncake 7y ago

1. Outsized rewards don't imply outsized contributions, rent-seeking exists. The contributions don't even have to be positive, see Facebook. 2. Outsized contributions shouldn't result in outsized rewards. The marginal utility of additional wealth is much higher if you're poor. Inequality is inefficient. Also, if you are rewarded as much as you contribute, your net contributions are zero. > Even our poor have modern conveniences, access to emergency healthcare, generally safe food and infrastructure. Dude. Emergency healthcare and generally safe food isn't something to be proud of unless you're a developing country.