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Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. They also tend to be subject

by olefoo 18y ago

Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. They also tend to be subject to catastrophic social events.

mynameishere 18y ago
They also tend to be subject to catastrophic social events. It would be interesting to actually quantify that. I suspect that the main catastrophes that occur involve rich people being robbed and/or murdered.
- LogicHoleFlaw 18y ago
  Don't forget kidnapping. (I'm serious. I've had friends who were from wealthy parts of Latin America where kidnapping was a real concern.)
- olefoo 18y ago
  Increased crime and lawlessness are also symptoms of vast disparities of wealth, yes. Your point?
  - turkishrevenge 18y ago
    Yes, but of course no one here is going to agree with you.
  - crocus 18y ago
    They're correlated, but it's hard to say which is cause and which is effect.
Prrometheus 18y ago
>Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. I would love some numbers to back up that claim. I know that poor repressive governments tend to have high income disparity while the Western world tends to have less. However the last time I looked at the numbers I don't think the data showed that income disparity is a major causal factor in making a country poor or rich. It sounds to me like that is the dream of envious leftists, one of many unquestioned assumptions that they like to bring up in every debate. There's a difference between a third-world country where the favored friends of the state are well-off while everybody else starves (see Zimbabwe) and a rich country where everybody is well-off but some are more well-off than others (see Britain). I question the "if you don't give us more money, we'll riot and break stuff" justification for income redistribution in a rich first-world country. Also, third-world countries should be focused on getting rich, not redistributing what little wealth they have. I am highly skeptical of the benefits of income redistribution under any circumstances.
- olefoo 18y ago
  OK, this thread is degenerating; I'd like to apologize to every one in the hacker news community for having participated in it. This is obviously not a topic it's possible to have an intelligent public discussion about.
drewcrawford 18y ago
Correlation != Causation Many African countries (i.e. Zimbabwe) are extremely poor overall and have great wealth disparities. But it seems highly unlikely that there's a direct causal relationship (it's more likely that there's a third cause behind both conditions, i.e. government corruption). If we throw out the bad datapoints and restrict our search to countries with relatively stable or well-established governments, I suspect you will find that the reverse is true, on the whole. Most U.S. economic growth happened during the oil boom and/or Rockefeller and/or train monopolies and/or ... Even recently, the first .com bubble coincided with Microsoft/antitrust. Contrast these periods with the relatively slow growth of Iceland, a stable country with low economic disparity. Iceland is probably a great place to live (never been there). But I'm guessing they still put gas in their cars and use Windows and buy pharmaceuticals from the US.
- olefoo 18y ago
  You have a point, although there again, it could be that what you are seeing is a wave of technological change which enhances the earning power of the rich first and then diffuses out to the rest of society. I do think that the hypothesis that wealth disparities in the US are a product of massive corruption is not one to be dismissed lightly given the ongoing socialization of the costs of bailing out failing banks...
  - drewcrawford 18y ago
    I would agree with you, on the whole, that some wealth disparities in the US are the product of government corruption. Of course, in order for a government to become corrupt it must first become powerful enough to be worth corrupting. It is my observation that governments most rapidly gain power as a reaction to perceived economic disparity: the New Deal, SOX, the IRS, the SEC. These were all once government 'solutions' to economic inequality and remain today some of the most powerful (and arguably, corrupt) organizations in the world. I would argue that almost any time you find a corrupt organization generating illicit wealth, you will also find a well-meaning person who proposed the creation of that organization to 'solve' economic disparity. It is true that there are wealth disparities that are created through government corruption, especially in the short term. But historically that corruption is ultimately enabled (perhaps accidentally) by those overly concerned with the problem of wealth disparity.
crocus 18y ago
Really? Within the US, Silicon Valley has among the greatest disparities of wealth, and it is probably the richest and fastest growing region in the country. Basically, it depends whether the disparities come from founding Google, or being the dictator's brother.
- helveticaman 18y ago
  Chile also has huge wealth disparities, but in the last twenty years the Gini coefficient stayed the same and the GDP per capita has grown 3-fold.
  - olefoo 18y ago
    Thanks for bringing up the Gini coefficient, I had not heard of it before.
jmatt 18y ago
Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. PG makes a good argument otherwise. Read the last paragraph for the concise version of the essay. http://www.paulgraham.com/gap.html http://www.paulgraham.com/gap.html

by olefoo 18y ago

Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. They also tend to be subject to catastrophic social events.

mynameishere 18y ago

They also tend to be subject to catastrophic social events. It would be interesting to actually quantify that. I suspect that the main catastrophes that occur involve rich people being robbed and/or murdered.

LogicHoleFlaw 18y ago
Don't forget kidnapping. (I'm serious. I've had friends who were from wealthy parts of Latin America where kidnapping was a real concern.)
olefoo 18y ago
Increased crime and lawlessness are also symptoms of vast disparities of wealth, yes. Your point?
- turkishrevenge 18y ago
  Yes, but of course no one here is going to agree with you.
- crocus 18y ago
  They're correlated, but it's hard to say which is cause and which is effect.

Prrometheus 18y ago

>Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. I would love some numbers to back up that claim. I know that poor repressive governments tend to have high income disparity while the Western world tends to have less. However the last time I looked at the numbers I don't think the data showed that income disparity is a major causal factor in making a country poor or rich. It sounds to me like that is the dream of envious leftists, one of many unquestioned assumptions that they like to bring up in every debate. There's a difference between a third-world country where the favored friends of the state are well-off while everybody else starves (see Zimbabwe) and a rich country where everybody is well-off but some are more well-off than others (see Britain). I question the "if you don't give us more money, we'll riot and break stuff" justification for income redistribution in a rich first-world country. Also, third-world countries should be focused on getting rich, not redistributing what little wealth they have. I am highly skeptical of the benefits of income redistribution under any circumstances.

olefoo 18y ago
OK, this thread is degenerating; I'd like to apologize to every one in the hacker news community for having participated in it. This is obviously not a topic it's possible to have an intelligent public discussion about.

drewcrawford 18y ago

Correlation != Causation Many African countries (i.e. Zimbabwe) are extremely poor overall and have great wealth disparities. But it seems highly unlikely that there's a direct causal relationship (it's more likely that there's a third cause behind both conditions, i.e. government corruption). If we throw out the bad datapoints and restrict our search to countries with relatively stable or well-established governments, I suspect you will find that the reverse is true, on the whole. Most U.S. economic growth happened during the oil boom and/or Rockefeller and/or train monopolies and/or ... Even recently, the first .com bubble coincided with Microsoft/antitrust. Contrast these periods with the relatively slow growth of Iceland, a stable country with low economic disparity. Iceland is probably a great place to live (never been there). But I'm guessing they still put gas in their cars and use Windows and buy pharmaceuticals from the US.

olefoo 18y ago
You have a point, although there again, it could be that what you are seeing is a wave of technological change which enhances the earning power of the rich first and then diffuses out to the rest of society. I do think that the hypothesis that wealth disparities in the US are a product of massive corruption is not one to be dismissed lightly given the ongoing socialization of the costs of bailing out failing banks...
- drewcrawford 18y ago
  I would agree with you, on the whole, that some wealth disparities in the US are the product of government corruption. Of course, in order for a government to become corrupt it must first become powerful enough to be worth corrupting. It is my observation that governments most rapidly gain power as a reaction to perceived economic disparity: the New Deal, SOX, the IRS, the SEC. These were all once government 'solutions' to economic inequality and remain today some of the most powerful (and arguably, corrupt) organizations in the world. I would argue that almost any time you find a corrupt organization generating illicit wealth, you will also find a well-meaning person who proposed the creation of that organization to 'solve' economic disparity. It is true that there are wealth disparities that are created through government corruption, especially in the short term. But historically that corruption is ultimately enabled (perhaps accidentally) by those overly concerned with the problem of wealth disparity.

crocus 18y ago

Really? Within the US, Silicon Valley has among the greatest disparities of wealth, and it is probably the richest and fastest growing region in the country. Basically, it depends whether the disparities come from founding Google, or being the dictator's brother.

helveticaman 18y ago
Chile also has huge wealth disparities, but in the last twenty years the Gini coefficient stayed the same and the GDP per capita has grown 3-fold.
- olefoo 18y ago
  Thanks for bringing up the Gini coefficient, I had not heard of it before.

jmatt 18y ago

Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth. PG makes a good argument otherwise. Read the last paragraph for the concise version of the essay. http://www.paulgraham.com/gap.html http://www.paulgraham.com/gap.html