5 ms·

A society with no technology has hardly any wealth gap. People who can leverage multiple technologies can multiply their efforts. Mass communication, mass dis

A society with no technology has hardly any wealth gap. People who can leverage multiple technologies can multiply their efforts. Mass communication, mass distribution and automation of all sorts. But Wall Street bonuses are subsidized by the fact the government socializes their biggest failures. Bailouts just encourage them to take greater risks, leveraging debt in dangerous ways that will blow up the system again.

downandout 6y ago
Taxpayers not only recovered everything from the 2008 bailouts, they actually earned a $15.3 billion profit. How is that “socializing their biggest failures”? From [1]: Early estimates for the total cost of the bailout to the government were as much as $700 billion, however TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6%... [1] https://en.m.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 https://en.m.wikipedia.org/wiki/Emergency_Economic_Stabiliza...
- mstipetic 6y ago
  It’s easy to make a profit when everyone is strapped for cash and you have an infinite supply
  - bawolff 6y ago
    There's no such thing as infinite money. Cash just symbolizes value its not actually "value", and you can't make infinite value by just printing infinite cash.
    - mstipetic 6y ago
      I’m not the person you should be explaining that to
      - bawolff 6y ago
        You seem to think that the government's control of the money supply means its easy for them to make a profit.
        mstipetic 6y ago
        No I think that it's easy for people that got the bailout to make a profit while being flush with cash in a crisis which they themselves caused, with no repercussions. Printing that money devalues everyone else's money, so it's basically a transfer of wealth from everyone to wall street.
    - imtringued 6y ago
      The banks don't have to manufacture the product. They just sell it. The easy money is the profit margin on the lending activity because the profit margin is usually constant, regardless of the state of the economy. I'm not saying banks are evil but they do have it easy because they are core infrastructure that people don't want to live without.
  - speedplane 6y ago
    > It’s easy to make a profit when everyone is strapped for cash and you have an infinite supply I’d expand this... It’s easy to make a profit when everyone is strapped for cash.
  - downandout 6y ago
    Perhaps, but the point was that these banks in no way “socialized their biggest failures”.
- onetimemanytime 6y ago
  >>Taxpayers not only recouped everything from the 2008 bailouts, they actually earned a $15.3 billion profit. How is that “socializing their biggest failures”? Taxpayers should have behaved like hedge funds behave with one another...merciless. Want cash cause no one else loans to you? Sure, hand 95% of the business. The difference between what I said and $15.3 Billion is the gift.
  - downandout 6y ago
    The government is not a hedge fund. It has no expertise in running businesses. Had they done what your are suggesting, the markets wouldn’t have reacted the way they did, the companies would have gone bankrupt under government mismanagement, the economy would have continued to crater, and not $1 of the money would have been recovered. It turns out that the architects of this bailout were very smart about the way they did it. Also, relative to the recent stimulus packages that have no hope of ever being recovered, the numbers from 2008 are quaint and the conditions under which it was given were extremely fiscally responsible.
    - onetimemanytime 6y ago
      >>Had they done what your are suggesting, the markets wouldn’t have reacted the way they did, the companies would have gone bankrupt under government mismanagement, the economy would have continued to crater, and not $1 of the money would have been recovered. Nah. Keep the management, they run the business not owners. In fact give them raises and bonuses. It's not like managers had other employment options. But either way, they did get a lifesaving bailout, regardless of the merits or whether US got their money back
      - downandout 6y ago
        they did get a lifesaving bailout, regardless of the merits or whether US got their money back They did, and given the systemic importance of the companies that received this money, that was a gift not only to the companies, but to the entire economy. We wouldn’t have an economy today had they not done this. Today we are capable of giving away trillions with no hope of recovery in part because of what was done in 2008 - and it was done at no cost to taxpayers.
- ZephyrBlu 6y ago
  You left off an extremely relevant detail from your quote: "... annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation"
  - downandout 6y ago
    “Perhaps” isn’t a data point - it’s speculation, and is thus irrelevant. The money was recovered at a $15.3 billion profit. If they had included a number and a reference to the data backing up their guess that “perhaps” it might have been a tiny inflation-adjusted loss, I would have included it. I’m not sure what your point in bringing it up is either. The point is that the bailouts were fully recovered, and that is undisputed. HN loves its pedantry, but there is little value to this particular incarnation of it.
  - imtringued 6y ago
    If interest payments were the only thing getting bailed out people wouldn't be angry over it.
    - downandout 6y ago
      Well, they shouldn’t be angry at all, because they got a $15 billion profit. People are a bit too tough to please if that makes them angry, especially in light of the fact that we will be paying for the most recent stimulus packages for generations, and they seem to have public support.
bawolff 6y ago
What's "no technology", because ancient rome was full of giant wealth gaps. Maybe if you mean hunter-gatherer societies, but i don't really know enough about them to comment.
- donw 6y ago
  Rome was an incredibly advanced society with a great deal of technology, though.
  - anoncake 6y ago
    Not compared to today. If technology and wealth gap were linked, ancient Rome would have been much more equal than our society.
- Melting_Harps 6y ago
  > What's "no technology", A poor, non-existing fanciful hypothetical argument that cannot stand on it's own, but is made to illustrate an ill-convinced point: because since the advent of anatomical Humans (~200k-300k) we see evidence of Man was using clubs or spears fashioned from wood, or arrowheads with the art in caves to go with it. All of which fall under technology of some sort. In short, its a poorly reasoned hypothetical to support one's own biases and perhaps disdain for tech and the inherent inequality that follows from those who benefit from it.
  - indigo945 6y ago
    This is correct. More generally, there is absolutely no evidence that wealthier people do, on average, "leverage" technologies better. Ancient Rome is one example because while advanced technology existed, the wealthiest people were land owners taking in the profits of slave labor, not the architects and inventors who built temples and refined concrete. Of course, the same is true for modern society. Even so-called "tech entrepreneurs" like Elon Musk do much better at seeking profits than "leveraging technologies" -- as paying people to develop technologies isn't the same thing as leveraging them for increasing the productivity of oneself, at all. However, of course, the argument is hardly surprising. After all, much of the ideology of modern capitalism rests on the ideal of the Iron Man, the genius inventor who, by his smartness (and benevolent white masculinity) embodies the excuse for the exploitation of the Earth's natural resources, for the creeping destruction of our democracy and the huge disparities in wealth and power that go along with it. You just have to believe this is real, otherwise all you ever learned from Coca Cola advertising would be wrong, at that is too painful to admit.
kristopolous 6y ago
Ok but during a crisis what's the alternative? The alternative now is to disconnect the systems from the possibility of contagion, but the nature of crisis is essentially an acknowledgment of a failure to achieve in those efforts. So what then, really?
- Qahlel 6y ago
  Less government intervention: Let them fail. System can only fix itself, if we let the flaws fall.
  - kristopolous 6y ago
    When has such a policy actually worked? Do you have any clean historical examples at a large scale? Panic of 1873 is the closest I know of and it didn't go very well I'm not taking a stand. It's just that macroeconomics is hard and counterintuitive, especially when we're dealing with something large enough to have currency implications
  - TeMPOraL 6y ago
    That's assuming the system can fix itself, which generally isn't true :). If a boiler in your bathroom maneuvers itself into a runaway positive feedback loop, it won't fix itself. It will explode, sending superheated water and shards of steel and plastic across your house. The smoldering remains of the PID controller that drove the failure won't recollect themselves and reweld the shredded tank. A system that fails can be fixed by the system in which the failing one is contained. That same outer system can also work to prevent the inner system from failing in the first place. (And sure, in the analogy, the "outer system" is the homeowner that can buy a new boiler. But wouldn't it be better to make sure the original boiler can't move out of its control envelope? Then the homeowner wouldn't have a bathroom to renovate and a pet to bury, after it caught a flying pressure valve in the eye.)
- Negitivefrags 6y ago
  The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot of suffering. But on the other hand, the rich will lose more, and during the rebuilding a different set of people will gain the upper hand and end up on top. It's hard to get the political will to actually allow what needs to happen to fix wealth inequality.
sagonar 6y ago
My counter example is slavery, which would lead to a very big wealth gap. I think that large slavery state or system would need metal working, but will guess it has existed without.
- bawolff 6y ago
  Probably you need at least farming so you have something for your slaves to work on that can scale easily.
- donw 6y ago
  Yes, but what does slavery have to do with technology...? I don't understand the connection to the parent post.
f6v 6y ago
What kind of technology enabled wealth gap in feudal society? It seems it was more about religion being used to subdue people.
- donw 6y ago
  > What kind of technology enabled wealth gap in feudal society? In short: Weapons. On the pre-gunpowder battlefield, the mounted, armored knight was roughly equivalent to the modern light tank. It is incredibly hard to take out an armored knight with the kind of weapons or tools which would have been available to peasants or serfs, so it doesn't take that many knights to keep enough peasants in-line to build a very wealthy kingdom. Religion during this era functioned much more like the modern civil service than what you or I would recognize as a church, and this also included both education and state security functions. When firearms became commonplace, this game totally changed. Previously, weapons, even the longbow, took years to master well enough to be combat effective. With muskets, you can turn a group of ignorant peasants into a fighting force capable of taking on armored cavalry in a few months, possibly even weeks. The Enlightenment, as well as our ideas about "equal treatment under the law", were the direct result of this force parity.
  - belgian_guy 6y ago
    Following this reasoning, why didn't the enlightenment occur in asia, which had earlier access to gunpowder? Iirc the ottoman empire had portable guns before the west. And china had fire lances way before that.
    - donw 6y ago
      Because the Enlightenment was a complex social phenomenon with multiple prerequisites...?
    - ben_w 5y ago
      “Gun” isn’t one single tech; you start with a canon that’s hard to move, dangerous to the user, and with a smooth barrel and ball that doesn’t have good accuracy. Industry to make gunpowder cheaply and reliably rather than as one-offs for anti-castle siege weapons, and metallurgy and tooling to make the weapons hand-held and not prone to exploding in the operator’s hand, are what I have to assume old Asia lacked.
Aunche 6y ago
> Bailouts just encourage them to take greater risks, leveraging debt in dangerous ways that will blow up the system again. In practice, this hasn't happened. As a whole, financial institutions are more risk-adverse than ever. Keep in mind, that they don't want another Dodd-Frank.
- jbverschoor 6y ago
  Why do you think so? The whole GME thing could potentially bring infinite losses
  - noxer 6y ago
    No it can not. It just moves money to someone else which usually leads to more stable markets because thous who bet wrong lose and the other win.
- Melting_Harps 6y ago
  > As a whole, financial institutions are more risk-adverse than ever. And this includes Hedgefunds, like Melvin Capital, Citadel and the like? Doesn't the Robinhood and GME thing DIRECTLY contradict what you're saying? Furthermore, they are over leveraged on real estate in teh US and BlackRock accounts for every greater RE holdings than post 2008 housing crisis. I'm not sure what you are talking about, Dodd-Frank is like Glass-Steagall, they'll just make up rules when the bailouts are required (Goldman Sachs 2008), just like airliners laid off a large majority of their staff despite the bailouts in the first Trump bailout being issued to ENSURE they wouldn't and they took the money either way.
  - TeeMassive 6y ago
    > And this includes Hedgefunds, like Melvin Capital, Citadel and the like? Doesn't the Robinhood and GME thing DIRECTLY contradict what you're saying? Meme stocks are a thing born out of social media just very recently and will most likely not happen that much given that now edge funds are aware of it and have probably already deployed the appropriate counter-measures.
gher-shyu3i 6y ago
While what you point out is definitely true, a very important cause of the wealth gap in todays world that barely anyone talks about is the accepted engagement in lending money with interest (i.e. usury). It's heavily built in to the society today. It's not for no reason that this practices (along with derivative practices) is prohibited in the major 3 religions.
- imtringued 6y ago
  A lot of companies (and the jobs those companies created) were built on top of that usury and the workers who lent out their money were even compensated for that!
  - gher-shyu3i 6y ago
    That doesn't justify the immorality of engaging in usury, it's like saying whaling is banned, but there are people who need to feed their families - we already know that. A superior and not immoral model is investing in said companies, so if they succeed both the investors and company owners profit, otherwise they both lose. It's proper risk sharing.

downandout 6y ago

Taxpayers not only recovered everything from the 2008 bailouts, they actually earned a $15.3 billion profit. How is that “socializing their biggest failures”? From [1]: Early estimates for the total cost of the bailout to the government were as much as $700 billion, however TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6%... [1] https://en.m.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 https://en.m.wikipedia.org/wiki/Emergency_Economic_Stabiliza...

mstipetic 6y ago
It’s easy to make a profit when everyone is strapped for cash and you have an infinite supply
- bawolff 6y ago
  There's no such thing as infinite money. Cash just symbolizes value its not actually "value", and you can't make infinite value by just printing infinite cash.
  - mstipetic 6y ago
    I’m not the person you should be explaining that to
    - bawolff 6y ago
      You seem to think that the government's control of the money supply means its easy for them to make a profit.
      - mstipetic 6y ago
        No I think that it's easy for people that got the bailout to make a profit while being flush with cash in a crisis which they themselves caused, with no repercussions. Printing that money devalues everyone else's money, so it's basically a transfer of wealth from everyone to wall street.
  - imtringued 6y ago
    The banks don't have to manufacture the product. They just sell it. The easy money is the profit margin on the lending activity because the profit margin is usually constant, regardless of the state of the economy. I'm not saying banks are evil but they do have it easy because they are core infrastructure that people don't want to live without.
- speedplane 6y ago
  > It’s easy to make a profit when everyone is strapped for cash and you have an infinite supply I’d expand this... It’s easy to make a profit when everyone is strapped for cash.
- downandout 6y ago
  Perhaps, but the point was that these banks in no way “socialized their biggest failures”.
onetimemanytime 6y ago
>>Taxpayers not only recouped everything from the 2008 bailouts, they actually earned a $15.3 billion profit. How is that “socializing their biggest failures”? Taxpayers should have behaved like hedge funds behave with one another...merciless. Want cash cause no one else loans to you? Sure, hand 95% of the business. The difference between what I said and $15.3 Billion is the gift.
- downandout 6y ago
  The government is not a hedge fund. It has no expertise in running businesses. Had they done what your are suggesting, the markets wouldn’t have reacted the way they did, the companies would have gone bankrupt under government mismanagement, the economy would have continued to crater, and not $1 of the money would have been recovered. It turns out that the architects of this bailout were very smart about the way they did it. Also, relative to the recent stimulus packages that have no hope of ever being recovered, the numbers from 2008 are quaint and the conditions under which it was given were extremely fiscally responsible.
  - onetimemanytime 6y ago
    >>Had they done what your are suggesting, the markets wouldn’t have reacted the way they did, the companies would have gone bankrupt under government mismanagement, the economy would have continued to crater, and not $1 of the money would have been recovered. Nah. Keep the management, they run the business not owners. In fact give them raises and bonuses. It's not like managers had other employment options. But either way, they did get a lifesaving bailout, regardless of the merits or whether US got their money back
    - downandout 6y ago
      they did get a lifesaving bailout, regardless of the merits or whether US got their money back They did, and given the systemic importance of the companies that received this money, that was a gift not only to the companies, but to the entire economy. We wouldn’t have an economy today had they not done this. Today we are capable of giving away trillions with no hope of recovery in part because of what was done in 2008 - and it was done at no cost to taxpayers.
ZephyrBlu 6y ago
You left off an extremely relevant detail from your quote: "... annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation"
- downandout 6y ago
  “Perhaps” isn’t a data point - it’s speculation, and is thus irrelevant. The money was recovered at a $15.3 billion profit. If they had included a number and a reference to the data backing up their guess that “perhaps” it might have been a tiny inflation-adjusted loss, I would have included it. I’m not sure what your point in bringing it up is either. The point is that the bailouts were fully recovered, and that is undisputed. HN loves its pedantry, but there is little value to this particular incarnation of it.
- imtringued 6y ago
  If interest payments were the only thing getting bailed out people wouldn't be angry over it.
  - downandout 6y ago
    Well, they shouldn’t be angry at all, because they got a $15 billion profit. People are a bit too tough to please if that makes them angry, especially in light of the fact that we will be paying for the most recent stimulus packages for generations, and they seem to have public support.

bawolff 6y ago

What's "no technology", because ancient rome was full of giant wealth gaps. Maybe if you mean hunter-gatherer societies, but i don't really know enough about them to comment.

donw 6y ago
Rome was an incredibly advanced society with a great deal of technology, though.
- anoncake 6y ago
  Not compared to today. If technology and wealth gap were linked, ancient Rome would have been much more equal than our society.
Melting_Harps 6y ago
> What's "no technology", A poor, non-existing fanciful hypothetical argument that cannot stand on it's own, but is made to illustrate an ill-convinced point: because since the advent of anatomical Humans (~200k-300k) we see evidence of Man was using clubs or spears fashioned from wood, or arrowheads with the art in caves to go with it. All of which fall under technology of some sort. In short, its a poorly reasoned hypothetical to support one's own biases and perhaps disdain for tech and the inherent inequality that follows from those who benefit from it.
- indigo945 6y ago
  This is correct. More generally, there is absolutely no evidence that wealthier people do, on average, "leverage" technologies better. Ancient Rome is one example because while advanced technology existed, the wealthiest people were land owners taking in the profits of slave labor, not the architects and inventors who built temples and refined concrete. Of course, the same is true for modern society. Even so-called "tech entrepreneurs" like Elon Musk do much better at seeking profits than "leveraging technologies" -- as paying people to develop technologies isn't the same thing as leveraging them for increasing the productivity of oneself, at all. However, of course, the argument is hardly surprising. After all, much of the ideology of modern capitalism rests on the ideal of the Iron Man, the genius inventor who, by his smartness (and benevolent white masculinity) embodies the excuse for the exploitation of the Earth's natural resources, for the creeping destruction of our democracy and the huge disparities in wealth and power that go along with it. You just have to believe this is real, otherwise all you ever learned from Coca Cola advertising would be wrong, at that is too painful to admit.

kristopolous 6y ago

Ok but during a crisis what's the alternative? The alternative now is to disconnect the systems from the possibility of contagion, but the nature of crisis is essentially an acknowledgment of a failure to achieve in those efforts. So what then, really?

Qahlel 6y ago
Less government intervention: Let them fail. System can only fix itself, if we let the flaws fall.
- kristopolous 6y ago
  When has such a policy actually worked? Do you have any clean historical examples at a large scale? Panic of 1873 is the closest I know of and it didn't go very well I'm not taking a stand. It's just that macroeconomics is hard and counterintuitive, especially when we're dealing with something large enough to have currency implications
- TeMPOraL 6y ago
  That's assuming the system can fix itself, which generally isn't true :). If a boiler in your bathroom maneuvers itself into a runaway positive feedback loop, it won't fix itself. It will explode, sending superheated water and shards of steel and plastic across your house. The smoldering remains of the PID controller that drove the failure won't recollect themselves and reweld the shredded tank. A system that fails can be fixed by the system in which the failing one is contained. That same outer system can also work to prevent the inner system from failing in the first place. (And sure, in the analogy, the "outer system" is the homeowner that can buy a new boiler. But wouldn't it be better to make sure the original boiler can't move out of its control envelope? Then the homeowner wouldn't have a bathroom to renovate and a pet to bury, after it caught a flying pressure valve in the eye.)
Negitivefrags 6y ago
The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot of suffering. But on the other hand, the rich will lose more, and during the rebuilding a different set of people will gain the upper hand and end up on top. It's hard to get the political will to actually allow what needs to happen to fix wealth inequality.

sagonar 6y ago

My counter example is slavery, which would lead to a very big wealth gap. I think that large slavery state or system would need metal working, but will guess it has existed without.

bawolff 6y ago
Probably you need at least farming so you have something for your slaves to work on that can scale easily.
donw 6y ago
Yes, but what does slavery have to do with technology...? I don't understand the connection to the parent post.

f6v 6y ago

What kind of technology enabled wealth gap in feudal society? It seems it was more about religion being used to subdue people.

donw 6y ago
> What kind of technology enabled wealth gap in feudal society? In short: Weapons. On the pre-gunpowder battlefield, the mounted, armored knight was roughly equivalent to the modern light tank. It is incredibly hard to take out an armored knight with the kind of weapons or tools which would have been available to peasants or serfs, so it doesn't take that many knights to keep enough peasants in-line to build a very wealthy kingdom. Religion during this era functioned much more like the modern civil service than what you or I would recognize as a church, and this also included both education and state security functions. When firearms became commonplace, this game totally changed. Previously, weapons, even the longbow, took years to master well enough to be combat effective. With muskets, you can turn a group of ignorant peasants into a fighting force capable of taking on armored cavalry in a few months, possibly even weeks. The Enlightenment, as well as our ideas about "equal treatment under the law", were the direct result of this force parity.
- belgian_guy 6y ago
  Following this reasoning, why didn't the enlightenment occur in asia, which had earlier access to gunpowder? Iirc the ottoman empire had portable guns before the west. And china had fire lances way before that.
  - donw 6y ago
    Because the Enlightenment was a complex social phenomenon with multiple prerequisites...?
  - ben_w 5y ago
    “Gun” isn’t one single tech; you start with a canon that’s hard to move, dangerous to the user, and with a smooth barrel and ball that doesn’t have good accuracy. Industry to make gunpowder cheaply and reliably rather than as one-offs for anti-castle siege weapons, and metallurgy and tooling to make the weapons hand-held and not prone to exploding in the operator’s hand, are what I have to assume old Asia lacked.

Aunche 6y ago

> Bailouts just encourage them to take greater risks, leveraging debt in dangerous ways that will blow up the system again. In practice, this hasn't happened. As a whole, financial institutions are more risk-adverse than ever. Keep in mind, that they don't want another Dodd-Frank.

jbverschoor 6y ago
Why do you think so? The whole GME thing could potentially bring infinite losses
- noxer 6y ago
  No it can not. It just moves money to someone else which usually leads to more stable markets because thous who bet wrong lose and the other win.
Melting_Harps 6y ago
> As a whole, financial institutions are more risk-adverse than ever. And this includes Hedgefunds, like Melvin Capital, Citadel and the like? Doesn't the Robinhood and GME thing DIRECTLY contradict what you're saying? Furthermore, they are over leveraged on real estate in teh US and BlackRock accounts for every greater RE holdings than post 2008 housing crisis. I'm not sure what you are talking about, Dodd-Frank is like Glass-Steagall, they'll just make up rules when the bailouts are required (Goldman Sachs 2008), just like airliners laid off a large majority of their staff despite the bailouts in the first Trump bailout being issued to ENSURE they wouldn't and they took the money either way.
- TeeMassive 6y ago
  > And this includes Hedgefunds, like Melvin Capital, Citadel and the like? Doesn't the Robinhood and GME thing DIRECTLY contradict what you're saying? Meme stocks are a thing born out of social media just very recently and will most likely not happen that much given that now edge funds are aware of it and have probably already deployed the appropriate counter-measures.

gher-shyu3i 6y ago

While what you point out is definitely true, a very important cause of the wealth gap in todays world that barely anyone talks about is the accepted engagement in lending money with interest (i.e. usury). It's heavily built in to the society today. It's not for no reason that this practices (along with derivative practices) is prohibited in the major 3 religions.

imtringued 6y ago
A lot of companies (and the jobs those companies created) were built on top of that usury and the workers who lent out their money were even compensated for that!
- gher-shyu3i 6y ago
  That doesn't justify the immorality of engaging in usury, it's like saying whaling is banned, but there are people who need to feed their families - we already know that. A superior and not immoral model is investing in said companies, so if they succeed both the investors and company owners profit, otherwise they both lose. It's proper risk sharing.