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Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation),

• wanorris 15y ago
  Don't you think that the top tax bracket being slashed from over 70% to well below 50% had something to do with it as well?
  • pg 15y ago
    Less than people think. Back when taxes were so high, the rich were really good at tax avoidance. So the rate doesn't tell you the whole story. As one of the people whose opinion about working for a large company changed during the 1970s, I know I didn't consciously think about tax rates. (It's possible they affected me unconsciously though, via the examples of people who'd cleared more after tax due to lower rates.)
    • hans00 15y ago
      "Back when taxes were so high, the rich were really good at tax avoidance." first, [citation needed]. Second, compared to now? Third, is it relevant? how? I see you glossed over that. It's like hacking..and painting..isn't it.
      • jgesture 15y ago
        If the rich didn't actually pay the percentage in taxes as given by their tax bracket, then their tax bracket isn't relevant because it isn't something that was actually followed in practice. Also, capital gains tax is really. You'd have to make less than $8,500/yr to be in a lower income tax bracket. This hasn't always been the case. So, one easy, legal way to pay less in taxes is to get paid via capital gains.
    • btilly 15y ago
      Back in the 1950s, the rich were really good at tax avoidance. All they had to do was to donate more than their total income to charity. (The so-called flying nun tax exemption.) This was doable because when you donated items that appreciated in value, you didn't get taxed on the increase in value, but got to claim the whole value. So if your parents had bought a lot of art, you could donate the art. Better yet you could donate a million dollars to a charitable foundation you had, have them use it to buy a piece of art from you, and then donate 4 other pieces of art which are now valued at $1 million each. The result was a huge run-up in the value of things like art, and a simultaneous increase in public art for display. When you visit the Metropolitan Museum, you're basically seeing the benefits of a tax dodge.
      • kongqiu 15y ago
        Can you recommend any good books or papers on this phenomenon?
    • danmaz74 15y ago
      It is impossible not to notice that this trend started when Reagan took power and neo-liberalism was adopted as the reference in economic policy. The theory: More wealth produced, better for everybody. The practice: More wealth produced, better only for the top earners.
  • btilly 15y ago
    Go back further. 70% itself was a major slash by JFK (a very rich person from a very rich family) from the previous 90%+ in the 50s. Before that, there was no point in being paid more. The only thing that made sense was to take pleasure in the organization that you ran.
    • watmough 15y ago
      Plus there was always investing in other companies, spreading capital, creating new sources of wealth. Wrong period, but wasn't Jay Miner financed by some dentists when designing the Amiga, initially? This is the sort of thing I am thinking of. Then there was a period in people largely borrowed against their house/assets to start a company. That is now closed to many. On the flip-side (looking through pg's eyes), the cost of starting many classes of companies has now essentially dropped to just the time required, as much of the infrastructure, process, software required is free or can be generated or outsourced cheaply.
  • gopi 15y ago
    You were confusing the top income tax rate with the effective tax rate. When the top income tax was 91% (from 1951-1964), the capital gain tax was 25%. So the effective tax rate paid by the rich was always the same, infact the rich pay more in tax today at the current top 35% rate than when it was 91%!
• portman 15y ago
  "Technological progress should cause increasing economic inequality" Does that mean you are unfazed by growing inequality, and view it as an unavoidable byproduct of progress? Or do you believe economic inequality is a negative externality (like pollution) that needs to be remedied?
  • nicholasjbs 15y ago
    pg's thoughts on inequality: http://paulgraham.com/inequality.html http://paulgraham.com/inequality.html
    • vacri 15y ago
      From that link, it's clear that pg likes inequality because otherwise it's 'taking money from the rich and giving it to the poor, which adversely affects VC' But the main article talks about 30 years where money has been taken from the poor and given to the rich - that is, everyone has not increased together, and the poorest have lost ground. This article doesn't really answer that.
    • leot 15y ago
      Well put, as pg's essays usually are. But I think there are rather large gaps: 1) He glosses together reduction of income inequality with elimination of it. The zero inequality thing has been tried and failed. 2) one of his arguments is that better education of the poor will increase wealth inequality, because it will increase the number of customers and the number of possible entrepreneurs. While the premises are no doubt true, the conclusion isn't. There are other inequality-decreasing factors that might well have a stronger impact. At the very least, a better educated population might have the wherewithal to organize and vote for increased taxes on wealthy people. Less cynically, better educated people need less stuff to get by (e.g. their cars last longer), and they are savvier consumers. And empirically, if one excludes the U.S., the best educated countries tend to also have the lowest income inequality. 3) pg neglects the costs of U.S. monetary policy on risk taking. The past 20 years have seen low inflation. When inflation is low, there is less need for money to be invested in order to preserve wealth. With higher rates of inflation, investors have no choice but to try and extract greater value out of the wealth they have if they want to keep up. 4) A related point: pg's argument is that high taxes reduce the large rewards founders get, causing them to take smaller risks. Yet there is nothing intrinsic about taxation that necessitates the burden fall primarily on the recently wealthy. PG's argument doesn't easily apply to "old money" -- would the decrease in upside of a wealth tax outweigh the incentives to invest imposed by a wealth tax? From a tech progress/startup perspective, wouldn't the elimination of capital gains in favor of a tax on wealth cause exactly the right kinds of incentives for starting companies?
• hans00 15y ago
  Man, what fantasy world do you live in? Large corporations decrease inequality? [citation needed] Ambitious people started to lose interest? I can't even dignify that with a [citation needed]. Ambitious people have what to do with anything on a national scale? Ambitious people somehow caused, or were party to, the decimation of the middle class, which somehow never once gets mentioned by the actual economists and political theorists who actually know stuff about this stuff? Oh! Are you "pg" of that ludicrous "hackers and painters" essay, the one that actual painters tore to shreds because it's the same sort of bizarre nonsequitor drivel? I can see you're still at it. Nice "work".
  • learc83 15y ago
    Since you're unaware he's also "pg" who created ycombinator. Edit: I'd like to point out that this wasn't some kind of appeal to authority to support pg's arguments, so kindly explain the down mods.
    • nfriedly 15y ago
      I wasn't one of the downvoters, but my guess is that the logic is something along the lines of "don't feed the trolls."
  • csomar 15y ago
    You don't seem to be serious, but I'm making this reply for other people in HN. I might be wrong, so judge and reply. Large corporations decrease inequality? Yes. All (most) software developers in a large corporation are paid the same wage. Well, there are persons that can make millions not working in a company (ie. Indie game developer, iphone app developer...). But when you work for a large corporation, you might take 20% more than the average developer, but not 20X times more. So large corporations increase equality among developers. Boss get paid 10 times more than a dev. gets? Well, a boss is not a developer, and you are doing the wrong comparison here. Compare the boss in this corporation to another boss in another large corporation. They are getting paid in the same range, no? That's equality. When you are your own boss, and your friends is his own boss; you can become as unequal as you want. So, small businesses and startups promotes inequalities.
• jbooth 15y ago
  I think this comment only acknowledges the existence of white collar jobs. You used to be able to pay for a house, a car, and the kids' college education with a factory job. While the wife stayed at home. Now, that scenario is eye-popping unbelievable. You're probably at wal-mart or starbucks if you don't have some sort of specialist skill or a connection into the white collar world. I'm not endorsing a particular solution here, and specifically not endorsing forcing factories to employ expensive people instead of cheap robots to 'create jobs'. But it's important to see the situation clearly.
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      • anamax 15y ago
        > Please, point to me one example of this blue collar utopia. Much of the "oil states" are like that. > What about CPAs, lawyers, and their must be some sort of corporate hierarchy wherever these people are employed right? (1) In other words, you don't actually know anything about these biz,so you're hoping that what you picked up watching "The Office" is reasonably close. It isn't. (2) Not really. How many lawyers do you think an oil drilling company needs? They need more CPAs than lawyers, but a decent "roughneck" costs more and a decent foreman is gold, and gets it. The lawyers? Not so much. It's hard and dangerous work, but it's very good money. You folks really ought to look at what decent tradesmen get.
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• joshklein 15y ago
  These data relate to "production and non-supervisory workers" (82% of today's private sector work force). The people you refer to would seem to comprise the other 18%.
• RyanMcGreal 15y ago
  The more interesting question for me is: why are the dividends of increasing productivity no longer being shared with employees?
  • forensic 15y ago
    because those employees did not produce the increase in productivity, technologists did. The technologists and the entrenched oligopolists ate all of the surplus while the commoditized worker drones got nothing. Which is inline with free market theory. The wealth goes to the people who produce the wealth and the people who corner the market.
  • startupcomment 15y ago
    Just conjecture: senior management in established corporations have stacked the payscales in their favor. I know senior managers in established corporations who have received ridiculously large bonuses and stock option grants for doing nothing other than what should ordinarily be expected of them for the benefit of the corporation, and their level of risk is so small relative to their reward. In some cases, the benefit to the corporation is of questionable value, yet excessively lavish compensation is granted. I suspect that some of these senior managers are greedier and more short-term oriented (I'll milk this baby as much as I can for my personal gain here and now) than their pre-yuppie predecessors. Maybe there was a greater sense of self-restraint and balance in depression and WWII-reared generations (or maybe just lower expectations and objectives)?
  • dogwelder 15y ago
    I think because, there's no reason to assume they would be - labor costs are still (mostly) driven by supply and demand. If gizmos and computers and internets increase a worker's productivity, the gains go to the business owners, while the worker still gets paid at whatever the labor market decides. (During the 60's era wage earners had some natural advantages: booming demand for labor, restricted supply since single-income households were the norm, less ability to send manufacturing or service jobs offshore.) Higher top rates in the 60's era also meant some of that productivity gain in wealth went back to the average worker. The whole economy gained wealth from public investment in infrastructure, funding for education, healthcare research and so on. But around the late 70's, the tide started to turn towards lower taxes at the top. A few more trends got rolling at the same time: technology that made big productivity gains possible; entire manufacturing industries being sent overseas; the financial industry getting really interested in ways to move existing wealth from where it was, to their own pockets. That makes it sound entirely bad, which it wasn't... those trends also led to a slew of innovative new companies, disruptions to established business practices, stock options as a way to share in the risk and reward, and lots of cool gadgets. It's more interesting now than in 1960. But there are a lot of workers getting the shaft, and don't necessarily need to be.
• trevelyan 15y ago
  I suspect you're the exception rather than the rule, Paul. Checking the numbers released by the Bureau of Labor Statistics shows that the percentage of self-employed workers in the economy has FALLEN from 10 percent of the workforce in 1968 to 8.5 percent today.[1] Fewer people are working for themselves, although you're right that the 1980s seem to be when things started to change. [1] http://www.bls.gov/webapps/legacy/cpsatab9.htm http://www.bls.gov/webapps/legacy/cpsatab9.htm -- only stats on unincorporated single-owner businesses go back to the 1960s, but the stats on incorporated single-owner businesses don't show any significant change over the last 10 years, so it seems hard to argue that Americans are really more entrepreneurial now and those numbers just aren't catching it.
  • learc83 15y ago
    Do the stats on incorporated business include LLCs?
    • trevelyan 15y ago
      I really don't know. They wouldn't capture multi-founder startups, but it's probably a fair proxy for degree of independent entrepreneurialism that Paul's talking about.
      • learc83 15y ago
        My reason for asking, is that most small business started over the last decade have been LLCs. If the stats are only tracking corporations the data could be extremely skewed.
• trunnell 15y ago
  Technological progress should cause increasing economic inequality Is this view at odds with mainstream economists? I believe the mainstream view is that technological progress is a tide that should naturally lift all boats.
  • lukesandberg 15y ago
    The common view is that 'economic growth' is a tide that lifts all boats. But unfortunately its lifting some boats much faster than others.
  • jgesture 15y ago
    I think the argument is that technology is great for the people who use technology. If every programmer and engineer got paid $500,000/yr, that would be great...for ever programmer or engineer, it wouldn't matter much for others. I do tech support for a web hosting company and I've definitely seen people with low incomes who don't and don't want to use technology, they are falling behind.
• jshen 15y ago
  "it would strain the fabric of the organization to reward people that way." This is so true, and I also think the fabric of our society will be strained as the gap grows. Especially when the offspring of these highly productive people begin inheriting enormous sums. Maybe a larger estate tax is a good counterbalance.
• buff-a 15y ago
  I don't believe the problem is economic inequality. It does not matter if the rich get richer. What matters is that the poor are getting poorer in absolute terms: how much they have to work in order to make rent, buy food, enjoy a vacation. I do not believe that the poor would even notice how many private jets the rich have if they had food on the table. A staggering number do not.
  • InclinedPlane 15y ago
    The poor are not getting poorer. In absolute terms real income for the bottom quintile has increased. In addition, technological progress has drastically reduced the cost of many luxury items and put them in reach of the poor. Today the "poor" in America not only have clean drinking water and electricity they also have cell phones, internet access, large screen tvs, dvrs, cars, refrigerators, dish and clothes washers, etc. In short they have the ability to live at a much higher quality of living than in any previous era. Sure it sucks to be poor, believe me I know, but let's not kid ourselves into thinking that the developed world is devolving into some dickensian nightmare when nothing of the sort is happening. Edit: a helpful graph: http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg http://en.wikipedia.org/wiki/File:United_States_Income_Distr...
    • _delirium 15y ago
      In what world can someone making $25k/yr (according to your graph of the 20th percentile) afford rent, cell phones, internet access, large screen tvs, dvrs, cars, refrigerators, dish and clothes washers, etc.? In most metropolitan areas just rent will eat up half of that, health insurance much of the rest, and a car all the rest. And don't even think about trying to buy a family with kids health insurance -- the average family health-insurance policy costs $13k/yr, and even a bare-bones policy costs around $5k.
      • InclinedPlane 15y ago
        Outside of a metropolitan area, it's easy (I've done it, and had plenty of money to spare). Inside of a metropolitan area it's a lot harder and probably requires roommates or living in the suburbs or finding a particularly cheap area to live.
• watmough 15y ago
  This really interesting, and somewhat depressing at the same time. I also remember the 'big-bang' in the UK, and the rise of the yuppie, "loads-a-money" types etc., which corresponded with the start of my working life. A few years ago, I had some contact contracting in a large corp., and it was quite a feat to adjust to the life 'inside', where to be quite honest, life was a good bit slower, with a largely out-of-sight board, and dictates coming from on-high. The take-away for me, is that not everyone is a Paul Graham, or a Zed Shaw, or a fogus, and that if you support the overall welfare of the country, then we should also support the population at large with reasonable roles that can support them with a living wage. If we don't do this, and we haven't been, then the consequences of a giant unruly, unhappy and active underclass await.
• jholman 15y ago
  It saddens me that you introduce the straw man of the zeroth percentile, "firmly anchored at zero". It wasn't in the linked article, which only talked about quintiles, none of which are anchored at zero. And with respect to these statistics, clearly someone taking an unpaid vacation is not in the class "production and non-supervisory workers". I have little problem with inequality. I do think there are some downsides, like the threat of violent revolution, but my point is that I'm not making some hobgoblin of wealth or income inequality. I don't really care whether 20% of U.S. wealth is controlled by the top 1% or the top 10%. But it does strike me as a little troubling to see -4% gains for the bottom percentile over a period of 80% increased productivity (taking those stats at face value).
  • monopede 15y ago
    There is an interesting book, "The Spirit Level: Why Equality is Better for Everyone" by Richard Wilkinson and Kate Pickett, that makes a very strong argument that in developed countries inequality is correlated pretty much every "bad" metric (health, crime, teenage pregnancy, etc.) of a society. Now, of course, correlation does not mean causation and it's perhaps more interesting what the true underlying causes are. But if inequality is such a strong indicator, it is worth wondering whether inequality isn't a bad thing in itself.
• nhaehnle 15y ago
  As a US citizen you may not be aware of this, but the time between 1970 and 1980 was also when full employment was effectively abandoned as a policy goal in most Western countries. In countries like France, Germany and Australia, unemployment was constantly below 4% for many decades after WWII, even below 1% in many cases. What's more, rises in the unemployment rate due to recessions were quickly and successfully fought using fiscal policy. In fact, such policies where quite consciously implemented after WWII even in countries that did not see large scale destruction, because the consensus was that returning soldiers needed to be given employment to avoid social problems. Unfortunately, low unemployment meant better bargaining positions for workers, and so getting rid of this "problem" was quite openly discussed for some time (this was documented in a PhD thesis, http://bilbo.economicoutlook.net/blog/?p=11941 http://bilbo.economicoutlook.net/blog/?p=11941). Economic troubles in the 1970s helped convince people that something needed to change and made it easier for attitudes towards economic policy to be changed, i.e. the shock doctrine. Thatcher in the UK was probably the most memorable driver of this change with her very open fight against unions. It seems to me that a nice test of which of the two explanations fits the bill better is to compare the development to countries in which those measures of inequality, unemployment, and decoupling of real wage from productivity increases did not change at the same time as in the US. Was it because the large corporation developed differently, or was it because those political shifts happened at a different time?
  • notahacker 15y ago
    In fairness (in the UK at least) the decoupling of unemployment and inflation occurred in the 1970s well before minimising unemployment rates ceased to become an objective of government policy at the end of that decade. Exogenous shocks like oil prices and trend decline in the competitiveness of (UK) manufacturing helped drive this. Thatcher's shock doctrine may have had many flaws of its own but the abandonment of targeting unemployment via monetary policy was preceded by the previous administrations' failures to actually achieve their unemployment objectives.
  • Roboprog 15y ago
    Was it only 10 or 12 years ago that Alan Greenspan was worried that the national debt might actually be paid off, which worried him? I bet he sleeps soundly now. God help me if any of my children want to become economists.
• Steko 15y ago
  "So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed." Or maybe why even today, other countries have reversed that tendency. And the answer to that question is pretty simple, progressive taxation.
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• cHalgan 15y ago
  I actually believe that lack of democratic institutions and lack of regulations is enabling rich (either rich by inheritance or self made) to become more rich. I'm not sure how large corporation has influence to this because at least, in Eastern Europe, raise of inequality (tycoons and such) goes hand in hand with lack of democratic institutions (sometime outright corruption but in many cases everything is "legal") and lack of regulations. Unfortunately, regardless of reason of increasing inequality, history showed us that inequality is often fixed by events which are not part of capitalism teaching (revolution, war, crazy people end up leading the country).
• Hyena 15y ago
  This presumes that only the "top end" has access to those levers. That's only true through the patent system and, incidentally, Dean Baker points out that the patent system is a good predictor of inequality. So levers for me, not for thee has precisely the result we would expect. Fascinating.
• jonmc12 15y ago
  "while technology gives the top end ever more powerful levers" Technology can create entirely new ways of delivering value and generating income, it can multiply income and it can eat existing income streams. Inequality is not such a bad thing if technology is the vehicle of economic mobility. Technology can act as a enabler in both directions of income generation. However, when wealth or power or technology prevent economic mobility at any level, that is a bad thing. Inequality is not the problem, its access to economic mobility, which presumably means access to empowering technology.
• cma 15y ago
  How about opening trade-relations with China--a country where forming a labor union is punishable with the death penalty--didn't that happen around that time?
• joshcrews 15y ago
  My explanation of the 1947-1979 middle class bulge is the spoils of World War II for the United States. It gained brain power (smart immigrants), oversees market domination, and a premium on capital (other countries capital and people destroyed by war). Those spoils paid high wages for the US middle class because it needed those workers for its factories and companies. After a few decades the advantages of the spoils of war evened out with other countries (catch ups in capital, education, strong legal systems) and technology for outsourcing and cheap shipping broke up the US middle classes prior monopoly on US factory/company jobs.
  • OstiaAntica 15y ago
    Indeed, it was U.S. policy to distribute the spoils of war. America created the Marshall Plan, the global trade, finance, and legal arrangements, and generally encouraged other countries to catch up. It was a selfless policy, perhaps unique in world history.
    • arethuza 15y ago
      The Marshall Plan was intended to counter Soviet influence in Europe so while it was a sensible policy to say that it was "selfless" is perhaps a bit inaccurate.
  • bd_at_rivenhill 15y ago
    I wish I could upvote this more. It constantly astounds me that people construct elaborate theories about the decay of morality amongst the elite of America when faced with such a powerful supply/demand argument. It's pretty simple really: the industrialized nations spent tremendous resources over a span of about 7 reducing each other to rubble. At the end of it, they wanted to rebuild, and the only country with industrial capacity remaining was the United States. Furthermore, the process of rebuilding was extremely labor-intensive, involving construction and manufacture of durable commercial and consumer goods in an environment with low automation. To top it all off, when the other nations were finally rebuilt and started to be competitive again, the size of the available labor pool simultaneously started to expand as women entered the workforce. The middle-class American dream was the result of a global labor market anomaly that lasted for several decades, which was long enough to convince everyone that it was the new normal, and the long decline since the late 70s was the result of that anomaly ending.
• Steko 15y ago
  "I think the key to the answer is the large corporation. The period of flattening coincides with the heyday of the large corporation. Large corporations tend to decrease economic inequality. " I think this is off the mark. This time period corresponds directly to the rise of the financial industry which is mostly independent of firm size.
  • dogwelder 15y ago
    I'm inclined to agree. It's striking how the graph showing the wealth flow to the top 1% correlates with changes to the capital gains tax rate. There are benefits to a low cap gains rate, but below a certain level, it seems associated with slower growth, more of the income flowing to the top, and more volatility and crashes. You can make the argument it's goosing the economy to concentrate more and more capital into a single point of failure, a deeply interconnected network of financial firms. And you gotta wonder what the economy would look like, if Wall Street hadn't been siphoning off so much of the brains and capital to play card tricks. It might otherwise have gone towards, say, innovations in healthcare, transportation, energy, even domestic manufacturing.
  • rmc 15y ago
    I thought the financial industry started in Amsterdam in the late 1600s? What happened between 1700 and 1950?
• Florin_Andrei 15y ago
  > What happened at the end of the 1970s... ...was that "reaganomics" took over after that.
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• doki_pen 15y ago
  Maybe that is why, maybe it isn't. The problem is, when most of the population doesn't have disposable income, it makes it much harder to go out and make money in a productive way. Of course, there is always scamming. That works in any economy.
• msellout 15y ago
  It is far from certain that technological progress was the cause of the increase in inequality. There has been much study on this question--why inequality--and the results are inconclusive. Unfortunately, I don't have the links to back it up right now, but I suggest that you look into the academic literature before coming to a conclusion on the cause of increasing inequality.
• bluedanieru 15y ago
  How do you reconcile this with control of political processes? Vast differences in income between the rich and the poor could lead to a huge gulf in influence over the government and, sure enough, exactly that has happened in the States. And, what do you think of indications that increased income disparity leads to decreased quality of life across the board, for rich and poor alike? Moreover the bottom end of the scale isn't anchored at zero even in the US.
• kb101 15y ago
  "Technological progress should cause increasing economic inequality" is a bold statement. Presumably, increasing productivity for everyone is one of the signal benefits of technological progress. If we accept that as true, then why can we not say that technological progress is agnostic as far as economic inequality is concerned? Many of the arguments about economic inequality in this thread seem to be predicated on the notion that we are talking about comparing salaries or car brands. Don't be jealous of your neighbor for having a higher salary or a better car, and why should he have to give up more of his money via taxes just to enhance your lifestyle... seems to be the gist. But income inequality is rooted in the question not of does your neighbor have more goodies, but how do we divide the spoils of our shared enterprise. If you and your neighbor are partners in the same firm, and you are working your ass off so that he can ride around in a Benz, things are a little different. It is interesting to observe that when this argument is couched in terms immediately relevant to most of the posters here, the response on HN is quite different. I.e. "I have a great business idea, I just need someone to code it for 1% of the business equity". There are markedly fewer posters defending this notion, or condemning the hacker who wants a bigger share as exhibiting some kind of perverse socialist urge toward income redistribution, than there are posters in this thread defending the same notion expanded to society as a whole.
• zallarak 15y ago
  "Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers." - does an increase in the range of possibilities necessarily imply a larger gap? What if technology causes the range to widen, but the average gap to lessen. Not sure if its true or not, concrete data on this would be interesting.
• beefman 15y ago
  The bottom end of the scale isn't fixed. A person taking a vacation in 2011 adds more value to society by doing so than someone taking the same vacation in 1950.
• Lagged2Death 15y ago
  Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. What "scale" are we talking about, and why ever would it be "firmly anchored at zero?" It's perfectly possible to have a negative net worth, a negative cash flow, a negative effect on the wealth and well-being of the society in which you live, etc. What technology does "the top end" have access to that others don't today? Cell phones? Web servers? Technology has always been influential in proportion to its cheapness. And it's all really cheap now. If a vacation works and recharges your batteries, it's not, in the grand scheme, a zero-productivity interval, is it? I think the key to the answer is the large corporation. The period of flattening coincides with the heyday of the large corporation. Large corporations are still around and arguably more powerful than ever. Yet the difference in pay between the top executives and average workers in those corporations is one way the growing gap between the rich and the not-rich is illustrated and measured. I remember the transition quite clearly. When I was a little kid, in the early 70s, the most impressive thing you could do was to work for a large corporation. It was the era of conglomerates in shiny office towers. By 1980 we were starting to see a glimpse of the world we now live in, where the ambitious people are all free agents. I think this says a lot more about how children's view of the world around them evolves as they grow up than about actual changes in the American business landscape. America has been the land of entrepreneur-worship for a long time. John D. Rockefeller was working for himself from the start.
• eru 15y ago
  > Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. We measure inequality of income not in absolute dollars but as ratios. So the anchoring at zero doesn't make a difference.