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What these guys never seem to get is that there are different sources of inequality. Larry & Sergey did not get rich in the same way a dictator's cousin does.

by pg 15y ago

What these guys never seem to get is that there are different sources of inequality. Larry & Sergey did not get rich in the same way a dictator's cousin does. So analyzing what's correlated with inequality in general doesn't tell you much. Talking about what's correlated with inequality in general is like talking about what's correlated with leaving high school before age 17. Your sample will be a mix of kids who dropped out and kids who went to college early. Most will be kids who dropped out. You'll then discover that leaving high school before 17 is correlated with all sorts of bad things. But your conclusions will be worse than useless as a source of advice for kids considering going to college early.

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- lotharbot 15y ago
  > "Why does the cause ... matter if the effects of it are the same?" The statistics do not say "no matter what the cause, the effects are identical." What they show is a tendency, not an absolute hard-and-fast rule. I contend that, if you separated out countries with high inequality due to corruption from countries with high inequality due to innovation, you'd find that inequal-corrupt has lower growth than equal, and equal has lower growth than inequal-innovative. But since they're averaging inequal-corrupt with inequal-innovative, that effect gets hidden -- which leads to people trying to solve inequality (counterproductively!) when the real problem is corruption.
- pg 15y ago
  Their sample of countries is mostly those where inequality is of the medieval type, rather than the Google type. We already know that's bad.
forinti 15y ago
In Brazil in the 1970s, there was an economic philosophy that argued that 'the cake should grow before it can be divided'. Actually, what happened was that, as inequality grew, the rich changed their spending habits and industry chased after their needs, instead of expanding to fill everyone's necessities. The result was that growth eventually stopped. In 1980s Brazil you saw as many products on the shelves as you would in the eastern bloc. So yes, even if society gives everyone a fighting chance to get rich, it should take care not to let the gap widen too much so as not to shrink its own market.
- deleted 15y ago
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by pg 15y ago

deleted 15y ago

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lotharbot 15y ago
> "Why does the cause ... matter if the effects of it are the same?" The statistics do not say "no matter what the cause, the effects are identical." What they show is a tendency, not an absolute hard-and-fast rule. I contend that, if you separated out countries with high inequality due to corruption from countries with high inequality due to innovation, you'd find that inequal-corrupt has lower growth than equal, and equal has lower growth than inequal-innovative. But since they're averaging inequal-corrupt with inequal-innovative, that effect gets hidden -- which leads to people trying to solve inequality (counterproductively!) when the real problem is corruption.
pg 15y ago
Their sample of countries is mostly those where inequality is of the medieval type, rather than the Google type. We already know that's bad.

forinti 15y ago

In Brazil in the 1970s, there was an economic philosophy that argued that 'the cake should grow before it can be divided'. Actually, what happened was that, as inequality grew, the rich changed their spending habits and industry chased after their needs, instead of expanding to fill everyone's necessities. The result was that growth eventually stopped. In 1980s Brazil you saw as many products on the shelves as you would in the eastern bloc. So yes, even if society gives everyone a fighting chance to get rich, it should take care not to let the gap widen too much so as not to shrink its own market.

deleted 15y ago
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