5 ms·

This is a dishonest piece. It ignores that it's based on a zero-sum game and the world isn't zero sum. The quoted economists know that very well. I like that t

This is a dishonest piece. It ignores that it's based on a zero-sum game and the world isn't zero sum. The quoted economists know that very well. I like that the coin flip game illustrates the concept of compounding interest, but it doesn't model wealth creation at all. Most new ventures aren't I-win-you-lose, they're we-win-or-I-lose. Wealthy people really can take bigger bets more frequently like the article suggests, but it's not necessarily at the expense of everyone else. A more accurate illustration would be a game where each round you have a choice: bet 25% of your money or recieve $0.30. After each round, you must pay $0.25 to play again. Some people start the game with no money, some people start with $1.00. If you think this game through, you'll still end up with super wealthy outliers and bankruptcies, but the players in the game actually have some agency.

gyulai 4y ago
That sounds interesting. Did you run the simulation?
- gabesullice 4y ago
  I didn't. The interesting and difficult part would be that every agent could play a different strategy. It's fine to take $0.30 every round, you can play forever. Some people with a $1.00 would bet three times in a row, lose, and go bust. Edit: if you run it, I'd love to see and play with it!
flawn 4y ago
The only reason why it isn't zero sum is because we get access to more resources, and this leads de facto to more money in the pool (money <--> resources) right? If we assume the best case that these new resources are distributed equally and not depending on wealth, then the Yard Model still holds in place as we talk about relative percentages.
- gabesullice 4y ago
  No, because new resources don't materialize like manna from heaven. Someone, somewhere needs to reorganize resources in a more efficient way or discover new ones. If you benefit "equally" from that change in dynamics to the person who actually catalyzed the change, then there would be less incentive to catalyze it in the first place. It may happen from time to time because people are curious and benevolent. But, in general, if catalyzing that change has a cost, then the society depends on some people sacrificing their own good for everyone else's. In other words, the benefactor will have paid to catalyze it, but they'll only get an "equal" share of the gains to the people who sacrificed nothing. I think you probably don't mean "equally" though. You probably mean "fairly". And it's probably true that "sacrificing" 20% of a billion dollars is a lot different than 20% of ten thousand dollars. But rates of return do tend to decrease at scale, maybe not enough? Personally, I think taking from the catalyzers isn't optimal. It's also petty to worry that they benefitted "too much" from their actions. If we must tax, tax land and consumption. I haven't thought it through, but maybe a 100% estate tax, minus some reasonably capped life insurance for spouses and dependents, would reduce some of the feelings of unfairness that people experience.
  - jakupovic 4y ago
    >No, because new resources don't materialize like manna from heaven. No, you're wrong. Me finding gold or pretty much anything of value does mean that it did materilize from heaven. Many more examples...
    - gabesullice 4y ago
      Gold very rarely falls on your head while you're reclining on the sofa.
- HPsquared 4y ago
  Not even that, simple bartering increases value by distributing items away from the people who don't want them, to the people who do. Value is subjective. If we each start with one red and one blue pen, but I prefer red pens and you prefer blue, we (voluntarily) trade the pens and each have two of our favourite colour. Net gain!
cloutchaser 4y ago
It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything. So even in this stupid simulation, it just doesn’t work, as people get wealthier they actually risk less. This whole article is Marxist academic bullshit, eaten up by Marxist upper class tech 20 year olds in this thread.
- AnimalMuppet 4y ago
  > It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything. Rightly, I think. The marginal utility of the next dollar is higher when you have fewer dollars. (I think of it as roughly a 1/x curve, but I have no solid data for this.) This means that, if I bet 50% of my available money on a 50/50 chance, I will lose more utility with a loss than I will gain with a win. But the more I have, the flatter the curve out where I am. So the richer I am, the more I can make that 50/50 bet, not just because I can take the loss better, but also because in terms of my personal utility, the rewards and losses are more evenly balanced. Also note that if you have a 20% loss, it takes a 25% gain (on what you have left) to bring you back to even.
  - cloutchaser 4y ago
    This is just not how it works on the psychological level. Mathematically yes, but we are not machines. Someone with a net worth of $1bn is not going to brazenly bet $500m because hey, who cares it’s only half my net worth. That’s ridiculous. Just like this entire post and discussion. It’s a frustrated poor intellectuals self explanation for why they are unsuccessful. It’s also the line of thinking that when taken to the extreme killed around 130m people in the 20th century.
ARK_12 4y ago
Regardless of what complex strategy you apply in the real world, this still indicates that there's a bias at the core of a 50-50 fair bet in the long run, ability and IQ aside. Besides the economy can very well have zero sum game elements to it
dontreact 4y ago
Wealth isn’t zero sum but power over law (as defined by who has influence over the rules we live by) is. When you have concentration of power due to concentration of wealth, the society will become unstable and undemocratic. So even though wealth isn’t zero sum, wealth inequality is a problem that needs to be addressed for long term stability.
- AuthorizedCust 4y ago
  > Wealth isn’t zero sum but power over law… Religious extremism isn’t coming mainly from the wealthy. It’s dominantly a lower-strata southern thing, with notable metastases all around the country, yet it plays strongly in the US system. That some wealthy co-opt the extremists doesn’t change the above.
  - momdad420 4y ago
    [dead]
  - 29athrowaway 4y ago
    If you have a tornado coming straight at your house with your family inside you will be praying I guarantee you. If you lived in a sparse, lonely place, with a bad economy, maybe joining a church starts sounding like a good idea. Instead of judging people consider yourself lucky.
    - AuthorizedCust 4y ago
      Nice strawman. I wrote “extremism”. You’re responding to something else.
      - 29athrowaway 4y ago
        Then who are the southern religious extremists? name them.
        4y ago
ksniwmidjd 4y ago
Zero sum game? Fractional reserve banking would like to have a word with you
naasking 4y ago
> This is a dishonest piece. [...] If you think this game through, you'll still end up with super wealthy outliers and bankruptcies, but the players in the game actually have some agency. You basically admitted that the zero sum property has little bearing on the outcomes we're scrutinizing here, and so the argument is ultimately the same. I'm not sure how the piece is dishonest simply because it dispenses with an apparently irrelevant premise.
- gabesullice 4y ago
  Honestly, this was a good observation that forced me to think more deeply about why the distinction matters. I disagree that it's irrelevant. If the game is zero sum, the winners must succeed at the expense of everyone else. The game mechanics themselves produce unfair outcomes since nobody has any agency in their own outcome. Therefore, as this piece argues, the rules should be changed. On the other hand, my example provides an alternative explanation for wealth inequality in which risk taking and inequality are inextricably linked. In my game, nobody loses because someone else won. Far fewer people would find these game mechanics unfair, even though the final distribution of wealth is the same. It is not obvious that the rules should be changed. I could adjust my game mechanics to make them look even more like the real world (as I see it): Every time someone takes a risk and wins, the non-bet reward should go up by a penny (e.g. from $0.30 to $0.31). In that situation, one would expect all the players to encourage risk taking because they know it benefits everyone whether they're taking risks or not. They might even conclude that the risk takers should have a chance at being wealthier than them because of these effects. Using the zero-sum game leads the reader to a conclusion based on a false premise and I feel that was intellectually dishonest. Note: one can still argue that the rules should be changed because wealth inequality itself is a problem, but that's not what this article is doing. It's arguing it based on the fictional rules.
dang 4y ago
Please make your substantive points without name-calling or swipes (like "dishonest"). They don't add to the informational comment and they tend to irritate, distract, and ultimately evoke worse from others. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.
- gabesullice 4y ago
  You're right, that was poorly worded.

gyulai 4y ago

That sounds interesting. Did you run the simulation?

gabesullice 4y ago
I didn't. The interesting and difficult part would be that every agent could play a different strategy. It's fine to take $0.30 every round, you can play forever. Some people with a $1.00 would bet three times in a row, lose, and go bust. Edit: if you run it, I'd love to see and play with it!

flawn 4y ago

The only reason why it isn't zero sum is because we get access to more resources, and this leads de facto to more money in the pool (money <--> resources) right? If we assume the best case that these new resources are distributed equally and not depending on wealth, then the Yard Model still holds in place as we talk about relative percentages.

gabesullice 4y ago
No, because new resources don't materialize like manna from heaven. Someone, somewhere needs to reorganize resources in a more efficient way or discover new ones. If you benefit "equally" from that change in dynamics to the person who actually catalyzed the change, then there would be less incentive to catalyze it in the first place. It may happen from time to time because people are curious and benevolent. But, in general, if catalyzing that change has a cost, then the society depends on some people sacrificing their own good for everyone else's. In other words, the benefactor will have paid to catalyze it, but they'll only get an "equal" share of the gains to the people who sacrificed nothing. I think you probably don't mean "equally" though. You probably mean "fairly". And it's probably true that "sacrificing" 20% of a billion dollars is a lot different than 20% of ten thousand dollars. But rates of return do tend to decrease at scale, maybe not enough? Personally, I think taking from the catalyzers isn't optimal. It's also petty to worry that they benefitted "too much" from their actions. If we must tax, tax land and consumption. I haven't thought it through, but maybe a 100% estate tax, minus some reasonably capped life insurance for spouses and dependents, would reduce some of the feelings of unfairness that people experience.
- jakupovic 4y ago
  >No, because new resources don't materialize like manna from heaven. No, you're wrong. Me finding gold or pretty much anything of value does mean that it did materilize from heaven. Many more examples...
  - gabesullice 4y ago
    Gold very rarely falls on your head while you're reclining on the sofa.
HPsquared 4y ago
Not even that, simple bartering increases value by distributing items away from the people who don't want them, to the people who do. Value is subjective. If we each start with one red and one blue pen, but I prefer red pens and you prefer blue, we (voluntarily) trade the pens and each have two of our favourite colour. Net gain!

cloutchaser 4y ago

It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything. So even in this stupid simulation, it just doesn’t work, as people get wealthier they actually risk less. This whole article is Marxist academic bullshit, eaten up by Marxist upper class tech 20 year olds in this thread.

AnimalMuppet 4y ago
> It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything. Rightly, I think. The marginal utility of the next dollar is higher when you have fewer dollars. (I think of it as roughly a 1/x curve, but I have no solid data for this.) This means that, if I bet 50% of my available money on a 50/50 chance, I will lose more utility with a loss than I will gain with a win. But the more I have, the flatter the curve out where I am. So the richer I am, the more I can make that 50/50 bet, not just because I can take the loss better, but also because in terms of my personal utility, the rewards and losses are more evenly balanced. Also note that if you have a 20% loss, it takes a 25% gain (on what you have left) to bring you back to even.
- cloutchaser 4y ago
  This is just not how it works on the psychological level. Mathematically yes, but we are not machines. Someone with a net worth of $1bn is not going to brazenly bet $500m because hey, who cares it’s only half my net worth. That’s ridiculous. Just like this entire post and discussion. It’s a frustrated poor intellectuals self explanation for why they are unsuccessful. It’s also the line of thinking that when taken to the extreme killed around 130m people in the 20th century.

ARK_12 4y ago

Regardless of what complex strategy you apply in the real world, this still indicates that there's a bias at the core of a 50-50 fair bet in the long run, ability and IQ aside. Besides the economy can very well have zero sum game elements to it

dontreact 4y ago

Wealth isn’t zero sum but power over law (as defined by who has influence over the rules we live by) is. When you have concentration of power due to concentration of wealth, the society will become unstable and undemocratic. So even though wealth isn’t zero sum, wealth inequality is a problem that needs to be addressed for long term stability.

AuthorizedCust 4y ago
> Wealth isn’t zero sum but power over law… Religious extremism isn’t coming mainly from the wealthy. It’s dominantly a lower-strata southern thing, with notable metastases all around the country, yet it plays strongly in the US system. That some wealthy co-opt the extremists doesn’t change the above.
- momdad420 4y ago
  [dead]
- 29athrowaway 4y ago
  If you have a tornado coming straight at your house with your family inside you will be praying I guarantee you. If you lived in a sparse, lonely place, with a bad economy, maybe joining a church starts sounding like a good idea. Instead of judging people consider yourself lucky.
  - AuthorizedCust 4y ago
    Nice strawman. I wrote “extremism”. You’re responding to something else.
    - 29athrowaway 4y ago
      Then who are the southern religious extremists? name them.
      - 4y ago

ksniwmidjd 4y ago

Zero sum game? Fractional reserve banking would like to have a word with you

naasking 4y ago

> This is a dishonest piece. [...] If you think this game through, you'll still end up with super wealthy outliers and bankruptcies, but the players in the game actually have some agency. You basically admitted that the zero sum property has little bearing on the outcomes we're scrutinizing here, and so the argument is ultimately the same. I'm not sure how the piece is dishonest simply because it dispenses with an apparently irrelevant premise.

gabesullice 4y ago
Honestly, this was a good observation that forced me to think more deeply about why the distinction matters. I disagree that it's irrelevant. If the game is zero sum, the winners must succeed at the expense of everyone else. The game mechanics themselves produce unfair outcomes since nobody has any agency in their own outcome. Therefore, as this piece argues, the rules should be changed. On the other hand, my example provides an alternative explanation for wealth inequality in which risk taking and inequality are inextricably linked. In my game, nobody loses because someone else won. Far fewer people would find these game mechanics unfair, even though the final distribution of wealth is the same. It is not obvious that the rules should be changed. I could adjust my game mechanics to make them look even more like the real world (as I see it): Every time someone takes a risk and wins, the non-bet reward should go up by a penny (e.g. from $0.30 to $0.31). In that situation, one would expect all the players to encourage risk taking because they know it benefits everyone whether they're taking risks or not. They might even conclude that the risk takers should have a chance at being wealthier than them because of these effects. Using the zero-sum game leads the reader to a conclusion based on a false premise and I feel that was intellectually dishonest. Note: one can still argue that the rules should be changed because wealth inequality itself is a problem, but that's not what this article is doing. It's arguing it based on the fictional rules.

dang 4y ago

Please make your substantive points without name-calling or swipes (like "dishonest"). They don't add to the informational comment and they tend to irritate, distract, and ultimately evoke worse from others. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.

gabesullice 4y ago
You're right, that was poorly worded.