12 ms·

Pooling and Sharing of wealth makes everyone's wealth grow faster

159 points by max_ 3y ago

stuaxo 3y ago
This is shown time and time again (see all the studies about unconditional giving or basic income), and yet those with the most hoard their wealth keeping it out of the useful economy.
mschuster91 3y ago
Society, at least in the classic European model, works just the same: everyone (yes, I know, there are exceptions, that's not the point) pays their share into health insurance, LTD insurance, unemployment insurance, workplace accident insurance, pension systems and a ton of other social benefit systems. And everyone benefits from this kind of collective solidarity - our societies are far less combative (both in the literal and the proverbial sense) than the US are.
- ekianjo 3y ago
  thats one way of seeing things. If you never left Europe that is
  - manmal 3y ago
    What’s your way of seeing things?
  - chpatrick 3y ago
    The more I see of the world the more I agree with OP, what's your point?
  - anonzzzies 3y ago
    I left the EU and lived in many places, travelled to more. Always happy to be back; it's not perfect, but it's worse elsewhere.
- jiofj 3y ago
  It's more like we pay half our salary in taxes and then we get terrible education and a healthcare system where you can't even get an appointment.
  - harha 3y ago
    and it creates all the wrong incentives since they're overdoing it by quite a bit. it also forces people to less optimal decisions because they need to avoid taxes. at the end of the day, this makes them less resilient, since governments won't be fast enough to react to new developments and incentivized to actually solve problems. edit: just to add to this: I don't think pooling / sharing is bad, there are many cases where this makes sense (investments, insurance), especially when it's voluntary, but it's easy to overdo it in a forced model. European living abroad btw, familiar with many different ways people live.
    - geysersam 3y ago
      Optimal decision making = poor people don't buy health insurance, rich people buy health insurance
  - abwizz 3y ago
    on the flip side, would you rather the bribe your dr for an appointment and "donate" to the school?
    - harha 3y ago
      well you need to in a public system that's overloaded, so you lose both when paying in and again when you need to get treatment.
      - vidarh 3y ago
        Americans pay more in tax towards public healthcare than we do in some European countries. Then they pay again. E.g. the UK NHS costs less per capita than Medicare + Medicaid costs per capita (not per user), despite the former providing universal service. Partly explained by artificial restrictions on Medicare limiting their ability to negotiate price - the "free" market is intentionally prevented from functioning. It's pretty much corporate welfare paid for by regular tax payers. I never understand why Americans tolerate this. The proportion who pays twice in the UK is around 10% who opt for private insurance on top. The proportion who pays twice in the US is every tax payer. Total healthcare spend per capita (public + private) tells a pretty clear picture, where costs of healthcare in the US is totally out of control.
- NeverFade 3y ago
  The only problem with this model is that it doesn't seem to be working long term. Economically, Europe has been stagnating for a long time, and recently its been in a decline. So it's a nice model as long as you can maintain it, which doesn't seem to be very long. https://archive.ph/5eZjb https://archive.ph/5eZjb
  - withinboredom 3y ago
    It depends on what you value, right? There are hard limits on the number of people any plot of land can handle and feed. Stagnation is probably a good thing. Always “doing more” isn’t always a good thing. It’s not a zero-sum game where there is some kind of competition.
    - NeverFade 3y ago
      Stagnation isn't "a good thing" when you're comparing to societies that are progressing. And it may be a zero sum game, when stagnating nations are drained of talent and brains, so this model is even less sustainable, as anyone who can do better leaves, and the rest are left to support those who don't do particularly well.
      - withinboredom 3y ago
        Yes, but what is “progress” right now? Move to a country where you can make infinite money (a gamble) but lose it all as soon as you get sick? Or move to another one where every move is monitored and watched? Or where you need a phone to do the most basic things, where you are stranded with no way to eat until you charge your phone? Progress may not always be good, at least in today’s times it basically means “more efficient extraction of wealth from the middle class”.
    - playday 3y ago
      Let’s assume what you’re saying was true: doing less is better. Well just mechanically, a “evil” society that does more will attract more labor and capital than one that doesn’t. Any area of competition except “goodness” will be won by the evil country, such as space races, weapons development, and new technologies. That means the society which chooses to do less will be culturally, technologically, and militarily at the whims of the evil society. So the power dynamic will definitionally belong to the doing more society at the expense of the doing less one, and in the final state the goal of goodness by doing less has failed. This is a contradiction disproving the assumption .
- CTDOCodebases 3y ago
  It’s not fair to compare any country to the US since they get to export their inflation.
- apples_oranges 3y ago
  It works as long as overall wealth is increasing, businesses and population are growing. We'll see how it goes on from here..
- playday 3y ago
  Then why is real gdp per capita in many Western European countries mostly stagnant since 2008? If what you’re saying was true, Europe should be growing faster than USA and even faster than countries like China that have much worse social safety nets.
  - febusravenga 3y ago
    I don't know, but as someone pointes out, we EUropeans are less combative and maybe need less to satisfy our needs, so we don't run for more GDP? maybe it's enough? I'm not saying it's good, but maybe it's just less pressure -> less force -> less progress.
  - avianlyric 3y ago
    There’s more to life than GDP. Economic growth is poor measure of collective happiness or quality of life. Are you going to argue that average quality of life in china is substantially better than Europe because their GDP growth is higher?
    - playday 3y ago
      Going back to the original article, the subject is regarding ergodicity and economic benefits of cooperation. The commenter I’m replying to extended an analogy to claim that this research extends to certain countries social welfare system. My position is that this extension is outright false, that just because cooperation can create benefits under the conditions of the research, it doesn’t demonstrate economic growth results from social welfare policies.
  - j7ake 3y ago
    Because these benefits don’t necessary result in growth of real gdp per capita, but increase the stability and livability of a city. A PhD student in many places in Europe can afford to have their own apartment and have kids. Where is that possible in usa?
    - machinekob 3y ago
      In which European cities PhD can afford to buy apartment (Paris? London? Berlin?). Or you are speaking about smaller cities in which you can also make the same argument for US.
- logifail 3y ago
  > Society, at least in the classic European model, works just the same (..) everyone benefits from this kind of collective solidarity There appear to be a growing number of voters who disagree. https://www.theguardian.com/world/2023/jun/30/far-right-on-the-march-europe-growing-taste-for-control-and-order https://www.theguardian.com/world/2023/jun/30/far-right-on-t...
  - blowski 3y ago
    Yes, this model works well when people are mostly surrounded by people "like them". Populists tell such people they'd be better off if it weren't for all the people with different coloured skin, wearing funny clothes, speaking weird languages. And so while everyone probably is better off, they fester that resentment, creating a cultural feeling that we're not, and it's all _their_ fault.
  - OfSanguineFire 3y ago
    Populist parties in Europe do not necessarily oppose taxation for social programs and collective solidarity. This is the case with the Perussuomalaiset party in Finland, for example, which supports a welfare state in spite of the anti-immigrant rhetoric that gets it categorized as far-right.
    - vidarh 3y ago
      In fact, historically, few right wing parties in Europe in general have opposed welfare programs outright. A large portion of European welfare programs came from the centre right or right, partially on the basis of a Christian morality argument (e.g. Bismarcks original German healthcare and pension insurance reforms, backed by Zentrum, a party who went on to support Hitlers candidacy for Chancellor, and whose spiritual successor is the CDU), partially as a realisation it was either forging compromises or risk revolution (e.g. Bismarks reforms were at least in part outright "stolen" from demands from left wing parties he banned and imprisoned leading members of, as part of a two-prong strategy of appeasement and an iron fist. That free market and right libertarian parties have gained some traction again is a relatively "new" (few decades) phenomenon, after many of them were squeezed hard by the rapid growth of socialist parties to their left a century ago. EDIT: Worth adding that classically liberal parties in Europe have largely leaned socially liberally, e.g. "low overhead welfare" rather than no welfare. A lot of the universal basic income talk comes from classical liberals as a counter to social democratic "big government welfare" not by removing the welfare but by trying to minimise government involvement in the equation.
- iknownothow 3y ago
  I think the Personal Liability insurance that almost everyone has in Germany is an overlooked societal lubricant. For €10 a month, you get €10 million in coverage for accidental damage. * No incentive for revenge law suits. * Damages are well regulated so you can't sue for €1 million just because someone's bicycle ran over your toe. * Can't sue for exorbitant medical expenses because in most cases there are no personal medical expenses i.e. covered anyway by govt health insurance. I'm unsure if personal liability insurance is popular elsewhere in Europe.
  - logifail 3y ago
    > Damages are well regulated so you can't sue for €1 million just because someone's bicycle ran over your toe. Counter-example: a website uses Google Fonts and the owner gets a letter from someone's German lawyer demanding they pay "damages" for the GDPR "violation" [0] https://www.bitdefender.com/blog/hotforsecurity/german-website-fined-100-euros-after-court-says-googles-font-library-violates-gdpr/ https://www.bitdefender.com/blog/hotforsecurity/german-websi... [1] https://www.spiegel.de/netzwelt/web/razzia-wegen-betrugs-rund-um-google-schriftarten-a-d70a829e-05b9-47ba-8eab-fa90996e4cca https://www.spiegel.de/netzwelt/web/razzia-wegen-betrugs-run...
    - RandomLensman 3y ago
      You notice that the Spiegel article talks about criminal behavior by a lawyer (and the individual sums are tiny, not even clear they would have taken this to court as German courts take upfront fees).
  - patall 3y ago
    From what I have heard from someone working at an insurance company, those liability contracts are not cost covering. They have those for customer recruitment.
- bsza 3y ago
  This model works well in countries that already have the wealth to support it, usually from spending centuries colonizing other countries and sucking them dry. It doesn't work quite as well in the countries that had been colonized.
  - slushh 3y ago
    Why? From a cash flow perspective, the monthly insurance premiums should cover the expenses.
  - sleepyhead 3y ago
    Sorry to break your bubble but most European countries did not colonise other countries. The most successful ones, Scandinavian countries, did not colonise other countries (well they did internally but not the same way as England and France for example). If you look to Norway we had a social democratic system before we gained the majority of wealth (aka oil).
    - bsza 3y ago
      https://en.wikipedia.org/wiki/Swedish_overseas_colonies https://en.wikipedia.org/wiki/Swedish_overseas_colonies https://en.wikipedia.org/wiki/List_of_possessions_of_Norway https://en.wikipedia.org/wiki/List_of_possessions_of_Norway https://en.wikipedia.org/wiki/Danish_overseas_colonies https://en.wikipedia.org/wiki/Danish_overseas_colonies
      - consilient 3y ago
        Scandinavian countries did not establish successful profitable colonies (except perhaps Iceland, if you want to count that). It's ambiguous enough whether the average Briton really benefited from their colonial adventures: the Scandinavian peasantry clearly did not. Finland in particular was an impoverished backwater until the early 20th century.
  - xg15 3y ago
    Depends. A lot of the former colonies attempted more collectivist policies but were prevented from doing so by their former colonizers (or other rich countries). https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9ta... https://en.wikipedia.org/wiki/Fran%C3%A7afrique https://en.wikipedia.org/wiki/Fran%C3%A7afrique
- tomjen3 3y ago
  Hard disagree on that - I would be much better of with a US health insurance were there weren't months of waiting time for treatment. Sure if I am unemployed I would be better of with the version we have in Denmark, but I won't be unemployed for long. And if I get a disability, I have private insurance for that too, because the public one isn't good enough. The unemployment insurance portion I pay will pay out something like 1/2 my salary, but because everyone pays the same in I am subsidising those who are much more likely to be unemployed (bricklayers in winter, to make a simple example). Oh and many of those are going to get most of their salary paid out because they are not over the cap. So to sum up: by having a single system everone pays into you are going to be put together with people who have an entirely different risk profile and you will be better of in a system were you could choose your own insurances. Then of course I am also subsidicing all the drug users and alcoholics, but thats also an issue in the US, because society has decided that we must.
- heavyset_go 3y ago
  > everyone (yes, I know, there are exceptions, that's not the point) pays their share into health insurance Everyone pays their fair share based on income from working, but not from their wealth, assets, dividends, interest, etc in many places. If your "income" comes from those sources, you aren't paying your fair share compared to people who must work to eat.
  - sleepyhead 3y ago
    This is false. Pretty much all personal income is taxed, and definitively dividends. While it might be beneficial for the society to tax assets, any personal income from those assets are taxed in most cases. There are ways to avoid it to a certain extend but if you want a 5 million euros from one of your companies you would pay tax on that. If you want a boat you could set up HireMyBoat Inc and then avoid paying taxes on that 5 mill to pay a boat but still use the boat for vacations (this might be illegal but very rarely enforced).
    - heavyset_go 3y ago
      I didn't say personal income wasn't taxed, and I also put "income" in quotes because capital gains aren't taxed as income, and there are various schemes one can engage in to shield value from, or reduce, taxes like income tax.
  - FirmwareBurner 3y ago
    Exactly. Which is why a lot of Europe's wealth is inherited and has policies in place to protect that wealth and roll it over across generations (nearly) tax free, so most of the Government taxes are gathered on the backs of the working class, not the asset owning class, making it a serfdom with extra steps. Ironically, US has way tougher inheritance taxes than most of EU.
    - anon1199022 3y ago
      Also Europe has so many literal monarchy and other royal descents that still owns huge capital, banks and so on. GL with auditing royal families, so much hidden information there.
- machinekob 3y ago
  Tbh there is a price for that, our taxation is one of the highest in the world with stagnation for past 15 years (even with enormous "immigration" flow). Also people who are in top of their fields almost never stay in Europe (especially if they are young) as potential tax burden for top brackets (which aren't that high its mostly middle class in US wealth scale) are enormous and total taxation can be as high as 60-65% (with VAT and local laws [homes, car, fuel]) for 1.5-3x less money then in US or even in some Asian based corporations which directly makes EU stagnant in most of the R&D fields (even in IT i can make like triple the money in US or 1.5x in China corporations). EU system is good if you are making money not from work but from wealth (rent, stocks etc.) which is only for folks who already make a lot of investments in younger days or just inherit a lot of cash/properties/stocks. I know US folks love to be angry about their country, but they are in best position for making decent living in the whole world, except possibly some small asian/european states like Switzerland/Singapore etc.
  - lapcat 3y ago
    > people who are in top of their fields almost never stay in Europe (especially if they are young) > I know US folks love to be angry about their country, but they are in best position for making decent living These are two different things. The disparity of wealth between the top and the bottom, indeed between the top and everyone else, is greater than in the other wealthy countries. For decades, income in the US has been stagnant except at the top. And when the salaries of the masses finally start to rise due to demand for labor, the Federal Reserve decides that is the Worst Thing Ever and intentionally provokes a recession. > EU system is good if you are making money not from work but from wealth Every system is good if you are making money not from work but from wealth.
    - machinekob 3y ago
      > Every system is good if you are making money not from work but from wealth. But not every system is taxing you 65% from work and 0-20% from wealth. Indeed US wealth disparity is enormous but this is also a country with highest number of billionaire, gigant corporations and biggest stock exchange. And all of that didn't change the fact that US middle class is wealthiest middle class in the world (except some small countries that cant be compared Norway/Qatar etc.)
- refurb 3y ago
  But the US taxpayer also pays into health insurance (for retirees, low income and subsidies for everyone else), long-term disability, unemployment insurance, workers compensation, social security pension. So what's the difference again?
PappGaborSandor 3y ago
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Tee3993 3y ago
> spontaneous altruism > The cooperating gamblers This article mistakes "altruism" with "cooperation". With cooperation there are no free gifts, everything comes with strings attached. And defection and breaking rules is punished!
d4nt 3y ago
Some time ago I asked myself: why did gambling become so addictive? You always loose, but it’s so powerfully addictive the behaviour must be beneficial in some way. It occurred to me that you always loose when doing “artificial gambling” (casinos, horse races etc) but “natural gambling” is different. Should we explore this coastline, should we try and cultivate this plant, should we run this scientific experiment? These bets may not pay off individually, but for the overall population over time they always pay off. The natural world has ergodicity.
- deleted 3y ago
  [deleted]
renewiltord 3y ago
As an individual participant you can optimize your outcomes further by hiding some gains and claiming them as losses. In this way, you can extract more from the system. You have an added cost of determining whether to hide a particular win and an added cost of hiding the win itself. But in exchange you can juice your returns. Therefore, just like so many old economic puzzles rely on ergodicity, this one relies either on full cooperation: either through honesty or through cheap verification (either through transparency or something else). With that assumption visible, we can see why such an obviously positive result still doesn’t result in that action among informed participants when that precondition is not met.
jl6 3y ago
There’s a chance I’m doing this a great disservice, but this whole site and subject seems to scream pseudoscience. It seems largely pushed by one guy - Ole Peters. It seems he created the Wikipedia page on this subject. His research is done under the umbrella of the authoritative sounding “London Mathematical Laboratory”, which he founded. It makes giant claims, like the headline here which seems intended to be read as “mathematics proves collectivism is best” - and yet offers little empirical evidence beyond saying that an abstract mathematical model can tell us something about the real world. Spherical horses and all that. It even pulls the classic pseudoscience manoeuvre of positioning itself against “mainstream economics”. Crank until proven otherwise IMHO. Edit: looks like it’s not just me: https://arxiv.org/pdf/2306.03275.pdf https://arxiv.org/pdf/2306.03275.pdf Edit 2: he has a Twitter account where he rails against mainstream economics. He’s a physicist.
- NeverFade 3y ago
  Seems like the good old false Marxist argument, in a sexy new "mathematical" package to appeal to a geeky crowd. I predict it will do extremely well here.
  - throwawayqqq11 3y ago
    You mean the utterly wrong marxist "accumulation of capital" claim? So ridiculous! There is no $problem in our civilization and it certainly isnt made by our economy or ignorance.
    - Kratacoa 3y ago
      https://en.wikipedia.org/wiki/Labor_theory_of_value#Criticism https://en.wikipedia.org/wiki/Labor_theory_of_value#Criticis...
      - throwawayqqq11 3y ago
        Could you instead show me some value which was not produced by labour please?
playday 3y ago
It’s interesting because most Ponzi schemes present themselves as a way to pool and share wealth.
jongjong 3y ago
I like being on the receiving end of people sharing their money. I worked so hard for so long and got nothing out of it so whenever someone gives me free money, I feel like I earned it. I only look for easy money these days and free money is the easiest of all. Most wealthy people these days received their wealth for free if you think about it... They got it through talking BS. It's all about manipulating people to choose them, to keep them on as a supplier, to give them extra big contracts with friendly terms, to direct traffics to their websites... Anyone earned serious money through hard intelligent work?
levzettelin 3y ago
The mathematics of this seem sound. The ideological overhead ("cooperation is good"), however, seems wrong. The same outcome that the author achieves with pooling in a group can be achieved by an individual just splitting their wealth into N pools, and then playing the coin-toss individually with each of those N pools. Also, I suspect an even better outcome for an individual would be achieved by essentially using the Kelly criterion, which means that you wager a certain fraction of year wealth on every coin-toss. The optimal fraction that should be wagered on each toss can be calculated with pretty basic math. For the lefties: this doesn't mean that cooperation is bad, of course. It just means that the argument in the article can not be used in support of your ideology.
- _0ffh 3y ago
  I don't think the ideological overhead of "cooperation is good" is a leftist one. Quite the opposite, if we qualify it down to "voluntary cooperation is good" it forms the heart of capitalism. The problem with leftism is that often it is also fine with "forced cooperation is good", and that's where it goes bad.
- pcrh 3y ago
  The classic Prisoner's Dilemma demonstrates "cooperation is good". Perhaps this is an extension of that.
keiferski 3y ago
I have an amateur theory on a similar idea and could use some feedback on it. I’m sure this isn’t an original idea, but I’m not an economist. The argument goes like this: the wealthy members of society have a higher quality of life when income inequality is not extreme. Not because of diminished social ostracism, but because the luxury products they want to consume would not exist without the markets and broad consumer base to fund them. In other words, the average wealthy person today has access to technology, exotic food, plumbing, fast cars, etc. that even kings didn’t have a few centuries ago. These things only exist because wealth was sufficiently distributed to incentivize their development. Many or most of them would not exist in a world of extreme inequality, if only from lack of interest (e.g., a wealthy 17th century aristocrat isn’t going to start a plumbing business, but the son of a tradesman will.) All the money in the world won’t help the King of France build a private jet in 1770. The conclusion of this is that from a purely selfish point of view, the wealthy have a vested interest in not centralizing all wealth. Edit: it's so bizarre when people don't reply and just downvote a comment that is purely speculating.
- stagas 3y ago
  Seems reasonable to me, go with it. I mean, it also makes sense even at a societal level, would you rather people around you when you walk in the street be content/satisfied or looking out for a victim to steal from? I'd rather all people have sufficient access to life's needs so that selfishly i'm not scared that I'll be robbed. Your theory makes sense in many levels.
- Gravityloss 3y ago
  Good points. If one looks at military technology, it often tries to be ahead of mainstream off the shelf solutions. It ends up extremely expensive and slow to develop. After the development is finished, it might be that many of the commercial solutions could be better. In a field where the mainstream is making rapid progress, it often doesn't make sense to create your own bespoke solution.
  - keiferski 3y ago
    Bespoke vs. commercial is a good way to put it too. The higher-end version of the commercial solution is better than the "designed as higher-end" bespoke one.
southernplaces7 3y ago
Often the overall notion of something being good or bad is extremely dependent on the specific details of how it's applied, and their dynamics. While pooling capital or wealth and sharing it among a voluntary, mutually interested group may work for making that wealth grow (after all it's the basis of market exchange and so much built prosperity), this shouldn't be used as a justification for defending forced collectivization and collectivism. These latter tactics might work sometimes in very specific contexts, but their dynamics make them very different and much more plausibly destructive than useful, or even moral.
_v7gu 3y ago
too many words just to say concave utility rewards risk sharing

159 points by max_ 3y ago

This is shown time and time again (see all the studies about unconditional giving or basic income), and yet those with the most hoard their wealth keeping it out of the useful economy.

mschuster91 3y ago

Society, at least in the classic European model, works just the same: everyone (yes, I know, there are exceptions, that's not the point) pays their share into health insurance, LTD insurance, unemployment insurance, workplace accident insurance, pension systems and a ton of other social benefit systems. And everyone benefits from this kind of collective solidarity - our societies are far less combative (both in the literal and the proverbial sense) than the US are.

ekianjo 3y ago
thats one way of seeing things. If you never left Europe that is
- manmal 3y ago
  What’s your way of seeing things?
- chpatrick 3y ago
  The more I see of the world the more I agree with OP, what's your point?
- anonzzzies 3y ago
  I left the EU and lived in many places, travelled to more. Always happy to be back; it's not perfect, but it's worse elsewhere.
jiofj 3y ago
It's more like we pay half our salary in taxes and then we get terrible education and a healthcare system where you can't even get an appointment.
- harha 3y ago
  and it creates all the wrong incentives since they're overdoing it by quite a bit. it also forces people to less optimal decisions because they need to avoid taxes. at the end of the day, this makes them less resilient, since governments won't be fast enough to react to new developments and incentivized to actually solve problems. edit: just to add to this: I don't think pooling / sharing is bad, there are many cases where this makes sense (investments, insurance), especially when it's voluntary, but it's easy to overdo it in a forced model. European living abroad btw, familiar with many different ways people live.
  - geysersam 3y ago
    Optimal decision making = poor people don't buy health insurance, rich people buy health insurance
- abwizz 3y ago
  on the flip side, would you rather the bribe your dr for an appointment and "donate" to the school?
  - harha 3y ago
    well you need to in a public system that's overloaded, so you lose both when paying in and again when you need to get treatment.
    - vidarh 3y ago
      Americans pay more in tax towards public healthcare than we do in some European countries. Then they pay again. E.g. the UK NHS costs less per capita than Medicare + Medicaid costs per capita (not per user), despite the former providing universal service. Partly explained by artificial restrictions on Medicare limiting their ability to negotiate price - the "free" market is intentionally prevented from functioning. It's pretty much corporate welfare paid for by regular tax payers. I never understand why Americans tolerate this. The proportion who pays twice in the UK is around 10% who opt for private insurance on top. The proportion who pays twice in the US is every tax payer. Total healthcare spend per capita (public + private) tells a pretty clear picture, where costs of healthcare in the US is totally out of control.
NeverFade 3y ago
The only problem with this model is that it doesn't seem to be working long term. Economically, Europe has been stagnating for a long time, and recently its been in a decline. So it's a nice model as long as you can maintain it, which doesn't seem to be very long. https://archive.ph/5eZjb https://archive.ph/5eZjb
- withinboredom 3y ago
  It depends on what you value, right? There are hard limits on the number of people any plot of land can handle and feed. Stagnation is probably a good thing. Always “doing more” isn’t always a good thing. It’s not a zero-sum game where there is some kind of competition.
  - NeverFade 3y ago
    Stagnation isn't "a good thing" when you're comparing to societies that are progressing. And it may be a zero sum game, when stagnating nations are drained of talent and brains, so this model is even less sustainable, as anyone who can do better leaves, and the rest are left to support those who don't do particularly well.
    - withinboredom 3y ago
      Yes, but what is “progress” right now? Move to a country where you can make infinite money (a gamble) but lose it all as soon as you get sick? Or move to another one where every move is monitored and watched? Or where you need a phone to do the most basic things, where you are stranded with no way to eat until you charge your phone? Progress may not always be good, at least in today’s times it basically means “more efficient extraction of wealth from the middle class”.
  - playday 3y ago
    Let’s assume what you’re saying was true: doing less is better. Well just mechanically, a “evil” society that does more will attract more labor and capital than one that doesn’t. Any area of competition except “goodness” will be won by the evil country, such as space races, weapons development, and new technologies. That means the society which chooses to do less will be culturally, technologically, and militarily at the whims of the evil society. So the power dynamic will definitionally belong to the doing more society at the expense of the doing less one, and in the final state the goal of goodness by doing less has failed. This is a contradiction disproving the assumption .
CTDOCodebases 3y ago
It’s not fair to compare any country to the US since they get to export their inflation.
apples_oranges 3y ago
It works as long as overall wealth is increasing, businesses and population are growing. We'll see how it goes on from here..
playday 3y ago
Then why is real gdp per capita in many Western European countries mostly stagnant since 2008? If what you’re saying was true, Europe should be growing faster than USA and even faster than countries like China that have much worse social safety nets.
- febusravenga 3y ago
  I don't know, but as someone pointes out, we EUropeans are less combative and maybe need less to satisfy our needs, so we don't run for more GDP? maybe it's enough? I'm not saying it's good, but maybe it's just less pressure -> less force -> less progress.
- avianlyric 3y ago
  There’s more to life than GDP. Economic growth is poor measure of collective happiness or quality of life. Are you going to argue that average quality of life in china is substantially better than Europe because their GDP growth is higher?
  - playday 3y ago
    Going back to the original article, the subject is regarding ergodicity and economic benefits of cooperation. The commenter I’m replying to extended an analogy to claim that this research extends to certain countries social welfare system. My position is that this extension is outright false, that just because cooperation can create benefits under the conditions of the research, it doesn’t demonstrate economic growth results from social welfare policies.
- j7ake 3y ago
  Because these benefits don’t necessary result in growth of real gdp per capita, but increase the stability and livability of a city. A PhD student in many places in Europe can afford to have their own apartment and have kids. Where is that possible in usa?
  - machinekob 3y ago
    In which European cities PhD can afford to buy apartment (Paris? London? Berlin?). Or you are speaking about smaller cities in which you can also make the same argument for US.
logifail 3y ago
> Society, at least in the classic European model, works just the same (..) everyone benefits from this kind of collective solidarity There appear to be a growing number of voters who disagree. https://www.theguardian.com/world/2023/jun/30/far-right-on-the-march-europe-growing-taste-for-control-and-order https://www.theguardian.com/world/2023/jun/30/far-right-on-t...
- blowski 3y ago
  Yes, this model works well when people are mostly surrounded by people "like them". Populists tell such people they'd be better off if it weren't for all the people with different coloured skin, wearing funny clothes, speaking weird languages. And so while everyone probably is better off, they fester that resentment, creating a cultural feeling that we're not, and it's all _their_ fault.
- OfSanguineFire 3y ago
  Populist parties in Europe do not necessarily oppose taxation for social programs and collective solidarity. This is the case with the Perussuomalaiset party in Finland, for example, which supports a welfare state in spite of the anti-immigrant rhetoric that gets it categorized as far-right.
  - vidarh 3y ago
    In fact, historically, few right wing parties in Europe in general have opposed welfare programs outright. A large portion of European welfare programs came from the centre right or right, partially on the basis of a Christian morality argument (e.g. Bismarcks original German healthcare and pension insurance reforms, backed by Zentrum, a party who went on to support Hitlers candidacy for Chancellor, and whose spiritual successor is the CDU), partially as a realisation it was either forging compromises or risk revolution (e.g. Bismarks reforms were at least in part outright "stolen" from demands from left wing parties he banned and imprisoned leading members of, as part of a two-prong strategy of appeasement and an iron fist. That free market and right libertarian parties have gained some traction again is a relatively "new" (few decades) phenomenon, after many of them were squeezed hard by the rapid growth of socialist parties to their left a century ago. EDIT: Worth adding that classically liberal parties in Europe have largely leaned socially liberally, e.g. "low overhead welfare" rather than no welfare. A lot of the universal basic income talk comes from classical liberals as a counter to social democratic "big government welfare" not by removing the welfare but by trying to minimise government involvement in the equation.
iknownothow 3y ago
I think the Personal Liability insurance that almost everyone has in Germany is an overlooked societal lubricant. For €10 a month, you get €10 million in coverage for accidental damage. * No incentive for revenge law suits. * Damages are well regulated so you can't sue for €1 million just because someone's bicycle ran over your toe. * Can't sue for exorbitant medical expenses because in most cases there are no personal medical expenses i.e. covered anyway by govt health insurance. I'm unsure if personal liability insurance is popular elsewhere in Europe.
- logifail 3y ago
  > Damages are well regulated so you can't sue for €1 million just because someone's bicycle ran over your toe. Counter-example: a website uses Google Fonts and the owner gets a letter from someone's German lawyer demanding they pay "damages" for the GDPR "violation" [0] https://www.bitdefender.com/blog/hotforsecurity/german-website-fined-100-euros-after-court-says-googles-font-library-violates-gdpr/ https://www.bitdefender.com/blog/hotforsecurity/german-websi... [1] https://www.spiegel.de/netzwelt/web/razzia-wegen-betrugs-rund-um-google-schriftarten-a-d70a829e-05b9-47ba-8eab-fa90996e4cca https://www.spiegel.de/netzwelt/web/razzia-wegen-betrugs-run...
  - RandomLensman 3y ago
    You notice that the Spiegel article talks about criminal behavior by a lawyer (and the individual sums are tiny, not even clear they would have taken this to court as German courts take upfront fees).
- patall 3y ago
  From what I have heard from someone working at an insurance company, those liability contracts are not cost covering. They have those for customer recruitment.
bsza 3y ago
This model works well in countries that already have the wealth to support it, usually from spending centuries colonizing other countries and sucking them dry. It doesn't work quite as well in the countries that had been colonized.
- slushh 3y ago
  Why? From a cash flow perspective, the monthly insurance premiums should cover the expenses.
- sleepyhead 3y ago
  Sorry to break your bubble but most European countries did not colonise other countries. The most successful ones, Scandinavian countries, did not colonise other countries (well they did internally but not the same way as England and France for example). If you look to Norway we had a social democratic system before we gained the majority of wealth (aka oil).
  - bsza 3y ago
    https://en.wikipedia.org/wiki/Swedish_overseas_colonies https://en.wikipedia.org/wiki/Swedish_overseas_colonies https://en.wikipedia.org/wiki/List_of_possessions_of_Norway https://en.wikipedia.org/wiki/List_of_possessions_of_Norway https://en.wikipedia.org/wiki/Danish_overseas_colonies https://en.wikipedia.org/wiki/Danish_overseas_colonies
    - consilient 3y ago
      Scandinavian countries did not establish successful profitable colonies (except perhaps Iceland, if you want to count that). It's ambiguous enough whether the average Briton really benefited from their colonial adventures: the Scandinavian peasantry clearly did not. Finland in particular was an impoverished backwater until the early 20th century.
- xg15 3y ago
  Depends. A lot of the former colonies attempted more collectivist policies but were prevented from doing so by their former colonizers (or other rich countries). https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9ta... https://en.wikipedia.org/wiki/Fran%C3%A7afrique https://en.wikipedia.org/wiki/Fran%C3%A7afrique
tomjen3 3y ago
Hard disagree on that - I would be much better of with a US health insurance were there weren't months of waiting time for treatment. Sure if I am unemployed I would be better of with the version we have in Denmark, but I won't be unemployed for long. And if I get a disability, I have private insurance for that too, because the public one isn't good enough. The unemployment insurance portion I pay will pay out something like 1/2 my salary, but because everyone pays the same in I am subsidising those who are much more likely to be unemployed (bricklayers in winter, to make a simple example). Oh and many of those are going to get most of their salary paid out because they are not over the cap. So to sum up: by having a single system everone pays into you are going to be put together with people who have an entirely different risk profile and you will be better of in a system were you could choose your own insurances. Then of course I am also subsidicing all the drug users and alcoholics, but thats also an issue in the US, because society has decided that we must.
heavyset_go 3y ago
> everyone (yes, I know, there are exceptions, that's not the point) pays their share into health insurance Everyone pays their fair share based on income from working, but not from their wealth, assets, dividends, interest, etc in many places. If your "income" comes from those sources, you aren't paying your fair share compared to people who must work to eat.
- sleepyhead 3y ago
  This is false. Pretty much all personal income is taxed, and definitively dividends. While it might be beneficial for the society to tax assets, any personal income from those assets are taxed in most cases. There are ways to avoid it to a certain extend but if you want a 5 million euros from one of your companies you would pay tax on that. If you want a boat you could set up HireMyBoat Inc and then avoid paying taxes on that 5 mill to pay a boat but still use the boat for vacations (this might be illegal but very rarely enforced).
  - heavyset_go 3y ago
    I didn't say personal income wasn't taxed, and I also put "income" in quotes because capital gains aren't taxed as income, and there are various schemes one can engage in to shield value from, or reduce, taxes like income tax.
- FirmwareBurner 3y ago
  Exactly. Which is why a lot of Europe's wealth is inherited and has policies in place to protect that wealth and roll it over across generations (nearly) tax free, so most of the Government taxes are gathered on the backs of the working class, not the asset owning class, making it a serfdom with extra steps. Ironically, US has way tougher inheritance taxes than most of EU.
  - anon1199022 3y ago
    Also Europe has so many literal monarchy and other royal descents that still owns huge capital, banks and so on. GL with auditing royal families, so much hidden information there.
machinekob 3y ago
Tbh there is a price for that, our taxation is one of the highest in the world with stagnation for past 15 years (even with enormous "immigration" flow). Also people who are in top of their fields almost never stay in Europe (especially if they are young) as potential tax burden for top brackets (which aren't that high its mostly middle class in US wealth scale) are enormous and total taxation can be as high as 60-65% (with VAT and local laws [homes, car, fuel]) for 1.5-3x less money then in US or even in some Asian based corporations which directly makes EU stagnant in most of the R&D fields (even in IT i can make like triple the money in US or 1.5x in China corporations). EU system is good if you are making money not from work but from wealth (rent, stocks etc.) which is only for folks who already make a lot of investments in younger days or just inherit a lot of cash/properties/stocks. I know US folks love to be angry about their country, but they are in best position for making decent living in the whole world, except possibly some small asian/european states like Switzerland/Singapore etc.
- lapcat 3y ago
  > people who are in top of their fields almost never stay in Europe (especially if they are young) > I know US folks love to be angry about their country, but they are in best position for making decent living These are two different things. The disparity of wealth between the top and the bottom, indeed between the top and everyone else, is greater than in the other wealthy countries. For decades, income in the US has been stagnant except at the top. And when the salaries of the masses finally start to rise due to demand for labor, the Federal Reserve decides that is the Worst Thing Ever and intentionally provokes a recession. > EU system is good if you are making money not from work but from wealth Every system is good if you are making money not from work but from wealth.
  - machinekob 3y ago
    > Every system is good if you are making money not from work but from wealth. But not every system is taxing you 65% from work and 0-20% from wealth. Indeed US wealth disparity is enormous but this is also a country with highest number of billionaire, gigant corporations and biggest stock exchange. And all of that didn't change the fact that US middle class is wealthiest middle class in the world (except some small countries that cant be compared Norway/Qatar etc.)
refurb 3y ago
But the US taxpayer also pays into health insurance (for retirees, low income and subsidies for everyone else), long-term disability, unemployment insurance, workers compensation, social security pension. So what's the difference again?

PappGaborSandor 3y ago

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Tee3993 3y ago

> spontaneous altruism > The cooperating gamblers This article mistakes "altruism" with "cooperation". With cooperation there are no free gifts, everything comes with strings attached. And defection and breaking rules is punished!

d4nt 3y ago

Some time ago I asked myself: why did gambling become so addictive? You always loose, but it’s so powerfully addictive the behaviour must be beneficial in some way. It occurred to me that you always loose when doing “artificial gambling” (casinos, horse races etc) but “natural gambling” is different. Should we explore this coastline, should we try and cultivate this plant, should we run this scientific experiment? These bets may not pay off individually, but for the overall population over time they always pay off. The natural world has ergodicity.

deleted 3y ago
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renewiltord 3y ago

As an individual participant you can optimize your outcomes further by hiding some gains and claiming them as losses. In this way, you can extract more from the system. You have an added cost of determining whether to hide a particular win and an added cost of hiding the win itself. But in exchange you can juice your returns. Therefore, just like so many old economic puzzles rely on ergodicity, this one relies either on full cooperation: either through honesty or through cheap verification (either through transparency or something else). With that assumption visible, we can see why such an obviously positive result still doesn’t result in that action among informed participants when that precondition is not met.

jl6 3y ago

There’s a chance I’m doing this a great disservice, but this whole site and subject seems to scream pseudoscience. It seems largely pushed by one guy - Ole Peters. It seems he created the Wikipedia page on this subject. His research is done under the umbrella of the authoritative sounding “London Mathematical Laboratory”, which he founded. It makes giant claims, like the headline here which seems intended to be read as “mathematics proves collectivism is best” - and yet offers little empirical evidence beyond saying that an abstract mathematical model can tell us something about the real world. Spherical horses and all that. It even pulls the classic pseudoscience manoeuvre of positioning itself against “mainstream economics”. Crank until proven otherwise IMHO. Edit: looks like it’s not just me: https://arxiv.org/pdf/2306.03275.pdf https://arxiv.org/pdf/2306.03275.pdf Edit 2: he has a Twitter account where he rails against mainstream economics. He’s a physicist.

NeverFade 3y ago
Seems like the good old false Marxist argument, in a sexy new "mathematical" package to appeal to a geeky crowd. I predict it will do extremely well here.
- throwawayqqq11 3y ago
  You mean the utterly wrong marxist "accumulation of capital" claim? So ridiculous! There is no $problem in our civilization and it certainly isnt made by our economy or ignorance.
  - Kratacoa 3y ago
    https://en.wikipedia.org/wiki/Labor_theory_of_value#Criticism https://en.wikipedia.org/wiki/Labor_theory_of_value#Criticis...
    - throwawayqqq11 3y ago
      Could you instead show me some value which was not produced by labour please?

playday 3y ago

It’s interesting because most Ponzi schemes present themselves as a way to pool and share wealth.

jongjong 3y ago

I like being on the receiving end of people sharing their money. I worked so hard for so long and got nothing out of it so whenever someone gives me free money, I feel like I earned it. I only look for easy money these days and free money is the easiest of all. Most wealthy people these days received their wealth for free if you think about it... They got it through talking BS. It's all about manipulating people to choose them, to keep them on as a supplier, to give them extra big contracts with friendly terms, to direct traffics to their websites... Anyone earned serious money through hard intelligent work?

levzettelin 3y ago

The mathematics of this seem sound. The ideological overhead ("cooperation is good"), however, seems wrong. The same outcome that the author achieves with pooling in a group can be achieved by an individual just splitting their wealth into N pools, and then playing the coin-toss individually with each of those N pools. Also, I suspect an even better outcome for an individual would be achieved by essentially using the Kelly criterion, which means that you wager a certain fraction of year wealth on every coin-toss. The optimal fraction that should be wagered on each toss can be calculated with pretty basic math. For the lefties: this doesn't mean that cooperation is bad, of course. It just means that the argument in the article can not be used in support of your ideology.

_0ffh 3y ago
I don't think the ideological overhead of "cooperation is good" is a leftist one. Quite the opposite, if we qualify it down to "voluntary cooperation is good" it forms the heart of capitalism. The problem with leftism is that often it is also fine with "forced cooperation is good", and that's where it goes bad.
pcrh 3y ago
The classic Prisoner's Dilemma demonstrates "cooperation is good". Perhaps this is an extension of that.

keiferski 3y ago

I have an amateur theory on a similar idea and could use some feedback on it. I’m sure this isn’t an original idea, but I’m not an economist. The argument goes like this: the wealthy members of society have a higher quality of life when income inequality is not extreme. Not because of diminished social ostracism, but because the luxury products they want to consume would not exist without the markets and broad consumer base to fund them. In other words, the average wealthy person today has access to technology, exotic food, plumbing, fast cars, etc. that even kings didn’t have a few centuries ago. These things only exist because wealth was sufficiently distributed to incentivize their development. Many or most of them would not exist in a world of extreme inequality, if only from lack of interest (e.g., a wealthy 17th century aristocrat isn’t going to start a plumbing business, but the son of a tradesman will.) All the money in the world won’t help the King of France build a private jet in 1770. The conclusion of this is that from a purely selfish point of view, the wealthy have a vested interest in not centralizing all wealth. Edit: it's so bizarre when people don't reply and just downvote a comment that is purely speculating.

stagas 3y ago
Seems reasonable to me, go with it. I mean, it also makes sense even at a societal level, would you rather people around you when you walk in the street be content/satisfied or looking out for a victim to steal from? I'd rather all people have sufficient access to life's needs so that selfishly i'm not scared that I'll be robbed. Your theory makes sense in many levels.
Gravityloss 3y ago
Good points. If one looks at military technology, it often tries to be ahead of mainstream off the shelf solutions. It ends up extremely expensive and slow to develop. After the development is finished, it might be that many of the commercial solutions could be better. In a field where the mainstream is making rapid progress, it often doesn't make sense to create your own bespoke solution.
- keiferski 3y ago
  Bespoke vs. commercial is a good way to put it too. The higher-end version of the commercial solution is better than the "designed as higher-end" bespoke one.

southernplaces7 3y ago

Often the overall notion of something being good or bad is extremely dependent on the specific details of how it's applied, and their dynamics. While pooling capital or wealth and sharing it among a voluntary, mutually interested group may work for making that wealth grow (after all it's the basis of market exchange and so much built prosperity), this shouldn't be used as a justification for defending forced collectivization and collectivism. These latter tactics might work sometimes in very specific contexts, but their dynamics make them very different and much more plausibly destructive than useful, or even moral.

_v7gu 3y ago

too many words just to say concave utility rewards risk sharing