4 ms·

No mention of Piketty or r>g? Look, I know this is a tech forum and we don't claim to be good at the social sciences, but this is a central debate and r>g, the

No mention of Piketty or r>g? Look, I know this is a tech forum and we don't claim to be good at the social sciences, but this is a central debate and r>g, the idea that the rate of return to capital tends to exceed economic growth over the course of history, is a major result from Piketty's Capital In The 21st Century that people interested in "grow the pie" vs "trickle down" really ought to be familiar with. Even if you disagree, you ought to be able to articulate why, and "the average includes winners and losers" ain't it. "But life has improved, r>g couldn't have been true forever" -- last time the inequality bubble popped because of a great depression and two world wars. The capital was incinerated, metaphorically and literally. It's a cautionary tale and we should aspire to do better.

dnautics 4mo ago
> It's a cautionary tale and we should aspire to do better. Why is it a cautionary tale? Sounds like we should have a bunch of incinerations of capital, ideally let the capital mobilizers that are actually competent survive.
- tikhonj 4mo ago
  "Let's have more world wars" isn't a great thing to aim for.
  - dnautics 4mo ago
    I'm suggesting deflationary contractions, but okay. Note that deflationary contractions in 1930 sucked because we didn't have solid supply chains, modern agriculture, liquid asset markets turbocharged with rapid information interchange etc. Might be worth trying in the 20X0s
    - ericd 4mo ago
      The populist blowbacks from that were a major cause of the second world war.
      - dnautics 4mo ago
        weimar republic created hyperinflation, in response to deflation, and so at best its a second order effect with a not so subtle intervening policy that was the primary target of the backlash
        ericd 4mo ago
        I thought it was monetizing fiscal deficits due to WW1 war reparations payable only in gold?
        smallmancontrov 4mo ago
        Yes, dnautics is confused. In the early 20s Germany hyperinflated to pay reparations, they subsequently became allergic to inflationary policy, and then when the deflationary wave of the Great Depression hit in the late 20s they were allergic to the correct policy response, so they let deflation bite, and a certain Austrian fellow rode that pain into power.
engineeringwoke 4mo ago
Eh, I'll bite. I haven't read the source but for one, there wasn't really even a US dollar until 1935. When banks failed, and they did unlike now when they artificially don't, you lost everything. There was no FDIC. All of those mechanisms are artificial and serve to make the banking industry large and profitable. Not to mention currency debasement, another aspect of the modern world that makes finance uniquely profitable and, really, white collar work existent in any major form at all. It's ingenious. Since capitalism is naturally deflationary, as competition removes all profit over the long term, let's interfere and make it so workers make less money every working day. Hence, in order to make even the same amount of money each year, one has to either rise in the hierarchy, or argue for raises, which is inherently risky. Basically, before 1935, it was hard to accumulate that much wealth. It wasn't generally backed by any nation state guarantee. Real estate has always been a great store of wealth, but it has physical limitations. The world since 1935 is now a world of nation state wealth guarantees. The only reason this amount of wealth is allowed to occur, is because of it. We took a strange path since 2008, when the banks were not allowed to fail. Everything eventually comes to pass.
- smallmancontrov 4mo ago
  No. I'm surprised someone who picked the name "engineeringwoke" has no love for FDR. He's the GOAT! The largest bank in the US is #14 on the S&P by market cap. If the Federal Reserve is a conspiracy to make banks profitable, it is doing a poor job. More to the point: I challenge anyone who doesn't like the Fed and the compromise it represents (money printer exists, but is guarded from the politicians by a council of 12) to name their alternative. Hard money? Politicians can print? You picked "hard money." Let's go! Everyone who learns about the Cantillon Pump thinks they would love to run it in reverse. This is because they don't understand that it does not run in reverse. It is not symmetrical. They underestimate the pain of a deflationary shock, where everyone (namely your employer) gets an incentive to not participate in the economy and then stops participating in the economy (namely by employing you). Rent and debt is still due, of course. This is the pain that inspired the USA to split from Britain (scrip/specie). This is the pain of the Great Depression -- you threw out that 1935 date like it was the culmination of a Bond bad guy plot, not the capitulation of a country tired of deflation. We even have the counterfactual: Germany, having just escaped the Weimar inflation, decided in 1929 to take the deflationary response to the Great Depression. It led them to a very dark place. Returning to the USA: they weren't called "robber barons" because they failed to accumulate wealth. Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term, it squeezes it onto assets, which is where that unearned income we were talking about originates from. If you have ever heard or given a business pitch, attended a class in business school, or listened to a VC for 30 seconds you have heard some heinously anticompetitive scheme and their plan to leverage it for personal gain by turning it into an asset they own. Network effects, platform effects, two sided markets, returns to scale, etc etc etc. Usually they don't work, but when they do and you get a stock or a deed or a title to a money fountain (exploitation fountain, seen from the other side) you get to stack trillions while the competition spends decades trying to cross your capitalism-created and capitalism-guaranteed moat. Yes, in recent times the money printer has been used to exacerbate inequality. But it isn't the cause of inequality -- certainly not if you look at what happened in the 1935: https://ceprdc.tumblr.com/post/87307310830/piketty-in-one-graph-this-graphic-summarizes-the https://ceprdc.tumblr.com/post/87307310830/piketty-in-one-gr... Turns out you can have an inflationary adjustment and unwind inequality and boost the economy at the same time, so long as you remember to tax the rich. FDR sends his regards! You'd like Capital in the 21st Century.

dnautics 4mo ago

> It's a cautionary tale and we should aspire to do better. Why is it a cautionary tale? Sounds like we should have a bunch of incinerations of capital, ideally let the capital mobilizers that are actually competent survive.

tikhonj 4mo ago
"Let's have more world wars" isn't a great thing to aim for.
- dnautics 4mo ago
  I'm suggesting deflationary contractions, but okay. Note that deflationary contractions in 1930 sucked because we didn't have solid supply chains, modern agriculture, liquid asset markets turbocharged with rapid information interchange etc. Might be worth trying in the 20X0s
  - ericd 4mo ago
    The populist blowbacks from that were a major cause of the second world war.
    - dnautics 4mo ago
      weimar republic created hyperinflation, in response to deflation, and so at best its a second order effect with a not so subtle intervening policy that was the primary target of the backlash
      - ericd 4mo ago
        I thought it was monetizing fiscal deficits due to WW1 war reparations payable only in gold?
        smallmancontrov 4mo ago
        Yes, dnautics is confused. In the early 20s Germany hyperinflated to pay reparations, they subsequently became allergic to inflationary policy, and then when the deflationary wave of the Great Depression hit in the late 20s they were allergic to the correct policy response, so they let deflation bite, and a certain Austrian fellow rode that pain into power.

engineeringwoke 4mo ago

Eh, I'll bite. I haven't read the source but for one, there wasn't really even a US dollar until 1935. When banks failed, and they did unlike now when they artificially don't, you lost everything. There was no FDIC. All of those mechanisms are artificial and serve to make the banking industry large and profitable. Not to mention currency debasement, another aspect of the modern world that makes finance uniquely profitable and, really, white collar work existent in any major form at all. It's ingenious. Since capitalism is naturally deflationary, as competition removes all profit over the long term, let's interfere and make it so workers make less money every working day. Hence, in order to make even the same amount of money each year, one has to either rise in the hierarchy, or argue for raises, which is inherently risky. Basically, before 1935, it was hard to accumulate that much wealth. It wasn't generally backed by any nation state guarantee. Real estate has always been a great store of wealth, but it has physical limitations. The world since 1935 is now a world of nation state wealth guarantees. The only reason this amount of wealth is allowed to occur, is because of it. We took a strange path since 2008, when the banks were not allowed to fail. Everything eventually comes to pass.

smallmancontrov 4mo ago
No. I'm surprised someone who picked the name "engineeringwoke" has no love for FDR. He's the GOAT! The largest bank in the US is #14 on the S&P by market cap. If the Federal Reserve is a conspiracy to make banks profitable, it is doing a poor job. More to the point: I challenge anyone who doesn't like the Fed and the compromise it represents (money printer exists, but is guarded from the politicians by a council of 12) to name their alternative. Hard money? Politicians can print? You picked "hard money." Let's go! Everyone who learns about the Cantillon Pump thinks they would love to run it in reverse. This is because they don't understand that it does not run in reverse. It is not symmetrical. They underestimate the pain of a deflationary shock, where everyone (namely your employer) gets an incentive to not participate in the economy and then stops participating in the economy (namely by employing you). Rent and debt is still due, of course. This is the pain that inspired the USA to split from Britain (scrip/specie). This is the pain of the Great Depression -- you threw out that 1935 date like it was the culmination of a Bond bad guy plot, not the capitulation of a country tired of deflation. We even have the counterfactual: Germany, having just escaped the Weimar inflation, decided in 1929 to take the deflationary response to the Great Depression. It led them to a very dark place. Returning to the USA: they weren't called "robber barons" because they failed to accumulate wealth. Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term, it squeezes it onto assets, which is where that unearned income we were talking about originates from. If you have ever heard or given a business pitch, attended a class in business school, or listened to a VC for 30 seconds you have heard some heinously anticompetitive scheme and their plan to leverage it for personal gain by turning it into an asset they own. Network effects, platform effects, two sided markets, returns to scale, etc etc etc. Usually they don't work, but when they do and you get a stock or a deed or a title to a money fountain (exploitation fountain, seen from the other side) you get to stack trillions while the competition spends decades trying to cross your capitalism-created and capitalism-guaranteed moat. Yes, in recent times the money printer has been used to exacerbate inequality. But it isn't the cause of inequality -- certainly not if you look at what happened in the 1935: https://ceprdc.tumblr.com/post/87307310830/piketty-in-one-graph-this-graphic-summarizes-the https://ceprdc.tumblr.com/post/87307310830/piketty-in-one-gr... Turns out you can have an inflationary adjustment and unwind inequality and boost the economy at the same time, so long as you remember to tax the rich. FDR sends his regards! You'd like Capital in the 21st Century.