10 ms·

Technology and wealth inequality

86 points by gatsby 13y ago

flyinglizard 13y ago
The problem of inequality is mostly a local thing where gentrification is taking progress, or on a wider scale, a media debate. No one seriously feels inadequate because of how the people on Forbes 500 live. They are so far out of the average person sphere that it has no significance on anyone. Likewise, I doubt a person from Mississippi genuinely feels a disparty with his investment banking brethren in NYC. In short, I don't think inequality is something people feel unless there's an ongoing public debate. People judge themselves by their immediate environment, which I believe follows a normal distribution nearly anywhere (there are always some more successful than others; business owners, entrepreneurs, paid workers and homeless. It's like that nearly anywhere). It's should be also noted that while nationwide inequality among western world countries is rising (all across the board), it's shrinking on a global level [1]. [1] http://i.imgur.com/B4vI8Y8.png http://i.imgur.com/B4vI8Y8.png
- bdcs 13y ago
  Wealth is almost always Pareto distributed -- not normally (Gaussian) distributed as you claim: http://en.wikipedia.org/wiki/Pareto_distribution http://en.wikipedia.org/wiki/Pareto_distribution
  - flyinglizard 13y ago
    I meant normal as in "common", not Gaussian - sorry!
- rwl 13y ago
  Sadly, the big problem with inequality is not "feelings of inadequacy". The problem is that wealth buys power and influence, both socially and politically. Thus increasing inequality means political power is increasingly concentrated in the hands of a few; and that usually leads to policies that will enhance and protect the lives of those few at the expense of everyone else.
pdonis 13y ago
One key point that is missed in this article: why do people making minimum wage have trouble making ends meet? Because all this advance of technology has not made the necessities of life cheaper in the same way it's made, say, computers cheaper. For a few hundred dollars today, you can buy orders of magnitude more computing power than existed in the entire world when I was a child. Yet it's still difficult for people working low wage jobs to afford food, housing (meaning housing in an area that's reasonably safe to live in), and transportation (again, that's reasonably safe to use). Why is that? Why has all this enormous improvement in productivity not made the necessities of life so cheap that even someone making minimum wage can easily afford them? It seems to me that fixing that would go a long way towards fixing the problems Altman is talking about, yet nobody talks about it.
- bdcs 13y ago
  People currently spend about 9% of disposable income on food as compared to 24% in the 60's -- so what you suggest is happening to some degree: http://3.bp.blogspot.com/-Uz4mKJv2dWQ/T_B-DGnY34I/AAAAAAAATto/6H1HYFtug00/s1600/food.jpg http://3.bp.blogspot.com/-Uz4mKJv2dWQ/T_B-DGnY34I/AAAAAAAATt...
  - gress 13y ago
    If 'disposable income' includes those at the top of the wealth scale, this chart indicates no such thing.
  - gerbal 13y ago
    It's closer to 16% for the lowest quintile.
    - patio11 13y ago
      Correct, see http://www.fas.org/sgp/crs/misc/R40545.pdf http://www.fas.org/sgp/crs/misc/R40545.pdf . You'll note that even for the lowest quintile this is a decline of over 50%. It would be higher if you just looked at constant consumption, but we don't do that, because our societal consensus is that poor Americans in 2014 do and should treat as standard what Americans in 1960 treated as luxury, including most relevantly, having other people cook for them. This is because, and I know this statement is controversial, America is radically wealthier at all levels in 2014 compared to 1974.
ojbyrne 13y ago
This seems to be lacking some historical perspective ("Those who forget history are condemned to repeat it"). This happened before: https://en.wikipedia.org/wiki/Gilded_Age https://en.wikipedia.org/wiki/Gilded_Age
- spikels 13y ago
  Funny how the Gilded Age, a pejorative term BTW, gets a bad rap because a few people got extremely rich. It was actually one on the most economically successful periods in US history. As pointed out by Wikipedia real wages were up 60% in 30 years despite a doubling in population including around 8 million very poor new immigrants. For comparison we have had around 5% real wage growth over the past 40 years and are having difficulty absorbing a similar number of poor immigrants despite being almost 10 time more populous. To paraphrase Santayana: "Those who cannot remember the past are condemned to be UNABLE to repeat it."
calbear81 13y ago
I think the San Francisco average price of $5MM is quite a bit inflated. It's closer to $850K (http://www.trulia.com/real_estate/San_Francisco-California/market-trends/ http://www.trulia.com/real_estate/San_Francisco-California/m...).
- sama 13y ago
  oops--fixed. i changed from an extreme specific example to averages, but forgot to update the text. thanks!
baddox 13y ago
The thesis of the article seems to be that wealth inequality, even if accompanied by a total wealth increase (and perhaps even if accompanied by a wealth increase for every single person, although that's not made explicit), is still "unfair" and therefore worth combating. But I'm confused when the article shifts between talking about what "is really unfair" and what "feels really unfair" (i.e. normative vs. descriptive fairness). I would have preferred a more consistent foundation for the thesis. Either argue why the normative view is valid, or demonstrate that a large portion of people do think wealth inequality is unfair. I think the latter is a more potent argument, especially paired with the claim that "the traditional endings to extreme wealth inequality in a society are never good."
- jedmeyers 13y ago
  Let's say a large portion of people do think that it is unfair that they do not have the same amount of wealth as other, smaller group of people. Would you consider it to be acceptable for the larger group to appropriate smaller group's wealth using that premise?
  - scarmig 13y ago
    False frame. Wealth--meaning a state-granted monopoly to some amount of capital, and a government promise to perform violence on anyone who disregards that monopoly--is a social contract. People are only talking about renegotiating the exact terms of that contract.
    - baddox 13y ago
      Wealth/property/capital can definitely exist without a government promise to perform violence on violators.
      - scarmig 13y ago
        It definitely can and should, but it looks very different from the way it looks with a government present to perform violence on violators. And even what counts as a violation is very different with a government than without. That's the point--and if it didn't, there'd be no reason to add in the extra administrative costs of government to get the same results. And to be clear: government enforcement of property through violence provides plenty of social value, but those reformulated property rights are socially defined and subject to change, and not natural in any sense.
deleted 13y ago
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- deleted 13y ago
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natural219 13y ago
Another great post. I love this guy. I think a lot of our discussion about this topic is limited because we're still a capitalist society that largely views social trends through the lens of economics. At some point in time, things like "GDP" and income distribution where fairly good proxies for notions like "overall well being" and "aspirational stability" (more thought is required on this second term). I think as technology progresses, we're going to see the use of money as a proxy for social measurement drift further and further away from actual reality. Any new social paradigm is going to have to start with fundamentals of human nature -- human competitiveness, equal opportunity, etc. In short, I think our failure to respond to these changes is mostly a failure of us to think clearly about what actually going on in the day-to-day lives of actors in this new technological world. I don't know where we start, but existential philosophy seems like a good jumping board. My thoughts are jumbled. I'd flush them out, but I need to get back to work.
seiji 13y ago
In the Types Of Economies That Work wars of the early 1900s, Marx kept pointing out the end result of capitalism will be the rich few controlling most of the wealth. It's only natural after all, the profit flows to the owners, not the workers: http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx We do the same thing today. Everybody knows you're a rube if you're just working—that's why there's Founder Mania around here. Get your fake 60% ownership, hire people to create value under you, capture most of the profit/exit yourself. Congrats on including actual charts (and some infographics too). Much nicer than just another "X is happening. Oh noes!" perspective.
allthatglitters 13y ago
This article supports many of the common fallacies that accompany most discussions of "wealth inequality" - and as usual believes it should be rectified... (by whom?) For a refreshing point of view on this topic, read http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-homogenous-dough.html http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-homogen... . It may not change your mind but it is certainly another way to think about the issue.
- benched 13y ago
  And where in that conception of things is the relief for the bottom 50-60% of the population? The main audience for this type of drivel seems to be wannabe entrepreneurs who want to believe they're on that straight and narrow to fortune, and deserve to be.
jamiequint 13y ago
Most implementations of basic income actually taper off as your income increases so the cost doesn't have to be adults_in_us*basic_income, but actually significantly less. It would probably be possible to support a basic income system just by getting rid of existing entitlements (although that is a big 'just')
- scarmig 13y ago
  No. Basic incomes, by definition, do not taper off. That's what makes them so compelling to economists: schemes that do taper off create steep marginal disincentives to work. Tapering off is the type of thing that sounds appealing--why give multimillionaires a regular check?--but it's a bad idea. (The name for the policies that do include that tapering off is a guaranteed minimum income, not a basic income.)
  - jamiequint 13y ago
    Thanks for the clarification, I did not realize the two were different. > Schemes that do taper off create steep marginal disincentives to work There is no reason the marginal disincentives need to be steep. You could otherwise make the same argument about progressive income taxes. Those don't seem to disincentivize people from making more money, neither does guaranteed minimum income need to.
    - scarmig 13y ago
      I can and do make the same argument about progressive income taxes =) And, to be totally clear about my perspective, I believe all taxes on income are taxes that disincentive work and are economically destructive. It's not an on-or-off switch: you've got to look at the margins. At the margin, you'll work less if you get $100 in return for an hour's labor than if you get $200 in return for it. Maybe still more than half as much work, but you'll still decrease the amount of labor you perform. Income taxes do exactly that. It's possible to make the marginal disincentives less steep, but the more you do that, the more you lose the cost savings you were hunting for in the first place. E.g. imagine a basic income of $20k. And suppose you make it phase out such that at $40k you don't get one. That amounts to a whopping 50% marginal tax rate. And that tax rate is on top of existing taxes, and it's not hard to end up with a result where someone making $30k/year is paying a 75% marginal tax rate. Which is much too high for anyone making so little. So let's try spreading it out. If it phases out at $60k, that's a 33% marginal tax rate; $80k is 25%; $100k is 20%. That's much better, though still a significant tax. But you've also made the guaranteed minimum income much closer in cost structure to a simple basic income. At least 90% of individuals make less than $100k, and their average per capita income is probably below $40k (remember we're cutting out the long tail that accounts for a large percentage of income). So we're paying out around $12k to each of them on average; and since we cut out the people making above $100k, that's around $11k per person, 55% the direct financial cost of a basic income. Cheaper, definitely, but you're still going to face sticker shock. And you've paid for the cheapness in the disincentives due to taxes; administrative costs; and in creating incentives to misreport income.
johnrob 13y ago
I think health care and education should absorb the misplaced workers. The demand for those services is infinite and there should (in theory) always be incremental value created by additional workers (assume their salaries were 0; they would be paid for by the government instead of the employing institution).
- andrewfong 13y ago
  I'm not sure that's true. By the same argument, you might say that free vaccines would encourage overpopulation, but (according to Bill Gates at least) the data shows the opposite: "In society after society, he saw, when the mortality rate falls—specifically, below 10 deaths per 1,000 people—the birth rate follows, and population growth stabilizes." (http://www.forbes.com/sites/matthewherper/2011/11/02/the-second-coming-of-bill-gates/ http://www.forbes.com/sites/matthewherper/2011/11/02/the-sec...)
  - johnrob 13y ago
    You may have somehow responded to a comment that I deleted?
    - andrewfong 13y ago
      Oops -- yes, not sure how that happened.
- argumentum 13y ago
  Why not more painters, musicians, dancers, authors, athletes etc? I think the demand for those is far more elastic than for health care & education, esp. in the face of technology. How great would the world be if every 10th person was a comedian, a juggler, a jester or a magician. We could really have performers livening up every street, and they would be well fed and housed. Imagine more time for recreation, more time for bonding with our fellow man, for playing with our children and our grandparents, more time to travel the world, and one day the universe. I think that is the great promise of technology, that it will give us humans more time to enjoy being human.
invalidOrTaken 13y ago
It's important to note that over time, wealth always gathers itself into a few hands. Money will flow to the rich because they're good at getting it to flow to them. That's why they're rich, duh. As they grow rich, any sensible person looking to sell something will try and sell it to the rich, because they have discretionary income. The problem is that the rich are good at making money flow to them (remember---that's why they're rich), and so most of what they buy are investments of some kind. Which means they make more money, etc. In the past this has been mitigated by crazy amounts of philanthropy a la Carnegie or Rockefeller. I get the impression this is less so now, for two reasons. The first is that we're a more global culture, so philanthropy efforts go toward the third world rather than the third precinct. The second is that I suspect some of the rich feel persecuted by all this talk about the rich, and aren't kindly disposed towards donating their money to people who hate them. I'd love to hear recordings of Bill Gates's phone calls gone bad. As for solutions: I don't know. One that I've been working on is better financial software for the common man (to run on a phone, rather than a PC); perhaps that will at least stop him from being suckered by predatory lending.
- ojbyrne 13y ago
  I don't see how you can reconcile "always" with the fact that the US had a top marginal tax rate of 92% in 1952. https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State... You're leaving out the role of social upheaval.
  - invalidOrTaken 13y ago
    You're right, I am. But what does that tell you about where we're headed?
strlen 13y ago
Basic income or negative income tax are great ideas: they're cheaper to administer than the current welfare state, are more humane (people are treated as adults and allowed to spend the basic income on whatever they wish), and avoid perverse incentives. With the current system, getting a job easily has the same impact as a 100% tax -- all benefits go away, all income goes goes to deal with lost benefits (and free time goes to -- given this is an entry-level and menial/service job -- an activity that's not intrinsically rewarding). Yet, people have (initially surprising to me) visceral reactions against these proposals -- despite these proposals coming from all over the political map -- as unfair. Jonathan Haidt has an excellent article on morality of fairness: http://www.democracyjournal.org/28/of-freedom-and-fairness.php?page=all http://www.democracyjournal.org/28/of-freedom-and-fairness.p... In short, individuals see fairness on a scale -- from "what people receive should be proportional to what they contribute" to "from each according to his ability, to each according their means". It also makes sense to add a slightly more nuanced pole to this, namely "just desserts": "people should be able to keep everything that they earn, with the exception of fees for services they use and externalities they impose on others"; in other words, fairness concerns should also be balanced against negative liberty. This could explain why there's such strong opposition to a basic income: significant chunk of the population people see it as less fair as opposed to more fair, another chunk views it as just another form of theft. It's also why many aren't easily bothered by supposed excesses of idleness of the rich, as long as the wealth was acquired legitimately. This isn't to endorse these views, but to acknowledge that these positions are sincerely held by individuals of all races, genders, and incomes. This is also why many of the wealthy vote for politicians that (on paper) promise to reduce wealth inequality and one of the reasons why many of the poor vote for candidates that don't think inequality is a problem. In short, these are moral views as opposed to matters of rational self-interest. Contrary to Marx not everyone is fighting for their class interests, contrary to popular view of economics (which is different from how economists actually see it) not everyone is trying to maximize their own net worth by any means possible. Economists say individuals try to maximize their utility, which to nearly all means -- to some extent -- wanting to see good in the world, but with their own definition of what is good. So here's a proposal: when speaking on inequality and social justice, let's identify who the audience is, and justify policy proposals according to their values. If someone is a libertarian, address the negative effect concentration of wealth (which often begets political power) has on liberty (e.g., politicians buying their way into office to push Nanny state policies, wealthy funding campaigns that lead to criminalization of vice, etc...) Likewise, if someone cares about proportionality, point out that labour theory of value is false: law of supply and demand means it's inevitable that people will get rich as result of sheer luck or doing something that seems trivial. That's not to mention that many of the wealthy are wealthy as result of rent-seeking -- and fight both rent-seeking and the inequality it leads to. Otherwise, quite frankly, these ideas will remain dead in the water politically. Edit: one thing that should be noted is that it's unlikely that in a free market (which is generally a good thing) wealth distribution will be anything other than power law (which isn't to say we can't smooth it out, but we can't turn it to a normal probability distribution). However, wealth isn't everything: why not divorce wealth from status (to the extent, we already do this)? For example, Silicon Valley (it's getting hard to use that term non-ironically, unfortunately) does tend to praise the value of individual contributors as well as that of entrepreneurs and managers, yet there's disconnect in mainstream culture -- where remaining an individual contributor (or even a mid-tier manager) is _not_ considered a successful outcome. This change will have to happen organically, of course.
haberman 13y ago
The discourse around inequality in this article and elsewhere is frustrating to me, because it advances the idea that inequality is fundamentally unjust, using the lives of the poor as the example. To me this misses the point. The problem is not inequality, the problem is poverty. If everyone had enough that their basic needs were met and they were not struggling to survive, the fact that some people can afford Lamborghinis and some cannot would not be unjust in my opinion. Without inequality, there are no Elon Musks. Bootstrapping SpaceX and Tesla required more than 1/6,000,000,000'th of the world's resources. Big results require investment, and it's not practical to crowdfund a multi-million dollar investment. So who should we entrust to make big bets? Doesn't it only make sense that the people who have already been the most successful in creating wealth should have the freedom to take that wealth to try out new ideas? Inequality is not the problem. Poverty is the problem. Lack of access to education is the problem. We should strive to see that everyone can focus on improving their life and doing interesting things without struggling to survive. And if the most successful people take their spoils and build a 150-foot yacht, or take a ride into space, or invest in the next big company, more power to them.
- blah32497 13y ago
  Yep yep. The John Rawls's theory of justice should be a required topic in school. What matters is how well the poorest in society are doing, not the income distribution. If a system creates a mega rich class but ends up with the poorest in society being better off - then that's a better system. I'd also qualify that "poverty" is flexible and always changing. I live on 10K/yr in college (2 years ago). I had to share a room with a roommate, ate a lot of rice and beans. I was a pain in the ass - though not nearly as bad as I thought it would be. However not being able to afford a cellphone or a car, having an ancient computer and not being able to afford a lot of social activities (movies, restaurants, etc.) had a noticeable negative affect on my life. If I had grown up my whole life on 10K/yr it probably would have had a major impact. 20 years ago, a car and a phone and internet were a luxury, in Africa or South America it's still a luxury. In modern america, it's poverty.
  - glomph 13y ago
    We are so far from a distribution that even a Rawls based system would support that it seems pretty crass to even talk about it in my mind.
joelrunyon 13y ago
Honest question: are people surprised at the wealth distribution? It seems quite a few HNers are familiar with Pareto's principle & 80/20 and the current wealth distribution reflects that almost perfectly (Top 20% = 84% of wealth).[1] I'm not saying that being in that top 20% doesn't bear certain responsibilities, but it shouldn't necessarily be surprising. [1] http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/this-viral-video-is-right-we-need-to-worry-about-wealth-inequality/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/t...
- scarmig 13y ago
  Even if wealth and income will roughly fall along a Pareto distribution (plausible, but needs some argument), that doesn't mean the 80/20 is universal. Only some Pareto distributions (characterized by certain parameters) display the 80/20 principle. e.g. the Gini coefficient for an idealized Pareto distribution displaying the 80/20 principle is by definition 0.60. But Gini coefficients can obviously vary a lot from that, so societies definitely can exhibit either more or less wealth inequality.
firstOrder 13y ago
> Technology makes wealth inequality worse by giving people leverage and compounding differences in ability and amount of work. It also often replaces human jobs with machines. A long time ago, differences in ability and work ethic had a linear effect on wealth; now its exponential. This is a factor, but not much of one. Let's see who is wealthy. The top ten of the Forbes 400 wealthiest Americans. #1 Gates - grandfather ran a bank, and had a million dollar trust fund for him. #2 Buffett - father a Congressman, grandparents owned a chain of stores #3 Ellison - grew up middle class, self-made #4 Koch - inherited oil company #5 Koch - inherited oil company #6 Walton - inherited Walmart #7 Walton - inherited Walmart #8 Walton - inherited Walmart #9 Walton - inherited Walmart #10 Bloomberg - grew up middle class, self-made The incubi hovering over Silicon Valley are the limited partners whom VCs raise money from. Like the Forbes 400 list, or like the Federal Reserve Survey of Consumer Finances, most of the wealth is inherited. I've sat next to too many Chinese and Indian guys, running the whole show for some Fortune 500 company in terms of their databases, storage, or some programming group, who were on H1-B visas and making a pittance and living in a small apartment in some crappy neighborhood to think that "work ethic" and "ability" is what is making all the money. These people not only have a work ethic (like many in society), they also have the technical ability. They have the ability and they're using the ability. And making nothing. Those who get wealthy expropriating the surplus labor time profits of we workers who work and create wealth - they are the ones who are benefiting, not the "hard working" or "able". Watch the documentary "Born Rich" by one of their tribe. How many of the people interviewed their have the ability to know which data structure is proper for a certain project? Or how to set up BGP connections on a Cisco router? And so forth. They are benefiting due to the new technology, but it is they who benefit, the hard working able people building and implementing these things are getting scraps from the table. While GDP per capita has risen over the past decades, inflation-adjusted wages per hour have fallen. Things have gotten better for those who do not work, and worse for those who do work and create wealth. The only answer from those who parasitically expropriate profits from the surplus time of those of us who work and create wealth is this - "spend more of your time studying math. Go into debt to pay for college and spend four years paying for your own job training. Then you might live as well as your parents did, who did not have to do these things (or who would live better than you ever will by doing these things." Ultimately an economic system built on this has too many self-contradictions. Once you drain all the spare money from the average worker, no one has any money to buy the things these companies make. They can go into debt, but that just kicks the can down the road and makes the ultimate crash work. In fact Sam Altman's business, Green Dot, is predicated on this new reality. Poor people don't have the credit to get credit cards, so they go to Green Dot and get charged exorbinant amounts of money. His business is one of the heaviest into the transfer of wealth from the poor to the rich.
pchristensen 13y ago
I generally agree with this, my only input would be to this: "Technology makes wealth inequality worse by giving people leverage and compounding differences in ability and amount of work." to "differences in ability, amount of work, and utilizing existing wealth and assets." Technology helps the rich get richer, so it's naive to chalk its benefits up to only hard work and ability.
tn13 13y ago
When it comes to debating ideas the supporters of big-government/Communism/Socialism has lost the battle long back. In modern times I see that these people have changed skins and they are not talking about "inequality" and "environment" as tools to counter mostly free market enterprise and small government arguments. Eventually it all boils down to which policy would fetch more votes. Number of unproductive freeloaders in American society is probably increasing, there is tendency to look down upon the legal temporary job seekers in USA as job thieves depriving Americans of their jobs and we are told to be compassionate about the illegal migrants. The vote bank in favor of taxing the productive and paying the unproductive is increasing at a rapid pace. Yes, it will bring equality where everyone will be poorer and no hope for future. (Note: Big ships take longer to sink, I have no doubt USA will continue to be a leader over next 20 years or so but the decline after that will be catastrophic).
callmeed 13y ago
Random thoughts ... > We are becoming a nation of haves and have-nots—of prosperous San Francisco vs. bankrupt Detroit. Based on the people protesting/blocking the shuttles, San Francisco has plenty of have-nots. > and we’d presumably cut a ton of government bureaucracy. LOL. A $3.5T govt program is going to cut bureaucracy? Even if it swallowed up other existing entitlement spending, I don't see this happening.
iambateman 13y ago
It's easy to talk about inequality from a macro perspective, but imagine this... Imagine Bill Gates is sitting next to a McDonalds employee. Bill is millions of times wealthier than this guy. He could afford to hire 100,000 minimum wage employees for life. By all accounts Bill is lucky. He's smart and works hard too, but he's basically lucky. And increasingly, society suggests that we deserve some slice of his luck, because we have less. But why? Our government guarantees your right to private property. Once you own something, it's yours. When we choose to believe in a threshold at which the rules of private property cease, we erode Bill's incentive to participate in the market. If that doesn't feel like a big deal now, wait until the disincentive slides down to your level of income. I'm not saying that civic society shouldn't do anything for marginalized people. Education can have a meaningful effect on their wages and technology is going to shake the markets and people need help to smooth their individual outcomes, but to say that they deserve Bill's money simply because he's rich is a nasty nasty attitude. We need to seek an environment that allows everyone to grow through profitable employment, not artificially rebalance the top-end.
- benched 13y ago
  This (rather Randian) model of things is so contrived. Focus on the individual, their achievements, and personal wealth as untouchable property are half-truths, mythology, and contrivances. The economy is a collective thing. It's a network of people with money, goods, and services flowing between them. Serious wealth is and has always been primarily about one's positioning in the system, and only indirectly about their abilities or value delivered. Yes, presumably ability and achievement often have some influence on that positioning, but it's that mechanical fact of sitting in the thick part of the flow that matters when it comes to making a lot of money. (E.g. I get paid the same pretty much no matter what I do, while my blue-collar friends have to log hours and really work. Yeah, eventually I could potentially lose my job if I really do nothing, but in reality I can get away with doing very little - direct deposit still happens, because that's the system. I am so positioned with respect to the company's payroll system.) I don't see the problem with making changes at the systemic level to how the flow works (taxes, basic income), as well as making it easier for people to move around (which you addressed, re: education. e.g. returning college to affordability would be truly great).
natmaster 13y ago
Your ideal wealth distribution is that everyone has the exact same amount of wealth? Next you're going to be telling me some animals are more equal than others...
nostromo 13y ago
Here's an idea a friend and I have been throwing around. It's probably terrible to be honest, so I'd love to hear why it's dumb. Implement basic income, which HN is well aware of. But, instead of funding it entirely through income taxes, fund it primarily with what the Fed would call "Quantitative Easing" but what I will call "printing money." Right now, I believe the Fed has actually made inequality much worse by printing a metric ton of money and pumping it into government and the financial sector. The hope is that this will, to use a loaded term, "trickle down" to everyday Americans. Instead, it seems there isn't much trickling. So, why print money? Because it's a wealth tax. It's also the easiest tax to implement: you don't have to collect anything! No IRS. A huge amount of the US government would be gone: no more means testing government expenditures (benefits), no more tax collecting for revenue.
- dllthomas 13y ago
  Printing money isn't a tax on wealth, it's a tax on dollar denominated wealth. If I have a $5 million dollar home and a $20 million dollar stock portfolio, and the dollar falls 2% tonight, tomorrow I probably have a (roughly) $5.1 million dollar home and $20.4 million dollar stock portfolio. That said, I'm not convinced it's a terrible idea. What it would likely do is get businesses to stop sitting on cash reserves... if they do that by increasing production, that might lead good places. If they do it by fleeing into other assets, we'll just see the dollar crater. Increased demand expressed by those whose increase from the money they've been handed is less than their loss from inflation might mean that increasing production is the better move for them. I'm not sure I'd want to bet on it, though. Printing a portion of what is handed out (particularly in down times) seems less crazy.
- maxerickson 13y ago
  QE carries the implicit promise that they will eventually stop it and destroy some of the money. This keeps a lid on inflation. Start printing money without that implicit promise and away we go with the inflation.
benched 13y ago
Meta, but I cannot believe this excellently written post has already dropped from the front page, while some bullshit about "suhvuhbtle" and medium is still sitting in the top spots for hours. Like ever more hip ways for echo-chamber attention-seekers to share their amazing epiphanies about productivity with each other, is so much more interesting than poverty.
iterative 13y ago
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck." -- Robert A. Heinlein
argumentum 13y ago
These ideas (negative income tax/minimum income) have been proposed for decades by classical liberals / libertarians as a replacement to the welfare state, and (less often) as a supplement by progressives. This distinction is critical. But, I'd wager that many libertarians (like myself) would happily match the total welfare spend + proposed minimum income on a per person basis as long as we cut out the middle-class bureaucrats and administrators. It will be hard to reach consensus for the reasons Sam mentioned, but not impossible, since some elements are supported by otherwise diametrically opposed politics. I much prefer the debate be between libertarians & progressives (or even anarchists & socialists) than the center-left and center-right. > But this still doesn’t address the fundamental issue—I believe most people want to be productive. I'm not too worried about that people will be lazy or feel alienated due to not being productive. Science and Technology are not the only outlets for human creativity: my prediction is that we will see a flowering of the Arts and Recreation: more music, more writing, more painting, more sculpture, more sports & games etc. This will enhance all of our lives .. As an aside, I think its a mistake to measure the delta in wealth distribution primarily in terms of assets. Technology, while increasing wealth disparity in measurable ways, often decreases it in immeasurable (and more important) ones: for example, wikipedia vs encyclopedia britannica.

86 points by gatsby 13y ago

The problem of inequality is mostly a local thing where gentrification is taking progress, or on a wider scale, a media debate. No one seriously feels inadequate because of how the people on Forbes 500 live. They are so far out of the average person sphere that it has no significance on anyone. Likewise, I doubt a person from Mississippi genuinely feels a disparty with his investment banking brethren in NYC. In short, I don't think inequality is something people feel unless there's an ongoing public debate. People judge themselves by their immediate environment, which I believe follows a normal distribution nearly anywhere (there are always some more successful than others; business owners, entrepreneurs, paid workers and homeless. It's like that nearly anywhere). It's should be also noted that while nationwide inequality among western world countries is rising (all across the board), it's shrinking on a global level [1]. [1] http://i.imgur.com/B4vI8Y8.png http://i.imgur.com/B4vI8Y8.png

bdcs 13y ago
Wealth is almost always Pareto distributed -- not normally (Gaussian) distributed as you claim: http://en.wikipedia.org/wiki/Pareto_distribution http://en.wikipedia.org/wiki/Pareto_distribution
- flyinglizard 13y ago
  I meant normal as in "common", not Gaussian - sorry!
rwl 13y ago
Sadly, the big problem with inequality is not "feelings of inadequacy". The problem is that wealth buys power and influence, both socially and politically. Thus increasing inequality means political power is increasingly concentrated in the hands of a few; and that usually leads to policies that will enhance and protect the lives of those few at the expense of everyone else.

pdonis 13y ago

One key point that is missed in this article: why do people making minimum wage have trouble making ends meet? Because all this advance of technology has not made the necessities of life cheaper in the same way it's made, say, computers cheaper. For a few hundred dollars today, you can buy orders of magnitude more computing power than existed in the entire world when I was a child. Yet it's still difficult for people working low wage jobs to afford food, housing (meaning housing in an area that's reasonably safe to live in), and transportation (again, that's reasonably safe to use). Why is that? Why has all this enormous improvement in productivity not made the necessities of life so cheap that even someone making minimum wage can easily afford them? It seems to me that fixing that would go a long way towards fixing the problems Altman is talking about, yet nobody talks about it.

bdcs 13y ago
People currently spend about 9% of disposable income on food as compared to 24% in the 60's -- so what you suggest is happening to some degree: http://3.bp.blogspot.com/-Uz4mKJv2dWQ/T_B-DGnY34I/AAAAAAAATto/6H1HYFtug00/s1600/food.jpg http://3.bp.blogspot.com/-Uz4mKJv2dWQ/T_B-DGnY34I/AAAAAAAATt...
- gress 13y ago
  If 'disposable income' includes those at the top of the wealth scale, this chart indicates no such thing.
- gerbal 13y ago
  It's closer to 16% for the lowest quintile.
  - patio11 13y ago
    Correct, see http://www.fas.org/sgp/crs/misc/R40545.pdf http://www.fas.org/sgp/crs/misc/R40545.pdf . You'll note that even for the lowest quintile this is a decline of over 50%. It would be higher if you just looked at constant consumption, but we don't do that, because our societal consensus is that poor Americans in 2014 do and should treat as standard what Americans in 1960 treated as luxury, including most relevantly, having other people cook for them. This is because, and I know this statement is controversial, America is radically wealthier at all levels in 2014 compared to 1974.

ojbyrne 13y ago

This seems to be lacking some historical perspective ("Those who forget history are condemned to repeat it"). This happened before: https://en.wikipedia.org/wiki/Gilded_Age https://en.wikipedia.org/wiki/Gilded_Age

spikels 13y ago
Funny how the Gilded Age, a pejorative term BTW, gets a bad rap because a few people got extremely rich. It was actually one on the most economically successful periods in US history. As pointed out by Wikipedia real wages were up 60% in 30 years despite a doubling in population including around 8 million very poor new immigrants. For comparison we have had around 5% real wage growth over the past 40 years and are having difficulty absorbing a similar number of poor immigrants despite being almost 10 time more populous. To paraphrase Santayana: "Those who cannot remember the past are condemned to be UNABLE to repeat it."

calbear81 13y ago

I think the San Francisco average price of $5MM is quite a bit inflated. It's closer to $850K (http://www.trulia.com/real_estate/San_Francisco-California/market-trends/ http://www.trulia.com/real_estate/San_Francisco-California/m...).

sama 13y ago
oops--fixed. i changed from an extreme specific example to averages, but forgot to update the text. thanks!

baddox 13y ago

The thesis of the article seems to be that wealth inequality, even if accompanied by a total wealth increase (and perhaps even if accompanied by a wealth increase for every single person, although that's not made explicit), is still "unfair" and therefore worth combating. But I'm confused when the article shifts between talking about what "is really unfair" and what "feels really unfair" (i.e. normative vs. descriptive fairness). I would have preferred a more consistent foundation for the thesis. Either argue why the normative view is valid, or demonstrate that a large portion of people do think wealth inequality is unfair. I think the latter is a more potent argument, especially paired with the claim that "the traditional endings to extreme wealth inequality in a society are never good."

jedmeyers 13y ago
Let's say a large portion of people do think that it is unfair that they do not have the same amount of wealth as other, smaller group of people. Would you consider it to be acceptable for the larger group to appropriate smaller group's wealth using that premise?
- scarmig 13y ago
  False frame. Wealth--meaning a state-granted monopoly to some amount of capital, and a government promise to perform violence on anyone who disregards that monopoly--is a social contract. People are only talking about renegotiating the exact terms of that contract.
  - baddox 13y ago
    Wealth/property/capital can definitely exist without a government promise to perform violence on violators.
    - scarmig 13y ago
      It definitely can and should, but it looks very different from the way it looks with a government present to perform violence on violators. And even what counts as a violation is very different with a government than without. That's the point--and if it didn't, there'd be no reason to add in the extra administrative costs of government to get the same results. And to be clear: government enforcement of property through violence provides plenty of social value, but those reformulated property rights are socially defined and subject to change, and not natural in any sense.

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natural219 13y ago

Another great post. I love this guy. I think a lot of our discussion about this topic is limited because we're still a capitalist society that largely views social trends through the lens of economics. At some point in time, things like "GDP" and income distribution where fairly good proxies for notions like "overall well being" and "aspirational stability" (more thought is required on this second term). I think as technology progresses, we're going to see the use of money as a proxy for social measurement drift further and further away from actual reality. Any new social paradigm is going to have to start with fundamentals of human nature -- human competitiveness, equal opportunity, etc. In short, I think our failure to respond to these changes is mostly a failure of us to think clearly about what actually going on in the day-to-day lives of actors in this new technological world. I don't know where we start, but existential philosophy seems like a good jumping board. My thoughts are jumbled. I'd flush them out, but I need to get back to work.

seiji 13y ago

In the Types Of Economies That Work wars of the early 1900s, Marx kept pointing out the end result of capitalism will be the rich few controlling most of the wealth. It's only natural after all, the profit flows to the owners, not the workers: http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx We do the same thing today. Everybody knows you're a rube if you're just working—that's why there's Founder Mania around here. Get your fake 60% ownership, hire people to create value under you, capture most of the profit/exit yourself. Congrats on including actual charts (and some infographics too). Much nicer than just another "X is happening. Oh noes!" perspective.

allthatglitters 13y ago

This article supports many of the common fallacies that accompany most discussions of "wealth inequality" - and as usual believes it should be rectified... (by whom?) For a refreshing point of view on this topic, read http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-homogenous-dough.html http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-homogen... . It may not change your mind but it is certainly another way to think about the issue.

benched 13y ago
And where in that conception of things is the relief for the bottom 50-60% of the population? The main audience for this type of drivel seems to be wannabe entrepreneurs who want to believe they're on that straight and narrow to fortune, and deserve to be.

jamiequint 13y ago

Most implementations of basic income actually taper off as your income increases so the cost doesn't have to be adults_in_us*basic_income, but actually significantly less. It would probably be possible to support a basic income system just by getting rid of existing entitlements (although that is a big 'just')

scarmig 13y ago
No. Basic incomes, by definition, do not taper off. That's what makes them so compelling to economists: schemes that do taper off create steep marginal disincentives to work. Tapering off is the type of thing that sounds appealing--why give multimillionaires a regular check?--but it's a bad idea. (The name for the policies that do include that tapering off is a guaranteed minimum income, not a basic income.)
- jamiequint 13y ago
  Thanks for the clarification, I did not realize the two were different. > Schemes that do taper off create steep marginal disincentives to work There is no reason the marginal disincentives need to be steep. You could otherwise make the same argument about progressive income taxes. Those don't seem to disincentivize people from making more money, neither does guaranteed minimum income need to.
  - scarmig 13y ago
    I can and do make the same argument about progressive income taxes =) And, to be totally clear about my perspective, I believe all taxes on income are taxes that disincentive work and are economically destructive. It's not an on-or-off switch: you've got to look at the margins. At the margin, you'll work less if you get $100 in return for an hour's labor than if you get $200 in return for it. Maybe still more than half as much work, but you'll still decrease the amount of labor you perform. Income taxes do exactly that. It's possible to make the marginal disincentives less steep, but the more you do that, the more you lose the cost savings you were hunting for in the first place. E.g. imagine a basic income of $20k. And suppose you make it phase out such that at $40k you don't get one. That amounts to a whopping 50% marginal tax rate. And that tax rate is on top of existing taxes, and it's not hard to end up with a result where someone making $30k/year is paying a 75% marginal tax rate. Which is much too high for anyone making so little. So let's try spreading it out. If it phases out at $60k, that's a 33% marginal tax rate; $80k is 25%; $100k is 20%. That's much better, though still a significant tax. But you've also made the guaranteed minimum income much closer in cost structure to a simple basic income. At least 90% of individuals make less than $100k, and their average per capita income is probably below $40k (remember we're cutting out the long tail that accounts for a large percentage of income). So we're paying out around $12k to each of them on average; and since we cut out the people making above $100k, that's around $11k per person, 55% the direct financial cost of a basic income. Cheaper, definitely, but you're still going to face sticker shock. And you've paid for the cheapness in the disincentives due to taxes; administrative costs; and in creating incentives to misreport income.

johnrob 13y ago

I think health care and education should absorb the misplaced workers. The demand for those services is infinite and there should (in theory) always be incremental value created by additional workers (assume their salaries were 0; they would be paid for by the government instead of the employing institution).

andrewfong 13y ago
I'm not sure that's true. By the same argument, you might say that free vaccines would encourage overpopulation, but (according to Bill Gates at least) the data shows the opposite: "In society after society, he saw, when the mortality rate falls—specifically, below 10 deaths per 1,000 people—the birth rate follows, and population growth stabilizes." (http://www.forbes.com/sites/matthewherper/2011/11/02/the-second-coming-of-bill-gates/ http://www.forbes.com/sites/matthewherper/2011/11/02/the-sec...)
- johnrob 13y ago
  You may have somehow responded to a comment that I deleted?
  - andrewfong 13y ago
    Oops -- yes, not sure how that happened.
argumentum 13y ago
Why not more painters, musicians, dancers, authors, athletes etc? I think the demand for those is far more elastic than for health care & education, esp. in the face of technology. How great would the world be if every 10th person was a comedian, a juggler, a jester or a magician. We could really have performers livening up every street, and they would be well fed and housed. Imagine more time for recreation, more time for bonding with our fellow man, for playing with our children and our grandparents, more time to travel the world, and one day the universe. I think that is the great promise of technology, that it will give us humans more time to enjoy being human.

invalidOrTaken 13y ago

It's important to note that over time, wealth always gathers itself into a few hands. Money will flow to the rich because they're good at getting it to flow to them. That's why they're rich, duh. As they grow rich, any sensible person looking to sell something will try and sell it to the rich, because they have discretionary income. The problem is that the rich are good at making money flow to them (remember---that's why they're rich), and so most of what they buy are investments of some kind. Which means they make more money, etc. In the past this has been mitigated by crazy amounts of philanthropy a la Carnegie or Rockefeller. I get the impression this is less so now, for two reasons. The first is that we're a more global culture, so philanthropy efforts go toward the third world rather than the third precinct. The second is that I suspect some of the rich feel persecuted by all this talk about the rich, and aren't kindly disposed towards donating their money to people who hate them. I'd love to hear recordings of Bill Gates's phone calls gone bad. As for solutions: I don't know. One that I've been working on is better financial software for the common man (to run on a phone, rather than a PC); perhaps that will at least stop him from being suckered by predatory lending.

ojbyrne 13y ago
I don't see how you can reconcile "always" with the fact that the US had a top marginal tax rate of 92% in 1952. https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State... You're leaving out the role of social upheaval.
- invalidOrTaken 13y ago
  You're right, I am. But what does that tell you about where we're headed?

strlen 13y ago

Basic income or negative income tax are great ideas: they're cheaper to administer than the current welfare state, are more humane (people are treated as adults and allowed to spend the basic income on whatever they wish), and avoid perverse incentives. With the current system, getting a job easily has the same impact as a 100% tax -- all benefits go away, all income goes goes to deal with lost benefits (and free time goes to -- given this is an entry-level and menial/service job -- an activity that's not intrinsically rewarding). Yet, people have (initially surprising to me) visceral reactions against these proposals -- despite these proposals coming from all over the political map -- as unfair. Jonathan Haidt has an excellent article on morality of fairness: http://www.democracyjournal.org/28/of-freedom-and-fairness.php?page=all http://www.democracyjournal.org/28/of-freedom-and-fairness.p... In short, individuals see fairness on a scale -- from "what people receive should be proportional to what they contribute" to "from each according to his ability, to each according their means". It also makes sense to add a slightly more nuanced pole to this, namely "just desserts": "people should be able to keep everything that they earn, with the exception of fees for services they use and externalities they impose on others"; in other words, fairness concerns should also be balanced against negative liberty. This could explain why there's such strong opposition to a basic income: significant chunk of the population people see it as less fair as opposed to more fair, another chunk views it as just another form of theft. It's also why many aren't easily bothered by supposed excesses of idleness of the rich, as long as the wealth was acquired legitimately. This isn't to endorse these views, but to acknowledge that these positions are sincerely held by individuals of all races, genders, and incomes. This is also why many of the wealthy vote for politicians that (on paper) promise to reduce wealth inequality and one of the reasons why many of the poor vote for candidates that don't think inequality is a problem. In short, these are moral views as opposed to matters of rational self-interest. Contrary to Marx not everyone is fighting for their class interests, contrary to popular view of economics (which is different from how economists actually see it) not everyone is trying to maximize their own net worth by any means possible. Economists say individuals try to maximize their utility, which to nearly all means -- to some extent -- wanting to see good in the world, but with their own definition of what is good. So here's a proposal: when speaking on inequality and social justice, let's identify who the audience is, and justify policy proposals according to their values. If someone is a libertarian, address the negative effect concentration of wealth (which often begets political power) has on liberty (e.g., politicians buying their way into office to push Nanny state policies, wealthy funding campaigns that lead to criminalization of vice, etc...) Likewise, if someone cares about proportionality, point out that labour theory of value is false: law of supply and demand means it's inevitable that people will get rich as result of sheer luck or doing something that seems trivial. That's not to mention that many of the wealthy are wealthy as result of rent-seeking -- and fight both rent-seeking and the inequality it leads to. Otherwise, quite frankly, these ideas will remain dead in the water politically. Edit: one thing that should be noted is that it's unlikely that in a free market (which is generally a good thing) wealth distribution will be anything other than power law (which isn't to say we can't smooth it out, but we can't turn it to a normal probability distribution). However, wealth isn't everything: why not divorce wealth from status (to the extent, we already do this)? For example, Silicon Valley (it's getting hard to use that term non-ironically, unfortunately) does tend to praise the value of individual contributors as well as that of entrepreneurs and managers, yet there's disconnect in mainstream culture -- where remaining an individual contributor (or even a mid-tier manager) is _not_ considered a successful outcome. This change will have to happen organically, of course.

haberman 13y ago

The discourse around inequality in this article and elsewhere is frustrating to me, because it advances the idea that inequality is fundamentally unjust, using the lives of the poor as the example. To me this misses the point. The problem is not inequality, the problem is poverty. If everyone had enough that their basic needs were met and they were not struggling to survive, the fact that some people can afford Lamborghinis and some cannot would not be unjust in my opinion. Without inequality, there are no Elon Musks. Bootstrapping SpaceX and Tesla required more than 1/6,000,000,000'th of the world's resources. Big results require investment, and it's not practical to crowdfund a multi-million dollar investment. So who should we entrust to make big bets? Doesn't it only make sense that the people who have already been the most successful in creating wealth should have the freedom to take that wealth to try out new ideas? Inequality is not the problem. Poverty is the problem. Lack of access to education is the problem. We should strive to see that everyone can focus on improving their life and doing interesting things without struggling to survive. And if the most successful people take their spoils and build a 150-foot yacht, or take a ride into space, or invest in the next big company, more power to them.

blah32497 13y ago
Yep yep. The John Rawls's theory of justice should be a required topic in school. What matters is how well the poorest in society are doing, not the income distribution. If a system creates a mega rich class but ends up with the poorest in society being better off - then that's a better system. I'd also qualify that "poverty" is flexible and always changing. I live on 10K/yr in college (2 years ago). I had to share a room with a roommate, ate a lot of rice and beans. I was a pain in the ass - though not nearly as bad as I thought it would be. However not being able to afford a cellphone or a car, having an ancient computer and not being able to afford a lot of social activities (movies, restaurants, etc.) had a noticeable negative affect on my life. If I had grown up my whole life on 10K/yr it probably would have had a major impact. 20 years ago, a car and a phone and internet were a luxury, in Africa or South America it's still a luxury. In modern america, it's poverty.
- glomph 13y ago
  We are so far from a distribution that even a Rawls based system would support that it seems pretty crass to even talk about it in my mind.

joelrunyon 13y ago

Honest question: are people surprised at the wealth distribution? It seems quite a few HNers are familiar with Pareto's principle & 80/20 and the current wealth distribution reflects that almost perfectly (Top 20% = 84% of wealth).[1] I'm not saying that being in that top 20% doesn't bear certain responsibilities, but it shouldn't necessarily be surprising. [1] http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/this-viral-video-is-right-we-need-to-worry-about-wealth-inequality/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/t...

scarmig 13y ago
Even if wealth and income will roughly fall along a Pareto distribution (plausible, but needs some argument), that doesn't mean the 80/20 is universal. Only some Pareto distributions (characterized by certain parameters) display the 80/20 principle. e.g. the Gini coefficient for an idealized Pareto distribution displaying the 80/20 principle is by definition 0.60. But Gini coefficients can obviously vary a lot from that, so societies definitely can exhibit either more or less wealth inequality.

firstOrder 13y ago

> Technology makes wealth inequality worse by giving people leverage and compounding differences in ability and amount of work. It also often replaces human jobs with machines. A long time ago, differences in ability and work ethic had a linear effect on wealth; now its exponential. This is a factor, but not much of one. Let's see who is wealthy. The top ten of the Forbes 400 wealthiest Americans. #1 Gates - grandfather ran a bank, and had a million dollar trust fund for him. #2 Buffett - father a Congressman, grandparents owned a chain of stores #3 Ellison - grew up middle class, self-made #4 Koch - inherited oil company #5 Koch - inherited oil company #6 Walton - inherited Walmart #7 Walton - inherited Walmart #8 Walton - inherited Walmart #9 Walton - inherited Walmart #10 Bloomberg - grew up middle class, self-made The incubi hovering over Silicon Valley are the limited partners whom VCs raise money from. Like the Forbes 400 list, or like the Federal Reserve Survey of Consumer Finances, most of the wealth is inherited. I've sat next to too many Chinese and Indian guys, running the whole show for some Fortune 500 company in terms of their databases, storage, or some programming group, who were on H1-B visas and making a pittance and living in a small apartment in some crappy neighborhood to think that "work ethic" and "ability" is what is making all the money. These people not only have a work ethic (like many in society), they also have the technical ability. They have the ability and they're using the ability. And making nothing. Those who get wealthy expropriating the surplus labor time profits of we workers who work and create wealth - they are the ones who are benefiting, not the "hard working" or "able". Watch the documentary "Born Rich" by one of their tribe. How many of the people interviewed their have the ability to know which data structure is proper for a certain project? Or how to set up BGP connections on a Cisco router? And so forth. They are benefiting due to the new technology, but it is they who benefit, the hard working able people building and implementing these things are getting scraps from the table. While GDP per capita has risen over the past decades, inflation-adjusted wages per hour have fallen. Things have gotten better for those who do not work, and worse for those who do work and create wealth. The only answer from those who parasitically expropriate profits from the surplus time of those of us who work and create wealth is this - "spend more of your time studying math. Go into debt to pay for college and spend four years paying for your own job training. Then you might live as well as your parents did, who did not have to do these things (or who would live better than you ever will by doing these things." Ultimately an economic system built on this has too many self-contradictions. Once you drain all the spare money from the average worker, no one has any money to buy the things these companies make. They can go into debt, but that just kicks the can down the road and makes the ultimate crash work. In fact Sam Altman's business, Green Dot, is predicated on this new reality. Poor people don't have the credit to get credit cards, so they go to Green Dot and get charged exorbinant amounts of money. His business is one of the heaviest into the transfer of wealth from the poor to the rich.

pchristensen 13y ago

I generally agree with this, my only input would be to this: "Technology makes wealth inequality worse by giving people leverage and compounding differences in ability and amount of work." to "differences in ability, amount of work, and utilizing existing wealth and assets." Technology helps the rich get richer, so it's naive to chalk its benefits up to only hard work and ability.

tn13 13y ago

When it comes to debating ideas the supporters of big-government/Communism/Socialism has lost the battle long back. In modern times I see that these people have changed skins and they are not talking about "inequality" and "environment" as tools to counter mostly free market enterprise and small government arguments. Eventually it all boils down to which policy would fetch more votes. Number of unproductive freeloaders in American society is probably increasing, there is tendency to look down upon the legal temporary job seekers in USA as job thieves depriving Americans of their jobs and we are told to be compassionate about the illegal migrants. The vote bank in favor of taxing the productive and paying the unproductive is increasing at a rapid pace. Yes, it will bring equality where everyone will be poorer and no hope for future. (Note: Big ships take longer to sink, I have no doubt USA will continue to be a leader over next 20 years or so but the decline after that will be catastrophic).

callmeed 13y ago

Random thoughts ... > We are becoming a nation of haves and have-nots—of prosperous San Francisco vs. bankrupt Detroit. Based on the people protesting/blocking the shuttles, San Francisco has plenty of have-nots. > and we’d presumably cut a ton of government bureaucracy. LOL. A $3.5T govt program is going to cut bureaucracy? Even if it swallowed up other existing entitlement spending, I don't see this happening.

iambateman 13y ago

It's easy to talk about inequality from a macro perspective, but imagine this... Imagine Bill Gates is sitting next to a McDonalds employee. Bill is millions of times wealthier than this guy. He could afford to hire 100,000 minimum wage employees for life. By all accounts Bill is lucky. He's smart and works hard too, but he's basically lucky. And increasingly, society suggests that we deserve some slice of his luck, because we have less. But why? Our government guarantees your right to private property. Once you own something, it's yours. When we choose to believe in a threshold at which the rules of private property cease, we erode Bill's incentive to participate in the market. If that doesn't feel like a big deal now, wait until the disincentive slides down to your level of income. I'm not saying that civic society shouldn't do anything for marginalized people. Education can have a meaningful effect on their wages and technology is going to shake the markets and people need help to smooth their individual outcomes, but to say that they deserve Bill's money simply because he's rich is a nasty nasty attitude. We need to seek an environment that allows everyone to grow through profitable employment, not artificially rebalance the top-end.

benched 13y ago
This (rather Randian) model of things is so contrived. Focus on the individual, their achievements, and personal wealth as untouchable property are half-truths, mythology, and contrivances. The economy is a collective thing. It's a network of people with money, goods, and services flowing between them. Serious wealth is and has always been primarily about one's positioning in the system, and only indirectly about their abilities or value delivered. Yes, presumably ability and achievement often have some influence on that positioning, but it's that mechanical fact of sitting in the thick part of the flow that matters when it comes to making a lot of money. (E.g. I get paid the same pretty much no matter what I do, while my blue-collar friends have to log hours and really work. Yeah, eventually I could potentially lose my job if I really do nothing, but in reality I can get away with doing very little - direct deposit still happens, because that's the system. I am so positioned with respect to the company's payroll system.) I don't see the problem with making changes at the systemic level to how the flow works (taxes, basic income), as well as making it easier for people to move around (which you addressed, re: education. e.g. returning college to affordability would be truly great).

natmaster 13y ago

Your ideal wealth distribution is that everyone has the exact same amount of wealth? Next you're going to be telling me some animals are more equal than others...

nostromo 13y ago

Here's an idea a friend and I have been throwing around. It's probably terrible to be honest, so I'd love to hear why it's dumb. Implement basic income, which HN is well aware of. But, instead of funding it entirely through income taxes, fund it primarily with what the Fed would call "Quantitative Easing" but what I will call "printing money." Right now, I believe the Fed has actually made inequality much worse by printing a metric ton of money and pumping it into government and the financial sector. The hope is that this will, to use a loaded term, "trickle down" to everyday Americans. Instead, it seems there isn't much trickling. So, why print money? Because it's a wealth tax. It's also the easiest tax to implement: you don't have to collect anything! No IRS. A huge amount of the US government would be gone: no more means testing government expenditures (benefits), no more tax collecting for revenue.

dllthomas 13y ago
Printing money isn't a tax on wealth, it's a tax on dollar denominated wealth. If I have a $5 million dollar home and a $20 million dollar stock portfolio, and the dollar falls 2% tonight, tomorrow I probably have a (roughly) $5.1 million dollar home and $20.4 million dollar stock portfolio. That said, I'm not convinced it's a terrible idea. What it would likely do is get businesses to stop sitting on cash reserves... if they do that by increasing production, that might lead good places. If they do it by fleeing into other assets, we'll just see the dollar crater. Increased demand expressed by those whose increase from the money they've been handed is less than their loss from inflation might mean that increasing production is the better move for them. I'm not sure I'd want to bet on it, though. Printing a portion of what is handed out (particularly in down times) seems less crazy.
maxerickson 13y ago
QE carries the implicit promise that they will eventually stop it and destroy some of the money. This keeps a lid on inflation. Start printing money without that implicit promise and away we go with the inflation.

benched 13y ago

Meta, but I cannot believe this excellently written post has already dropped from the front page, while some bullshit about "suhvuhbtle" and medium is still sitting in the top spots for hours. Like ever more hip ways for echo-chamber attention-seekers to share their amazing epiphanies about productivity with each other, is so much more interesting than poverty.

iterative 13y ago

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck." -- Robert A. Heinlein

argumentum 13y ago

These ideas (negative income tax/minimum income) have been proposed for decades by classical liberals / libertarians as a replacement to the welfare state, and (less often) as a supplement by progressives. This distinction is critical. But, I'd wager that many libertarians (like myself) would happily match the total welfare spend + proposed minimum income on a per person basis as long as we cut out the middle-class bureaucrats and administrators. It will be hard to reach consensus for the reasons Sam mentioned, but not impossible, since some elements are supported by otherwise diametrically opposed politics. I much prefer the debate be between libertarians & progressives (or even anarchists & socialists) than the center-left and center-right. > But this still doesn’t address the fundamental issue—I believe most people want to be productive. I'm not too worried about that people will be lazy or feel alienated due to not being productive. Science and Technology are not the only outlets for human creativity: my prediction is that we will see a flowering of the Arts and Recreation: more music, more writing, more painting, more sculpture, more sports & games etc. This will enhance all of our lives .. As an aside, I think its a mistake to measure the delta in wealth distribution primarily in terms of assets. Technology, while increasing wealth disparity in measurable ways, often decreases it in immeasurable (and more important) ones: for example, wikipedia vs encyclopedia britannica.