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> He's pointed out that capitalism is flawed -- that inequality is not an unintended result, but rather an inherent feature of it. As I've not read his work no

> He's pointed out that capitalism is flawed -- that inequality is not an unintended result, but rather an inherent feature of it. As I've not read his work nor critiques of his work, I'm curious to know if he puts any weight towards central bank policy and the widening inequality gap. Because from my well-worn armchair, it seems that interest rates are not a free market and that policies such as quantitative easing serve to benefit higher classes much more than others.

dalek_cannes 12y ago
> He's pointed out that capitalism is flawed -- that inequality is not an unintended result, but rather an inherent feature of it. One could argue, though, that the flaw is not in capitalist ideology per se, but that you can never fulfill its requirements perfectly: 1. Market information is never disseminated perfectly, i.e. to all parties, equally, at the same time with full accuracy. 2. Human beings are not rational. 3. Human rationality takes a nosedive if a person's wealth vs. time curve take a sudden upswing.
- zo1 12y ago
  You missed the biggest one, bud: 4. Governments are guaranteed to interfere. Either to help, or impede.
  - wslh 12y ago
    And 5. Physical location matters, even if you are legally located in US, if you live/work outside the richer centers it is difficult to earn more.
    - zo1 12y ago
      Agreed. This has historically always been the case. There is a reason that early cities formed around navigable waterways, trade-routes, or near specific wealth-making resources. One need only look to the middle east that was almost entirely desert and small-towns a short while ago (relatively speaking) to get a more recent and visible example of this. Equality is the exception, not the rule throughout history, including the recent "enlightened" one.
- onnoonno 12y ago
  > 2. Human beings are not rational. I think I now heard this meme/statement/mantra/whatever way too often. Sorry. First of all, I fundamentally do agree that this is the case. Deep down, I cannot fully figure out my emotions, that what drives me, in a completely rational sense. I like certain things, and I dislike others. BUT I would still argue that using the idea 'human beings are not rational' in the generic form I see it being used and for any form of policy is very dangerous. Although I believe we cannot completely figure out who we are and what we want, we CAN certainly reflect on our thoughts and actions rationally. Using this statement is very often basically saying: Humans believe 1+1=3, therefore we have to make policy x/y/z. Agreeing to this statement in this blanket form often thus means: a) Humans are not rational b) Therefore anyone discussing this statement is not rational c) Any rational argument about policy is essentially lost in this weird post-modernist black hole, by jumping back to a) Addendum: Or, said in a more concise way: We finally figured out that we are simply stupid primates (as if that is news at all). Because we are stupid primates, we cannot think. Because we cannot think, we have to base our policies on that. Isn't it surreal that one can appear to use deductive reasoning in this kind of 'argument'?
  - Perdition 12y ago
    I think you have missed what people are getting at with "humans are not rational". The argument behind Capitalism is that people will do what is in their self-interest, and more generally will be rational actors, and as such the outcome of the market will reflect what people want. However, people often act against their self-interest either naturally or because of manipulation, and short term self-interest can conflict with long term self-interest. A good example of this is "austerity" in hard economic times. When times are bad the reaction of many people is to "tighten their belts" and decrease spending, and in the short term that provides some protection against things like being laid off. However, if large numbers of people start doing this then the amount of economic activity is significantly reduced and those people who reduced their spending now risk being laid off.
    - onnoonno 12y ago
      That might all be true. However, the question is not discussed in a vacuum. It is discussed in the context of policy, seemingly often used as a core premise. Thus the question remains: What kind of policy one exactly wants to base on 'human's irrationality'. And whether it is good to base policy on irrational behavior. It is also important to consider that there will always be people who are more rational in their profit/money/power-maximizing than others. A policy based upon irrational behavior might create an inefficiency that will be exploited by those with more rational behavior. That's why I am wary about lines of reasoning along 'people are just irrational'. I believe it creates system(s) of thought where somehow, we account for people's irrationality and thus make it more just/less cyclic/less prone to capital accumulation. Yet, those who simply, coolly maximize their own gains, those who sort ideas like 'complex, advanced policy informed by the irrational behavior of humans' into the religion bin etc. will still come out ahead. In other words: We generate complex systems of thoughts, especially in fields like economic policy. Rational actors will play with those systems, circumvent them, be creative, etc. To turn the argument around: Given that human's rational behavior is limited, is it a good idea to create complex policy that makes it even less likely for humans to understand it and act rational?
- amiune 12y ago
  2 and 3 are probably a consequence of 1 because a human being with fewer information will look irrational to someone with more information.
yourapostasy 12y ago
> ...quantitative easing serve to benefit higher classes much more than others. While this is true, what it takes to route around this "power-law like attachment of nodes" that user orasis accurately described elsewhere in this thread has proven a maddeningly difficult problem to solve over the course of human history. The kind of top-down solution Piketty proposes ignores the kind of iterated game that plays out in the real world, and why the wealthy classes invest so heavily into political activity. It is not only relatively easy for the wealthy to eventually route around solutions like Piketty's, but even over the longer con subvert the original institutions into further means of command and control. There are interesting developments afoot for this dynamic in our current era, and part of the reason why forums like HN are so fascinating.

dalek_cannes 12y ago

> He's pointed out that capitalism is flawed -- that inequality is not an unintended result, but rather an inherent feature of it. One could argue, though, that the flaw is not in capitalist ideology per se, but that you can never fulfill its requirements perfectly: 1. Market information is never disseminated perfectly, i.e. to all parties, equally, at the same time with full accuracy. 2. Human beings are not rational. 3. Human rationality takes a nosedive if a person's wealth vs. time curve take a sudden upswing.

zo1 12y ago
You missed the biggest one, bud: 4. Governments are guaranteed to interfere. Either to help, or impede.
- wslh 12y ago
  And 5. Physical location matters, even if you are legally located in US, if you live/work outside the richer centers it is difficult to earn more.
  - zo1 12y ago
    Agreed. This has historically always been the case. There is a reason that early cities formed around navigable waterways, trade-routes, or near specific wealth-making resources. One need only look to the middle east that was almost entirely desert and small-towns a short while ago (relatively speaking) to get a more recent and visible example of this. Equality is the exception, not the rule throughout history, including the recent "enlightened" one.
onnoonno 12y ago
> 2. Human beings are not rational. I think I now heard this meme/statement/mantra/whatever way too often. Sorry. First of all, I fundamentally do agree that this is the case. Deep down, I cannot fully figure out my emotions, that what drives me, in a completely rational sense. I like certain things, and I dislike others. BUT I would still argue that using the idea 'human beings are not rational' in the generic form I see it being used and for any form of policy is very dangerous. Although I believe we cannot completely figure out who we are and what we want, we CAN certainly reflect on our thoughts and actions rationally. Using this statement is very often basically saying: Humans believe 1+1=3, therefore we have to make policy x/y/z. Agreeing to this statement in this blanket form often thus means: a) Humans are not rational b) Therefore anyone discussing this statement is not rational c) Any rational argument about policy is essentially lost in this weird post-modernist black hole, by jumping back to a) Addendum: Or, said in a more concise way: We finally figured out that we are simply stupid primates (as if that is news at all). Because we are stupid primates, we cannot think. Because we cannot think, we have to base our policies on that. Isn't it surreal that one can appear to use deductive reasoning in this kind of 'argument'?
- Perdition 12y ago
  I think you have missed what people are getting at with "humans are not rational". The argument behind Capitalism is that people will do what is in their self-interest, and more generally will be rational actors, and as such the outcome of the market will reflect what people want. However, people often act against their self-interest either naturally or because of manipulation, and short term self-interest can conflict with long term self-interest. A good example of this is "austerity" in hard economic times. When times are bad the reaction of many people is to "tighten their belts" and decrease spending, and in the short term that provides some protection against things like being laid off. However, if large numbers of people start doing this then the amount of economic activity is significantly reduced and those people who reduced their spending now risk being laid off.
  - onnoonno 12y ago
    That might all be true. However, the question is not discussed in a vacuum. It is discussed in the context of policy, seemingly often used as a core premise. Thus the question remains: What kind of policy one exactly wants to base on 'human's irrationality'. And whether it is good to base policy on irrational behavior. It is also important to consider that there will always be people who are more rational in their profit/money/power-maximizing than others. A policy based upon irrational behavior might create an inefficiency that will be exploited by those with more rational behavior. That's why I am wary about lines of reasoning along 'people are just irrational'. I believe it creates system(s) of thought where somehow, we account for people's irrationality and thus make it more just/less cyclic/less prone to capital accumulation. Yet, those who simply, coolly maximize their own gains, those who sort ideas like 'complex, advanced policy informed by the irrational behavior of humans' into the religion bin etc. will still come out ahead. In other words: We generate complex systems of thoughts, especially in fields like economic policy. Rational actors will play with those systems, circumvent them, be creative, etc. To turn the argument around: Given that human's rational behavior is limited, is it a good idea to create complex policy that makes it even less likely for humans to understand it and act rational?
amiune 12y ago
2 and 3 are probably a consequence of 1 because a human being with fewer information will look irrational to someone with more information.

yourapostasy 12y ago

> ...quantitative easing serve to benefit higher classes much more than others. While this is true, what it takes to route around this "power-law like attachment of nodes" that user orasis accurately described elsewhere in this thread has proven a maddeningly difficult problem to solve over the course of human history. The kind of top-down solution Piketty proposes ignores the kind of iterated game that plays out in the real world, and why the wealthy classes invest so heavily into political activity. It is not only relatively easy for the wealthy to eventually route around solutions like Piketty's, but even over the longer con subvert the original institutions into further means of command and control. There are interesting developments afoot for this dynamic in our current era, and part of the reason why forums like HN are so fascinating.