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>It seems likely that, considered as a whole, Extremistan is far more creative and productive than Mediocristan. But while its economic pie may be much larger,

>It seems likely that, considered as a whole, Extremistan is far more creative and productive than Mediocristan. But while its economic pie may be much larger, it is also much more unequally distributed. Consider what would happen if the pie was 1000 times larger and was distributed 100 times more unequally than now. Is this ideal? No, but the worst off would be 10 times better off than right now. This is something very important to consider when we think about increasing industrial efficiency. To bring out an old argument, the freezer eliminated the entire ice industry and put lots of people out of jobs, yet everyone was better off for it.

fiatmoney 12y ago
"distributed 100 times more unequally" doesn't mean anything, certainly not anything that implies anything about "the worst off". You need to characterize what happens to that specific part of the distribution if you want to estimate the impact. In particular it is possible to reduce the shares of the top N%, and the bottom N%, increasing the share of the middle, and have many measures of inequality go down.
lukasm 12y ago
Exactly. Inequality is not a problem - poverty is. I'd much rather be in a place where I'm a millionaire between trillionaires, than having little and be between millionaires. Sadly, envy and need for the social status are very strong.
- james1071 12y ago
  No, you wouldn't.
- withdavidli 12y ago
  Missing how economics work here. Prices will be adjusted to what the market can bare. There's still a 10^3 difference. That's being work like being worth $1,000 when everyone else is a millionaire. Edit: sorry, was calculating for billion. it's a 10^6 difference. $1 vs $1,000,000
  - Dewie 12y ago
    I think people are talking about wealth here, not money per se. If everyone can afford at least two houses, three boat and 12 cabins, they are certainly more well-off than most people are today, no matter what relative money-wealth is being discussed.
    - eternauta3k 12y ago
      The rich will have orders of magnitude more political power to force you to not abort / pray in school / you get the idea.
      - Dewie 12y ago
        Yeah, but that concern was not what I was replying to.
      - jiggy2011 12y ago
        Don't the rich tend to swing liberal, at least in America? Especially in the newer industries that will see much of the wealth accumulate.
    - withdavidli 12y ago
      Yes, but in that vein we can say that even America's poorest are better off than some middle class in other countries, or even the wealthy over 100 years ago. It's hard to objectively define "well-off" because psychologically people will be comparing what they have and don't have to those around them. So if a person owned 2 houses , 3 boats, and 12 cabins think they're well-off if everyone around them owns double/triple what they do, or would they think they are poor? Just a different perspective. Edit: Please note that my line of thought would eventually lead to which is better? Objectively more "things" vs psychological well being (where things are relative to what others have).
      - jiggy2011 12y ago
        You compare yourself with the people you know who tend to be those in similar economic positions to yourself. I've never felt jealous of a billionaire CEO with a private jet for example but I'm more likely to feel jealous of a friend who has a better laptop or car than me.
- Someone 12y ago
  What makes you think your envy and need for social status are that much lower than average?
- acgourley 12y ago
  Sounds like an interesting primate study - Group A: 100 bananas a day vs 10 bananas a day. Group B: 6 bananas a day vs 4 bananas a day, etc.
- legutierr 12y ago
  To echo what asgard1024 wrote: inequality is a problem if you are concerned with your own ability to make decisions for yourself. We see that today in our political system: money buys access, and concentrated wealth breeds concentrated power. Envy and social status are not the primary reasons people fear inequality; instead, it is the fear that someone else has control over your destiny, and you are powerless to stop it. And this is what we see every day, even as entrepreneurs--regulatory capture by entrenched interests (and government corruption generally) prevents innovation and real competition, keeping too much wealth in the undeserving hands of those who have rigged the game in their own favor. Furthermore, it is also quite possible that levels of inequality that we are seeing in the United States drag down economic growth, at least to the point that the material status of the poor is decreasing in absolute, objective terms. This makes perfect sense when you consider how important individual freedom is for broad economic growth--if economic inequality makes people less able to pursue their own objectives and best interests, all but the rich and politically connected will find themselves unable to contribute the best of themselves to society and to the markets. It's entirely conjecture to attempt to assert that high levels of inequality are an inevitable result of sustained economic growth, and that high levels of inequality are necessary to sustain growth. However, it makes it very easy to hold conservative views in opposition to redistributive policies if you also believe that redistributive policies hurt growth--even when there is no actual evidence backing that belief. Again, there is no evidence that redistributive policies as such harm growth. However, there may be evidence of a "goldilocks zone", an ideal level of inequality that spurs growth most effectively--where the opposite extremes of communism and the modern "gilded age"--and their well-documented drawbacks--are both avoided. To me this seems like common sense.
  - lukasm 12y ago
    >fear that someone else has control over your destiny That's true for people here. Most of society want "bread and circuses". Money is not the only motivator, so not inevitable to sustain growth. There is also problem with growth measurements e.g. Github improved my life by a lot, but contributed little to GDP.
mladenkovacevic 12y ago
Wait, what can robots do to increase the size of the pie as it were. The size of the pie represents the market. And the size of the global market is fed by the population of the earth. So while the population may be growing at some steady pace, it has nothing to do with automation except in cases where demand currently.overshadows supply. "Currently" is the key word here. No, automation is simply a tool for those who can afford it to cut out a large expense from their manufacturing process and increase profit. Not saying there's anything wrong with it. It's just you have to consider if nobody is left working and earning a decent living for themselves, then the size of the market starts to shrink.
- colomon 12y ago
  Are you implying that the only reason we appear to be more wealthy than, say, 18th century folks is because there are more people now?!?
- rthomas6 12y ago
  When a competitive industry cuts a large expense out of their manufacturing process, they increase profit and make cheaper goods. That's why Amazon is so successful, because they used technology to trim costs. Amazon also has small profit margins; they make up for small profit margins with high volume, which they get because of their low prices and convenience. To assume the size of the market is fed by the size of the population is to assume that human appetites for goods and services are finite. That is most definitely NOT the case. Some people want 100 fancy cars that they put in a garage or other ridiculous things. The size of the pie is what is available for consumption that people happen to want. Robots increase the size of the pie by making goods cheaper and more plentiful. That means people can consume more with the same amount of money... their money is worth more, so they're richer in real terms. For instance, if fancy cars were $10 each, you would be richer even though you have the same amount of money.
asgard1024 12y ago
This completely ignores fact that "be better off" also includes control of one's environment (also called freedom). Considering that, in your example, most people would be worse off. They would all have higher material standards, but if you consider amount of wealth equal to "voting rights" about their environment, then they got a cut. To say this less abstractly: Rich and poor are not a separate phenomena. Most people who are rich are so because they have power which they exercise over the poor.
- zo1 12y ago
  "Most people who are rich are so because they have power which they exercise over the poor." Define "power"? What does it mean to you? More so, what do you mean when you claim that the rich exercise power over the poor?
- rthomas6 12y ago
  Like I said, that much wealth inequality is not ideal. I just think that considering what maximizes the mean/median of world prosperity is as important, if not somewhat more important, than considering how wide the standard deviation of wealth distribution is. We should consider both things.

fiatmoney 12y ago

"distributed 100 times more unequally" doesn't mean anything, certainly not anything that implies anything about "the worst off". You need to characterize what happens to that specific part of the distribution if you want to estimate the impact. In particular it is possible to reduce the shares of the top N%, and the bottom N%, increasing the share of the middle, and have many measures of inequality go down.

lukasm 12y ago

Exactly. Inequality is not a problem - poverty is. I'd much rather be in a place where I'm a millionaire between trillionaires, than having little and be between millionaires. Sadly, envy and need for the social status are very strong.

james1071 12y ago
No, you wouldn't.
withdavidli 12y ago
Missing how economics work here. Prices will be adjusted to what the market can bare. There's still a 10^3 difference. That's being work like being worth $1,000 when everyone else is a millionaire. Edit: sorry, was calculating for billion. it's a 10^6 difference. $1 vs $1,000,000
- Dewie 12y ago
  I think people are talking about wealth here, not money per se. If everyone can afford at least two houses, three boat and 12 cabins, they are certainly more well-off than most people are today, no matter what relative money-wealth is being discussed.
  - eternauta3k 12y ago
    The rich will have orders of magnitude more political power to force you to not abort / pray in school / you get the idea.
    - Dewie 12y ago
      Yeah, but that concern was not what I was replying to.
    - jiggy2011 12y ago
      Don't the rich tend to swing liberal, at least in America? Especially in the newer industries that will see much of the wealth accumulate.
  - withdavidli 12y ago
    Yes, but in that vein we can say that even America's poorest are better off than some middle class in other countries, or even the wealthy over 100 years ago. It's hard to objectively define "well-off" because psychologically people will be comparing what they have and don't have to those around them. So if a person owned 2 houses , 3 boats, and 12 cabins think they're well-off if everyone around them owns double/triple what they do, or would they think they are poor? Just a different perspective. Edit: Please note that my line of thought would eventually lead to which is better? Objectively more "things" vs psychological well being (where things are relative to what others have).
    - jiggy2011 12y ago
      You compare yourself with the people you know who tend to be those in similar economic positions to yourself. I've never felt jealous of a billionaire CEO with a private jet for example but I'm more likely to feel jealous of a friend who has a better laptop or car than me.
Someone 12y ago
What makes you think your envy and need for social status are that much lower than average?
acgourley 12y ago
Sounds like an interesting primate study - Group A: 100 bananas a day vs 10 bananas a day. Group B: 6 bananas a day vs 4 bananas a day, etc.
legutierr 12y ago
To echo what asgard1024 wrote: inequality is a problem if you are concerned with your own ability to make decisions for yourself. We see that today in our political system: money buys access, and concentrated wealth breeds concentrated power. Envy and social status are not the primary reasons people fear inequality; instead, it is the fear that someone else has control over your destiny, and you are powerless to stop it. And this is what we see every day, even as entrepreneurs--regulatory capture by entrenched interests (and government corruption generally) prevents innovation and real competition, keeping too much wealth in the undeserving hands of those who have rigged the game in their own favor. Furthermore, it is also quite possible that levels of inequality that we are seeing in the United States drag down economic growth, at least to the point that the material status of the poor is decreasing in absolute, objective terms. This makes perfect sense when you consider how important individual freedom is for broad economic growth--if economic inequality makes people less able to pursue their own objectives and best interests, all but the rich and politically connected will find themselves unable to contribute the best of themselves to society and to the markets. It's entirely conjecture to attempt to assert that high levels of inequality are an inevitable result of sustained economic growth, and that high levels of inequality are necessary to sustain growth. However, it makes it very easy to hold conservative views in opposition to redistributive policies if you also believe that redistributive policies hurt growth--even when there is no actual evidence backing that belief. Again, there is no evidence that redistributive policies as such harm growth. However, there may be evidence of a "goldilocks zone", an ideal level of inequality that spurs growth most effectively--where the opposite extremes of communism and the modern "gilded age"--and their well-documented drawbacks--are both avoided. To me this seems like common sense.
- lukasm 12y ago
  >fear that someone else has control over your destiny That's true for people here. Most of society want "bread and circuses". Money is not the only motivator, so not inevitable to sustain growth. There is also problem with growth measurements e.g. Github improved my life by a lot, but contributed little to GDP.

mladenkovacevic 12y ago

Wait, what can robots do to increase the size of the pie as it were. The size of the pie represents the market. And the size of the global market is fed by the population of the earth. So while the population may be growing at some steady pace, it has nothing to do with automation except in cases where demand currently.overshadows supply. "Currently" is the key word here. No, automation is simply a tool for those who can afford it to cut out a large expense from their manufacturing process and increase profit. Not saying there's anything wrong with it. It's just you have to consider if nobody is left working and earning a decent living for themselves, then the size of the market starts to shrink.

colomon 12y ago
Are you implying that the only reason we appear to be more wealthy than, say, 18th century folks is because there are more people now?!?
rthomas6 12y ago
When a competitive industry cuts a large expense out of their manufacturing process, they increase profit and make cheaper goods. That's why Amazon is so successful, because they used technology to trim costs. Amazon also has small profit margins; they make up for small profit margins with high volume, which they get because of their low prices and convenience. To assume the size of the market is fed by the size of the population is to assume that human appetites for goods and services are finite. That is most definitely NOT the case. Some people want 100 fancy cars that they put in a garage or other ridiculous things. The size of the pie is what is available for consumption that people happen to want. Robots increase the size of the pie by making goods cheaper and more plentiful. That means people can consume more with the same amount of money... their money is worth more, so they're richer in real terms. For instance, if fancy cars were $10 each, you would be richer even though you have the same amount of money.

asgard1024 12y ago

This completely ignores fact that "be better off" also includes control of one's environment (also called freedom). Considering that, in your example, most people would be worse off. They would all have higher material standards, but if you consider amount of wealth equal to "voting rights" about their environment, then they got a cut. To say this less abstractly: Rich and poor are not a separate phenomena. Most people who are rich are so because they have power which they exercise over the poor.

zo1 12y ago
"Most people who are rich are so because they have power which they exercise over the poor." Define "power"? What does it mean to you? More so, what do you mean when you claim that the rich exercise power over the poor?
rthomas6 12y ago
Like I said, that much wealth inequality is not ideal. I just think that considering what maximizes the mean/median of world prosperity is as important, if not somewhat more important, than considering how wide the standard deviation of wealth distribution is. We should consider both things.