The trend is that wealth inequality will become almost the same as IQ inequality. IQ is more much important today than a generation ago in influencing individual economic outcomes. 100 years ago in an economy dominated by manual labor, the difference between a 90 IQ and 120 IQ wasn't that important, but now it is.
Economic Inequality
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Re: Economic Inequality
#92Earlier quoted context omitted.
I like the term social mobility. A person's station in life should not be tied to their parents' income level.
> A person's station in life should not be tied to their parents' income level. Why not? One's genes are rather intimately tied to one's parents' genes, and those genes completely determine one's physical self. One's upbringing is the direct result of one's parents' choices (and one's own reaction to them, which is itself a product of genes and upbringing). It seems patently obvious that one's parents' lot in life (i…
If this is true, then the children of billionaires would rise to the top even if they went to the same state schools and had the same resources/networks as everyone else. (Obviously the billionaires don't agree with you since they send their kids to exclusive private schools that cost more than a normal person earns in a year.)
If this were true (and I am not arguing that it isn't), a very high inheritance tax could be levied - the kids of billionaires don't need it because they will rise to the top anyway, and you can cut income taxes and corporate taxes to incentivise startup creation instead.
Re: Economic Inequality
#93For me, the issue with economic inequality in the US is that somehow it has lead to INEQUALITY OF OPPORTUNITY, which makes our economic system unfair.
Sample evidence:
* US children of wealthier parents grow up to be wealthier than US children of poorer parents, regardless of whether the child was adopted or not.[1]
* US children whose families are in the bottom income quartile are eight times less likely (!) than children from the top quartile to get a college degree by age 24.[2]
* According to test scores of US children in public school, those from low-income families are far less proficient in math and reading than their better-off peers.[3]
* Poorer US children eat a poorer diet, with negative consequences for brain and body development.[4]
* Poorer US children are more exposed to lead, with negative consequences for IQ and behavior.[5]
I gathered this evidence through a quick Google search, but there are lot of other data points out there suggesting we have a real problem: if you are born poor in the US, the odds are stacked against you -- you get worse healthcare, a worse diet, worse parenting, worse teachers, a poorer education, less support of all kinds... the list goes on.
WHY should wealthier children, who simply got lucky and won the "ovarian lottery," have more and better opportunities than poorer children?
Wouldn't we able to create EVEN MORE WEALTH if our economic system offered the same degree of opportunity and support to every child, regardless of parental status?
--
[1] http://www.theatlantic.com/business/archive/2015/07/rich-peo...
[2] http://www.forbes.com/sites/eriksherman/2015/02/05/wealthy-c... / http://www.pellinstitute.org/downloads/publications-Indicato...
[3] http://news.nationalgeographic.com/news/2014/09/140901-ameri...
[4] http://money.cnn.com/2015/01/29/news/economy/poverty-schools...
[5] http://www.environment.ucla.edu/reportcard/article3772.html
Re: Economic Inequality
#94Earlier quoted context omitted.
I like the term social mobility. A person's station in life should not be tied to their parents' income level.
Everyone says this until they become parents. Then they work as hard as they can to give their own kids every advantage they can.
That's true. We are not having kids, but if we were then I'd pay for every advantage for them. How can we make sure that working class children have equal access to the same opportunities and resources? Would I vote against legislation supporting them? I hope not.
Re: Economic Inequality
#95The most interesting question pg asks is one he doesn't really answer: >> Can you have a healthy society with great variation in wealth? What would it look like?
The Economist asked the same question in August, but didn't try too hard to answer it.
http://www.economist.com/news/united-states/21660180-what-go...
Re: Economic Inequality
#96It's hard to take this seriously when pg asks us to believe, on the basis of a single out of context quote, that Stiglitz is a simple-minded victim of the "pie fallacy". Stiglitz explicitly anticipates and addresses this criticism:
> One can think of what’s been happening in terms of slices of a pie. If the pie were equally divided, everyone would get a slice of the same size, so the top 1 percent would get 1 percent of the pie. In fact, they get a very big slice, about a fifth of the entire pie. But that means everyone else gets a smaller slice. Now, those who believe in trickle-down economics call this the politics of envy. One should look not at the relative size of the slices but at the absolute size. Giving more to the rich leads to a larger pie, so though the poor and middle get a smaller share of the pie, the piece of pie they get is enlarged. I wish that were so, but it’s not. In fact, it’s the opposite: as we noted, in the period of increasing inequality, growth has been slower—and the size of the slice given to most Americans has been diminishing. [my emphasis]
More generally, it's unclear what pg is attempting to do here. None of the arguments presented is at all original, and they are not presented in enough detail to be properly evaluated. So what are we meant to take away from this? That a rich dude is ok with income inequality? Quelle surprise.
Re: Economic Inequality
#97Earlier quoted context omitted.
On that note: the most offensive economic inequality isn't the 1% vs. the 99%, which successful startup founders would find themselves on the wrong side of. It's more about the 80 individuals with more wealth than half the world's population [1] – which, yes, does include "startup founders" such as Gates, Ellison, Bezos, Zuckerberg, Page & Brin, etc. But the vast majority of successful startup founders aren't in this…
> "More wealth than half the world's population" That's such a disingenuous statistic. A huge number of people, including a huge number of very well off people, have a negative net worth due to debt. I don't have a car payment or a mortgage, so I have more wealth than at least 30% of America, over 100 million people, combined! It's disappointing to see that FiveThirtyEight has now become just another outfit twisting…
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Re: Economic Inequality
#98I've never heard anyone begrudge innovators for getting wealthy. It's about crony capitalism and CEOs who enter a company, and siphon off wealth for themselves before getting "fired" with a golden parachute.
Re: Economic Inequality
#99Earlier quoted context omitted.
On that note: the most offensive economic inequality isn't the 1% vs. the 99%, which successful startup founders would find themselves on the wrong side of. It's more about the 80 individuals with more wealth than half the world's population [1] – which, yes, does include "startup founders" such as Gates, Ellison, Bezos, Zuckerberg, Page & Brin, etc. But the vast majority of successful startup founders aren't in this…
Why is that more offensive? What if they were all startup founders or created companies that made profound and positive change? At what point is the cross-over between being reasonably and unreasonably wealthy? If they have too much money and give most of it away, is that better than continuing to create new ventures that could make a difference? This economic inequality feels similar to racism. Why should a very wea…
> Why should a very wealthy person be pre-judged to be worse than others without knowing the whole picture?
Who said anything about judging them? Bill Gates is obviously a good person. That has nothing to do with whether or not we as a society want to allow unlimited financial returns for success in business.
Re: Economic Inequality
#100Usually pg's essays are spot-on. But this one, I feel, is based on a false premise: People aren't upset about startup founders getting rich -- in fact, society loudly applauds it. What people are upset about is legacy capital growing and growing and growing while the poor and middle class stagnate or even contract. On this subject, I always think about farms. Back in the day, it took ~100 people to work a large farm.…
Yes. This is a very strange article. When you think about what goes into the startup ethos, of independent hacking and really a passion for work, there's nothing antithetical about that and being turned off by massive income inequality in America. I, for one, would prefer to be an entrepreneur in a society that strove to make it harder for dynastic companies like Wal-Mart to accrue power. The "polynomial curve" histo…
> I am also weirded out by the "hunter" metaphor. The people fighting income inequality are not predators out to get pg's billions, they are working class people who can't afford healthcare or to send their kids to college.
The rabbit deems the wolf no less a predator because the wolf seeks to keep itself and its cubs alive.
As Graham notes, many of those decrying inequality really do want to improve the lot of the poor, not hurt the wealthy. What they don't realise is that they are very likely to kill the goose which lays golden eggs: the wealthy are, in very many instances, wealthy precisely because they have created circumstances which have benefited the great mass of mankind; if they are punished for improving the lot of others … they will stop doing so.
And then inequality will be less, but everyone will be worse off, rich and poor alike.