Economic Inequality

> They usually try to shape the world around them

Least of which are:

Bill Gates: http://www.gatesfoundation.org/

Warren Buffet: https://nonprofitquarterly.org/2013/07/09/buffett-makes-his-...

Mark Zuckerberg: https://www.facebook.com/chanzuckerberginitiative/

The problem is that these measures leave out most people's most valuable asset, their future earning potential. There's nothing wrong with having a serviceable mortgage or car payment. I think you misinterpreted me.

Yes, people do profit from that debt. Good! Because otherwise you wouldn't be able to turn some of that future earning potential into buying power today. This ancient innovation, the loan, allows us to do that. If the lender didn't stand to profit from interest, he wouldn't lend. It's a triumph of capitalism.

The problem with any discussion about inequality is that it ends up discussing the rich rather than wealth. This turns the discussion into a moral one which destroy any possibility of discussing this rationally.

First. It often creates two groups. The 1% and the rest and then go on to discuss trickle down effect. While it's in fact true that trickle down proportionally does not work with the 1% it does work with a lot of other people who create wealth and invest them into other things which then in return creates jobs much more proportional to their wealth (but still of course not in any 1 to 1 relationship)

Second. A lot of time discussions about the rich ends up being about their moral compass and their intentions to avoid paying taxes rather than about how they became rich and then look for any weakness in the system which allow for extreme richness (if any)

Third. In any discussion about how to tax the uber rich, tax avoidance and lobbying often ends up being the focal point. What I would like to suggest is instead we look at extreme wealth as a function primarily fueled by technology and globalization and then further down the list politics, network etc.

I.e. many of the people who are extremely rich today are so because they benefitted from technology and globalization happening at the right time for them not because they somehow worked the system fraudently to become rich (some of course did use it more than others but often also end up being rich much shorter time)

Extreme wealth is a function of the system not just the choice and skills of individuals. Someone will become the richest and their richness will be highly influenced by the system they operate in. Since this system is primarily technological and technology moves faster than legislation the job isn't to figure what rules to implement/remove/adjust but rather how to do it fast enough and still without killing the ability for growth.

But this wont happen until the economist who advice governments acknowledging technology as part of the equation instead of treating it as an externality as they do now.

And so why I have nothing against people getting rich (heck I hope to be so one day myself) trying to defend it like PG does here strikes me as extremely limited in how to understand the issues with inequality.

The chart you presented doesn't show the value created, just the value captured by a given segment. Wouldn't that be an important consideration? It's estimated that innovators, the group that Dr Graham is talking about, only capture around 2% of the value they create, with the rest going to society [1]. That's the whole point of the essay, that maybe reducing the 'absurd' levels of wealth will also lead to reduction in the levels of value creation that society currently benefits from.

[1] http://www.nber.org/papers/w10433

Where did you get that? As far as I've read, most studies find very poor or no correlations at all between IQ and wealth. And that's striking, given what you'd expect from a metric that measures IQ, isn't it?

In fact, those same studies often identify other factors. Interestingly, your parent's class is a hugely important indicator. Sociologists call this phenomenon social reproduction, and it essentially goes against the ideals of the 'american dream', where one can get ahead through hard work. In reality, socioeconomic mobility is quite poor, particularly in the US, which would explain metrics like IQ not being one of the foremost factors in determining wealth.

I would agree with you (not on the basis of data but merely by assumption) that IQ today in a mainly services economy is more important than 100 years ago in a mainly manual labor economy.