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Economic Inequality

paulgraham.com

181–190 of 580 posts

Re: Economic Inequality

#181

Earlier quoted context omitted.

If that were all that happened it would be great. But automation leaves a lot of people off the payrolls without jobs and if those jobs are paying less then less expensive food is not less expensive. And incomes have dropped more than inflation in most cases for the poor which means it is not cheaper for those less able to afford it. Complicated problems are not whisked away with making things less expensive = benefi…

"But automation leaves a lot of people off the payrolls without jobs" No, it does not. Before automated agriculture something like 90% of the population was directly engaged in agricultural labor. We don't have 90% unemployment or anything like it, and we also have social supports for those who are unemployed (also largely nonexistent in those days). " And incomes have dropped more than inflation in most cases for th…

> "we also have social supports for those who are unemployed "

Something that the very wealthy are trying to roll back.

I think the premise that automation will just shift work to other industries will be severely tested in the age of the self driving car and other forms of advanced automation.

Re: Economic Inequality

#182
post #163

Earlier quoted context omitted.

> "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…

This is a disingenuous rebuttal. The difference in wealth between someone worth $45B, and two people each worth $1 million and -$1million respectively, is identical. The millionaire is worth less than 0.01% of the first. If this were a card game, the millionaire could go piss himself. If it were possible to put $45B into a typical savings account earning 1% interest per year, that $45B person will make more money doi…

Hoarding? Do you think rich people just stuff their money in a mattress? Even if they deposited it all in checking accounts, the banks would reinvest it all over the economy.

Re: Economic Inequality

#183
post #115

Earlier quoted context omitted.

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…

Because those 80 people don't exist in a vacuum. Consider that there are probably tens of thousands of people required to facilitate the profound changes these few people made. This includes people in the food production chain, education (and as such, textbook publishers and paper manufacturers), and product manufacturing. I'm not even including the scientific advancements that made their change possible. So yes, the…

I think the biggest issue is that we are ignoring that a difference of degree is a difference in quality. Once a small number of rich people have more power than almost every one, our society is controlled in a non-representative way - an oligopoly.

Imagine if one rich person earned all the money in a country. That would be a very bad situation on many levels from concentration of power, to the induction of universal poverty. The question is, how far towards that extreme can you go while discouraging the bad effects? PG has many good points, but there was a major study that showed that US policy is mainly controlled by the preferences of the wealthy, even when the majority of the population disagrees. That doesn't sound like representative government.

http://journals.cambridge.org/action/displayAbstract?fromPag...

I don't think we should discourage the vast majority of entrepreneurs, but we should make it harder to get and maintain wealth once you move into the tens or hundreds of millions in assets or income, and past a certain number of billions, possibly blocked. I'm not sure what to do about people leaving the country once they reach that level though so that last part is probably not a good solution, but in spirit we shouldn't let a few people have too much unelected power. They're not just buying new shirts. The problem with wealth is that you can leverage the fact that people like one aspect about you (your ability to provide some business service) into another domain where they don't have to like you so much.

Re: Economic Inequality

#184

Earlier quoted context omitted.

The most extreme proposals I’ve seen in America are ones like... The most extreme proposals I've seen in America are a federal job guarantee and a permanent incomes policy similar to the Nixon wage and price controls of the early 70s. Post-Keynesians and MMT proponents are very enthusiastic about them, and they reject the idea of the basic income FWIW.

The Nixon wage-price controls were a disaster. They also precipitated the oil crisis, which persisted until Reagan finally cancelled the oil price controls.

I'm not aware of the relationship between Nixon era wage policies and the oil crisis. Do you have some info on that?

Re: Economic Inequality

#185
post #109

Earlier quoted context omitted.

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…

These sorts of discussions always go downhill because they very quickly turn into defending (and attacking) people as if their identity is inextricably linked to their wealth, which means that policy discussions are read (and sometimes written) as personal attacks. Can we do better than that, please? I don't see a claim that any of these folks are bad people for their money. Gates, for instance, is doing extraordinar…

Empirically, how well do you feel the US government spends its budget currently?

There's often an assumption in these discussions that if a billionaire isn't spending their money in a socially optimal way, the government will spend it better. But if you look at how governments actually spend their money, you'll find very little evidence to support that assumption.

Re: Economic Inequality

#186

Graham is arguing against an enormous straw man. Nobody is suggesting that we “prevent people from getting rich” or “end all economic inequality”. The most extreme proposals I’ve seen in America are ones like, “institute an unconditional basic income as an alternative to means-tested welfare programs,” or “allow every citizen/resident into a single-payer healthcare system,” or “go back to the tax structure of the 195…

I think you're taking this too literally. For instance, "ending economic inequality would mean ending startups" might be translated into something like: "Implementing policies that marginally reduce economic inequality would marginally reduce incentives to start a startup, and consequently reduce the number of founders that will start a startup in this country ever so slightly".

Sometimes it's easier to understand the consequences of doing something by pointing out extremes. It also makes for better reading, but the price you pay is that some people may think you're an extremist.

Re: Economic Inequality

#187

Graham is arguing against an enormous straw man. Nobody is suggesting that we “prevent people from getting rich” or “end all economic inequality”. The most extreme proposals I’ve seen in America are ones like, “institute an unconditional basic income as an alternative to means-tested welfare programs,” or “allow every citizen/resident into a single-payer healthcare system,” or “go back to the tax structure of the 195…

On paper, the tax rates were higher in the 50s. What isn't mentioned is that was the age of the tax shelter, the 3 martini lunch, etc. It is doubtful anyone actually paid those rates. Reagan's deal to lower the tax rates included repealing all those deductions and tax shelters.

You are welcome to try to eat and drink through tens of millions of dollars, but I doubt you can do it. Even if you can, there will be a lot of happy waiters and cooks serving you ;)

Re: Economic Inequality

#188
I have two points against this piece. The first in substance and the second in style.

> The real problem is poverty, not economic inequality.

This was in the footnote, and I will consider it, hopefully without creating a strawman, to be the boiled-down thesis.

Economic inequality and poverty are different problems, as PG noted, and both will never truly be solved barring dramatic and horrific solutions. But, the people I know, aren't talking about poverty. My friends, all of whom grew up in middle class life styles, aren't thinking about falling into poverty, which they consider to be the idea of barely making ends meet. They're thinking about why they can't afford to buy a house at age 30 like their parents did. Or why they have to put off having a kid until they're much older. Or why wages don't seem to give as much disposable income as they once did. Or why they're so in debt right after college, without a good job to speak for.

They're talking about the end of the middle class. And, while poverty swells from the middle class's withering, we can't just focus on its growth. It's like if you had three buildings. The first is tiny and barebones. The second is nicer and much larger. And the third is super glitzy but the smallest of all. Now imagine that neglect by the building owners has lit aflame the second building. Most people from the second building are now forced to overcrowd into the dilapidated first building.

People in the first building exclaim that we need more room. People in the third building close their blinds. The people in the second building are too proud to admit they have to stay in the first building.

Meanwhile, the second building turns to ash. And then the first and third buildings right next to the second start to catch on fire...

Metaphor aside, I believe the real problem is the withering of the middle class, i.e. where opportunity is most equal. It is the engine of our society and, in the economic view, probably what has made the West great.

While I do not know what set of specifics solution will work, I do know that, paraphrasing PG, the most important thing is to focus on the right problem.

Style: > So when I hear people saying that economic inequality is bad and should be eliminated, I feel rather like a wild animal overhearing a conversation between hunters. But the thing that strikes me most about the conversations I overhear is how confused they are. They don't even seem clear whether they want to kill me or not.

This paragraph set a dubious tone, and made me seriously question the objectivity of this piece.

I completely believe that PG has heard of these conversations: as a high-net-worth person, he must have been accused of exploitation and other capitalist ills a thousand times over.

But by including this paragraph, the spectrum stretches from "reducing income inequality" to "ending income equality", which portends violence. Not metaphorical violence. Real violence. PG is studied in history, so his words about death strike me as not apart of a metaphor but a real, sincere worry.

There's fear here; fear seems to be slightly and subtly tinging the rest of the essay. I appreciate PG's methodical, calm, purposeful writing. But the tone of this one clouds the message of "treat the disease, not the symptom".

I agree with a lot of what is said later on, but I had to do outside research first, and then coming back once I was sure I wouldn't be learning a distorted point or view.

Normally PG's editors are great at refining his words: but out of all them, only one seems to be studied in Income Equality (Max Roser). The others are either apart of the same class or social cohort: which may very well be why the general consensus from his editors was that this piece should go out as we see it now.

Re: Economic Inequality

#189
post #96

It'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…

That still sounds like the pie fallacy. The idea is that wealth is not a global conserved quantity, but can be created by individuals. One need not "enlarge the pie" globally so that the poor can have more of it. It's more like the rich create more of it and the poor create/obtain less of it.

He doesn't say anything to indicate that he thinks that wealth must necessarily be globally conserved. He's just saying that at as a matter of fact, the period that saw a rise in inequality did not see a rise in the absolute wealth of the majority. That's a factual claim that's either true or false; it would make no sense to say that it's fallacious.

Re: Economic Inequality

#190
Strawman Paul Graham's Conversation with the Poor

Man: I am worried about my next meal and seeing my children move up in the world past my station.

Graham: Well I can't relate to that I live in one of the best school districts in the world with some of the country's highest housing prices. My primary concern is what I will choose to eat at Sweetgrass or Chipotle.

Man: The school's in my district can't afford enough desks for students and are using Textbooks from the 90's. If the government was better funded by the taxes of the wealthy it could help to alleviate poverty.

Graham: Are you anti-startup? We have brought you Snapchat: the foremost service to allow upper-middle class teenagers to share pictures of their genitals, and Uber: a taxi substitute that makes it easier to get home after drinking yourself silly at the local gastropub. We created wealth, don't blame us for fighting tooth and nail to keep from paying our fair share into the government while we benefit from it's protection and services.

Man: I don't use any of those services, in fact I don't even have a phone or Internet services.

Graham: Well that's okay provided you fit into a model I have chosen to explain away the guilt I feel at becoming the thing I vowed to disrupt and change for the better as a young man, let me tell you about The Polynomial Curve. That should make you feel better for not being able to send your daughter to college.

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