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Economic Inequality

paulgraham.com

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Re: Economic Inequality

#391

Post by wstrange »

Turing_Machine wrote: post #356
wstrange wrote: post #181

Earlier quoted context omitted.

> "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.

"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" Look: we've gone from 90% agricultural workers to about 1% agricultural workers. Hand-weavers and spinners: gone (other than specialized or artsy-craftsy stuff). Neighborhood bakeries: gone (likewise). The list could go on forever. People have been predicting massive unemployment s…

Imagine a machine that has all of your intelligence, dexterity and creativity. What work will you do that said machine will not do better?

Perhaps we can all become artists - but then again, machines will be able to compose songs, write stories and create abstract art.

This is going to be very different than previous waves of automation that largely augmented human muscle.

Bringing it back to the original thread, I think the concern is that rising income inequality will accelerate as the wealthy will increasingly own the means of automation.

Some mechanism for wealth redistribution will be needed if we are going to avoid a meltdown in society. That doesn't mean that all should be equal, but we ought to think about how we can provide everyone with enough to live with dignity.

Re: Economic Inequality

#392

Post by geofft »

wildmusings wrote: post #248
geofft wrote: post #146

Earlier quoted context omitted.

I think the case for their motivation being affected makes sense in a physical-goods economy. If a woodworker sells $500M of chairs, sure, there's suddenly much less motivation to spend the same amount of parts and labor on the next chair for 1% of the profit. But for other kinds of revenue that makes less sense. The 5 millionth copy of Windows does as much good for that particular customer as every previous one, at…

Analogies aside, there is a moral component here. Everyone has a moral claim to the fruits of their labor, however rich or poor they are. You need some amount of tax to pay for our collective defense, police, courts, and mandatory education, but much more than that is immoral. Remember what taxation ultimately is: the police coming to your door and picking your pocket at gunpoint. It rarely comes to that, but that's…

At the risk of this turning into the low-quality discourse that followed Obama's "You didn't build that" soundbite a while ago, I'll point out that there is validity to that soundbite. The fruits of your labor only exist within an organized society. There's a reason that entrepreneurs prefer not just certain countries but certain places in certain countries for building companies: where you work, who you're near, what infrastructure is around, what customers are around, what regulatory frameworks are in place and what laws are interpreted in what ways, etc. all contribute to a more or less successful company. And those things can in large part be traced to good or bad governance.

What would a fair rent in Galt's Gulch be? What should John Galt have charged the other strikers for not only collective defense like the distortion field, but for the community existing? For the opportunity to live in such a society? If the US government collapse didn't happen, the number of people Galt would have wanted to live there would have been fairly high, and their willingness to pay, once they knew what he was up to, would also have been high. And he had a genuinely good product, and every right to eject people from Galt's Gulch at gunpoint.

Taxes up to that point are certainly fair. Whether governments as currently implemented are the right entities to collect those taxes is a question (though, by no means interpret me as advocating a Randian anarcho-capitalism just because I used Galt's Gulch as an example!), but your labor is fruitful within a society, and that society certainly has the right to charge you for it, or demand, at gunpoint if necessary, that you stop taking advantage of what they provide for free. (You always have the right to opt out of taxes if you opt out of the taxing society, as Roger Ver did.)

For a less fictional valley: how much does the government fund Bay Area universities in the form of research grants? And how much did the tech industry gain from that, and what would a fair price for access to that have been? Imagine a parallel universe where Stanford and Berkeley never got a penny of government funds. How much should a VC or founder in this parallel universe pay for transportation to ours?

Denying people the fruit of their labor is immoral. But society collectively also labors to build a better society.

Re: Economic Inequality

#393

Post by jessaustin »

wildmusings wrote: post #382
TuringTest wrote: post #353

Earlier quoted context omitted.

That's because the laissez-faire market forces you invoke are not the core of our prosperity, just one of the factors leading to it, so your comment did sound as an extreme parody of a right wing position (which may be more or less reasonable depending on how strongly you support it). Friedman and Hayek wrote their work before we had a thorough understanding of how complex systems are optimized. Thanks to more powerf…

Interestingly, Friedman, and I think Hayek as well, supported a universal basic income. Friedman called it a negative income tax, but its the same premise. I think a lot of laissez-faire capitalists would get behind that idea, if it was coupled by the permanent abolition of all other welfare programs and most labor regulations. It's definitely an idea I can get behind. It would require some constitutional amendment f…

One reason why many such characters would support basic income is that it would ostensibly remove the provision of benefits from the overview of the bureaucracy. That's the same reason that many others would not support it.

I'm very tempted to throw in with the former, except that I worry about the follow-on effects of basic income. Would a basic income just be a windfall for landlords, as they all increased rents by some large percentage of the average basic income? Or would the formerly-urban formerly-poor head for the hills, now that they could budget over the long term without relying on urban amenities? This would be a windfall for a different set of landlords and real estate investors, but it would drastically change the nature of 80% of the communities in the nation. That's not even to consider the wealth effects on markets more elastic than housing. It would be a grand experiment, but somebody would start crying.

Re: Economic Inequality

#394

Post by throwupper247 »

WalterBright wrote: post #369
throwupper247 wrote: post #330

Earlier quoted context omitted.

Selling something that people want isn't equal to providing value. Let me be pessimistic: coffee doesn't provide a positive value, because it's a drug that get's people addicted however little and subliminal. Maybe that is a value to society in general, but it isn't to the individual. The car definitely is an economic nessecity in some parts. I don't know what refridgerator oligarchy you are refering to and it specif…

I love coffee. It is one of the great pleasures of life, like chocolate and strawberries. It provides positive value to me.

Hedonism is your ultimate phylosophical truth, is it? Strawberries are hardly as heavily industrialised as coffee, calling your relationship with a hot bevarage a romantic one is doubtful. I am as pessimistic as your logic is flawed. There are few things in live the brain is prewired to feel a need for. Coffee supplis the illusion of fullfilling two or three enssential ones of these, hunger and thirst and sleep, but it doesn't actually provide the associated value.

Re: Economic Inequality

#395

Post by awakeasleep »

asift wrote: post #36
rst wrote: post #4

Central thesis (hidden a bit): "ending economic inequality would mean ending startups". So, who is the straw man who advocates completely ending economic inequality? Even left wingers in Europe (far to the left of anyone mainstream in the US) talk mainly of reducing it. So, if economic inequality were substantially reduced, would there still be startups? I believe another piece of common advice in this field is that…

Reducing economic inequality is merely a lesser form of eliminating it. I think the tough question people should consider here is whether relative inequality or absolute standard of living is the more important metric. If absolute standard of living rises faster as economic inequality increases, why should we try and limit economic inequality?

A lot of people are jumping into an argument with you, but I think your point of "inequity vs standard of living" is a really smart distillation of concepts and deserves credit for being insightful.

Re: Economic Inequality

#396

Post by geofft »

AnthonyMouse wrote: post #331
geofft wrote: post #194

Earlier quoted context omitted.

That's a fine argument, and now that we are no longer making the claim that my proposed approach is immoral on the face of it, we can have a reasonable discussion. :) I think you're totally right that this motivates public ownership (or at least Larry Page selling his company to other private owners, once his shares are worth $500M), and that this doesn't seem to be usefully doing anything productive for economic ine…

> or at least Larry Page selling his company to other private owners, once his shares are worth $500M I would argue definitely public. Google market cap is over $500B. Anyone else who owns $500M would have the same incentive, so you would have at least 1000 owners, and almost certainly far more than that because the owners would want to diversify instead of investing their entire $500M into a company they don't even…

Can you do a progressive tax on consumption, such that the rough cost for essentials is essentially untaxed, from there to average upper-middle-class consumption is moderately taxed, and O(a yacht) is highly taxed? I suppose this used to be impractical because consumption taxes are generally implemented at point of sale, but since most large transactions are digital (and there are well-accepted laws about moving huge amounts of cash around, anyway) maybe this is tractable.

Are you also suggesting a high estate tax, so that you're encouraged to spend or invest it instead of building up wealth for your family?

Re: Economic Inequality

#397

Post by jshen »

pdonis wrote: post #374
jacobolus wrote: post #8

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…

> Graham is arguing against an enormous straw man. This is a very hard case to make when Graham's money quote, at the start of the essay, is from a Nobel-Prize-winning economist saying, pretty much in so many words, that rich people get rich by taking stuff from poor people--which is exactly the claim Graham is arguing against. > Nobody is suggesting that we “prevent people from getting rich” or “end all economic ine…

"Graham's point is that if one person makes more than another because they're more productive, you don't want to "fix" that, because it's not a problem, it's what fuels economic growth."

I do not believe he said this, and it's a non sequitur

Re: Economic Inequality

#398

Post by jwesleyharding »

Did he read Piketty? It doesn't seem like he's even read it somehow: an awkward oversight if you're looking to contribute to high-level discourse about inequality.

He seems to assume that Ycombinator is a microcosm for the American economy, but this is a burdensome assumption for most who have even a casual interest in the subject.

For those who missed it: Capital, the recent intellectual best-seller on this topic, spent about 500 pages attempting to demonstrate that inherited wealth (NOT human capital) is the dominant force in the economy and that this tendency is only worsening, for fundamental structural reasons (r > g). In other words, we are entering a new gilded age.

Think Trump, not Zuckerburg.

So, I can't understand why Graham doesn't address this. If Piketty is correct, it renders meaningless almost every thing he writes in this piece.

Re: Economic Inequality

#399

Post by aaronbrethorst »

civilian wrote: post #254
cko wrote: post #214

Earlier quoted context omitted.

But is it wrong for a rich person to hoard wealth, or to spend only on luxuries for themselves? Why do they have to "contribute to society"? I'm by no means wealthy, and at my age of 29 I've donated more money than many of my coworkers. And I'm all for a portion of tax dollars supporting the underprivileged. But when I read about Larry Ellison's yacht-racing hobby, I think to myself, "good for him." He can spend his…

> Why do they have to "contribute to society"? This gets to the core of the question! How did a rich startup person get wealthy anyway? They built something that people wanted. People said: "hey, that thing you built, I value it at $20 and you're giving it away at $10, so I'm happy to buy it!" Anyone who made money from business has already created wealth and contributed to society, via the market. To the people who…

    This gets to the core of the question!
    How did a rich startup person get
    wealthy anyway? They built something
    that people wanted.
And were lucky enough to live in a society sufficiently functional to let them build that thing others wanted. You don't see a lot of millionaires or billionaires coming out of failed states.

Re: Economic Inequality

#400

Post by [deleted] »

throwupper247 wrote: post #394
WalterBright wrote: post #369

Earlier quoted context omitted.

I love coffee. It is one of the great pleasures of life, like chocolate and strawberries. It provides positive value to me.

Hedonism is your ultimate phylosophical truth, is it? Strawberries are hardly as heavily industrialised as coffee, calling your relationship with a hot bevarage a romantic one is doubtful. I am as pessimistic as your logic is flawed. There are few things in live the brain is prewired to feel a need for. Coffee supplis the illusion of fullfilling two or three enssential ones of these, hunger and thirst and sleep, but…

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