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Income inequality is not the problem, it's a symptom

blog.rongarret.info

21–30 of 242 posts

Re: Income inequality is not the problem, it's a symptom

#21

>So why doesn't Graham recognize and advocate this? Perhaps it's because two of his biggest golden geese — Uber and AirBnB — are actually relying on exactly the kind of political influence I'm calling out here in order to survive and prosper. Whether this is true or not, we need to realize PG has motives. He doesn't write essays just for his health.

Having read PG's essays since 2002, I suspect his motive is that he wants to have good ideas. The kind that will be remembered after his death. He even said as much in one of his essays [1]. He's writing for legacy, not for profit. YC itself was one of those ideas - it started out as an experiment [2], derived from a talk at Harvard Computer Society [3]. The easiest way to test if an idea is a good one is to go do it…

From half a world away I wouldn't say his motives are "Machiavellian", but his style and the subjects he wrote about definitely changed just after reddit and especially YC became important, mostly for the worst/not-interesting.

I think I started reading his essays in 2004 or so, and he was a cool guy, not as cool as jwz, for example, but pretty interesting nevertheless because of his story of actually making some good money out of having used LISP (which back then was like a Nirvana-reaching thing, I mean, making big money out of LISP) and for being a programmer who was actually showing interest for other things outside programming, like Renaissance painting (Christopher Alexander and his Turkish rugs' patterns was also a thing back then among programmers).

But then reddit launched, YC was founded, somehow they started making money, and things like Arc and trying to make LISP a world-dominating language became things of the past. That's when his writings became a lot less interesting for guys like me, i.e. for average programmers who just wanted to read what other guys smarter than them had to say.

Re: Income inequality is not the problem, it's a symptom

#22
post #10

Mr. Garret quotes Sanders: > The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country. I am rather puzzled that this idea gets so much traction. Does anyone really believe that if only the rules weren't "rigged" local shops and businesses would be able to compete against Wal-Mart a…

>Does anyone really believe that if only the rules weren't "rigged" local shops and businesses would be able to compete against Wal-Mart and Amazon?

To look at just one example, how long did it take to force Amazon to collect the kind of sales tax that mom and pop shops had to collect from the start?

Re: Income inequality is not the problem, it's a symptom

#23
post #14
post #10

Mr. Garret quotes Sanders: > The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country. I am rather puzzled that this idea gets so much traction. Does anyone really believe that if only the rules weren't "rigged" local shops and businesses would be able to compete against Wal-Mart a…

It took me years to realize that economics isn't physics - and it isn't ruled by physics-like laws. Instead, economics is governed by laws created by our society. And what we think of as "free market" is really just norms of trade which are created by our society. There is no reason why the bulk of the billions taken-in by WalMart should go to the Walton family while their employees live on food-stamps - that is just…

I don't understand the hate against Walmart. It only has a profit margin of 3.12% [1] and return on assets of 7.69%. Now I suppose you could argue that all the profits are hidden away somewhere, but that sounds like an unfalsifiable statement. It certainly would be illegal to hide assets from shareholders.

[1] https://finance.yahoo.com/q/ks?s=WMT

Re: Income inequality is not the problem, it's a symptom

#24
post #17

Earlier quoted context omitted.

> It's wishful thinking. The rules don't drive rewards to the top. It's intrinsic to the free market. No it isn't, we make the rules of the market, and we could just as easily change those rules to force companies to give more of their earnings to their employees rather than filtering it all up to the top. The market is what we make it, it has no intrinsic nature. The rules are rigged, by and for the wealthy, that is…

The companies themselves don't really have any capacity to enforce these "rules", they have to petition the government to do so. The end result is regulatory capture. How do you expect to "force companies to give more of their earnings to their employees rather than filtering it all up to the top"? More government, I guess? We've seen how this goes.

As just one example, tax reform[1], punish companies with high gaps between their highest and lowest paid workers. It's quite easy to force companies to do things, you just change the rules. When a company does better, the benefits of that productivity should not all go to the top; the employees should share in the wealth they created. Companies who share their wealth with their employees would get more favorable tax rates. Incentives matter.

[1] https://www.washingtonpost.com/opinions/harold-meyerson-cali...

Re: Income inequality is not the problem, it's a symptom

#25
post #10

Mr. Garret quotes Sanders: > The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country. I am rather puzzled that this idea gets so much traction. Does anyone really believe that if only the rules weren't "rigged" local shops and businesses would be able to compete against Wal-Mart a…

It's not about big business vs small business. It's about wages. Big businesses are not inherently bad, but so long as they are beholden to shareholders because capital gains are more valuable than production, the more they are going to screw over workers to reward investors.

Re: Income inequality is not the problem, it's a symptom

#26

>So why doesn't Graham recognize and advocate this? Perhaps it's because two of his biggest golden geese — Uber and AirBnB — are actually relying on exactly the kind of political influence I'm calling out here in order to survive and prosper. Whether this is true or not, we need to realize PG has motives. He doesn't write essays just for his health.

My best guess is that Graham writes these "essays" because he is, like a lot of us, simply the kind of dork who enjoys writing stuff like this.

Re: Income inequality is not the problem, it's a symptom

#27
post #10

Mr. Garret quotes Sanders: > The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country. I am rather puzzled that this idea gets so much traction. Does anyone really believe that if only the rules weren't "rigged" local shops and businesses would be able to compete against Wal-Mart a…

>Do people really believe that it's only because of "rigged" rules that big employers are downsizing and shipping production overseas?

Well yes, of course. If the rules weren't rigged, companies would be downsizing to replace humans with machine-labor.

Re: Income inequality is not the problem, it's a symptom

#29
post #14
post #10

Mr. Garret quotes Sanders: > The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country. I am rather puzzled that this idea gets so much traction. Does anyone really believe that if only the rules weren't "rigged" local shops and businesses would be able to compete against Wal-Mart a…

It took me years to realize that economics isn't physics - and it isn't ruled by physics-like laws. Instead, economics is governed by laws created by our society. And what we think of as "free market" is really just norms of trade which are created by our society. There is no reason why the bulk of the billions taken-in by WalMart should go to the Walton family while their employees live on food-stamps - that is just…

That's absolutely true. But while physical laws just exist, "economic laws" are a complicated combination of biology, psychology, social norms, the legal system, etc.

You can tweak the rules, but you can't run calculations that predict the results. Some of those legal arrangements might be unjust, but their results might be net-good all the same. We can, and should, keep evolving the social bargain, but upending it completely is very dangerous.

Re: Income inequality is not the problem, it's a symptom

#30
post #16
post #14

Earlier quoted context omitted.

It took me years to realize that economics isn't physics - and it isn't ruled by physics-like laws. Instead, economics is governed by laws created by our society. And what we think of as "free market" is really just norms of trade which are created by our society. There is no reason why the bulk of the billions taken-in by WalMart should go to the Walton family while their employees live on food-stamps - that is just…

Do you believe in property rights? Having a legal/police system to catch people who forcebly take property? Using trade to exchange property? This is the core of our system. And that system will always generate inequality. Not necessarily a bad thing. You can have laws to take the edge off inequality generated, but at the core of the system you can't really avoid it.

I believe in property rights to the extent that they benefit our society. That means that I don't believe in property rights as defined by the rich.
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