Economic Inequality • Hacker News Board

Re: Economic Inequality

#511

Post by srean » Sun, Jan 03, 2016, 11:32 AM UTC

murbard2 wrote: post #417

srean wrote: post #362

Earlier quoted context omitted.

> Anyone who made money from business has already created wealth and contributed to society, via the market. What in your opinion would be the contribution of a high frequency trader to a society or an individual ? Getting markets to be arbitrage less at sub-mili-second time scales was a pressing problem for no one. For some of the other industries, if you price the externalities, it is far from clear if they are pro…

It's not a large problem and that's exactly why the high frequency trading industry is tiny. You only think it's big because it gets disproportionate attention in the media.

>Its not a large problem

is a very charitable way of putting it.

Re: Economic Inequality

#512

Post by TeMPOraL » Sun, Jan 03, 2016, 11:48 AM UTC

icebraining wrote: post #509

TeMPOraL wrote: post #461

Earlier quoted context omitted.

We know that Uber is awful and managed by sociopaths in absolute terms. It does not need comparison to any kind of old taxi industry ideals. Plethora of reports we had for the last few years show this clearly. And old "taxi mafia" was at least subject to some improvements - each taxi company was local and had to listen to authorities, which in turn could be influenced by citizens. Uber? They don't give a flying fuck…

I don't like Uber either; I just dislike dishonest propaganda, even if targeted at a bad actor. > They don't give a flying fuck about the law, and they're too big for any single city to pressure them into anything. I think that's a little overblown. Uber has been forced to leave many cities (Paris, Frankfurt, Hamburg, Madrid, etc) and parts of cities (e.g. Calgary Airport). Uber may be willing to bend the law, but th…

Fair enough. I know about Germany, but I missed Paris and Madrid - thanks for the info. Though how much % of the total operations is that?

But it's not bending it, it's disregarding and breaking it. Bending was what Uber-like services have been doing in Europe for past 10+ years, and in time they managed to integrate themselves with the infrastructure nicely.

In my city the IRS tries to randomly call and then fine the living crap out of Uber drivers, but it doesn't seem to be effective. Frankly, if Uber teaches people anything it's how slow and inefficient local governments have become. Which is both good and bad to know. On the other hand, local startup community figured out that they're obliged to help Uber win, so they promote them and jobhunt for them and if our startup community is good at anything, it's good at promoting and finding people.

Re: Economic Inequality

#513

Post by ignasl » Sun, Jan 03, 2016, 11:57 AM UTC

I feel that this discussion about income inequality doesn't do us any good mostly because both sides are kinda right but they fail to realize that and just try to promote their own agenda. Economy seems simple but in reality there are millions of variables. Is the income inequality a real problem depends on a lot of those variables and possible solution depends on them too. Education of population, infrastructure built, society culture, human nature, society homogeneity, corruption, political system, dominant industries, social mobility, tax rates, efficiency in using tax revenue, various incentives etc. Everything matters and if you want to implement some policy you need to take into account as much as you can before deciding what is the best policy. Like a chess player calculates multiple steps in the future so should economists. For example in some dirt poor country with bad education and huge corruption the higher income inequality will result in even lower total pie while in silicon valley (where Graham comes from) increased income inequality just makes pie bigger to everyone (and that's why Graham argument is what it is). The problem is that everyone choose to see what they want to see and then argue about different thing than the other side. I understand that some John "The programmer and self labeled savior of the poor" thinks he is very smart economist and argues that if someone has too much and then someone has too little lets just take from rich and give it to the poor. But real world is much more complex. And before we even start discussing what we should do about income inequality we should first agree on what exactly we are arguing about. What is income? What is inequality? What is fair share of taxes? What is wealth? What is capital? Even what is the economy and how it works! How one or another policy will affect various economic activities? Analysis must be much broader than simply stating your opinion that being rich are bad (or good).

Re: Economic Inequality

#514

Post by djhn » Sun, Jan 03, 2016, 12:16 PM UTC

timmytokyo wrote: post #310

loteck wrote: post #157

> 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. Straw man aside, I continue to be deeply concerned about individuals who spend their time beli…

I think there is some validity to Graham's paranoia. There is another way to characterize the trends that Paul Graham observes. Perhaps growing economic inequality is a natural consequence of capitalism itself, and the "defragmentation" (or greater economic socialization) of the economy brought about by World War II was only a temporary reprieve from the overall trend toward greater inequality. This view is essential…

> As wealth accumulates at the upper end of the income spectrum, it has a self-reinforcing and accelerating feedback effect: greater wealth purchases greater political and social influence, which enables even greater wealth production, often at the expense of the poor and the less wealthy.

A case for wealth accumulating on top can be made, if you believe wealthy individuals, on average, are better at allocating funds for a given "common good objective" than the government. In that case you would expect them to be more intelligent and benevolent in their allocation of this wealth as well as less susceptible to corruption (financial, moral, ideological) than the bureaucracy.

Re: Economic Inequality

#515

Post by foldr » Sun, Jan 03, 2016, 12:24 PM UTC

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…

>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.

Not quite. All that Graham attempts to show in the essay is that rich people could, in principle, get rich without taking stuff from poor people. No-one really disputes that this is in principle possible. However, as Stiglitz points out in the book that Graham chooses to quote out of context, this doesn't appear to be how the rich have in fact got rich over the past decade or two.

Re: Economic Inequality

#516

Post by gotchange » Sun, Jan 03, 2016, 1:05 PM UTC

arximboldi wrote: post #444

Interesting rhetoric: first, PG ridicules people that fight inequality by using a straw man, to then call then infantile (ad hominem) and call for an us vs them, wolves and hunters, Silicon Valley against the world, in the most Goebbelian style. But most infantile is his metaphor of the chair maker. Yes, we know in fact that economy is not zero sum game. But economic inequality is not generated by chair makers that g…

> PG, you are not a wild animal in a room of hunters. It's more like you are the hunter, and this is a bait that we won't bite.

I like this line very much. Paul has this notion that he and the rest of the members of his social class that they're victims of the persecution of commoners and that he and his fellows have the right to defend themselves against those evil poor people who want to do them harm when it's actually them and their economic policies that he's championing that are damaging and hurting people occupying the lower rungs beneath them.

Re: Economic Inequality

#517

Post by gotchange » Sun, Jan 03, 2016, 1:24 PM UTC

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…

The problem with your argument is that you make it sound like it's inevitable that the net effect of automation on the welfare of human societies will be positive in the past, present and the future and while the other party questions this assertion and IMO he's legitimate reasons to be skeptic of this claim that automation was, is and will always be a good thing.

Also, can you tell me what would happen to the work force when most of the jobs in the services sectors will be automated?

Because as I see it, jobs in the agriculture and manufacturing - to greater extent - sectors are almost extinct and their counterparts in the services sector are on the way, the so-called quaternary sector can't absorb all the surplus and masses of labor that will sit idle because the the nature of that sector of the economy is that it's more of capital intensive and labor averse and can't create enough job opportunities to an ever growing human population and work force.

What would be the solution to this problem then?

Re: Economic Inequality

#518

Post by lostsock » Sun, Jan 03, 2016, 1:24 PM UTC

IkmoIkmo wrote: post #149

paulpauper wrote: post #91

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.

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 agains…

While I agree that a higher IQ does not nessicarly equate to high wealth every source I could find in a quick Google search seems to show a near linear correlation between IQ and income. I'd say this backs up what the GP was saying. For most very "wealthy" people it is built over many generations and passed down.

Re: Economic Inequality

#519

Post by lostsock » Sun, Jan 03, 2016, 1:27 PM UTC

efaref wrote: post #111

braythwayt wrote: post #23

Earlier quoted context omitted.

Not exactly. Before the woodworker builds the chair, they have some wood. The value of the wood is less than the value of the chair. So building the chair increases the total value of the economy. The actual sale of the chair to someone else is a NOOP, it’s just shuffling assets around.

That depends on the supply and demand ratios of wood and chairs. A chair isn't intrinsicly worth more than wood, and by making chairs you dilute the value of chairs. If I make a trillion chairs, I'll have to drop the price of them to sell them, and the bottom will fall out of the chair market. Meanwhile, wood will become scarce and the price of that will go up. You'll probably even end up with an industry of people d…

> and the bottom will fall out of the chair market

Please tell me that was intentional?

Re: Economic Inequality

#520

Post by mrchicity » Sun, Jan 03, 2016, 1:44 PM UTC

Mikeb85 wrote: post #226

So much material, so little time (today, for me at least). A few of his key points that I noticed: > In the real world you can create wealth as well as taking it from others. A woodworker creates wealth. He makes a chair, and you willingly give him money in return for it. A high-frequency trader does not. He makes a dollar only when someone on the other end of a trade loses a dollar. Not surprising that he uses this…

I'd argue that a robust and liquid financial market does "create wealth" in that it opens up new strategies that were previously too costly. For example, due to lower spreads, automated pricing, and decreased transaction costs, it is now cheaper than ever before to rebalance one's portfolio frequently to avoid over-exposure to certain sectors, gain exposure to more diversified international markets through ETFs, etc. etc.

A lot of this even has ties to the real physical economy. With a tight liquid market on the screen, commodity producers/consumers can adjust their oil/grain/gas hedges in real-time, retailers can manage their foreign exchange exposures and make live adjustments as orders arrive, and so on. Just makes the economy more efficient and reduces "slop" where end users built up risk exposures they didn't really want because hedging it was so expensive.

And I agree the HFT is creating value, especially market-making HFT. Absent his bid or offer, you would either lose more money paying a higher spread, or lose more in opportunity cost wasting time to wait for another trader on the other side. People who trade with them "lose" like people buying insurance "lose." Not everyone has the same utility function.