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How Paul Graham Gets It Wrong in “Economic Inequality”

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Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#11

Post by ZenoArrow »

nedwin wrote: post #4
ZenoArrow wrote: post #2

As I said last time this came up, the answer is a maximum wage. We can still set the maximum wage beyond the level of most people (e.g. $1,000,000 per annum after tax). I don't see how it would discourage innovation, but I do see how it'd help curb financial inequality.

Most wealth doesn't come from "wages" or salaries. It comes from inheritance and increasing value of assets. Many high profile CEO's are worth tens / hundreds of millions but take $1 salaries.

Inheritance is a separate issue, but one that you're right to raise. However, there's no reason you can't do both (set a maximum wage and set limits on inheritance).

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#12

Post by bjshepard »

jblow wrote: post #5
ZenoArrow wrote: post #2

As I said last time this came up, the answer is a maximum wage. We can still set the maximum wage beyond the level of most people (e.g. $1,000,000 per annum after tax). I don't see how it would discourage innovation, but I do see how it'd help curb financial inequality.

If you set a maximum wage like that, a lot of what is good in society would not happen because people would not be able to amass capital. For example, you would not have a SpaceX or a Tesla. You would not have Y Combinator as it exists today. You would not even have the video game that I am about to release next month. Yes, there are a lot of jerks who amass capital and do nothing with it or who do irresponsible thin…

You might also have space colonization or a world without cars?

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#13

Post by DannoHung »

jblow wrote: post #5
ZenoArrow wrote: post #2

As I said last time this came up, the answer is a maximum wage. We can still set the maximum wage beyond the level of most people (e.g. $1,000,000 per annum after tax). I don't see how it would discourage innovation, but I do see how it'd help curb financial inequality.

If you set a maximum wage like that, a lot of what is good in society would not happen because people would not be able to amass capital. For example, you would not have a SpaceX or a Tesla. You would not have Y Combinator as it exists today. You would not even have the video game that I am about to release next month. Yes, there are a lot of jerks who amass capital and do nothing with it or who do irresponsible thin…

I don't think the GP's suggestion is smart or good either, but I don't see how it would fail to allow for capital accrual.

It's not like you have to pay yourself all your earnings in wages as the owner of a business.

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#14

Post by innocentoldguy »

ZenoArrow wrote: post #2

As I said last time this came up, the answer is a maximum wage. We can still set the maximum wage beyond the level of most people (e.g. $1,000,000 per annum after tax). I don't see how it would discourage innovation, but I do see how it'd help curb financial inequality.

If we set a maximum wage, driven people would simply move to another country. There is plenty of evidence for that as well. The Beatles, for example, came to America to avoid the grievous taxes being levied in England. U.S. companies locate offices in more tax-friendly locales all the time too.

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#15

Post by ZenoArrow »

schmichael wrote: post #6
ZenoArrow wrote: post #2

As I said last time this came up, the answer is a maximum wage. We can still set the maximum wage beyond the level of most people (e.g. $1,000,000 per annum after tax). I don't see how it would discourage innovation, but I do see how it'd help curb financial inequality.

Problems with this: 1. "wage" is ambiguous to the point of useless given: executive compensation isn't solely in the form of salaries, a complex tax code, and wealth begets wealth (it's relatively easy to maintain wealth once you're able to reap more from safe investments than it takes you to live). 2. even if #1 could be solved with some complex formula, it's very easy to argue a maximum imposes a hard limit on how…

> "Elon Musk could surely easily hit the limit without all of his current ventures. What would be the incentive for him to continue to innovate once he's reached the limit?"

Whilst I can't speak directly for Elon, it does appear that his work is targeted at benefitting mankind. I'm sure that is plenty of incentive on its own.

> "wage" is ambiguous to the point of useless given: executive compensation isn't solely in the form of salaries, a complex tax code, and wealth begets wealth (it's relatively easy to maintain wealth once you're able to reap more from safe investments than it takes you to live)."

Sure, there will be loopholes, but let's start with the basics and wait for the loopholes to emerge. Tackling wages and inheritance should be enough to start off with.

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#16

Post by danhak »

> Further, there are an abundance of studies that show that reducing economic inequality (even through redistributive means) actually boosts overall prosperity.

To me, this sentence and the ones that follow are by far the most salient point.

How many Zuckerbergs, Gates, Brins, Pages and Bezos are we missing out on due to the fact that huge swaths of our country do not have the ability to fully explore and develop their talents? How many trillions in lost GDP does that amount to?

To me, this entire debate is a missed opportunity to discuss inequality on the basis of shared wealth, growth and prosperity. Instead we tend to debate these things on a moral dimension which immediately politicizes and polarizes the matter. See renewable energy for another example of how that works.

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#17

Post by tahssa »

jblow wrote: post #5
ZenoArrow wrote: post #2

As I said last time this came up, the answer is a maximum wage. We can still set the maximum wage beyond the level of most people (e.g. $1,000,000 per annum after tax). I don't see how it would discourage innovation, but I do see how it'd help curb financial inequality.

If you set a maximum wage like that, a lot of what is good in society would not happen because people would not be able to amass capital. For example, you would not have a SpaceX or a Tesla. You would not have Y Combinator as it exists today. You would not even have the video game that I am about to release next month. Yes, there are a lot of jerks who amass capital and do nothing with it or who do irresponsible thin…

Capital accumulation can still happen without wage accumulation. Just don't pay yourself too much and keep the money inside the business. Naturally the money will get spent on building things like tesla.

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#18

Post by gkop »

anateus wrote: post #9

Although PG makes a few turns of phrase, one of which is quoted in OP, that implies a straw-man who wants to end all economic inequality, he also talks several times about tackling the effects of economic inequality. The footnote in OP referring to studies that cover the negative effects on economic inequality supports rather than disproves PG's stance on this: economic inequality has multiple negative effects. One o…

> The footnote in OP referring to studies that cover the negative effects on economic inequality supports rather than disproves PG's stance on this: economic inequality has multiple negative effects.

No, that's the inverse causation of PG's stance. PG said "There are lots of things wrong with the US that have economic inequality as a symptom."

If we all agreed that economic inequality is the cause then nobody would be complaining about framing the conversation around economic inequality.

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#19

Post by schmichael »

ZenoArrow wrote: post #15
schmichael wrote: post #6

Earlier quoted context omitted.

Problems with this: 1. "wage" is ambiguous to the point of useless given: executive compensation isn't solely in the form of salaries, a complex tax code, and wealth begets wealth (it's relatively easy to maintain wealth once you're able to reap more from safe investments than it takes you to live). 2. even if #1 could be solved with some complex formula, it's very easy to argue a maximum imposes a hard limit on how…

> "Elon Musk could surely easily hit the limit without all of his current ventures. What would be the incentive for him to continue to innovate once he's reached the limit?" Whilst I can't speak directly for Elon, it does appear that his work is targeted at benefitting mankind. I'm sure that is plenty of incentive on its own. > "wage" is ambiguous to the point of useless given: executive compensation isn't solely in…

Perhaps a better critique of a maximum wage would be:

What does it solve that graduated income, property, and estate taxes do not?

I can't imagine it could possibly be any less complex than a tax code since it needs to contain the same estimations of wealth ("wage" in your approach).

Re: How Paul Graham Gets It Wrong in “Economic Inequality”

#20

Post by shitgoose »

ZenoArrow wrote: post #10
xyzzy4 wrote: post #3

Earlier quoted context omitted.

It would discourage innovation for a lot of reasons, and one is that high earners would move to other countries.

If they want to move, let them. The opportunities for making money would still be present. There's a bizarre notion going around that protecting the economy requires protecting the rich. However if you look at it, it doesn't make any sense. The strength of an actor in the economic system is directly related to their participation in that system. The rich are where they are because they hoard more of their wealth. Hoa…

"The opportunities for making money would still be present."

who will take advantage of those opportunities? people who take advantage of opportunities to make money have already moved out, haven't they?

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