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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”

#21

Post by ZenoArrow »

innocentoldguy wrote: post #14
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.

> "There is plenty of evidence for that as well."

Okay, can you show me some evidence?

> "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."

Both of those are examples of tax dodges. Maximum wage is different, in that people would be required to live in the country they made their main income in. Sure, you could move to the Cayman Islands, but good luck finding enough work there.

We should be closing tax loopholes too, it's not an either/or situation, we can do both.

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

#22

Post by lisper »

solomatov wrote: post #7

>while this report by the OECD found that “income inequality has a sizable and statistically significant negative impact on growth. Actually it doesn't do this. It shows that income inequality is associated with lower economic growth. Mixing correlation and causation.

Except that the data support a particular theory: extreme income inequality limits growth because growth is ultimately driven by broad-based consumption. If there's a plausible theory purporting to explain how the causality could possibly be the other way around, I haven't heard it.

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

#24

Post by ZenoArrow »

shitgoose wrote: post #20
ZenoArrow wrote: post #10

Earlier quoted context omitted.

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?

Let's use a hypothetical example. We bring in the wage cap, some wealthy people move elsewhere. Let's say one of the wealthy people ran a profitable supermarket. Are you saying we couldn't find someone who lived in the country to run a supermarket in the same location?

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

#25

Post by zappo2938 »

danhak wrote: post #16

> 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 the…

I can't think of anything more democratic than using money to vote on how to best allocate resources. The reward for doing well is to get more money to decide how that should then be allocated. This system works great until it crosses a threshold when the most talented consolidate the ability to decide how to best allocate resources into a small group of people. A small group of billionaires deciding how to allocate resources is better but not by much than a small group of people at the Gosbank in the Soviet Union deciding how to allocate resources. Progressive taxation is a good solution. We just need to tweak it until it works effectively. Unfortunately, we have gone in the wrong direction for past couple decades.

I grew up in a scientific community. People innovated and did research because they were passionate about knowledge and learning. Of course, some of them went on to create startups like Biogen but money was never the biggest motivator. I don't buy the argument that taxing the wealthy slightly more than now stifles innovation.

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

#27

Post by solomatov »

lisper wrote: post #22
solomatov wrote: post #7

>while this report by the OECD found that “income inequality has a sizable and statistically significant negative impact on growth. Actually it doesn't do this. It shows that income inequality is associated with lower economic growth. Mixing correlation and causation.

Except that the data support a particular theory: extreme income inequality limits growth because growth is ultimately driven by broad-based consumption. If there's a plausible theory purporting to explain how the causality could possibly be the other way around, I haven't heard it.

There might be other factor affecting both inequality and economic growth. For example, consider culture, natural resources, climate, etc. If you can't find a plausible way to explain something (inequality causes lower economic growth), it doesn't mean that there's no other way to explain it. Actually, the history of science shows that explanation of effects might be very surprising.

P.S. My comment doesn't support one side or the other. I am just pointing to a logical mistake.

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

#28

Post by EliRivers »

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?

As far as I can tell, he does not have a history of taking all the money and blowing it on himself. Whatever he's still working for, it's not because he wants extra money for spending. He clearly has some motive other than just wanting more money to blow.

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

#29

Post by dinkumthinkum »

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.

How about maybe that is sort immoral, let alone not serving any purpose of economic inequality. Now, your destroying entire industries for people that make things for multi-millionaires. Its just terribly naive, I'm not sure what this would achieve. Honestly, I'm not sure why you do not just argue for outright communism.

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

#30

Post by sradu »

Coming from a former communist country, I don't understand why smart, capable people want to give away their money to a corrupt, incompetent state to manage it for them.

The US is fundamentally different than Nordic countries, where socialism appears to be working: * The Nordic countries are tiny compared to the US. * They are highly educated. * Their society is homogenous.

It seems like everybody is assuming that there will be this rational actor collecting money from the rich and distributing them to the poor.

What actually is going to happen is that instead of entrepreneurs becoming rich, politicians will grow even richer than they are now. The politicians will have more power, power that they want to keep, and the only way to do that is to suppress the press and the people.

And that's how communism starts. It might sound like I'm taking it too far, but it's happened a number of times already.

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