How Paul Graham Gets It Wrong in “Economic Inequality” • Hacker News Board

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

#41

Post by evgen » Sun, Jan 03, 2016, 9:11 PM UTC

sradu wrote: post #30

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 th…

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.

Because the state is neither corrupt nor incompetent; this is the big fear of the cyber-selfish libertarians you will find on HN. Tell you what, why don't you start your rant with a list of these rich politicians who will grow even richer. Just a single name please.

No, this is not how communism starts. If you knew anything about the history of your own country (doesn't even matter which country this is) this would be readily apparent. Rich people becoming even richer and using the aparatus of the state to enshrine the power of their family or tribe is usually the outcome of a coup or war. Communism usually starts with a lot of rich people who did not make the last flight out having a short lean against a dusty wall somewhere after their family has spent several generations giving everyone in the country a reason to want to see their spleen paraded around the capital on a stick.

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

#42

Post by ZenoArrow » Sun, Jan 03, 2016, 9:14 PM UTC

dinkumthinkum wrote: post #29

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.

> "How about maybe that is sort immoral"

How is it immoral to set upper and lower bounds on what people can earn? Do you really think it's immoral that someone can only earn 1000x more (for example) than the poorest amongst us? Do you really find that oppressive?

> " Now, your destroying entire industries for people that make things for multi-millionaires."

You're not destroying industries, you're curbing the rate at which private wealth can be accumulated.

> "Honestly, I'm not sure why you do not just argue for outright communism."

Setting a maximum wage is socialist, but socialism is a broad church, communism is not the only system in the socialist umbrella.

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

#43

Post by douche » Sun, Jan 03, 2016, 9:16 PM UTC

ZenoArrow wrote: post #39

dinkumthinkum wrote: post #34

Earlier quoted context omitted.

I think you are missing basic principles of economics. Your arbitrary cap on income would move companies and jobs to countries free of weird policies like that.

If old companies move, new companies would spring up to take their place. The reason this would happen is because the demand is still there. People don't stop buying clothes just because a clothes shop stops trading in their country.

They do if the industry leaves, and the wealth creation that that industry provided dries up.

Look at the Rust Belt.

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

#44

Post by brushfoot » Sun, Jan 03, 2016, 9:18 PM UTC

This seems like the exact type of confusion Graham mentions. E.g., what does Bannon's insistence that public education is necessary have to do with Graham's essay? Graham clearly is not arguing against social programs or a mixed economy.

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

#45

Post by OmarIsmail » Sun, Jan 03, 2016, 9:20 PM UTC

It is insane (and also very educational) that so many people are completely missing pg's point - author of this response included.

I blame pg a little for using the phrase "income inequality" at all since it seems to be a trigger for many people and shuts down their critical reading and reasoning abilities. Let me try to phrase it in a clearer way.

If you focus on reducing "income inequality" then you will reduce income inequality, but that will have many negative unintended consequences (killing startups at the extreme, etc). Instead, people should focus on the REAL problems which is lack of economic opportunity, crushing poverty, and political corruption.

The real solutions all come from helping the people at the lesser end of the inequality equation without having to touch many of the people at the greater end. Universal healthcare, universal education (day-care/pre-school/public schools/job retraining), universal basic income. Just those three policies alone would have an unimaginable positive impact on whatever country institutes them. And my guess the money for these things already exists if you eliminate ridiculous wasteful spending, subsidies, etc.

If, at the end of day you eliminate wasteful spending and there is still a shortage of funds for these programs, then sure increase taxes on the wealthiest. My guess is that many would be fine with it (since it's going to a "good" cause).

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

#46

Post by ZenoArrow » Sun, Jan 03, 2016, 9:20 PM UTC

douche wrote: post #37

ZenoArrow wrote: post #11

Earlier quoted context omitted.

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).

What are you going to do, confiscate inheritances? The government has already taken their cut of the wealth that goes into an inheritance on the first go-around, and they are actively eroding it already by printing additional money and inflating the currency. They shouldn't get to double-dip into the hard-earned and carefully stewarded generational wealth of my family, just because somebody died. Sure, it feels good…

> "What are you going to do, confiscate inheritances?"

You can call it that if you want. With regards to inheritance, I'm suggesting setting a maximum amount that any single individual can inherit. The rest can go towards funding public infrastructure.

> "Sure, it feels good to say somebody who was born into the lucky sperm club isn't entitled to the fruits of their wildly successful parents' labors. But I'd rather bring up the floor than pull down the ceiling."

I'm not arguing for everyone to be poor, I'm suggesting that there should be a limit on how much richer someone can be. It's the ratio which is important. If a ratio is set, and you want to raise the upper bound, all you need to do is raise the lower bound along with it.

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

#47

Post by trav4225 » Sun, Jan 03, 2016, 9:21 PM UTC

danhak wrote: post #40

Pyxl101 wrote: post #38

Is economic inequality a problem in and of itself? Why? Economic quality seems like a red herring for actual issues like how well off people are. Is the actual concern about how poorly off the poor are? Imagine a thought experiment where aliens come to earth and give every human 100x the resources they have currently (or 100x a year's min wage), as an annuity. The poor are all now rich, and the wealthy can buy their…

The issue is always inequality and not absolute wealth, so your hypothetical of everybody having 100x the resources is not fundamentally different than the current situation. The issue is that wealthy people do not have a monopoly on talent, good ideas or intelligence. But they have a monopoly on power and influence. Society therefore suffers when the best ideas do not necessarily compete on an equal basis within the…

I think many of us agree that "society therefore suffers when the best ideas do not necessarily compete on an equal footing". Where many of us disagree is regarding the extent to which we have the moral license to do anything about it policy-wise.

Just my 2¢ :)

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

#48

Post by DevX101 » Sun, Jan 03, 2016, 9:22 PM UTC

danhak wrote: post #40

Pyxl101 wrote: post #38

Is economic inequality a problem in and of itself? Why? Economic quality seems like a red herring for actual issues like how well off people are. Is the actual concern about how poorly off the poor are? Imagine a thought experiment where aliens come to earth and give every human 100x the resources they have currently (or 100x a year's min wage), as an annuity. The poor are all now rich, and the wealthy can buy their…

The issue is always inequality and not absolute wealth, so your hypothetical of everybody having 100x the resources is not fundamentally different than the current situation. The issue is that wealthy people do not have a monopoly on talent, good ideas or intelligence. But they have a monopoly on power and influence. Society therefore suffers when the best ideas do not necessarily compete on an equal basis within the…

Multiplying everyone's MONEY by 100x wouldn't make any difference, but multiplying everyone's RESOURCES (what OP said) by 100x would absolutely make a big difference in human society.

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

#49

Post by ZenoArrow » Sun, Jan 03, 2016, 9:22 PM UTC

douche wrote: post #43

ZenoArrow wrote: post #39

Earlier quoted context omitted.

If old companies move, new companies would spring up to take their place. The reason this would happen is because the demand is still there. People don't stop buying clothes just because a clothes shop stops trading in their country.

They do if the industry leaves, and the wealth creation that that industry provided dries up. Look at the Rust Belt.

> "Look at the Rust Belt."

http://www.thedailybeast.com/articles/2014/12/07/the-rustbel...

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

#50

Post by Pyxl101 » Sun, Jan 03, 2016, 9:23 PM UTC

danhak wrote: post #40

Pyxl101 wrote: post #38

Is economic inequality a problem in and of itself? Why? Economic quality seems like a red herring for actual issues like how well off people are. Is the actual concern about how poorly off the poor are? Imagine a thought experiment where aliens come to earth and give every human 100x the resources they have currently (or 100x a year's min wage), as an annuity. The poor are all now rich, and the wealthy can buy their…

The issue is always inequality and not absolute wealth, so your hypothetical of everybody having 100x the resources is not fundamentally different than the current situation. The issue is that wealthy people do not have a monopoly on talent, good ideas or intelligence. But they have a monopoly on power and influence. Society therefore suffers when the best ideas do not necessarily compete on an equal basis within the…

Excellent! Thank you for clarifying. It sounds like the concern is that some people hold a monopoly on power, such that good ideas don't compete on their merits. Is that a good way of saying it?

I ask because that problem does not seem to me to be directly related to income equality.

In communist societies everyone had very similar income, and yet a small group had all the power and functioned as kingmakers in business. Or even outside communism, simple corruption: for example, until the 90s you needed a very hard-to-get license in order to start a business or do business at all in India (known as "license raj"). This stifled their business environment and innovation for decades. This type of problem still affects many countries today, especially corrupt ones.

https://en.m.wikipedia.org/wiki/Licence_Raj

It seems to me that good ideas are capable of flourishing in the US without any gatekeepers getting in the way. It's easier than ever before to start a company. Why do you believe that good ideas aren't already competing effectively on merit? (Examples?) Take Google, Microsoft, Facebook, Uber, etc. Did these not win on merit? Is there a legislative barrier to you starting your own competitor to one of these services?