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Economic Inequality: The Simplified Version

paulgraham.com

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Re: Economic Inequality: The Simplified Version

#101

Post by siberianbear »

jondubois wrote: post #42

Economic inequality is bad because it has a profound negative effect on most people's self-esteem and ability to enjoy life. With high inequality, money becomes more valuable and people start to think of everything in terms of money. Even romantic relationships become money-oriented. It's not uncommon for marriages to break up because of financial reasons. Wealth inequality causes more human suffering than moderate p…

I'm an American who has lived in Russia for a few years. I speak Russian fluently as second language. I've discussed this topic in depth with Russians from various backgrounds.

I think that your point ("People who lived in communist Russia will often tell you that people were happier under communism") is unsubstantiated. I've heard this a FEW times, but mostly from older (60+) unskilled laborers (like taxi drivers) who are simply unable to adjust to the new world.

Almost all Russians realize that their country is better until capitalism. (If you want to call what they have here 'capitalism', it's more like 'crony capitalism').

Nor do I agree with "It is human nature to want equality". Humans will always jockey for status and power. That is human nature. If it can't be done with money, then they will use whatever other kind of social 'currency' exists to try to rise in the hierarchy of status... just like the pigs in 'Animal Farm'... or communist party leaders in the Soviet Union.

Mostly, people are who complaining about inequality are really complaining that they ended up at the bottom of the hierarchy and have how no clue how to or no willingness to climb it.

Re: Economic Inequality: The Simplified Version

#102

Post by giardini »

pfooti wrote: post #73

"And unlike high incarceration rates and tax loopholes, startups are on the whole good." - pg. I'm not sure I buy that claim outright. I'm not sure I like asking whether THING is good based on claims about the goodness of CAUSE OF THING. If hugs caused cancer, would that make cancer good? Not certain, but I do believe it would make hugs less common. The problem with an argument like this is that it does nothing but p…

> do they deserve the sudden windfall cash that they received? Did the VCs who provided the capital deserve that windfall? Do the workers who actually created a lot of the value in question through their labor get compensated proportionally to the value they built?

And does the owner of capital (investor, banker) deserve the profit (s)he gains? As jivardo_nucci said once on this very forum:

The simulation studies of Bouchard & Mezard show that, regardless of initial conditions, wealth distribution ends up a Pareto distribution with a small percentage taking almost all of the goods. The take-away of Bouchard & Mezard's studies: the very rich aren't rich because they earned it (i.e., because they are skillful or knowledgeable), they are rich mostly because they are lucky.

All my life I've assumed that, when people had a going concern or were rich, that they _earned_ their wealth. But Bouchard & Mezard says they're, for the most part, simply very lucky.

If luck, rather than skill, is the source of one's wealth, then has one "earned" that wealth? How can one lay exclusive claim to something given by chance? I would contend that no such claim can be made.

In particular, I would contend that income gained through luck is fair game for government acquisition through taxation, and if it is possible to distinguish that portion of wealth due to skill from that due to luck (and such appears possible), then the "lucky" portion is open game for acquisition to be spent or redistributed as decided by the powers-that-be.

Wealth Condensation: Why the Rich Get Richer (and the poor poorer): http://iwillknow.jesaurai.net/?p=387

The Mathematics of Inequality: https://www.austms.org.au/Jobs/Library4.html

FWIW Bouchard & Mezard are not the only researchers whose models say this:

Chance helps the rich get richer, simulation study finds: http://www.world-science.net/othernews/110722_chance.htm*

Re: Economic Inequality: The Simplified Version

#103

Post by HSO »

spikels wrote: post #99
HSO wrote: post #43

> But economic inequality per se is not bad. Both essays feel like they are built on a strawman argument. Nobody serious said inequality was bad or good, not even Piketty. The discussion is about degrees, and PG adds nothing to it by arguing categorically. That we are talking degrees of inequality is also the reason why economists argue with statistics and do not differentiate much between specific causes or mechanis…

He is not arguing "categorically". You are simply misunderstanding. No strawman. Sorry.

Let me quote from http://www.paulgraham.com/ineq.html:

> 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.

Nobody is arguing "inequality is bad and should be eliminated". People are arguing that inequality has increased too much and should be dialed back. The question is how (and what is a more reasonable level).

> I'm all for shutting down the crooked ways to get rich. But that won't eliminate economic inequality,

Ditto

> And while it would probably be a good thing for the world if people who wanted to get rich switched from playing zero-sum games to creating wealth, that would not only not eliminate economic inequality,

Ditto

> You can't end economic inequality without preventing people from getting rich, and you can't do that without preventing them from starting startups.

The policy debate is not and never was about "ending inequality". It is to find a different level. And the precise reason people are not advocating for "eliminating inequality" is incentives.

As you can see: Strawman. Strawman. Strawman. All the way. Sorry.

Re: Economic Inequality: The Simplified Version

#104

Post by giardini »

ilostmykeys wrote: post #85

In its effort to empower the individual, capitalism has failed to scale. It's not a good design. If it was it would scale to empower most of the 7 billion inhabitants of this planet. What it has managed to do is empower a tiny fraction of the population at the expense of the rest of humanity. Those whom it empowered are neither the most intelligent nor the most helpful. They're just skilled opportunists; our genetic…

Unfettered capitalism has problems. Proponents like it's clean, easy models, but capitalism needs restraints. To blindly claim otherwise at this time in history is foolish and shows one is in a state of denial.

They're just skilled opportunists; our genetic inheritance from our reptilian cousins.

More likely from our primate ancestors, don't you think?

Re: Economic Inequality: The Simplified Version

#105

Post by chubot »

ThomPete wrote: post #97
chubot wrote: post #96

Earlier quoted context omitted.

Um, it doesn't at all? Did you change "income equality" to "economic inquality" ? What is extreme economic inequality vs normal economic inequality? Honest question -- I literally have no idea.

Economic Inequality example. People in Harlem vs. People in Brooklyn. Extreme Economic inequality example. People working in Walmart for less than a working living v.s. the Walmart family or the Koch family.

What are you saying PG is confusing then? He is talking about economic inequality caused by technology.

Are you saying that technology can't cause extreme economic inequality? Comparing a Wal-mart worker vs. Bill Gates, Steve Jobs, or Paul Graham sounds like extreme economic inequality by your definition.

I think you are missing exactly the point of the post, while accusing him of being confused.

Re: Economic Inequality: The Simplified Version

#106

Post by melted »

jondubois wrote: post #92
melted wrote: post #62

Earlier quoted context omitted.

Much of that "people were happy under communism" BS is just that: BS. As anyone past the age of about 30 would tell you, you tend to forget the shitty stuff a lot faster than the good stuff. As a result we often hold these romanticized notions of how things used to be. Yet if you actually go ahead and look at some videos from 20-30 years ago from those parts of the world, you see North Korea. No one seriously wants t…

A lot of what we (the west) believe about communism is shaped by western propaganda (though western propaganda is more about exaggerations and omission of facts than outright lies so you could argue that it's not as bad). If you ask old Russian people who were around at the time, they will often tell you that things were good.

I've done just that, in fact. That lasts exactly until they start remembering in greater detail how things _actually_ were, without all the unfounded nostalgia. And things were pretty fucking harsh even by the modest standards of today's Russia, both economically and politically.

Re: Economic Inequality: The Simplified Version

#107

Post by gethoht »

obrero wrote: post #36
nostromo wrote: post #11

Most people I know that are concerned about economic inequality aren't super bothered by self-made billionaires (Jobs, Zuck, and Gates to a lesser degree.) Mostly they are concerned about dynastic wealth (Waltons, Kochs) particularly when it's economic power intertwined with political power (Kennedys, Bushes, Clintons, Romneys). Outside of San Francisco, where many people feel real downward economic pressure from tec…

Income inequality, unemployment etc. are necessities for that dynastic wealth as well. If you're not going to make money by working and creating wealth, you have to make it as a rentier, expropriating wealth created during surplus labor time of those who do work. It causes a struggle for where the money goes - the worker who created the wealth by their labor, or to the heir in the profit of that expropriated labor ti…

Labor creates all wealth.

Re: Economic Inequality: The Simplified Version

#108

Post by jondubois »

siberianbear wrote: post #101
jondubois wrote: post #42

Economic inequality is bad because it has a profound negative effect on most people's self-esteem and ability to enjoy life. With high inequality, money becomes more valuable and people start to think of everything in terms of money. Even romantic relationships become money-oriented. It's not uncommon for marriages to break up because of financial reasons. Wealth inequality causes more human suffering than moderate p…

I'm an American who has lived in Russia for a few years. I speak Russian fluently as second language. I've discussed this topic in depth with Russians from various backgrounds. I think that your point ("People who lived in communist Russia will often tell you that people were happier under communism") is unsubstantiated. I've heard this a FEW times, but mostly from older (60+) unskilled laborers (like taxi drivers) w…

The part of people that wants equality is what I call human nature, the part that wants personal rewards is our animal part.

Re: Economic Inequality: The Simplified Version

#109

Post by punee »

jondubois wrote: post #92
melted wrote: post #62

Earlier quoted context omitted.

Much of that "people were happy under communism" BS is just that: BS. As anyone past the age of about 30 would tell you, you tend to forget the shitty stuff a lot faster than the good stuff. As a result we often hold these romanticized notions of how things used to be. Yet if you actually go ahead and look at some videos from 20-30 years ago from those parts of the world, you see North Korea. No one seriously wants t…

A lot of what we (the west) believe about communism is shaped by western propaganda (though western propaganda is more about exaggerations and omission of facts than outright lies so you could argue that it's not as bad). If you ask old Russian people who were around at the time, they will often tell you that things were good.

Yeah, it's just too bad we can't ask the (millions of) old Russian people who were around at the time and who got killed. Are you fucking kidding me?

Re: Economic Inequality: The Simplified Version

#110

Post by punee »

gwright wrote: post #90
sethbannon wrote: post #72

Imagine a factory that's dumping large amounts of arsenic into the public drinking water supply -- a factory that can't operate without doing so. Imagine also that studies show small amounts of arsenic are safe, but large amounts in drinking water can cause serious negative health effects. Seeing these studies, someone comes along and proposes a regulation that limits the amount of arsenic this factory is allowed to…

This analogy doesn't work for me. You are equating different amounts of wealth (generally considered a good thing at any level) with different amounts of poison. You also repeat a concern made by many critics of Graham's essay, the connection between wealth and the ability to influence public policy, access to politicians and so on. Positing that the wealth is the source of the problem and suggesting the limiting the…

Oh wow, I'm sorry I missed your comment because for the last few days I've been wondering why no one was asking that.

Why on earth is no one pointing out that the excessive influence of the rich on politics is a problem that has to do with institutions being corruptible, and not with money?

Don't want rich people to influence politicians? Don't give so much power to politicians in the first place.

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