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IT is the cause of rising income and wealth inequality since the 1970s [pdf]

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Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#21

Post by Sholmesy »

jstanley wrote: post #12
coldtea wrote: post #11

Earlier quoted context omitted.

Serious question: who says it "makes everyone better off"? Fancy new technology is not of much comfort to people who back in the day could buy a house and send their kids to college with a single blue collar income-earner and now can hardly find a job (and can't even dream of sending their kids to college with their puny earnings). > if technology makes everyone better off but increases inequality, is that a bad outc…

If you can't keep up, that's not other people's fault for being better than you.

This is such an ignorant statement, it makes my blood boil.

People shouldn't be left to die, because they weren't naturally blessed with an adaptability that allows them to be retrained into software engineers. There are a huge number of reasons why someone might not be able to "keep up" in todays world. To write that off as 'being better' is disgusting.

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#23

Post by [deleted] »

m12k wrote: post #18

Here's another possibility: The highly increased value of intellectual property that comes from IT has made transfer pricing a much more efficient means of tax avoidance for companies, who are free to move almost all their profits to the Cayman Islands and other tax havens. Expecting our tax authorities to judge whether a trade between two subsidiaries of a multinational is at 'fair market value' makes sense if they'…

[deleted]

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#24

Post by throwayawnotime »

dang wrote: post #4
polotics wrote: post #2

Infuriating! An high-priest of the church of the economists does his job of exonerating politics from ugly social change, with "IT" as the sacrificial goat. The obvious counterpunch "what about politics" gets this answer doubling down slimy-leech style: (Quote) A Final Note The IT revolution has brought about improvements in living standards and its great technical achievements enjoy a very high level of consumer and…

Would you please not post ideological rants to HN? Even if you're right, it lowers the quality of discussion below what we're hoping for here. Actually being right makes it worse.

is this censorship? the posted article is clearly ideological

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#25

Post by klodolph »

paulajohnson wrote: post #14
acchow wrote: post #5

Serious question: if technology makes everyone better off but increases inequality, is that a bad outcome? Why or why not?

To answer that you need a way of equating money with "utility" (i.e. the use and/or pleasure that people get from their money). I believe that utility is logarithmic with rate of expenditure. Hence doubling your spending rate gets you a constant increment in utility. This is why we measure pay rises in percent rather than absolute value. Another $100/week would make a huge difference to someone on the breadline, but…

My guess is it would be more of a logistic curve (S-shaped) rather than logarithmic. $1 does not make you much happier than 1¢, but $50k/year is a big step up from $30k/year.

At the low end, at some point you can afford to have a roof over your head, and an extra $20 might mean that you're eating much better for a whole week, or you can buy new shoes, or whatever. But if you're homeless, $20 won't feed you for very long or get you out of the rain for very long.

At the mid range, a salary bump from $30k to $50k might make a world of difference if you're trying to raise a family. It might mean that you're not worrying about how you're going to pay for groceries, or it might mean that your kids are always wearing reasonable, well-fitting clothing.

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#26

Post by xiler »

> The low labor share in the 1980's is then out of line with the rest of our results. However, it is compatible with the fact that wage growth and labor share started to fall early in the 1970's, caused by factors not present in our study. Political factors such as laws to weaken unions, automation, outsourcing, and globalization were operative even before the rise of monopoly power in the 1980's. Hence, by the time monopoly power came into play, wages and labor share were already low. Hence, apart from rising monopoly power, other factors had an impact on the dynamics of wages and labor share which are not examined here.

Indeed when we compare the inequality present in different industrialized nations with varying degrees of unionization, nations with stronger unions seem to have lower inequality despite experiencing an increase in automation. As stated in an IMF report [1]:

Traditional explanations for the rise of inequality in advanced economies are skill-biased technological change and globalization, which have increased the relative demand for skilled workers, benefiting top earners relative to average earners. But technology and globalization foster economic growth, and there is little policymakers can or are willing to do to reverse these trends. Moreover, while high-income countries have been similarly affected by technological change and globalization, inequality in these economies has risen at different speeds and magnitudes.

So perhaps the combination of automation together with weakened unions is responsible for inequality in industrialized nations?

[1] https://www.imf.org/external/pubs/ft/fandd/2015/03/pdf/jaumo...

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#27

Post by apatters »

jstanley wrote: post #12
coldtea wrote: post #11

Earlier quoted context omitted.

Serious question: who says it "makes everyone better off"? Fancy new technology is not of much comfort to people who back in the day could buy a house and send their kids to college with a single blue collar income-earner and now can hardly find a job (and can't even dream of sending their kids to college with their puny earnings). > if technology makes everyone better off but increases inequality, is that a bad outc…

If you can't keep up, that's not other people's fault for being better than you.

The assumption which seems to underly this statement (that failing to keep up signifies some kind of personal inferiority) is fallacious. The fact of the matter is that around 40% of Americans end up in the same income quintile as their parents. Extreme moves in either direction are rare; 4% in the bottom quintile will move to the top and 8% in the top will fall to the bottom. So in fact a large part of someone's ability to "keep up" (e.g., not be poor) depends on whether they were born into wealth in the first place. No matter what level they're born at, most people don't move very far.

Source: https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#28

Post by chongli »

jstanley wrote: post #20
oblio wrote: post #13

Earlier quoted context omitted.

Ok, let's say you're right. 1. Are you willing to leave behind, say, 40-50% of the population? Especially since that group could include people such as your parents or your partner or your kids. 2. If you're willing to leave them behind, what are you going to do with them?

If it's your parent, partner, or kids, (or even if it's not -- it could be anyone) you're welcome to provide for them yourself. You're also welcome to donate to (or even work for!) charities that provide for them. But it's not OK to force everyone else to provide for them.

You ought to familiarize yourself with the social contract. Rich people do not create their wealth in a vacuum. Everybody contributes to the creation of an environment whereby wealth creation is possible. This includes everything from basic utilities, infrastructure (roads & rail), health and safety, education, food security, military etc.

If you want to try your hand at creating wealth without "forcing" others to provide for you, there are plenty of lawless regions in places like Somalia, Syria, and Afghanistan for you to test your mettle. Sound unappealing? There you go.

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#29

Post by nippples »

I really thought it was corrupt politicians giving away public resources to private mega corporations, irresponsible financing systems, wall street selling lel bonds, the undermining of the national working class, bogus copyright laws that are designed to squish small and upcoming competition, and people purchasing garbage degrees instead of useful ones with money they don't have guaranteeing they'll be indebted for at least two or three decades.

But no, it's just IT. How wrong I was.

Re: IT is the cause of rising income and wealth inequality since the 1970s [pdf]

#30

Post by JamesBarney »

klodolph wrote: post #25
paulajohnson wrote: post #14

Earlier quoted context omitted.

To answer that you need a way of equating money with "utility" (i.e. the use and/or pleasure that people get from their money). I believe that utility is logarithmic with rate of expenditure. Hence doubling your spending rate gets you a constant increment in utility. This is why we measure pay rises in percent rather than absolute value. Another $100/week would make a huge difference to someone on the breadline, but…

My guess is it would be more of a logistic curve (S-shaped) rather than logarithmic. $1 does not make you much happier than 1¢, but $50k/year is a big step up from $30k/year. At the low end, at some point you can afford to have a roof over your head, and an extra $20 might mean that you're eating much better for a whole week, or you can buy new shoes, or whatever. But if you're homeless, $20 won't feed you for very l…

Why do you think going from 0k -> 20k makes less of a difference than 30k -> 50k?(And we're talking about consumption not production, so weird things like having government benefits removed don't factor in).
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