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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]

#31

Post by [deleted] »

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…

[deleted]

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

#32

Post by JamesBarney »

ageek123 wrote: post #6
acchow wrote: post #5

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

Some people will claim you can get both innovation and equality if you just throw in enough redistribution, but this is completely delusional.

Yeah only pinko hippies like the IMF believe that :)

https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf

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

#33

Post by mamon »

chongli wrote: post #28
jstanley wrote: post #20

Earlier quoted context omitted.

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 pr…

Are you suggesting that rich people use those utilities like education or infrastructure for free? Because I'm pretty sure that they already pay for them, in taxes or otherwise. And of course their companies also PROVIDE some of the services you mentioned.

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

#34

Post by jupp0r »

trhway wrote: post #3

industrial revolution, IT, next is AI (in all shapes, from self-driving to self-kidney-transplanting to self-QM and space-exploring) ... and that is the emotional foundation of that scene from the "AI". Though cyborg-ization of people may open other options. May be it will be natural that "all cyborgs are equal" as a result of being connected to the same global AI net, etc... Though most probably the cyborgization wo…

Are you implying that all countries except the US were poor in the 1950s? While the US was at the head of the per-capita GDP ranking in 1950, there were others that followed close: http://www.nationmaster.com/country-info/stats/Economy/GDP-p...

Notably Venezuela was 4th, which seems especially sad given the recent developments there.

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

#35

Post by timgrahamtech »

acchow wrote: post #5

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

Consider the question in a different context. Suppose I go to a poor village in India and I give each school age kid the equivalent of 10 USD in INR (rupees) but I give one kid the equivalent of 500 USD. Let's suppose the kid who gets more isn't chosen at random. Suppose that I have some criteria for who deserves to get more but that I don't consider who deserves it the most. Everyone got something but one person got significantly more. Is that a bad outcome? Will the kids who got 10 USD feel satisfied knowing that most of the others got the same amount? Will the kid who got 500 USD start to tell the others that they would have gotten 500 USD too if only they had done XYZ?

I think this question is really just asking if inequality is bad. It seems to me that inequality is an inherent part of nature in general and the human condition in particular. "Would you really want equality, or are you ok with inequality at some level?" Another way to say equal is homogeneous. To rephrase it, "Would you want everyone to be the same, or do you value diversity instead?"

I would propose a different question. If some cause (technology in this case) has the effect of helping everyone but helps some substantially more, is this situation sustainable? Then consider, will everyone's fortunes continue to improve forever? Will some equilibrium in the inequality be established? Will the inequality eventually reach an extreme such that the situation will be worse for certain people or society as a whole?

I don't propose answers to these questions. However, I think we can look through history to find examples of how similar scenarios played out in the past.

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

#36

Post by aembleton »

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'…

I'd like to see corporation tax replaced with a Border Adjustment Tax [1]. The tax would be paid on the result of USA Revenue - USA Costs. If you were to move intellectual property offshore and licence it from that subsidiary then that would not be a USA Cost and therefore would not be deductible. If you brought it back onshore then it would only be deductible if there was a cost. If you moved into another company within the US, then it would be a cost but that company would then need to pay tax on that revenue minus the minimal costs that it would incur to store IP.

1. http://www.investopedia.com/terms/b/border-adjustment-tax.as...

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

#37

Post by igravious »

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 severely disabled, we should provide zero social supports for them and their families so?

It's nobody's fault that they're garbage people. Luck of the lottery.

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

#38

Post by d--b »

This is a very long, very technical article. I really won't understand much of it as it is now. And that's a pity because this is a question that needs to be understood and debated.

I think that unless there is a digestible version of the arguments along with the general counter arguments, it's not a very useful read. And comments are just going to be undocumented reaction to the title...

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

#39

Post by ben_w »

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…

At current exchange rates, $20 will provide 39 days worth of food to someone in the UK (assuming the only thing they care about it calories and not vitamins, as this is the Tesco Value Digestive Biscuits Diet — I have no idea if homeless people would eat like that).

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

#40

Post by amelius »

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…

I suppose there is also a psychological component to it. If your neighbor is making 10x the amount of money and doing 1/10 the amount of work, then that's a real problem there. So even in relatively rich countries where everybody has enough food and medical care, inequality can be a problem.
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