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Joseph Stiglitz Says American Inequality Didn’t Just Happen

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Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#71

Post by nitrogen »

scroot wrote: post #11
montrose wrote: post #2

His thesis is that changes in government policy are the cause of the increasing economic inequality in America. But a simple thought experiment is enough to disprove this: imagine what Larry Page would have done in 1950 vs 1998. In 1950 he would have become a professor or gone to work for Bell Labs. In 1998 he was able to start his own company and become a billionaire. But it wasn't changes in government policy that…

> But it wasn't changes in government policy that made this possible. It was the rise of microcomputers and networks that made this possible The history of computing is precisely one of government policy, namely the ARPA funding from the 60s and early 70s.

Microcomputers came in part from the homebrew computer scene in the 70s.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#72

Post by sunstone »

There will always be a few companies that make outsized margins due to unique market circumstances. These would include the likes of Google, Amazon, Boeing and Disney for example. But companies like these are a red herring when trying to get to the root cause of inequality in America.

The real cause is the regulatory capture of the Republican party by business generally and the subsequent maintaining of that process through, first, gerrymandering and subsequently, gaming appointments to the Supreme Court.

It will be a difficult and long process to reverse this attack on the public interest.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#73

Post by salawat »

lajhsdfkl wrote: post #54
InitialLastName wrote: post #35

Earlier quoted context omitted.

What's the economic value of the World Wide Web? How tiny a portion of that should we really allocate to the innovators who create the concepts our economy is built on?

So do you have an actual proposal for how we should be rewarding these people? Your rhetorical question provides no value. I want to know how we should decide who should be rewarded, how we can obtain the money to reward them and what benefit does rewarding them in this fashion provide to society.

That's a bit disingenuous.

Not all rewards need be monetary or zero-sum.

Also, one does not reward someone to provide a benefit to oneself. THAT is thinking that creates the greatest inequality in our system if you ask me.

Oh, let me pay this employee... but wait! That money goes right into a retirement account, that invests in an index fund, that supports me and my business partners...

A reward is something given at a COST to another in recognition of their accomplishment. You give it without thought of a return, because what they have done is made your life better.

The fact no one in economics wants to think through the money trail thoroughly doesn't change that the corporation is no longer a provider of services as it's primary goal... It is an enricher of the few who jump on the equity train.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#74

Post by aphextron »

kevin_thibedeau wrote: post #24
aphextron wrote: post #17

Earlier quoted context omitted.

>This appears to prove Stiglitz' point doesn't it? There was no deficit of innovation in the mid 20th century, all without massive economic inequality. The main argument of Keynesianism always comes down to the baseline of wealth for all people though. The average person today is far wealthier than the average person in 1950, and that's the real goal. Not necessarily equality of outcomes for each individual.

I make less today than my entry level junior engineer salary 20 years ago after adjusting for inflation and cost of living. All ships do not necessarily rise. Wage and salary suppression is a real thing and will eventually bring our society to the breaking point. We are just beginning to feel the first tremors.

>I make less today than my entry level junior engineer salary 20 years ago after adjusting for inflation and cost of living. All ships do not necessarily rise.

Yet a person in the third world is now able to feed a whole family and live in relative comfort even on the cut rate salaries of outsourced programming work. The point is that as long as the total amount of wealth generated in the world increases, the ends justify the means.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#75

Post by TangoTrotFox »

I think the first thing that conversations like this need are data. I ran into this [1] when actually searching information on the chiseling out of the middle class. And that paper does describe that. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. There's even been a chiseling out of the middle class as a whole declining from 38.8% of society to 32% of society.

But the eye opener is this. This is the change in the size of each economic group between 1979 and 2014 as a percent of the total population:

- Rich: 0.1% -> 1.8%

- Upper Middle Class: 12.9% -> 29.4%

- Middle Class: 38.8% -> 32%

- Lower Middle Class: 23.9% -> 17.1%

- Poor or Near-Poor: 24.3% -> 19.8%

Statistics like this are certainly subject to biased interpretation and 'massaging'. If one is curious about the source, wiki has a section on the political stance of the Urban Institute [2]. Though the paper itself is very transparent in their methodology and extremely readable. I found it all eye opening to the point that it actually changed my worldview.

[1] - https://www.urban.org/research/publication/growing-size-and-...

[2] - https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#76

Post by lumberjack »

Is this not true everywhere though? The only difference is that in some countries, you have 80% of the population within one tax bracket of each other, so it is really hard to pass legislation that will piss off 80% of the electorate. In more unequal countries, you have more stratified demographics, so you can pass individualized legislation that will only attack one tax bracket at a time, thus ensuring that you do not piss off too much of the electorate in one go.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#77

Post by TangoTrotFox »

sokoloff wrote: post #7

I half wonder if the issue of inequality is that America may have a fatter right tail on the distribution rather than an ever-narrowing tail. Instead of only having the Rockefeller, Vanderbilt, etc 0.001% wealthy, we have a 5-6% band of households who are millionaires[0] and that makes the wealth more visible when it’s a handful of people in your town or social circle than when it was only a handful of people in the…

I also wondered the same thing and sought out data on it a while back. I provided those data in this thread here [1]. The gist of it is that our hypothesis does seem to be supported by the data.

And I think it makes sense if you consider things in a thought experiment. In a nation with a king and a 100 impoverished citizens inequality would be mostly invisible. But now imagine our king decides he's been cruel keeping everything to himself. And so he decides to grant 10 of the citizens great tracts of lands means of production. Well now the inequality would become quite a bit more visible. Instead of just one king you now have 10% of the entire population living in the lap of luxury.

The king realizes this is a problem and so decides to greatly expand the holdings of these 10 individuals and now grant an additional 30 individuals holdings comparable to what the 10 prior had. So now you have a king, 10 incredibly wealthy individuals, 30 wealthy individuals, and 60 commoners. But of course the problem becomes even more apparent. Now an entire 40% of the population is living in luxury while 60% feel completely left out. What made those 40% so special anyhow?

As more and more people make their way to the top, even as a percent of society, the apparent inequality somehow grows. This feels paradoxical because if we look at things objectively society has become vastly better off as a whole, yet it would feel quite the opposite. And that does seem to be exactly what is happening to America today.

[1] - https://news.ycombinator.com/item?id=16952930

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#78

Post by UncleEntity »

ComradeTaco wrote: post #52
UncleEntity wrote: post #43

Earlier quoted context omitted.

> It's certainly possible I'm overlooking some larger aggregate effect because I'm not taking a far enough step back. Inflation has a large aggregate effect, the people who first get the newly minted dollars can spend them at the current dollar value before their distribution dilutes the value of the dollar as a whole. The effect of each newly created dollar may be immeasurably small but over time may result in thing…

High inflation benefits those who have high debts and little savings. Low inflation benefits wealthy people with minimal debt and large savings. The federal reserve driving limited inflation has occurred for around 100 years, and the time in America with the least income inequality fell squarely in the middle during the 1950s and 1960s. The Federal Reserve and it's monterary policies aren't the issue.

I can actually use that exact same argument to claim the opposite.

The federal reserve driving high monetary inflation (ie low interest rates) has fallen squarely in the times of the most income inequality, the 1920's and today.

The Federal Reserve and its monetary policies can not be ruled out as the issue.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#79

Post by bmpafa »

lumberjack wrote: post #76

Is this not true everywhere though? The only difference is that in some countries, you have 80% of the population within one tax bracket of each other, so it is really hard to pass legislation that will piss off 80% of the electorate. In more unequal countries, you have more stratified demographics, so you can pass individualized legislation that will only attack one tax bracket at a time, thus ensuring that you do n…

Unless you can short-circuit that system by convincing the lower tax brackets that their success hinges on minimizing the taxation of the top-bracket.

Then the whole thing just sort of goes to hell.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#80

Post by lajhsdfkl »

coldtea wrote: post #69
lajhsdfkl wrote: post #54

Earlier quoted context omitted.

So do you have an actual proposal for how we should be rewarding these people? Your rhetorical question provides no value. I want to know how we should decide who should be rewarded, how we can obtain the money to reward them and what benefit does rewarding them in this fashion provide to society.

> So do you have an actual proposal for how we should be rewarding these people? Sure. An innovation tax, and a group of cross industry and academic people (e.g. a mix of successful founders, engineers, great researchers, Nobel winners, plus a jury of common folk etc) that decides, every e.g. 5-10 years, who gets to share the money among a shortlist of potential benefactors. "Hmm, looks like this Turing person did go…

And this innovation tax takes priority over all of the other things that need to be funded? What about the millions without healthcare? Also are we really going to trust some bureaucratic institution to dispense billions of dollars in a fair manner?
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