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Joseph Stiglitz Says American Inequality Didn’t Just Happen

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131–140 of 222 posts

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

#131
When cities were popular places to live, they were expensive places where service workers couldn't afford housing alone in the city center. Clerks, secretaries, and assistants would rent lodgings---often shared rooms---in boarding houses, or attics and spare rooms in other people's houses. Everyone else with less stable jobs, either slept in their place of business If they were lucky, or slept in dormitories, and "flop houses".

In the US, I'd hesitate to call it an improvement when the cities became unpopular, and the newly minted middle class chose to live in the suburbs, with tech parks, and factory parks. Then the poor could live affordably in cities, which people would still go to for entertainment, but crime sky-rocketed, and educational opportunities plummeted till inner city schools were the worst in the country.

To me, the issue of the underclass is systemic. You can't bandage over it with rent-control, or temporary welfare programs. The only way to deal with it is a universal entitlement that anyone, of any income, benefits from like for example universal healthcare which in Europe has leveled out infant mortality rates between the poor and the middle classed.

If we could provide education, food and housing in the same universal way, it would eliminate much of the issue of inequality.

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

#132
post #114

Earlier quoted context omitted.

What is produced now and the services brought now always are for the people living now So farmers should eat their seedcorn now and worry about what to sow only when it’s already the next season?

You already know that your comment is not worth a response, so I'm just curious, why did you write it? There are better forums than HN for such a low level of discussion. Why are you here? Of course, your money savings translate into seeds for farmers... sure. Because if people didn't save money they would eat all the seeds! And then possibly the furniture or each other? Please go and troll somewhere else.

[deleted]

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

#133
post #120

Earlier quoted context omitted.

> unregulated capitalism Ah yes, the unbridled laissez-faire capitalist markets throughout the world. It couldn't possibly be that our markets are more regulated than ever before, or that the very regulations and bureaucracy meant to protect us have caused these failures. No no no, it's capitalism's fault. It's certainly not that government power has for decades been exploited by the incumbents to kill competition. T…

The US has allowed complete unbridled capitalism during the gilded age. Quoting Wikpedia "From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation's wealth, while the top 10% owned roughly three fourths of it.[61] The bottom 40% had no wealth at all.[59] In terms of property, the wealthiest 1% owned 51%, while the bottom 44% claimed 1.1%" So pure, unregulated capitalism, lead…

IIRC, before the industrial revolution, wealth inequality was much much worse, with a majority living on subsistence farming.

Wealth inequality is misleading as it doesn't represent standard of living very well. Income inequality is better in that regard.

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

#134
post #122

Something came up yesterday, in the discussion about business schools, that I think is also relevant here. A lot of people — as in, practically everyone — has been persuaded over the last half-century or so that the board of directors of a public corporation have a legal responsibility to maximize shareholder value. The general acceptance of that fiction is resulting in a tremendous amount of wealth transfer from the…

Why does maximizing shareholder value imply a transfer of wealth from middle class to wealthy? Middle class people can and should be shareholders.

Middle class people should generally own diversified index funds, not hand-picked shares.

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

#135
post #120

Earlier quoted context omitted.

> unregulated capitalism Ah yes, the unbridled laissez-faire capitalist markets throughout the world. It couldn't possibly be that our markets are more regulated than ever before, or that the very regulations and bureaucracy meant to protect us have caused these failures. No no no, it's capitalism's fault. It's certainly not that government power has for decades been exploited by the incumbents to kill competition. T…

The US has allowed complete unbridled capitalism during the gilded age. Quoting Wikpedia "From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation's wealth, while the top 10% owned roughly three fourths of it.[61] The bottom 40% had no wealth at all.[59] In terms of property, the wealthiest 1% owned 51%, while the bottom 44% claimed 1.1%" So pure, unregulated capitalism, lead…

Just remember that inequality per se is not a bad thing. Capitalism seems to me to be the only way to get people out of poverty, which is, of course, what we want.

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

#136
post #122

Earlier quoted context omitted.

Why does maximizing shareholder value imply a transfer of wealth from middle class to wealthy? Middle class people can and should be shareholders.

Most corporate stock is owned by the wealthy: https://www.investopedia.com/news/stock-ownership-slips-ineq... Furthermore, it is mostly hedge funds that benefit from short-term price gains, as they're frequently leveraged, often with options. Long-term holders like individuals and mutual funds are usually unleveraged.

Even if most corporate stock is owned by the wealthy, in terms of relative wealth changes all that matters is a person's personal percentage investment in the stock market. For example, if you have a middle class person who has 80% of their retirement savings (wealth) in stocks and a rich person who has 50% of their wealth in stock (because of liquidity concerns for example - and this is common) then if the stock market goes up by 20%, then the middle class person's wealth increases by 16% while the rich person's wealth only increases by 10%. In that situation inequality is reduced by maximizing shareholder value, so I think it's totally incorrect to say that maximizing shareholder value increases inequality in general.

People need to educate themselves on personal finance matters like this because inaccurate thinking towards seriously emotional issues like this has dangerous consequences.

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

#137
I own this book and attended the book signing. It is a great book.

Perhaps the largest cause of inequality today, however, is the rent-seeking of artificially high housing costs by making land artificially scarce in markets such as SF, NYC, London, Boston, ... through 1) zoning density restrictions, 2) overuse of historic landmark status, 3) overregulation that makes it difficult or expensive to build housing. This rent-seeking makes landlords like President Trump far wealthier than they would be in an efficient market without the rent-seeking and makes others pay more than they would in an efficient market. Japan has federal laws that override the local laws that benefit wealthy landlords so that there is far, far more construction of housing in Tokyo than in the entire state of California or NYC. 140,000 units vs. 90,000 and 20,000 per year respectively.

In addition, the rising costs of healthcare in the US contribute to depressed wages since money that would otherwise go towards salaries instead go towards ever-increasing cost of employer paid premiums and employee out-of-pocket expenses (larger deductibles and larger co-pays). These rising healthcare costs are largely caused by the increasing of unhealthy and overeating in the US compared with many other OECD developed Western nations.

Taxing sugar and sugar substitutes would probably make a large contribution to combating overeating and obesity.

Another cause of depressed wages in the US (and perhaps elsewhere such as The UK) is global labor arbitrage, the import of labor (from Mexico legal and illegal in the case of working class) and from other countries in the form of H1-B Visa abuse.

Fixing the rent-seeking which causes artificially high housing costs, fixing the high costs of healthcare by addressing obesity in the US, and stemming (illegal) immigration and H1-B visa abuse would go a long way towards dealing with inequality.

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

#138
I am opposed to all forms of unjust extraction, whether that's the rich ripping off other people and taking money they are not owed, to the poor feeling entitled to the money of the rich for the singular reason that they're poor. It is unjust for the rich to engage in theft and usury, even if done for the greater good (consequentialism). It is unjust for the poor to engage in theft or feel entitled to the money of the rich simply because they are poor and that X's poverty somehow automatically entitles X to Y's money. Charity is possible, but charity by definition is not something someone is entitled to, even if it is good to practice it. Indeed, a culture of charity is healthier because it simultaneously requires engagement of the giver with the needs of the receiver and does not insult the dignity of either party by maintaining it as an act of free giving and free receiving instead of institutionalizing a cold, obfuscating, and bureaucratically-managed dependence.

Some argue that b/c the rich benefit unjustly from our money, we are, as an act of justice, entitled to extract their wealth. The problem with that position is that instead of addressing the problem, it normalizes the pathologically unjust exploitation of the rich. It gives the rich even more incentive to pillage b/c of the categorical levying taxes on wealth. It erodes respect for ownership and property, things that are necessary for the good of human beings and the maintenance of social order (eminent domain has a place, but I'm talking about the common case, and even then, compensation is due). It legitimizes greed. It normalizes theft through taxes since taxation that goes beyond covering the administrative costs of the state and the financing of necessary public services is unjust. The net effect is that the rich, along with the gov't they control, become virtual slave owners on whose graces the poor are made dependent (no doubt, this is useful during elections). The middle class is in effect sandwiched between an exploitative upper class and a lower class beholden to the rich, encouraging animosity toward the middle class from both ends. That the government controls taxation does not mean all that much when the rich have significant sway over the government. The tax revenue in such situations is more likely to be used to fund things that benefit the rich, such as a public education that conforms to the designs of the rich.

One way to counter the excessive accumulation of wealthy is to require companies to make workers stakeholders in the companies they work for. What percentage they should own I don't know, but enough to be able to significantly influence things like the compensation a CEO receives. This would eliminate the need for unions as something distinct from companies since all parties have skin in the same game.

Other ways are the elimination of corporate subsidies that create monopolies and a subsidiarist approach to the distribution of political power, making it difficult for the rich to maintain power over its diffuse allocation.

It is a mistake to think that state socialism is the solution to state capitalism. In fact, they are two sides of the same coin and reinforce one another until they are effectively indistinguishable.

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

#140
post #122

Something came up yesterday, in the discussion about business schools, that I think is also relevant here. A lot of people — as in, practically everyone — has been persuaded over the last half-century or so that the board of directors of a public corporation have a legal responsibility to maximize shareholder value. The general acceptance of that fiction is resulting in a tremendous amount of wealth transfer from the…

Why does maximizing shareholder value imply a transfer of wealth from middle class to wealthy? Middle class people can and should be shareholders.

By definition, wealthy people own a lot more assets than middle class people. Why should any given asset class not be expected to follow the same pattern?
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