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Is Inequality Inevitable?

scientificamerican.com

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Re: Is Inequality Inevitable?

#11

Post by FabHK »

danhak wrote: post #5

Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.

It scales linearly.

If you have 3 (or 10) times as much as I have, and we both invest all our money in the same interest bearing account, then after N years you will still have 3 (or 10) times as much as I have.

So, according to your model, the initial wealth distribution should not change. (Of course, you can argue that those with more wealth consume a smaller part of it, and that gives rise to inequality, but that's an issue beyond "compound interest").

EDIT to remove a typo

Re: Is Inequality Inevitable?

#12

Post by jgalt212 »

danhak wrote: post #5

Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.

for sure, but you're missing the tax avoidance bit. Without tax avoidance, compound interest does nothing at most reasonable levels of r and t.

Re: Is Inequality Inevitable?

#13

Post by billions »

danhak wrote: post #5

Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.

If course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level OF EFFORT.

Even a wealthy person can lose their money if they don't make an effort investing it properly. How do people build wealth from the ground up? They work hard each and every day and that effort COMPOUNDS. They get smarter, more opportunities present themselves, they get better creating value for others. When you make strangers happy, they reward you with their money- a fair exchange! This is how wealth is made - compound effort.

Re: Is Inequality Inevitable?

#14

Post by wcarron »

TurkishPoptart wrote: post #8
zacharytelschow wrote: post #6

Absolutely - and that's a good thing. Those who produce more should earn more as well.

Oh boy, where do I begin? Edit: Sorry, I should first ask with how you define "production". It seems to be a now dated and almost arbitrary term more suited for agrarian or industrial societies, which seems less telling in an information/service-driven economy. If a police officer patrols for 8 hours, arresting no one, did he "produce" anything? Likewise, if he patrols for 8 hours, and arrests 2 people, did he "produ…

None of us know, so why don't you pick a place and actually begin? You know, contributing constructive dialogue instead of just posting a useless, condenscending rhetorical question.

Re: Is Inequality Inevitable?

#15

Post by FabHK »

zacharytelschow wrote: post #6

Absolutely - and that's a good thing. Those who produce more should earn more as well.

Right. And now that you have echoed Economics 101, it is time to look at these issues in a bit more detail. See for example John Kwak's Economism, in which he addresses this facile justification in some detail.

https://economism.net

Re: Is Inequality Inevitable?

#18

Post by billions »

wcarron wrote: post #14
TurkishPoptart wrote: post #8

Earlier quoted context omitted.

Oh boy, where do I begin? Edit: Sorry, I should first ask with how you define "production". It seems to be a now dated and almost arbitrary term more suited for agrarian or industrial societies, which seems less telling in an information/service-driven economy. If a police officer patrols for 8 hours, arresting no one, did he "produce" anything? Likewise, if he patrols for 8 hours, and arrests 2 people, did he "produ…

None of us know, so why don't you pick a place and actually begin? You know, contributing constructive dialogue instead of just posting a useless, condenscending rhetorical question.

I think the author was expecting equal upvotes despite not making an effort to forward the discussion

Re: Is Inequality Inevitable?

#19

Post by [deleted] »

FabHK wrote: post #11
danhak wrote: post #5

Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.

It scales linearly. If you have 3 (or 10) times as much as I have, and we both invest all our money in the same interest bearing account, then after N years you will still have 3 (or 10) times as much as I have. So, according to your model, the initial wealth distribution should not change. (Of course, you can argue that those with more wealth consume a smaller part of it, and that gives rise to inequality, but that'…

[deleted]

Re: Is Inequality Inevitable?

#20

Post by petemill »

billions wrote: post #13
danhak wrote: post #5

Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.

If course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level OF EFFORT. Even a wealthy person can lose their money if they don't make an effort investing it properly. How do people build wealth from the ground up? They work hard each and every day and that effort COMPOUNDS. They get smarter, more opportunities present themselves…

Classic. Poor people just aren't working hard enough!
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