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Is Inequality Inevitable?

scientificamerican.com

241–250 of 628 posts

Re: Is Inequality Inevitable?

#241
post #162

Earlier quoted context omitted.

The problem with your theory is that somebody would have to buy the shares from him. At scale that's zero sum, and the money can't come from people who don't have any. Think about it this way. Alphabet owns Google. When that happened, did it create an additional company out of whole cloth with the value of Google, on top of the value of Alphabet? No. That's double counting. The value only exists once. Moreover, unles…

Your alphabet / google analogy has zero connection to what we are talking. There doesn’t need to be anyone with the cash available to pay the entire price of Amazon. If Jeff Bezos wants to purchase something, he can trade Amazon stock for it. The corporation doesn’t have any control over whether he does that or not. It is exactly equivalent to money.

> It is exactly equivalent to money.

By this logic Google has an infinite amount of money because it has the ability to issue new shares. It can create a zillion dollars of new shares and sell them in the market and now it has a zillion dollars higher market cap because it has an extra zillion dollars in cash.

But it's not actually infinite, for two reasons. First, the money (or whatever you're exchanging the shares for) still has to come from somewhere. There isn't unlimited demand. It's not possible for every billionaire to sell their shares at once because then there would be nobody to sell them to. If they all tried to at once, the share prices would crash into the floor.

More importantly, if Bezos sells some shares in Amazon, it doesn't cause Amazon to have less capital. The company is still the same size. All you've changed is who owns it -- and unless the price he sells it for is dramatically lower than its current market value, it has to be some other rich people because nobody else has the money to buy it from him. The only way for a rich person to reduce their holdings in a corporation in order to spend the money is for some other rich person to reduce their spending by the same amount and use the money to buy the shares in their place -- and then the corporation is in control of that person's wealth, in the same amount as the original shareholder's.

The things that cause corporate officers to control less wealth are things like corporate spinoffs, taking existing public companies private (which then puts actual control into the hands of the owner), competitors eroding the incumbent's market share, corporate bankruptcies, etc. Two rich guys trading shares for real estate doesn't do that. At the end the corporation still has the same amount of wealth and the two rich guys have the same amount of wealth, you've just changed which one has their wealth in stock vs. land.

Re: Is Inequality Inevitable?

#242
post #144

It should be self-evident that the accelerating inequality we’re witnessing is not the natural inequality of competition and the power law, easily explained by simple arithmetic. An accelerating and historically high broad societal effect is naturally a product of broad and unique properties of the current regime, rather than fundamentally consistent properties, which would naturally be seen across all time. What is…

I was going to reference a similar point. There are economists out there that have predicted this and are not surprised. This isn't necessarily an "open question" but it is one that there is not the precious "consensus" that we see in other popular issues.

Re: Is Inequality Inevitable?

#243
post #66

A lot of it misses the point. Equality is unavoidable as long as people are allowed to compete for stuff. If people are allowed to compete for property then those that are better at competing will have more property. It might be possible to have property equality when people have access to same things but compete for different things, for example status, choice of partners, etc. And the most important point people se…

> when people have access to same things but compete for different things, for example status, choice of partners, etc. People are already complaining about inequality of status and partners. Why is inequality of wealth less just than those other things? > Inequality does not mean we need to have people who can't satisfy their most basic things I honestly don't understand why and moral arguments are not convincing.

Are you advocating for people to not have enough to satisfy their most basic needs?

Re: Is Inequality Inevitable?

#244
post #144

It should be self-evident that the accelerating inequality we’re witnessing is not the natural inequality of competition and the power law, easily explained by simple arithmetic. An accelerating and historically high broad societal effect is naturally a product of broad and unique properties of the current regime, rather than fundamentally consistent properties, which would naturally be seen across all time. What is…

A _lot_ of US public policy changes and economic structural changes which favour the rich have happened since 1971. The problem with trying to pin everything on inflation is that inflation has been more stable and lower in recent years than much of the Bretton Woods era...

According to the chart below, housing, food and beverage and other costs are up > 56% over the last 20 years. Granted, for many things in society, prices have declined thanks to manufacturing advances and trade, etc.

The difference is between those who held dollars and had a 56%+ loss of value over 20 years, vs those who held the same in assets which appreciated at the same rate as the general increase, and so did not lose value over time. https://www.aei.org/carpe-diem/chart-of-the-day-or-century/

Re: Is Inequality Inevitable?

#245

> "388 individuals possessed as much household wealth as the lower half of the world's population combined" My goodness! This completely shocked me. I wonder if we are all complicit in allowing this to happen. I know wealth buys power and vice versa, so it likely would be hard to change but aren't we all indirectly allowing this to happen?

Complicit implies a negative moral or ethical slant, but we are directly responsible, sure. We live in a representative democracy, so we can just ask for a bill to redistribute wealth and vote on it. The reason people don't is the same reason poor people support politicians that give the rich tax breaks.

Re: Is Inequality Inevitable?

#246
post #100

Earlier quoted context omitted.

You make it sound as though the economic pie is fixed and economics zero-sum. But that's clearly not the case, otherwise we'd still be living with stone age per-capita GDP (i.e., ~0). And it's not just that "those that are better at competing will have more property". Every person is free to make a variety of choices for themselves, including how much they prioritize wealth creation. Since each one of us has only one…

Isn't it also important to note that wealth acquisition activities and wealth creation activities are not the same thing?

There's also a number of activities that neither create, destroy or exchange wealth. This is why Mises sought to expand the study to praxeology and not simply economics.

Re: Is Inequality Inevitable?

#247
post #144

It should be self-evident that the accelerating inequality we’re witnessing is not the natural inequality of competition and the power law, easily explained by simple arithmetic. An accelerating and historically high broad societal effect is naturally a product of broad and unique properties of the current regime, rather than fundamentally consistent properties, which would naturally be seen across all time. What is…

Can you show me the simple arithmetic, please?

Re: Is Inequality Inevitable?

#248
post #220

Earlier quoted context omitted.

You make it sound as though the economic pie is fixed and economics zero-sum. But that's clearly not the case, otherwise we'd still be living with stone age per-capita GDP (i.e., ~0). And it's not just that "those that are better at competing will have more property". Every person is free to make a variety of choices for themselves, including how much they prioritize wealth creation. Since each one of us has only one…

It absolutely IS fixed. We may not have reached its peak, but until we managed to start settling other planets we have a finite amount of: Clean Water Land Natural resources You can take your pick about which one runs out first/be consumed by a small group of ultra-wealthy, but one of them WILL run out first.

How can something be fixed but not have reached its peak? You are saying that there is some theoretical maximum that is fixed but that is not in disagreement with the comment you are responding to.

Re: Is Inequality Inevitable?

#249
post #227
post #193

There is a popular political perspective that rules on campus these days that treats wealth as something that just magically exists and is simply "redistributed" by one means or another like, say, a phase change in physics where no magnetism/charge/energy/etc. is ever created or consumed. I waited for a point in their model where people actually produced wealth and consumed it, made something or ate it, in addition t…

I don't think your comment is a good faith engagement with leftist understandings of value. This is the starting point of Marx's whole theory of capitalism (it's in the first few chapters of Capital) which is the labor theory of value. Namely, his starting point is that labor is identified with value. Wealth is created when raw materials and the means of production are combined with labor. In the capitalist theory of…

[flagged]

Re: Is Inequality Inevitable?

#250
post #220

Earlier quoted context omitted.

You make it sound as though the economic pie is fixed and economics zero-sum. But that's clearly not the case, otherwise we'd still be living with stone age per-capita GDP (i.e., ~0). And it's not just that "those that are better at competing will have more property". Every person is free to make a variety of choices for themselves, including how much they prioritize wealth creation. Since each one of us has only one…

It absolutely IS fixed. We may not have reached its peak, but until we managed to start settling other planets we have a finite amount of: Clean Water Land Natural resources You can take your pick about which one runs out first/be consumed by a small group of ultra-wealthy, but one of them WILL run out first.

Many countries are creating clean water through desalination or reprocessing. Some countries have created land by building islands or reclaiming coastal shelf area. Natural resources available are increased by better tech making more available. So yeah, they’re less fixed than you think.
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