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Is Inequality Inevitable?

scientificamerican.com

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Re: Is Inequality Inevitable?

#471

Post by pietrovismara »

sdfin wrote: post #334

I don't get why lately the trend it to focus in inequality instead of focusing in poverty. I mean, if the % of poverty decreases, then economy is moving in a good direction, in spite of inequality, right? Suppose you had one million, and somebody else has one thousand millions, there would be a large gap, but I wouldn't consider it as negative. If there are arguments against what I wrote I would gladly read them and…

Because both inequality and poverty matter. Solving poverty is a matter of decency for all humanity and it would greatly improve our society. Solving inequality is as important, why? Because in a society where greed and profit motive trump any other ethic, we can't have individuals as powerful as states, thanks to the wealth they accumulated, partly, stealing from states. Earning billions and finding ways to not pay any taxes is equivalent to stealing for me.

Re: Is Inequality Inevitable?

#472

Post by vfc1 »

dorgo wrote: post #468
vfc1 wrote: post #464

It's inevitable and a direct consequence of the labor system that we live in. The internet makes it worse but its not the problem of the internet, its a problem of the system. In our labor system, a small number of individuals are by definition going to be payed, as employees, a small amount of the value that they add in order to make their boss wealthier. Over time, the employees get paid a constant amount of money…

>If those same persons would each own their small family shops and serve the same amount of customers Prices would increase (no economies of scale). 100 persons would have to deal with 99 problems (accounting, supply, marketing, ...) they didn't have before. And risks and competition. Most people don't want to deal with all those problems. Even if it pays better.

> Most people don't want to deal with all those problems. Even if it pays better.

It depends, if raised on a family of shop owners with the values that you should have your own business, that would simply be seen as part of life.

Those problems are not that hard, its not that hard to run a small shop. I think anyone could do it.

Re: Is Inequality Inevitable?

#473

Post by mikorym »

This question only worries me in the context of philosophy or in the context of the developed world.

My experience, being born on the African continent and with my (known) family having lived on the African continent for 10 generations, teaches me that this question is not a matter of philosophy but of pragmatism. The impression I have, whether illusory or not, is that the more fundamental human endeavor is towards Mazlo's pyramid of needs. One example that I can give is that often those that "defend" the position of the rich are not rich themselves, but rather believe in the value of personal property ownership.

And with regards to those in developing countries in general, I think the feeling is that you simply want to better your life up to a point of some kind of perception of equal access to opportunity (whether attainable or not). My point is thus that inequality in wealth is perhaps like inequality in everything else, including inequal distribution of personal preferences (in everything). It's easy to say this as a person with access to education and opportunity and pretend to say it on behalf of others, and could of course be misguided, but I don't know if relative spread of opportunity is important in the way that absolute spread of opportunity is.

Re: Is Inequality Inevitable?

#474

Post by growlist »

Obviously there needs to be a balance. Too little inequality and we end up with communism, destruction of incentives for innovation, and a 10 year wait to drive a Trabant - if you're lucky! Too much inequality and there's too small a market to sustain the extraction of wealth by the elite.

Re: Is Inequality Inevitable?

#475

Post by username90 »

vannevar wrote: post #397
SiVal wrote: 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…

It's not part of the model because, if you're studying how wealth gets distributed rather than how it is produced, it doesn't matter. I'm guessing that your disquiet at this notion comes from the possibility that everyone is creating their own wealth, and to some extent that is no doubt true. But if you start with the simplifying assumption that everyone's wealth creation ability is equal, and you just look at distri…

> someone with 1 million dollars is astronomically more likely to make another million dollars than someone with 100 dollars, even if the two people are otherwise identical

I'm not sure this is correct, at least not on average. Take two average persons, give one of them a million dollar, then watch what their net income is the next 10 years. I'd bet that the one you gave a million dollars will have used up a large part of it thus having a huge net loss while the one you didn't give anything will still be roughly at zero.

Edit: This study shows that people significantly reduce their income after winning the lottery, suggesting that there is a negative correlation between wealth and earnings given that everything else is the same.

https://www.nber.org/papers/w21762.pdf

Re: Is Inequality Inevitable?

#476

Post by gpvos »

WalterBright wrote: post #358

Without inequality we would not have airplanes, transatlantic cables, jet engines, electric cars, SpaceX, cloud computing, radar, internet phones, steel, automobiles, the textile industry, fuel, plentiful food, fresh fruit year round, etc.

I think we would develop these in due time, just slower. One could also argue that some of these (textile industry, cloud computing) are bad.

Actually, I am not against some inequality, as long as there is some kind of limit to it.

Re: Is Inequality Inevitable?

#477

Post by username90 »

vannevar wrote: post #397
SiVal wrote: 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…

It's not part of the model because, if you're studying how wealth gets distributed rather than how it is produced, it doesn't matter. I'm guessing that your disquiet at this notion comes from the possibility that everyone is creating their own wealth, and to some extent that is no doubt true. But if you start with the simplifying assumption that everyone's wealth creation ability is equal, and you just look at distri…

> Since virtually all human traits follow a Gaussian distribution, it seems like whatever the wealth-building factor is, it would also follow a Gaussian distribution. But wealth follows more of a power law distribution. You never encounter anyone 1000 times taller than average, but there are many people 1000 times wealthier than average.

This is nonsense. Lets take an easy example, books, people don't want to waste their time reading bad books so only the most palatable books gets a good amount of sales. This means that a small difference in skill leads to a large difference in sales, which would recreate the power-law of wealth creation. Similar arguments can be made about engineering skills, management skills etc.

Re: Is Inequality Inevitable?

#478

Post by duxut_staglatz »

vannevar wrote: post #397
SiVal wrote: 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…

It's not part of the model because, if you're studying how wealth gets distributed rather than how it is produced, it doesn't matter. I'm guessing that your disquiet at this notion comes from the possibility that everyone is creating their own wealth, and to some extent that is no doubt true. But if you start with the simplifying assumption that everyone's wealth creation ability is equal, and you just look at distri…

Many things in the economy follow a power law, see [0] for instance

[0] https://www.nber.org/papers/w14299

Re: Is Inequality Inevitable?

#479

Post by duxut_staglatz »

chewz wrote: post #460
wuliwong wrote: post #230

Earlier quoted context omitted.

I received a Ph.D. in physics in 2010, throughout my training, my anecdotal experience was that of an echo chamber. I didn't fully realize it until I left academia. Although, it was slowly becoming apparent as the years passed. My experience was of a relatively small and closed group of physicists who reaffirmed each other's assumption that they were at the absolute peak of intellectual thought. Most of the professor…

> the poorer a person is the larger a percentage they are willing to risk Utility function is logaritmic.

Is there any evidence that it is?

Re: Is Inequality Inevitable?

#480

Post by anovikov »

username90 wrote: post #477
vannevar wrote: post #397

Earlier quoted context omitted.

It's not part of the model because, if you're studying how wealth gets distributed rather than how it is produced, it doesn't matter. I'm guessing that your disquiet at this notion comes from the possibility that everyone is creating their own wealth, and to some extent that is no doubt true. But if you start with the simplifying assumption that everyone's wealth creation ability is equal, and you just look at distri…

> Since virtually all human traits follow a Gaussian distribution, it seems like whatever the wealth-building factor is, it would also follow a Gaussian distribution. But wealth follows more of a power law distribution. You never encounter anyone 1000 times taller than average, but there are many people 1000 times wealthier than average. This is nonsense. Lets take an easy example, books, people don't want to waste t…

Very true. And my opinion of why distribution becomes even more skewed in both the income and wealth, is that it becomes easier to exploit this small difference in skill thanks to computer and the Internet (and books are the best example: it costs nothing to "publish" the book in millions copies online, so the feedback loop moving slightly better authors on top works a lot better than in times of printed books).
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