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What if incomes grew like GDP?

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Re: What if incomes grew like GDP?

#91

Post by imgabe »

ardy42 wrote: post #76
imgabe wrote: post #38

Earlier quoted context omitted.

There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

> There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital? You only really own something if enough people in society ("we") agree that you do own it. If enough of "us" change our mind (for instance, if your ownership is no longer useful to us), then you don't really own that thing anymore.

We, that is you are free to devalue Facebook stock at any time by not buying it.

The fact that most people are not doing that should tell you that you are not as much a part of the dominant "we" as you think.

Re: What if incomes grew like GDP?

#92

Post by usrusr »

nine_k wrote: post #50
nsajko wrote: post #20

Earlier quoted context omitted.

Your point is truthful but not completely relevant: Bezos, at least, did receive a considerable amount of money as funding for Amazon from his family. My point is that the money received from parents most often is, in fact, an advantage. Now that I wrote it down explicitly, I wonder why is it that I have to argue this, seems quite obvious. (Note: I'm not saying the funding from parents was sufficient, or even necessa…

I see! It's a transfer between generations, though not an inheritance (which some people suggest to tax heavily). Again, Bezos got about $300k from his family (both his parents were doctors), which, I think, is far below the level of "unjust inherited fortune" or what is usually people suggest to tax into oblivion. Yes, when your parents help you, it's helpful — it's nearly tautologically true. This is why I as a par…

The problem is not intergenerational help, that existed at least as much if not more in times of less inequality. The problem is the size of the spoils. Intergenerational help is only brought up as a counter to the tired "it's your fault if you aren't a billionaire" defense (which is rarely brought up by billionaires themselves but all the time by their broke admirers)

Re: What if incomes grew like GDP?

#93

Post by wegs »

throwaway189262 wrote: post #67
hliyan wrote: post #4

I always like to say that we live in an exponential meritocracy , where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else. A lot of wealth is luck. But wealthy people (like HN audience) don't like to hear that. I can't find a link but there's controlled studies that show the richer someone precieves they are, the more they attribute it to skill. Even in studies where outcomes are completely randomized. Usually…

I think OP's comment is different. It's demand-side, not supply-side.

If a CEO causes 1000 employees to be 1% more efficient, that creates the same value as 1000 employees each being 1% more efficient. Ergo, if I'm an investor, if I believe a CEO will be slightly better than another CEO, it makes sense to pay a lot more.

If I have a market of 7 billion people in the world, and my software saves everyone a dollar, I've created $7E9 of value in the world, and probably monetized $7E7-$7E8 of value for myself. 40 years ago, my market was the US -- roughly 300 million people. With globalization, it's 7 billion.

If I'm making a search engine or webmail client, it's winner-takes-all. If I can hire two engineers, and I believe (statistically, per my lousy interview process) that one is 1% better than the other, I'll drop a shit-ton of money to hire them. See Mythical Man Month for why hiring an extra person with the "saved" money doesn't have the same effect.

And so on...

Economies of scale, winner-takes-all-markets, and zero marginal cost goods like IP fundamentally push salaries at the top up, even with small differences in performance, measured with noisy tools. I've worked with many CEOs. Someone who makes $10M isn't necessarily brighter than someone who makes $100k, but the demand-side economics still work out that way. The $10M salary often comes down to signalling; they've managed a big organization before, they have a nice elite university brand stamp, or they felt better the day of the interview. It STILL makes sense. My expected returns are STILL higher.

Where things break down a little bit is corruption and misaligned incentives -- lots of places, if you pay more, you get less -- but I think that's under-acknowledged. Things also break down is Simpson's Paradox. Globalization means income inequality WITHIN countries is getting worse, but worldwide, is getting better.

Re: What if incomes grew like GDP?

#94

Post by usrusr »

usaar333 wrote: post #73
throwaway189262 wrote: post #67

Earlier quoted context omitted.

There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else. A lot of wealth is luck. But wealthy people (like HN audience) don't like to hear that. I can't find a link but there's controlled studies that show the richer someone precieves they are, the more they attribute it to skill. Even in studies where outcomes are completely randomized. Usually…

I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment. What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or an…

I don't like the "skill" argument at all. It's not just skill vs luck, it's also willingness to throw everything else under the bus in favor of income.

Take for example US colleges: I'm pretty sure that tuition inflation doesn't quite lead to a large windfall for the best at teaching and researching, but surely for apex administrators. And considering the serpentine nature of career paths leading to the top of education administrations, low level administrators couldn't ever reach those positions through skill or hard work. The career path is basically feign academic ambition until there's window for defecting to administration. Similar compromise-paved ways to economic success exist in corporate cultures and even an entrepreneur will often be faced with a decision between money and other goals and qualities.

American culture likes to glorify greed as ambition, but there are more ambitions be had than money and power.

Re: What if incomes grew like GDP?

#95

Post by esarbe »

hliyan wrote: post #4

I always like to say that we live in an exponential meritocracy , where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

What makes you think we live in a meritocracy?

Wealth seems to be accumulating in the hands of already rich families that use that cash to provide their kids with a decent education that includes secret-handshake-introduction to other moneyed oligarchs to further secure all their positions on top of the wealth-extraction pyramid.

There's nothing meritocratic about it.

Re: What if incomes grew like GDP?

#96

Post by boh »

rualca wrote: post #83
boh wrote: post #49

Earlier quoted context omitted.

Hate to burst your bubble but if you're one of the 25% of Americans who has an undergraduate degree or above you're likely part of that barely-rich who are part of "the problem" (from a global perspective making over $50k a year counts as barely rich). No one wants to admit to being a part of some "elite" minority because there's always someone else to blame who's higher up on the ladder. Ultimately policy makes chan…

> No one wants to admit to being a part of some "elite" minority because there's always someone else to blame who's higher up on the ladder. The problem with that point of view is that ignores the corollary that most of the people are not held do blame because there's always someone else which is privileged and has direct control over their lives and livelihood. Complaining that someone in the US earning $50k/year is…

Agreed, that's the point. How do you think the doctors and lawyers feel (or to be more specific to HN--the people doing well in the tech sector)? Having a finger pointed at you for living your life without "doing something" when you're not part of the country leadership is an aspect of the "change" myth we're often subject to (i.e. it's your fault things are bad, not the actual people in charge).

*also depending on where you live, even within the US, $50k can be a decent salary.

Re: What if incomes grew like GDP?

#97

Post by boh »

akamaka wrote: post #58
boh wrote: post #22

Macro-analyses like this aren't particularly representative of any relevant point. For one thing GDP is a poor measure of the general increases of wealth. The US's pivot to services isn't represented in GDP since it only accurately measures physical production (Microsoft/Google/Facebook etc. aren't accurately represented). The actual increases that wind up going into salaries (particularly at the top half) are heavil…

Services make up 80% of US GDP, so it is definitely being measured to a large degree. I think you have a valid point to make about GDP being a poor measure of certain things, but I think you would find it worthwhile to study more about what exactly it is measuring and why it is still so useful.

It is useful. Just not in the context suggested by this article. Highly broad "what if" studies like this are shallow but offer suggestive assumptions that aren't particularly helpful to understand aspects of the economy like wealth, incomes and inequality

Re: What if incomes grew like GDP?

#98

Post by bsanr »

boh wrote: post #49
bsanr wrote: post #46

Earlier quoted context omitted.

It can be argued that the barely-rich are also a huge part of "the problem." Collectively, they wield a great deal of influence through their wealth, networks, and savvy, and instead of using it to solve "the problem," they are largely involved in an intra-class competition to secure the next open actually-rich spot (or to simply maintain their standard of living, and particularly that of their children, regardless o…

Hate to burst your bubble but if you're one of the 25% of Americans who has an undergraduate degree or above you're likely part of that barely-rich who are part of "the problem" (from a global perspective making over $50k a year counts as barely rich). No one wants to admit to being a part of some "elite" minority because there's always someone else to blame who's higher up on the ladder. Ultimately policy makes chan…

I have a degree and I've never made more than $35,000 in a year, pre-tax. This is not uncommon.

Re: What if incomes grew like GDP?

#99

Post by sudosysgen »

username90 wrote: post #90
sudosysgen wrote: post #59

Earlier quoted context omitted.

This is literally the argument for why communism hasn't worked. Without private property it was impossible to motivate people to do some kinds of work - taking on risk, organizing production, and some kinds of innovation - to a sufficient degree and without many drawbacks. If someone found a way to motivate people to do those kinds of labour properly - and force doesn't work well for many reasons, so it would have to…

Capitalism automatically allocates more resources to those who uses the resources well via markets mostly choosing to buy better or cheaper products. That works much much better than allocating resources via committees or strict laws, until you have a better solution for resource allocation any replacement for capitalism will fail. However this also means that as long as we keep the resource allocation thing mostly i…

Ah, but you have to make the difference between resources. There's capital, which I agree are often better allocated in capitalism, but other kinds of resources aren't problematic.

Which is pretty much what I said :). Organizing production was a proxy for capital allocation.

Re: What if incomes grew like GDP?

#100

Post by bsanr »

boh wrote: post #96
rualca wrote: post #83

Earlier quoted context omitted.

> No one wants to admit to being a part of some "elite" minority because there's always someone else to blame who's higher up on the ladder. The problem with that point of view is that ignores the corollary that most of the people are not held do blame because there's always someone else which is privileged and has direct control over their lives and livelihood. Complaining that someone in the US earning $50k/year is…

Agreed, that's the point. How do you think the doctors and lawyers feel (or to be more specific to HN--the people doing well in the tech sector)? Having a finger pointed at you for living your life without "doing something" when you're not part of the country leadership is an aspect of the "change" myth we're often subject to (i.e. it's your fault things are bad, not the actual people in charge). *also depending on w…

Doctors and lawyers are not making $50k a year. $50k is not even the average annual income in this country; it is not the income of the barely-wealthy. This is the problem: people making multiples of $50k live fundamentally different lives from those making sub-$50k. They have money to burn, and they do just that, often on self-serving goods and services with limited ROI compared to what the same amount of money would buy people with more basic concerns. However, they want to align themselves with struggling families and individuals culturally, because it absolves them of responsibility for changing private and public policy towards the nature of labor and welfare, and provides cover for them to continue their mindless march into the Moloch of a false meritocracy.

If you're paying $30k-$50k a year to send your kid to a private school, we're not talking about the same kind of family as a people working one or two jobs sub-$20/hr just to make rent. No one listens to the latter; if you're the former, you have positioned yourself socially to be heard by the decision-makers and policy-executors. If you don't say anything except in your own defense, knowing what an educated person should know about poverty and suffering in America, even somehow envisioning yourself as among those suffering, that's a choice.

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