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Why Inequality Matters

gatesnotes.com

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Re: Why Inequality Matters

#41

Post by RockyMcNuts »

chollida1 wrote: post #4

Just a heads up about the book. Its dense, like a Nassim Taleb book dense. it took me over a month to get through it so if you choose to read it, its not a weekend read. If you want the highlights, this economist article does as decent a job of summarizing 400+ pages as you can hope for in 4 paragraphs. http://www.economist.com/blogs/economist-explains/2014/05/ec... As for the content, the main take away, is his r >…

Nassim Taleb is dense, but not in the way you mean...New Yorker-level hand-wavy, extreme generalizations, OMG the horror of how stupid everyone else is...but if you can get past the pompous jackassery it is true there is much to be learned from him.

Re: Why Inequality Matters

#42

Post by saalweachter »

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with differentiating between the "good investor" and the "lavish lifestyle guy" is that the good investor is actually the one that you (rather, Piketty) need to be most worried about.

People worried about inequality aren't (just) worried about the morality of consumption -- a fat cat sitting atop a mountain of cash drinking champagne and eating caviar while the peasants starve. They're worried about maintaining a democratic society, where everyone gets roughly an equal say in how things go. Highly concentrated wealth is a threat to that. Someone with enough money can single handedly change the course of politics (by funding candidates, lobbyists, or directly bribing various parties), public discourse (by controlling media corporations and through them who says what on TV or in print), and even science itself (by funding some researchers and not others).

The sleazy but short-sighted hedge fund manager bringing in a million plus a year but spending it all on yachts and McMansions isn't a threat. Bill Gates and Warren Buffett, the good investors, are the ones walking around with nukes. They could choose to blow us up at any time, and it's only through their continuing mercy that they haven't.

Wealth taxes are about disarming everyone -- good and evil -- for the safety of us all, not about morality.

Re: Why Inequality Matters

#43

Post by bluthru »

bsbechtel wrote: post #12

>High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal. I agree with generally all of Gates' thoughts here, but there are two actors to consider when discussing how to address problems associated with inequality - the government, and those who own capital. There is an implicit assumption…

>The risk with a powerful government that can do this is it can be bought.

Only if it is weak and has incentives to do so. Policies like Citizens' United weaken the government and permit capital to further influence politics.

Re: Why Inequality Matters

#44

Post by couchand »

Shinkei wrote: post #39
r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with any consumption tax is that wealthier people spend a smaller percentage of their income on needs compared to lower classes. If you make it progressive, they will just buy their most expensive items overseas and never (or hide?) the import and avoid the tax. Anytime you try to regulate, there will be people making big money trying to find workarounds. Anyway, taxing in this way imposes a moral judgeme…

Why do people always use the term punish when talking about taxes? Taxes are levied, you're only punished if you fail to pay.

Re: Why Inequality Matters

#45

Post by [deleted] »

icebraining wrote: post #38
plehoux wrote: post #33

Gates described three personas : 1. One guy is putting his capital into building his business 2. A woman who’s giving most of her wealth to charity 3. A third person is mostly consuming, spending a lot of money on things like a yacht and plane All three actually spend their wealth. The problem with extreme inequality is that really wealthy people can invest, give and spent AND still sit on massive amount of wealth th…

All three actually spend their wealth. The problem with extreme inequality is that really wealthy people can invest, give and spent AND still sit on massive amount of wealth that get past to the next generation. A progressive tax on consumption wouldn't be enough to fight this. Gates also specifically talks about an estate tax to prevent the wealth to pass to the next generation (at least, part of it).

[deleted]

Re: Why Inequality Matters

#46

Post by GuiA »

> Take a look at the Forbes 400 list of the wealthiest Americans. About half the people on the list are entrepreneurs whose companies did very well (thanks to hard work as well as a lot of luck). Contrary to Piketty’s rentier hypothesis, I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since. In America, that old money is long gone—through instability, inflation, taxes, philanthropy, and spending.

The USA are somewhat of an edge case here due to their youth. Look at older countries, such as France (where Piketty and I are from) and you'll see a marked difference.

Re: Why Inequality Matters

#47

Post by taeric »

bsbechtel wrote: post #34
taeric wrote: post #19

Earlier quoted context omitted.

I'm not sure I understand your other option. If the government doesn't have control over the flow of wealth, why do you think it will not just increasingly flow to those in power? I understand the concern over governments that are not acting in the best interest of the people. However, abstaining from the process seems a very shaky way to actually get it to act in an appropriate way. More to the point, I thought the…

>I'm not sure I understand your other option. If the government doesn't have control over the flow of wealth, why do you think it will not just increasingly flow to those in power? Up until roughly 1903, the US didn't have any personal income taxes. There was a small business tax, and this was it. Gates' own example of old money no longer existing didn't really point to examples such as the Waltons, but to families w…

Seems like a very small amount of evidence to base such a large idea on. You could probably form the same argument against the more modern consumption taxes. Since for many this translates to a sales tax, and not the early excise taxes that are covered under the same category. (Right?)

Though, your argument falls more heavily on the mistake Gates seems to have also made. The type of wealth that the book refers to as "old wealth" really refers to a rentier based society. This is somewhat important, because much of what would have been the "old money" in the US was effectively disrupted by massive technology changes. It isn't that the old wealth just disappeared, it was not created in such a way that it sustained itself.

This is important, because wealth in the modern US does sustain itself. Quite heavily, even.

Re: Why Inequality Matters

#48

Post by akmiller »

[deleted] wrote: post #29
akmiller wrote: post #26

Earlier quoted context omitted.

Spending doesn't do as much as starting or investing in new companies or even philanthropy itself. Gates and Pickety agree on the estate tax which would help for people trying to sit on their wealth and simply pass it along to their heirs. Of course the estate tax needs some improvements.

[deleted]

I don't think that encourages spending....I think that encourages offshore bank accounts and the like. Anyhow, I'd think that anyone with any type of massive windfall is pretty thoroughly invested so in some capacity it is contributing back to the economy.

I also can't imagine there are many who receive some type of windfall and are just sitting on it!

Re: Why Inequality Matters

#49

Post by noarchy »

yequalsx wrote: post #22
r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with relying, even partially, on philanthropy to correct some of the imbalances of capitalism is that one encounters the free rider problem. There is also the issue where a very wealthy person has as their philanthropic cause something which few others think is a good choice of philanthropy. Such decisions should be made by society as a whole through their elected representatives. I know this wasn't the m…

>The problem with relying, even partially, on philanthropy to correct some of the imbalances of capitalism is that one encounters the free rider problem.

Do you think that the free rider problem is corrected by state-run welfare programs? I'd be skeptical of such a claim, myself.

>There is also the issue where a very wealthy person has as their philanthropic cause something which few others think is a good choice of philanthropy. Such decisions should be made by society as a whole through their elected representatives.

If someone chooses to give their money to a cause that isn't widely recognized, is that really a problem? If they've zeroed in on an area that they feel has been neglected by "society" (which you use here in place of "government"), this could be quite a good thing for the beneficiaries.

Re: Why Inequality Matters

#50

Post by bsbechtel »

bluthru wrote: post #43
bsbechtel wrote: post #12

>High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal. I agree with generally all of Gates' thoughts here, but there are two actors to consider when discussing how to address problems associated with inequality - the government, and those who own capital. There is an implicit assumption…

>The risk with a powerful government that can do this is it can be bought. Only if it is weak and has incentives to do so. Policies like Citizens' United weaken the government and permit capital to further influence politics.

Agreed, although it certainly wasn't the start of it.
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