Why Inequality Matters • Hacker News Board

Re: Why Inequality Matters

#171

Post by loumf » Thu, Oct 16, 2014, 3:56 PM UTC

marcosdumay wrote: post #82

saalweachter wrote: post #42

Earlier quoted context omitted.

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 maint…

The elephant that everybody pretends that isn't in the room is that what you just called weapons is the ability to create wealth. Do we really need to take it away from everybody? Recently, capitalists aren't the ones disrupting the economy in the US, here in Brazil, in the PIIGS, or any other place that I looked. That position is always held by people with power, but little capacity of creating wealth themselves. At…

It's not evident in Gates's review, but one of Piketty's arguments for a wealth tax is just so we can get a better picture of wealth. He goes through great lengths to try to get data on it -- if there was a tax, even a small one, we'd have far greater transparency.

He then thinks that this would lead to changes -- because his data, no matter how good you think it is, is arguable and possibly wrong.

Re: Why Inequality Matters

#172

Post by freshyill » Thu, Oct 16, 2014, 3:58 PM UTC

harmonicon wrote: post #121

I have a lot of respect for Bill Gates because of his philanthropic efforts. However, I am very skeptical of the consumption tax argument. To me that sounds like a sales tax and sales tax is regressive. i.e. Tax on French baguette hits the poor more than the rich, since as a group they consume way more baguette. Even if it is just a special sales tax that targets the rich only, discouraging spending by people with mo…

It's true that most sales taxes are regressive, but you can have progressive sales taxes as well. A few examples:

In New York, there's no tax on clothing and shoes under $110 (at least that was the number when I lived there a few years ago). If you're buying stuff that costs more than that, then you can probably afford the tax, since there plenty of completely fashionable and functional items that cost far less.

In many (most?) places, there's no sales tax on most foods you'd buy in a supermarket, but there is on prepared foods and restaurant meals.

You could probably take these even further by raising the taxes on more expensive clothing items. If you're buying a $1,000 purse or eating a $500 meal, you can probably afford a higher tax rate.

It would probably be challenging to apply a progressive sales tax to everything, but it's certainly possible for many purchases.

Re: Why Inequality Matters

#173

Post by lmm » Thu, Oct 16, 2014, 3:59 PM UTC

simonh wrote: post #90

saalweachter wrote: post #42

Earlier quoted context omitted.

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 maint…

Interesting argument, but surely you don't think the world needs less investment? So if you're going to tax away money that would otherwise be invested in creating businesses and jobs, what do you think should be done with it instead? Or do you think the state is a more efficient investor of capital? I do agree that wealth is a potent weapon, but that's why capitalism works best when markets, and politics are well re…

Yes, the state is a more efficient investor of capital. Counterintuitive as it may be, just taking money and giving it to poor people is a very good investment in terms of the public good that results. A rich individual investing into a funded company is much more visible, but that same money spread more widely might launch hundreds of "lifestyle businesses" that would ultimately be more productive.

Re: Why Inequality Matters

#174

Post by Omniusaspirer » Thu, Oct 16, 2014, 4:00 PM UTC

JoeAltmaier wrote: post #157

Omniusaspirer wrote: post #147

Earlier quoted context omitted.

It's just a different mentality towards life and entitlement- there's nothing sad about it. Hitting all your points in order: 1) 1 million dollars is a lot of money to come out of nowhere. It's simply dishonest to pretend that isn't a life changing amount for a middle class family. At the very least it's going to be like you said- modest home paid off(100-500k), car loans all paid off(50k), and student loans paid off…

That's Polyanna thinking, that an estate tax will benefit humanity. What nation do you live in? You trust the govt to spend your wealth, more than say a relative? I don't believe it. And 'wealth' isn't all gold buried in the back yard. Its also investments in businesses (either stocks or directly) as a corporation or even a proprietorship. Who runs the restaurant after you die? The government? Preposterous.

You're assuming the estate tax needs to exist in it's current form- ideally it would allow for me to deign money out to specific aspects of government or approved (need to avoid abuse here) charities of my choice. That would still serve to dissuade the multigenerational family/genetic lottery while leaving the individual with some say in how their (now former) assets are used.

On your last point- a traditional corporation won't fail if one person dies as the issue of ownership is inherently divested from any individual person. Stocks are one of the easiest assets to liquidate on this planet- I'm not seeing an issue there. The restaurant? It would be sold. If I have a family member who I actually think could run it adequately they would be able to purchase it like anybody else and I would encourage them to do so while I was still alive.

Re: Why Inequality Matters

#175

Post by Marazan » Thu, Oct 16, 2014, 4:01 PM UTC

m0th87 wrote: post #152

RockyMcNuts wrote: post #41

Earlier quoted context omitted.

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.

It's interesting that you critique Taleb's broad generalizations, and then typecast him as a handy-wavy New Yorker at the same time.

Taleb starts The Black Swan by criticisng people for using anecdotes to justify their position. He then uses a series of anecdotes to justify his position.

As far as I could tell this wasn't done as some kind of meta-commentary on anecdotes - just a massive lack of self-awareness

Re: Why Inequality Matters

#176

Post by lmm » Thu, Oct 16, 2014, 4:01 PM UTC

forgingahead wrote: post #98

saalweachter wrote: post #42

Earlier quoted context omitted.

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 maint…

Currently, 436 people (Reps, Senators and President) control nearly 4 trillion dollars, the budget for this year. What should we do about them?

Devolve as much as we can. Split federal programs into state programs, then county-level programs, where the money is collected and spent on a much smaller scale.

Re: Why Inequality Matters

#177

Post by Taek » Thu, Oct 16, 2014, 4:01 PM UTC

saalweachter wrote: post #42

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 maint…

One thing that always bothers me about wealth distribution is that you can't simply move wealth around and expect things to get better. People who have wealth are going to be better with that wealth than people who don't. They grew up with wealthy people, have managed the wealth for a long time, have witnessed mistakes and successes, and overall have spent a lot of time contemplating wealth.

If you take that wealth and move it to the average person, even if their fundamental intelligence is equivalent, their experience, education, and exposure is going to be a lot lower.

"They're worried about maintaining a democratic society, where everyone gets roughly an equal say in how things go."

It's an unpopular opinion, but I don't think that everyone should have a roughly equal say in how things go. The average person isn't as well equipped to deal with large problems as the elite are. Everyone has different specialties, and different volumes of abilities. You wouldn't let an intern have an equal say as a senior engineer when designing the core infrastructure. You especially wouldn't let the janitor have an equal say - he's got no experience in desiging such things!

I'm always very uneasy about equality talks because all people are not equally suited to make global policy decisions. Nor are they equally incentivized to make the most informed and rational decisions.

I'm not saying that there isn't a problem or that we shouldn't do anything about it, but I am saying that I disagree with an egalitarian approach. We want the majority of decisions to be made by people who understand what they are deciding and have lots of experience, not to be made by individuals who mostly understand the topic from a single reddit thread. We want to make sure that the incentives of the people in power are aligned with the people who are not in power, but leveling the playing field is not an approach I find valuable.

Re: Why Inequality Matters

#178

Post by bryondowd » Thu, Oct 16, 2014, 4:03 PM UTC

brandonmenc wrote: post #112

judk wrote: post #97

Earlier quoted context omitted.

Paying someone to do worthless work (lavishing luxury on someone) does not help society much. That's just gaming the numbers, like saying "going to war" helps the economy. Paying someone to alleviate basic needs does. Not all consumption is equal.

> Paying someone to do worthless work (lavishing luxury on someone) does not help society much. Tell that to the people feeding their families by working at the resort, or in the vineyard, or the tannery. There is a demand for luxury goods, and there always will be. A tax in the consumption of those goods cuts into the wages of the non-wealthy involved in their production.

Depends what you do with the taxes. If you use them to decrease the financial burden of just surviving for the non-wealthy population, that frees up their wealth for consumption of more reasonable items, which increases demand for those items, which creates more jobs supplying those items. So really, wouldn't this just be a matter of shifting jobs from supplying exclusive luxury items to supplying more common quality of life improving amenities?

Of course, I'm just a tech nerd with zero finance/economy training, so let me know if I'm missing something obvious.

Re: Why Inequality Matters

#179

Post by crdoconnor » Thu, Oct 16, 2014, 4:03 PM UTC

simonh wrote: post #90

saalweachter wrote: post #42

Earlier quoted context omitted.

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 maint…

Interesting argument, but surely you don't think the world needs less investment? So if you're going to tax away money that would otherwise be invested in creating businesses and jobs, what do you think should be done with it instead? Or do you think the state is a more efficient investor of capital? I do agree that wealth is a potent weapon, but that's why capitalism works best when markets, and politics are well re…

>Interesting argument, but surely you don't think the world needs less investment?

Right now it does. There is far too much money chasing too few investment opportunities. This is causing bubbles all over the place. Money that would have been productively invested were there demand is being funneled into property, gold, the equities market, fixed income & even bitcoin.

>Or do you think the state is a more efficient investor of capital?

Sometimes it is. It's a myth that the state is incapable of efficiently allocating capital and the private sector always does a better job. Sometimes the private sector does an atrocious job (e.g. see the massive overbuild of housing in the last decade).

Re: Why Inequality Matters

#180

Post by danielweber » Thu, Oct 16, 2014, 4:03 PM UTC

protonfish wrote: post #155

danielweber wrote: post #135

Earlier quoted context omitted.

Why is investment "hoarding"? Money in the bank is moving around, even without the multiplier of partial reserve banking.

Not all of it is hoarding, but some of it is. The effects on the economy between letting your money sit in government bonds vs. purchasing a consumable cannot be even close. The worst is investing in foreign companies - that wealth completely disappears from the domestic economy. Stock options and commodities and currency speculation create no wealth, only move funds from one person to another. Even typical investmen…

Our modern society exists because of accumulated wealth. Roads, buildings, computers, cars, refrigerators, factory equipment, power grids: those are accumulated wealth. (There are also intangible things that accumulate as well, but try landing on a desert island with a copy of Wikipedia and then attempting to build a computer.)

The American economy is over 70% consumption. This doesn't mean "increase consumption to increase the American economy." We will probably never get under 50% consumption, because we are a mature economy with creature comforts. But the more we invest, the more stuff our children will have.

Consumption is the easiest thing to gin up in the short term, so governments that are on rapid election cycles always can choose policies to bump them up. But, although I believe Keynesianism is correct when it says you should pump consumption to get out of a recession, I also believe Keynesianism is correct when it says you should not be encouraging consumption when not in a recession. You need to save when times are good and spend when times are bad.