Why Inequality Matters • Hacker News Board

Re: Why Inequality Matters

#271

Post by nicholas73 » Thu, Oct 16, 2014, 5:34 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…

> 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.

Disagree. The good investor not only puts capital to work and creates wealth for others, he is also taking money out of the system. Since he is not consuming, the net effect of his increased capital hoard is to decrease prices across the board for everyone else. This can change once he decides to spend, but then he will pay consumption taxes like the others.

Re: Why Inequality Matters

#272

Post by norseboar » Thu, Oct 16, 2014, 5:36 PM UTC

Taek wrote: post #224

shadowfox wrote: post #211

Earlier quoted context omitted.

> 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 The usual trouble with this sort of idea is who gets to decide the "elite" that makes the decisions. How do you prevent this group from becoming an insular clique and debar other people from similar opportunities etc. Powe…

No I totally agree. I believe that there should be an elite who makes most of the decisions, which is mostly how things are today, but I also believe that there needs to be methods of being sure that the elite are operating in everyon'es best interest, and that they will be replaced if they aren't. There are a lot of broken incentives. If one of the elite comes to the realization that they are no longer the most usef…

Do you see this system of the elite ruling as an ideal that will never be reached (a la Plato's Republic) or as a practical system? Because in the latter case, you've got an intractable problem on your hands.

The problem is a basic political systems one: at some point, you need the consent of the governed. There are no stable systems on the record where a majority of those governed dislike the leadership. Either the oppressed are a minority (colonial Europe, slavery in the US) or the gov'ts are short-lived and unstable (on an order of 50-100 years, in the short term these can work). The most stable regimes that don't have majority support are ones that suppress free speech, which is hard to argue is operating "in everybody's best interest".

So, if you want a stable oligarchy that preserves some free speech, you need a group of "elites" that the whole society agrees is fit to lead them. I don't think the average voter believes themselves to be in the best position to run the country -- that's exactly why they vote for somebody else to do it.

But if you take voting out of the equation, you're trying to build a system where you have an elite that has support of the majority, without consulting the majority. At best, you have a system of guesswork that results in something similar to democracy (because the oligarchy are people the majority supports anyway). At worst, you have an unstable government.

Re: Why Inequality Matters

#273

Post by TeMPOraL » Thu, Oct 16, 2014, 5:37 PM UTC

r00fus wrote: post #233

forgingahead wrote: post #98

Earlier quoted context omitted.

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

Your number is way off (435+100+more than 1 executive branch), and furthermore, if you don't follow the money that influences these actors (lobbying, revolving door, non-blind blind trusts, etc) then you don't really understand what or who is driving those decisions. Fighting politicians is like whack-a-mole - even if you get rid of bad ones, the replacements are often just as corrupt as the ones that got replaced. F…

Exactly. It doesn't make sense to fight politicians, because they pretty much have no agency. They are public faces to the decisions made inside the system that is both influenced from outside (lobbying, et al.) as well as having its own power dynamic. If you're a honest, well-meaning, incorruptible politician, you'll get filtered out from the system at early stages. No one is going to let you take an important seat if you're uncontrollable.

Re: Why Inequality Matters

#274

Post by marcosdumay » Thu, Oct 16, 2014, 5:38 PM UTC

icebraining wrote: post #209

loumf wrote: post #171

Earlier quoted context omitted.

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.

Does he make it clear why would the tax be needed? After all, you can impose the same information transparency requirements needed to levy the tax without actually levying it, no?

Tax evasion is a crime that's much more throughly punished than lying to sense agents or misreporting wealth. That's for obvious reasons, because tax evasion actually takes money from the hands of the government, while the later actions (that are not even consistently considered crimes) just hurt some abstract concept of data gathering, that could lead to better policies in the future, or not - nobody can be sure - for reasons that very few people can understand.

Add to that that the few people in power that do understand how data can improve policies normally have an idea what kind of improvement they'll get, and don't like it (they are in power, if they liked it, they'd already do it). While tax evasion is understood by everybody and weaken they power right now, in visible ways.

Re: Why Inequality Matters

#275

Post by bjourne » Thu, Oct 16, 2014, 5:38 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…

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

Absolutely! The number of inventions that was created by government investments absolutely dwarfs the number of privately funded inventions. Internet, GPS, cancer research, nuclear power.. I've never heard a logical explanation to why companies should be more efficient than states. Everyone just seem to take it as a given because "everyone knows" that governments are buerucratic and inefficient.

Re: Why Inequality Matters

#276

Post by nhaehnle » Thu, Oct 16, 2014, 5:38 PM UTC

AnthonyMouse wrote: post #248

marcosdumay wrote: post #82

Earlier quoted context omitted.

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…

> 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? Any time you're considering a tax system you have to consider the incentives it creates for people. If you have a "wealth tax" then we have to consider how the rich will try to avoid it. First, people will convert from savings and investm…

> Most importantly, the only way that a wealth tax is going to do what Piketty wants is if the rate is higher than the typical rate of return on capital.

Note that one important reason why Piketty wants a wealth tax is that this would lead to much higher quality data on the wealth distribution (I haven't read the book, but he says so very clearly in his TED talk).

> But if it's higher then the economic incentives it creates are catastrophic.

Frankly, this sounds much too alarmist. First of all, the talk is always about a progressive wealth tax in the first place. That is, few people would be affected by the highest tier.

Second, if you think about the steady state, it's clear that wealth up to the level of the highest tier of taxation wouldn't be accumulated in the first place. [0] Yes, people would try to evade taxes, but they are already doing this today. [1] More likely, this would create incentives for donations.

As a final thought, the idea of using a VAT to finance a basic income is nice, but it doesn't help against wealth inequality, because poor people generally spend a much higher fraction of their disposable income on stuff on which VAT is paid.

[0] My intuition for this comes from income taxes: During the time when highest marginal rates were much higher than today, executives didn't bother bargaining for the ridiculously high salaries that they get today, and so few people really paid those highest rates.

[1] And if you're worried about people renouncing citizenship: I think we should grow a pair and get serious about exit taxes.

Re: Why Inequality Matters

#277

Post by GFK_of_xmaspast » Thu, Oct 16, 2014, 5:38 PM UTC

Taek wrote: post #177

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…

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 a…

So just out of curiosity, do you see yourself in the "have a say" group or the "do not have a say" group?

Re: Why Inequality Matters

#278

Post by jotm » Thu, Oct 16, 2014, 5:39 PM UTC

"A third person is mostly consuming, spending a lot of money on things like a yacht and plane. While it’s true that the wealth of all three people is contributing to inequality, I would argue that the first two are delivering more value to society than the third."

Really? I always considered this kind of spending a good thing for society. Other businesses and people get that money, they create technology, materials and processes that would likely not exist otherwise, there's still tax being paid along the way and we get a bit of cultural heritage as a bonus (castles, boats, planes, cars, the Sistine Chapel, a lot of paintings - all of which exists only because some rich man decided he wanted it).

Taxing luxury is a mistake and a potential slippery slope IMO. IIRC, the US tried it in the past with disappointing results.

Re: Why Inequality Matters

#279

Post by krisdol » Thu, Oct 16, 2014, 5:42 PM UTC

aidenn0 wrote: post #205

m0th87 wrote: post #148

Earlier quoted context omitted.

Piketty addresses this specifically in pointing out that wealth had to be reconstructed almost from scratch following WW2. If you buy his thesis, then this wealth will be inherited by third- and fourth- generation billionaires next, unless another shock at the scale of WW2 happens.

I buy into that thesis for Europe, but the continental US was largely shielded from the destruction of WW2.

The ratio of capital-to-labor money was at an unusual low even in the US during that era. It has since been returning to its pre-WW2 levels. Piketty addresses WW2 a lot in his book, for many reasons including that this economic anomaly occurred during this period.

Re: Why Inequality Matters

#280

Post by vixen99 » Thu, Oct 16, 2014, 5:45 PM UTC

astazangasta wrote: post #166

radmuzom wrote: post #80

Earlier quoted context omitted.

Great comment. Also, those of us who fight against inequality are not fighting for equality at all. What we say is simple - if you have a million dollars and 100 people to share it - rather than 1 person have 990,000 and the remaining 10,000 divided among 99 we want the 1st person to have 800,000 and the remaining 200,000 to be divided among the 99. That way, the first guy can have his $5,000 wine without paying any…

Don't speak for everyone. Personally I think the idea that we need wealth concentration at all is bogus. Investment is already performed by teams of skilled experts on behalf of the wealthy. We don't need individuals who simply perform the function of owning things and reaping the benefits for literally doing nothing. There are better ways we could be allocating capital. We also don't need wealth concentration to enc…

Yes, stop Musk et al., doing what they're doing because we 'don't need it' 'cos it's bogus.

How your ideas could operate in other than a totalitarian state is not clear to me because you'd certainly never be able to implement them otherwise - thank goodness.