Why Inequality Matters • Hacker News Board

Re: Why Inequality Matters

#281

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

humanrebar wrote: post #96

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…

> 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. I'd go the other way in fact, if you are interested in redistributing wealth, you should encourage rich people to blow money on labor-intensive consumables. Using legal or social pressure to keep the rich from buying luxu…

I think you're right.

Just FYI, the line of thought of Gates here is probably based on the idea that you need "capital" in order to have a productive work force. If the rich spend all their money for consumption, then there will not be enough capital available - or so the argument goes.

I personally don't buy the argument; I believe that it goes too far into abstract models, confuses finances for the real world, and (like so much of economics) ignores the existence of banks. If Bill Gates were to sell shares to finance frivolous consumption, this would obviously not cause the physical destruction of factories and machines etc.

At the same time, it would encourage the companies he buys from to expand their production and invest. Now, some people may wonder what investors/financiers those companies can find if all the rich guys sell their investments to consume. Well, those companies can always go to banks, which have an essentially unlimited capacity for funding real-world investments.

Re: Why Inequality Matters

#282

Post by johnpenton » Thu, Oct 16, 2014, 5:46 PM UTC

masklinn wrote: post #239

michaelvkpdx wrote: post #198

I appreciate Gates' analysis of Piketty, but Gates is still blind to an important point- he came from a middle-class background and therefore had enough capital to gain a footing in the world and to be able to write his initial code without worrying about the basic needs of survival. 40% of youth in the USA today do not even have that, and as such, have virtually no chance at all of being able to even play in the cap…

> Gates is still blind to an important point- he came from a middle-class background Gates didn't come from a middle-class background but from an upper-class one. His father was a highly successful lawyer and cofounder of Shidler & King (then Preston Gates & Ellis, now K&L Gates), his maternal grandfather was an affluent banker (national bank president) and his mother was a Seattle power serving on the boards of Unit…

That sounds pretty middle class to me. Professional people - lawyers, bankers, management, etc. The US doesn't really have an upper class at all - just lots of rich middle class people.

Maybe it's a British thing, but to me class is only minimally about money, so you can't just say the Gates family are rich so they're upper class.

In Britain you can be penniless but still be upper class, or a billionaire but still working class. Take David Beckham - rich but working class. You can probably find some destitute Baronets somewhere who are definitely still upper class.

Re: Why Inequality Matters

#283

Post by TeMPOraL » Thu, Oct 16, 2014, 5:47 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.

Don't forget that those people are still going to be automated away from their jobs soon, so it's in everyone's best interest to figure out how to make society work without requiring people to slave away doing increasingly worthless and wasteful things. I.e. how to make those people feed their families without working on things that don't really need to be done.

Re: Why Inequality Matters

#284

Post by ommunist » Thu, Oct 16, 2014, 5:47 PM UTC

That's easy! Inequality matters until some people are more equal than the others.

Re: Why Inequality Matters

#285

Post by vidarh » Thu, Oct 16, 2014, 5:49 PM UTC

nicholas73 wrote: post #271

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 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 pr…

You completely ignore the whole argument for why the "good investor" is dangerous: He accumulates, and by accumulating he enables far more substantial interference with the democratic process.

Re: Why Inequality Matters

#286

Post by Omniusaspirer » Thu, Oct 16, 2014, 5:50 PM UTC

kamaal wrote: post #260

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…

>>I'm really not seeing why anyone should be entitled to never work again simply because their parents made a lot of money. Because, their parents earned it. People slog their bones off, make a lot of sacrifices and after a life time of work get to such a position. If some body's parents doesn't want to leave a inheritance, or don't to earn or whatever. I would leave that at calling it as their personal decision. >>I…

You answered your own second statement.

Their PARENTS earned it. Not the kids. That's my entire point- I don't think children should be entitled to assets their parents "slogged their bones off for" simply because they won the lottery of being born with those parents.

You disagree and that's fine, I was merely presenting the other side of this debate (and the one I personally sit on the side of).

Re: Why Inequality Matters

#287

Post by mgulaid » Thu, Oct 16, 2014, 5:51 PM UTC

Economists don't consider philanthropy a strong factor in economic development or advancement. Philanthropy IMHO has never contributed significantly to lift millions of people out of poverty. Although Gates Foundation and similar NGOs are doing wonderful deeds in Africa and the USA, it will not have the same impact as tax structure/incentives, trade policy, labor laws, access to education, immigration laws, etc. Also how do you define philanthropy, the work of the Koch brothers can be considered philanthropic in some peoples' opinions. Philanthropy is personal and political exercise.

I think philanthropy is great, but only few people are doing it. And those who do it, don’t do it effectively, do it too late, or focus on the symptoms rather on the causes, which are much harder to deal with. Philanthropy has become an accessory or a career suffix for those have got lucky.

Gates talks about the middle class in China and else where is getting bigger. True, but philanthropic has little to do with this improvement. Aggressive and central economic management, and free trade policy with the US helped above mentioned countries to sustain a healthy middle income class in China, Mexico, Colombia.

Re: Why Inequality Matters

#288

Post by dragonwriter » Thu, Oct 16, 2014, 5:52 PM UTC

bsbechtel wrote: post #206

dragonwriter wrote: post #154

Earlier quoted context omitted.

> However, if you cut taxes across the board, not just for the wealthy, the concentration of wealth does tend to even out. I don't see any reason or evidence for this, that is, for the proposition that ceteris paribus and independent of the distribution of tax burden, reducing the level of taxation promotes a more equal distribution of wealth. Certainly, to the extent that a given distribution of taxation itself prom…

(Having a hard time following your argument...) >Certainly, to the extent that a given distribution of taxation itself promotes inequality, reducing the level of taxation in with that distribution will mitigate that effect, but your proposition is equivalent to the proposition that every distribution of taxation promotes inequality compared to the absence of taxation, which I don't see any reason to believe. I think…

> I think you are saying taxes cause inequality

No, I'm not saying that. That's your argument.

> and the way we tax everyone can make inequality better or worse

Yes, I am saying that the way tax burdens are distributed can increase or decrease inequality.

> but my argument is that the complete absence of taxation will always improve inequality.

I recognize that that is your claim. What I don't see is a reason to accept that claim, in the form of evidence or even an explanatory theory of why one should expect it to be true.

> In another thread here I pointed out that inequality only became an issue in the 20th century around the same time the US government began taxing everyone directly through personal income taxes.

Yes, I saw that claim, as well. I'm not conviced that inequality only became an issue then, and even if it did there's a lot of competing explanations (e.g., the end of the frontier period (which, while it may not have actually impeded the growth of actual inequality, provided a distraction from it as an issue.)

But even if it was accepted that the adoption of the federal personal income tax was a contributing factor to actual inequality, that doesn't provide support for the claim that the mere existence of taxation causes inequality rather than that the particular distribution of taxes does so. First, because taxes in the US existed before federal personal income taxes were adopted, and, second, because even if they didn't, you couldn't, from one instance of taxation, differentiate between an effect of the particular form of taxation and an effect of taxation as such.

Re: Why Inequality Matters

#289

Post by nhaehnle » Thu, Oct 16, 2014, 5:53 PM UTC

danielweber wrote: post #135

protonfish wrote: post #25

Earlier quoted context omitted.

I'm no supply-side economist, or advocate of Brave New World consumerism, but I believe that taxing the purchase of actual consumer products would not have a positive effect on the economy of the country. I believe a healthy economy is an active one. An incentive to remove money from active circulation (hoarding) could have long-term negative repercussions. And a country where the government encourages the average pe…

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

One might call passive investment "hoarding" because it does not really encourage economic activity.

See, "investment" is such a loaded term. Somebody who uses their savings to open a restaurant is clearly making an "investment", and this form of investment is directly positive for the economy.

When you put your money into e.g. an index fund, the situation is much less clear. You help drive up stock prices, but this does not immediately say anything about the real world. At the same time, the counterfactual is that you would have spent this money on consumption, or to buy a new car, or whatever.

Those latter actions directly increase the demand that companies see, which encourages those companies to expand, i.e. to increase real world economic activity.

Don't get me wrong: individual saving is a wonderful thing, and there are all sorts of good reasons for it. But if nobody consumes, the economy has no reason to grow...

Re: Why Inequality Matters

#290

Post by loumf » Thu, Oct 16, 2014, 5:53 PM UTC

icebraining wrote: post #264

loumf wrote: post #227

Earlier quoted context omitted.

A tax does it with the force of law using the systems we already have in place. It's the cheapest, easiest, most likely to work way we have of doing this sort of thing.

Why can't we do it with the force of law using the systems we already have in place, without actually charging the tax?

The tax will make sure they list deductions, which are also useful to know.

Also, the transparency is a benefit, but so is the tax revenue. We should at least cover the expense of the program and consider if there are other taxes that should be reduced.