Why Inequality Matters • Hacker News Board

Re: Why Inequality Matters

#411

Post by nhaehnle » Fri, Oct 17, 2014, 6:27 AM UTC

nhaehnle wrote: post #281

humanrebar wrote: post #96

Earlier quoted context omitted.

> 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…

Great... you make the effort of writing a balanced comment that both explains an argument of somebody and why that argument is probably misleading and/or incomplete, and it gets downvoted without a single reply actually challenging the contents (note that dragonwriter's reply simply adds another aspect to this discussion).

Re: Why Inequality Matters

#412

Post by VexXtreme » Fri, Oct 17, 2014, 6:31 AM UTC

capisce wrote: post #364

ahomescu1 wrote: post #306

Earlier quoted context omitted.

Replace "wealth" with "intelligence", "attractiveness" or even "physical strength", and you get similar threats. Big, strong people could hurt us at any time, and "it's only through their continuing mercy that they haven't"; intelligent people could manipulate or persuade us, while attractive people could seduce us for their own benefit. And yet, we still let people go to the gym to work out and go to school and read…

So we shouldn't attempt to disincentivize countries from building up a nuclear arsenal, as long as they haven't nuked anyone yet?

You didn't answer his question whether it's ok to try to neuter the power that people derive from certain innate attributes. I.e. is it OK to make an exceptionally good looking person pay a higher tax, because there's a loose correlation between physical appearance and one's ability to secure a good future? Furthermore, doesn't everyone deserve the same shot at procreating with a good looking individual? Shouldn't we start using the power of coercion to make sure that unattractive people get to mate and have children as well? Where does it stop?

Re: Why Inequality Matters

#413

Post by VexXtreme » Fri, Oct 17, 2014, 6:48 AM UTC

bjourne wrote: post #275

simonh wrote: post #90

Earlier quoted context omitted.

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" th…

Your statement is fallacious. If governments are more efficient at creating inventions and advancing science, then according to that logic, a big government with greater power should be more efficient at advancing technological and scientific progress.

Yet, the majority of important technological and scientific inventions usually come from free-market based capitalistic societies. I don't see countries like North Korea, Russia and China making any scientific and technological breakthroughs, and I think it's easy to argue that they have very powerful governments.

Private sector has and always will drive the majority of progress. How much exactly, usually varies by era and political structure of the global society, but the fact that the free market ultimately drives innovation is indisputable.

Re: Why Inequality Matters

#414

Post by davidw » Fri, Oct 17, 2014, 6:57 AM UTC

couchand wrote: post #356

davidw wrote: post #81

Earlier quoted context omitted.

Taxes, among other things, can be used to discourage "bad" behavior - like smoking, or burning carbon, or other stuff that has costs for society at large ("externalities"). By and large, the more you tax something, the more you discourage it.

It is true that by taxing something you usually discourage it, but that's a simplified view that's not always the case. It assumes normal goods and a particular relationship between taxation and interest rates that doesn't necessarily bear out. In particular, in a discussion of wealth tax vs. consumption tax, you can't rely on the naive assumption that elasticity of consumption has a significant bearing on the net ef…

I said 'by and large'. It's clearly a long, complicated discussion. But I wanted to provide a reason why taxes might be termed 'punishment' rather than delve into the economics of it all, which you could probably write entire books about.

Re: Why Inequality Matters

#415

Post by VexXtreme » Fri, Oct 17, 2014, 7:08 AM UTC

refurb wrote: post #345

nhaehnle wrote: post #289

Earlier quoted context omitted.

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…

I don't follow. If I buy stock during an IPO, the company gets the money to either reinvest or invest in something else. If I buy stock post-IPO, that provides cash to someone else to either invest in additional stock or spend on consumables. I don't agree that investing in any way relates to hoarding.

He seems to think that equities are some kind of sinkholes where the money simply gets tied up or disappears. He doesn't understand that the money used to buy a share has to go to the seller of the said share, who might in turn use it to consume. It's actually an incredibly common fallacy that keeps getting brought up time and again.

Re: Why Inequality Matters

#416

Post by tszyn » Fri, Oct 17, 2014, 7:14 AM UTC

jmckib wrote: post #377

tszyn wrote: post #337

Earlier quoted context omitted.

The rich don't need the government to exert influence and rig the game in their favor. For example, they can: - buy up their competitors to create monopolies - use one monopoly to build another one (e.g. "if you buy our competitor's coal, you can't use our railroad") - gain control over natural resources - collude with their competitors - abuse the legal system to kill competitors - hire marketers and fund NGOs for p…

I wasn't suggesting that we scrap the Antitrust Division of the US Department of Justice specifically. You make a good argument that we still need them. However, there are many other areas in which the government could be scaled back without incurring a robber baron scenario. Do some googling for "regulatory capture" and you'll see what I mean. Simplifying the tax code and the bureaucracy that comes with it is one go…

I've noticed that most examples of regulatory capture provided in the Wikipedia article involve regulatory agencies failing to enforce rules on selected companies (e.g. BP was allowed to drill in the Gulf of Mexico without doing the environmental legwork, Goldman Sachs was allowed to manipulate the commodities markets, etc.), which resulted in Very Bad Things happening. These cases don't show that "big government" regulation is bad. They show that failure to regulate is bad. Off the top of my head, I can't think of too many examples of companies using the government to their own ends. OTOH, I can think of many examples of government restricting the freedom of corporations in the name of some social good. For this reason, I think that if we scaled back the government, corporations would have more power, not less. (Not to mention other negative effects of government abdicating its responsibilities in particular areas.)

Re: Why Inequality Matters

#417

Post by cbovis » Fri, Oct 17, 2014, 7:53 AM UTC

smutticus wrote: post #235

Taek wrote: post #177

Earlier quoted context omitted.

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…

One of my favorite Churchill quotes is, "The best argument against democracy is a 5 minute conversation with the average voter." You're position isn't all that strange, and it does cut right to the heart of the issue. Do we really want to live in a democratic society? Part of the problem with addressing this question is that we've generally agreed the answer is, 'Yes'. Even if we're not always willing to fully live t…

"If more money is made, then we made the right decision"

Unfortunately this is so often true in a purely financially oriented point of view however it completely neglects moral obligations which SHOULD supersede financial incentives if need be.

Re: Why Inequality Matters

#418

Post by jeffdavis » Fri, Oct 17, 2014, 7:59 AM UTC

reirob wrote: post #367

jeffdavis wrote: post #237

Earlier quoted context omitted.

"Gates' idea of a consumption tax would heavily penalize these people, who have been enslaved into a consumer lifestyle by the wealthy who exercise control over their lives." That came out of the blue... can you expand on that? [Note also that Gates said a progressive consumption tax.] I like a progressive consumption tax because (I currently believe, anyway) that it's harder to avoid than an income tax. Income can h…

"if you are living here then you are consuming here" - it strikes me that, the more you are poor the more you are bound to consume local. The richer you are the more choice you have where to consume (or where to invest, at some point of wealth this could also be considered as consumption). Therefore I tend to think that a consumption tax will penalize the poor.

Can you give an example of living in the US and consuming mostly somewhere else? Are you just talking about luxurious vacations to Europe?

Re: Why Inequality Matters

#419

Post by maigret » Fri, Oct 17, 2014, 8:39 AM UTC

aurelian wrote: post #314

vishnugupta wrote: post #263

Earlier quoted context omitted.

> If you take that wealth and move it to the average person. Wealth redistribution doesn't necessarily mean taking money/wealth, literally, from wealthy and giving it away to poor. It includes, among others, subsidized education, free access to basic health care, nutritious food, potable water, eradication of epidemics, decent housing, decent retirement income and so on. This is the problem I see in societies that ar…

>Poor are poor not just because they don't have money but also because they are unable to get out of it. They have to go through unspeakable ordeal just to get one meal a day and this places enormous cognitive load on the entire family. That seems like it should be true intuitively, but if it were true, you'd expect higher benefit levels to correlate with higher rates of getting out of poverty. The data points to the…

I think welfare is only one tool against poverty, far from being the whole solution. Actually nordish countries have many more tools against equality, like health coverage and free education. Welfare, even in those countries, is the last "fallback", nothing more. So the study is really biased on the people with the most problems. No surprise they don't get out of it well.

Re: Why Inequality Matters

#420

Post by simoncarter » Fri, Oct 17, 2014, 10:07 AM UTC

jotm wrote: post #278

"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 a…

I was about to ask this question, though not sure I can share in the conclusion. I was under the impression that people who spend money on consumables help drive the economy, though this might be tangential to the net value to society of each dollar spent. Further, as I understood, taxes on consumables such as VAT, which is how I assume one would go about dealing with that third category of wealthy person, tends to disproportionately impact the poorer in society, at least from what i've read in the news.