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Economic Inequality: The Simplified Version

paulgraham.com

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Re: Economic Inequality: The Simplified Version

#11

Post by nostromo »

Most people I know that are concerned about economic inequality aren't super bothered by self-made billionaires (Jobs, Zuck, and Gates to a lesser degree.)

Mostly they are concerned about dynastic wealth (Waltons, Kochs) particularly when it's economic power intertwined with political power (Kennedys, Bushes, Clintons, Romneys).

Outside of San Francisco, where many people feel real downward economic pressure from tech, most of the US seems pretty happy with the self-made uber rich. In fact, I think people are downright fond of these people. The real discomfort comes when those oligarchs look to preserve dynastic wealth and power for generation after generation using trusts and other tax avoidance strategies.

Re: Economic Inequality: The Simplified Version

#12

Post by gajomi »

I agree with the basic claim of this response: economic inequality itself it not a problem. I don't really think I would care too much about an extravagant billionare class if the lower classes had 100K household incomes in a robust democracy where the proletariat would have have fair representation. The problem of poverty, generalized, is a problem of access to essential resources. What counts as "essential" of course might be debatable, but the metric for improvement should be about reducing the fraction of the population that doesn't have access to essential resources. However...

>We will not do a good job of fixing the bad causes of economic inequality unless we attack them directly.

I would replace "will not" with "may not". If the "good" and "bad" forces at work are sufficiently correlated in their ultimate causes then a blunt metric of reducing overall inequality might turn out to be a nice strategy.

EDIT: In particular if per capita income is known then the total variance and behavior in the tail may place strong constraints on the fraction of the population below a threshold.

Re: Economic Inequality: The Simplified Version

#13

Post by chubot »

ThomPete wrote: post #6

I am kind of surprised that PG insist on confusing extreme economic inequality (which is the one most people are talking about when they say it's bad) with normal economic inequality (which most people are totally fine with.) Edited to clear up confusion

This comment doesn't make any sense without defining "extreme" vs "normal" income equality. That is far from obvious.

Do you think that technology alone can't produce extreme income inequality? Why?

Re: Economic Inequality: The Simplified Version

#14

Post by hackuser »

> economic inequality per se is not bad.

A lot of research shows that high society-wide economic inequality causes many bad effects, economically, politically and socially. I believe that is the basis of many concerns. According to that research, high inequality is per se bad (I don't know enough to define "high", but many others have).

> [inequality due to startup founder success is good]

Generally I agree, but:

1) The question isn't whether all inequality is bad but whether current levels are bad. Nobody argues for perfect equality.

2) It overlooks the problem that many are denied the opportunity of such success because of their race, gender, social networks, or economic class,[1] which deny them access to the important resources such as education, financing, contacts, or jobs.

That's bad for the people who otherwise would succeed; it's bad for our society socially and politically to have people who are and feel excluded; and it's very bad for our economy to not utilize the >70% [2] of human resources that aren't middle-class or wealthier white males.

----

[1] AFAIK, plenty of research shows that education depends significatly on the economic class of your family

[2] Around 33% of the U.S. population is white male and some of them are poor; therefore 70% seems a safe estimate.

Re: Economic Inequality: The Simplified Version

#15

Post by egusa »

great article. i know it was written to clarify earlier misinterpretations, but i really found i took away more from this one than from the prior article. it reminds me of the mark twain quote "If I had more time, I would have written you a shorter letter.”

Re: Economic Inequality: The Simplified Version

#17

Post by pervycreeper »

Really the correctness of this argument hinges on what definition of inequality one uses. A single factor like standard deviation, for example, tells one much too little. Outliers have a disproportionate effect on this. On the other hand, the gap between what might be called "poor", and "middle-class" affects almost everybody, and the power imbalance that results from this difference leads to many negative effects for those who can't keep up. In summary: the disproportionate influence of the super-rich, and the relative condition of the lower classes are separate issues that are both sloppily discussed using the term "income inequality".

Re: Economic Inequality: The Simplified Version

#19

Post by tempestn »

balsam wrote: post #9

Only the last paragraph is original, but it is probably also wrong. So PG is saying that the major cause of inequality is technological advancement. But for example see that economic inequality decreased after WWII, but is it really that farfetched to imagine that technological power did not decrease during the war years? (E.g. Manhattan Project.) It is also not hard to imagine that wars would distribute technology m…

There are multiple factors that affect inequality, so a short term decrease in inequality can certainly still occur while technology continues to advance. In his other recent essay[1], pg goes into more detail on why inequality decreased in the postwar years, despite advances in technology.

[1]: http://www.paulgraham.com/re.html

Re: Economic Inequality: The Simplified Version

#20

Post by Alex3917 »

> economic inequality per se is not bad

So let's grant that economic inequality is good in some cases.

Even if this is the case, reducing economic inequality may be the most efficient way to solve a wide variety of societal issues. E.g. how many societies are there with high inequality where the poor aren't discriminated against or pushed around by those with money?

Sure, in theory inequality isn't the same as:

- Regulatory capture

- The political system being owned by the super wealthy

- Endless war

- Environmental atrocities

- The dismantling of public infrastructure

- The completely dysfunctional healthcare system

- The privatization of public resources

But 'not the same as' doesn't mean unrelated, since inequality is what enables these things to occur. E.g. the rich can bribe politicians to pass laws that make them richer by allowing them to poison low-income minorities or whatever. And while reducing inequality may not be the perfect solution for the reasons stated, it's not clear that a better solution exists. (Sort of like how democracy is the worst form of government, except for all others that have been tried or whatever.)

Even if economic inequality is intrinsically good, which I think it is, it doesn't follow that reducing inequality is bad.

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