On Inequality and Risk Capacity • Hacker News Board

Re: On Inequality and Risk Capacity

#11

Post by freshbagels » Tue, Jul 23, 2019, 12:38 AM UTC

To say that risk capacity is the "real" source of inequality is simply incorrect.

There are plenty of people at or below poverty level who have little/no aversion to risk - it's just that the high-stakes gambles accessible to them are of a different nature than those accessible to a person of middle/upper class.

Risks with high rewards associated with impoverished people:

  - Theft/robbery

  - Scams/fraud

  - Selling drugs/other illicit items

Risks with high rewards associated with the middle/upper class:

  - Investing (stocks, crypto)

  - Quitting your job to start a business

For the impoverished, the consequences and chances of things going awry are stronger than a person of middle/upper class, yet they do pursue those risks, likely at a higher rate than the upper/middle class pursues the risks listed for them.

Re: On Inequality and Risk Capacity

#12

Post by [deleted] » Tue, Jul 23, 2019, 12:42 AM UTC

asciirobot wrote: post #9

The cause of inequality is a combination of inherited wealth, workers not having control of means of production, and a lack of real direct democracy in how we make decisions as a society. This inequality is enforced with violence by those hoarding all of the wealth and power. Both capital and the state are to blame here. Interesting mental exercises aside, this article is hard to take seriously.

[deleted]

Re: On Inequality and Risk Capacity

#13

Post by [deleted] » Tue, Jul 23, 2019, 12:46 AM UTC

freshbagels wrote: post #11

To say that risk capacity is the "real" source of inequality is simply incorrect. There are plenty of people at or below poverty level who have little/no aversion to risk - it's just that the high-stakes gambles accessible to them are of a different nature than those accessible to a person of middle/upper class. Risks with high rewards associated with impoverished people: - Theft/robbery - Scams/fraud - Selling drugs…

[deleted]

Re: On Inequality and Risk Capacity

#14

Post by fuzz4lyfe » Tue, Jul 23, 2019, 12:47 AM UTC

vannevar wrote: post #6

fuzz4lyfe wrote: post #3

Earlier quoted context omitted.

I see the solution in another direction. For every monopoly I see I also find a government enforcing that monopoly. Limit government power, not private ownership if you wish to improve the lot of the average person.

You confuse cause for effect. Emerging monopolies gain the power to warp regulations in their favor by virtue of the concentration of wealth and power. That concentration is an inevitable consequence of the wealth-income feedback loop. Without limits on wealth, capitalism collapses in on itself like a black hole.

> Emerging monopolies gain the power to warp regulations in their favor by virtue of the concentration of wealth and power.

Exactly. And no civilization on earth has yet solved the "Power tends to corrupt; absolute power corrupts absolutely." problem at scale. In what society does power not exist in some form? In even the most primitive of human societies the first and best portion of the meal would be given to those who had the most political favor. We have control of a single vector in this equation, the size of the government. I see no other way.

Re: On Inequality and Risk Capacity

#15

Post by WalterBright » Tue, Jul 23, 2019, 12:48 AM UTC

vannevar wrote: post #2

I'd agree that risk capacity (or element of ruin, as it's known in gambling circles) is a big factor in rising inequality. But there are many other advantages that the wealthy enjoy that may also explain the divergence. The wealthy can borrow money at much more favorable rates, they can meet minimum investment thresholds in ventures or funds that provide higher rates of return, they benefit from economies of scale in…

> they can meet minimum investment thresholds in ventures or funds that provide higher rates of return

On the other hand, anyone can invest in FAANG stocks and get a higher rate of return.

Re: On Inequality and Risk Capacity

#16

Post by 323454 » Tue, Jul 23, 2019, 1:48 AM UTC

asciirobot wrote: post #9

The cause of inequality is a combination of inherited wealth, workers not having control of means of production, and a lack of real direct democracy in how we make decisions as a society. This inequality is enforced with violence by those hoarding all of the wealth and power. Both capital and the state are to blame here. Interesting mental exercises aside, this article is hard to take seriously.

To start with just one of your assertions, I don't think "real" direct democracy is likely to reduce inequality. As one example, California Prop 13 was passed by direct ballot and many would point to it as a major _cause_ of inequality.

People vote mostly of out self interest, but mediating their expression of self interest through elected representatives enables pragmatic compromises that make the most good for the most people. Ultimately, I view representative democracy as a recognition that the political process will always depend on a small number of powerful people, so it's better if those people have some accountability to the people. Direct democracy circumvents that political process, forcing representatives' hands and blocking compromise. The result is stuff like Brexit.

I do think there is a place for direct democracy, but it is very limited. Historically it has been useful in affecting constitutional change e.g. the 1967 Australian referendum to grant citizenship to Aboriginals.

Re: On Inequality and Risk Capacity

#17

Post by SantalBlush » Tue, Jul 23, 2019, 2:36 AM UTC

fuzz4lyfe wrote: post #14

vannevar wrote: post #6

Earlier quoted context omitted.

You confuse cause for effect. Emerging monopolies gain the power to warp regulations in their favor by virtue of the concentration of wealth and power. That concentration is an inevitable consequence of the wealth-income feedback loop. Without limits on wealth, capitalism collapses in on itself like a black hole.

> Emerging monopolies gain the power to warp regulations in their favor by virtue of the concentration of wealth and power. Exactly. And no civilization on earth has yet solved the "Power tends to corrupt; absolute power corrupts absolutely." problem at scale. In what society does power not exist in some form? In even the most primitive of human societies the first and best portion of the meal would be given to those…

When our government was much smaller, it committed genocide of American Indians and recognized slavery. Similar things can be said of some other countries with small governments. I'm not convinced that government corruption is much of a function of its size.

Re: On Inequality and Risk Capacity

#18

Post by WalterBright » Tue, Jul 23, 2019, 2:59 AM UTC

WalterBright wrote: post #15

vannevar wrote: post #2

I'd agree that risk capacity (or element of ruin, as it's known in gambling circles) is a big factor in rising inequality. But there are many other advantages that the wealthy enjoy that may also explain the divergence. The wealthy can borrow money at much more favorable rates, they can meet minimum investment thresholds in ventures or funds that provide higher rates of return, they benefit from economies of scale in…

> they can meet minimum investment thresholds in ventures or funds that provide higher rates of return On the other hand, anyone can invest in FAANG stocks and get a higher rate of return.

For example, if you'd bought some MSFT when Nadella became CEO, you'd have a 5x rate of return.

Re: On Inequality and Risk Capacity

#19

Post by gumby » Tue, Jul 23, 2019, 3:48 AM UTC

It's not just overt financial risk. For example, tying health insurance to a job makes it hard for many people to leave their job (to start or join a new business).

Just as the roads provide an effective baseline for physical communication, universal health insurance of some sort provides a baseline or substrate for innovation.

There are other examples (e.g. clean air) but the health insurance case is most significant in the USA.

Re: On Inequality and Risk Capacity

#20

Post by claudiawerner » Tue, Jul 23, 2019, 8:37 AM UTC

323454 wrote: post #16

asciirobot wrote: post #9

The cause of inequality is a combination of inherited wealth, workers not having control of means of production, and a lack of real direct democracy in how we make decisions as a society. This inequality is enforced with violence by those hoarding all of the wealth and power. Both capital and the state are to blame here. Interesting mental exercises aside, this article is hard to take seriously.

To start with just one of your assertions, I don't think "real" direct democracy is likely to reduce inequality. As one example, California Prop 13 was passed by direct ballot and many would point to it as a major _cause_ of inequality. People vote mostly of out self interest, but mediating their expression of self interest through elected representatives enables pragmatic compromises that make the most good for the…

There are also ideological factors at play here. When GP is arguing for direct democracy they're not arguing for it in isolation, they're arguing for it as opposed to the political-economic system of today which they see as under the thumb of capital, which in part is due to the representative model. But simply removing the representative model won't rid us of capital's totality, nor its mechanisms (inequality through equality etc.)