Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#11

Post by hervature » Wed, Dec 04, 2019, 2:39 PM UTC

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

I had a very different takeaway from Piketty's book. Namely, that inflation (primarily hyper inflation) has been the only force to reduce income inequality. For example, Jeff Bezos is much more affected than I am if the government decides to give everyone a $1B. Thus, governments looking to end income inequality shouldn't be afraid of high inflation.

Re: Economists Are Rethinking the Numbers on Inequality

#12

Post by aguyfromnb » Wed, Dec 04, 2019, 2:41 PM UTC

mamon wrote: post #9

aguyfromnb wrote: post #6

Earlier quoted context omitted.

> artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? > wealth flowing from working classes and…

Interest rates are set by FED, who can print arbitrary amount of money out of thin air, there is no supply/demand mechanism involved in setting them. Basically every rate change is an experiment testing whatever monetary theory is currently popular among FED board members.

>Interest rates are set by FED, who can print arbitrary amount of money out of thin air

One interest rate is set by the Fed, which serves as a benchmark for other market rates.

But it's a simple question: if I can borrow money at 3%, why would I borrow your money at 7% so you can earn a return? And if someone wants to lend me money at 3%, why is that "artificial"?

>who can print arbitrary amount of money out of thin air

How else should money be created? Should we do pretend mining, like Bitcoin?

Re: Economists Are Rethinking the Numbers on Inequality

#13

Post by leto_ii » Wed, Dec 04, 2019, 2:41 PM UTC

A lot of this article reminded me of the techniques used by climate change deniers to sow doubt.

Take for example the following: > Another correction concerns the tax reforms passed under Ronald Reagan in 1986. Apparent changes in top incomes around this reform account for about two-fifths of the total increase between 1962 and 2015 in the pre-tax incomes of the top 1% in Messrs Piketty and Saez’s estimates. Messrs Auten and Splinter say this is an illusion. Reagan’s tax reform created strong incentives for firms to operate as “pass-through” entities, where owners register profits as income on their tax returns, rather than sheltering this income inside corporations. Since these incentives did not exist before then, top-income shares before 1987 are liable to be understated.

In essence this just says that it's possible the rich used to be overwhelmingly rich even before the Reagan era reforms, hence inequality might not have increased that much over the past decades. This is hardly comforting for the average person.

Or take a look at the conclusive paragraph: > While that long and bloody academic battle takes place it would be wise for policymakers to proceed cautiously. Proposals for much heavier taxes on high earners, or a tax on net wealth, or the far more radical plans outlined in Mr Piketty’s latest book, are responses to a problem that is only partially understood.

Doesn't it smack of "the science is not in yet" argument used by climate change deniers?

Re: Economists Are Rethinking the Numbers on Inequality

#14

Post by WC3w6pXxgGd » Wed, Dec 04, 2019, 2:41 PM UTC

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

Taxation is violence. It is not the proper role of government to reduce income differences.

Re: Economists Are Rethinking the Numbers on Inequality

#15

Post by awrence » Wed, Dec 04, 2019, 2:41 PM UTC

hervature wrote: post #11

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

I had a very different takeaway from Piketty's book. Namely, that inflation (primarily hyper inflation) has been the only force to reduce income inequality. For example, Jeff Bezos is much more affected than I am if the government decides to give everyone a $1B. Thus, governments looking to end income inequality shouldn't be afraid of high inflation.

Bezos is basically entirely invested in stocks (Amazon). His exposure to monetary inflation is roughly 0. If the government hands out 1bn to everyone that'll happen at the expense of cash / bond holders. Prices from Amazon services will just adjust accordingly to the inflation spike along with their profit margins.

Re: Economists Are Rethinking the Numbers on Inequality

#16

Post by pksdjfikkkkdsff » Wed, Dec 04, 2019, 2:41 PM UTC

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

Afaik his finding are disputed. And even if not, why should it even be desirable to encourage labor? If capital is so great, people should seek owning capital, not seek to work more. As they say, savings plans start at 50$/month.

It seems rather great that this opportunity exists (assuming it is true). The alternative is that you have to work and work until you die.

Re: Economists Are Rethinking the Numbers on Inequality

#17

Post by joshklein » Wed, Dec 04, 2019, 2:42 PM UTC

hervature wrote: post #11

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

I had a very different takeaway from Piketty's book. Namely, that inflation (primarily hyper inflation) has been the only force to reduce income inequality. For example, Jeff Bezos is much more affected than I am if the government decides to give everyone a $1B. Thus, governments looking to end income inequality shouldn't be afraid of high inflation.

Inflation IS a tax on wealth. When done intentionally (by printing money), it’s called seigniorage.

Re: Economists Are Rethinking the Numbers on Inequality

#18

Post by _jal » Wed, Dec 04, 2019, 2:43 PM UTC

harimau777 wrote: post #10

It seems to me that income is in effect an abstraction of a person's social class. Therefore, I wonder if it might be more effective to look at the factors that actually separate different social classes. For example: What percentage of a population is self employed and/or employed in a role with significant autonomy? What percentage of a population owns their own house? Of those who own a house, how much control ove…

> It seems to me that income is in effect an abstraction of a person's social class.

That's not how class works. There are multimillionaires running their own blue-collar businesses and farms whom a bankrupt real estate developer would look down on.

Re: Economists Are Rethinking the Numbers on Inequality

#19

Post by SamBam » Wed, Dec 04, 2019, 2:44 PM UTC

pksdjfikkkkdsff wrote: post #16

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

Afaik his finding are disputed. And even if not, why should it even be desirable to encourage labor? If capital is so great, people should seek owning capital, not seek to work more. As they say, savings plans start at 50$/month. It seems rather great that this opportunity exists (assuming it is true). The alternative is that you have to work and work until you die.

"Why doesn't everyone just get rich?"

Re: Economists Are Rethinking the Numbers on Inequality

#20

Post by aguyfromnb » Wed, Dec 04, 2019, 2:44 PM UTC

citilife wrote: post #8

aguyfromnb wrote: post #6

Earlier quoted context omitted.

> artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? > wealth flowing from working classes and…

> Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. While that's somewhat true, its also largely dictated / controlled / heavily influenced by government. This means the overnight lending rate, U.S. bond rate, etc.

>This means the overnight lending rate, U.S. bond rate, etc.

The overnight lending rate is set by the Fed, yes.

Treasuries are sold in the market. Although an initial auction price is set, the rates will fluctuate based on demand for the bonds.

I don't deny the Fed are a major influence on rates, as it's a major component of their mandate now. However, the market can "agree" or "disagree" with those rates and set corresponding rates however they choose.