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Inequality in Equalland

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Re: Inequality in Equalland

#131

Post by loewenskind »

gaius wrote: post #125
loewenskind wrote: post #96

Earlier quoted context omitted.

But what is the point of such a line of discussion? If there are no consequences then of course no one would care. The whole reason such a thing is discussed is because there are indeed very real consequences.

Not really. Here in the UK "the poor" have satellite TV, free healthcare, smoke 40 cigarettes a day, and pay someone else to cook their food . What does it matter that "the rich" go to the opera and smoke cigars and eat at fancy restaurants instead of the kebab shop? How does any of the latter take anything away from the former?

We were talking in the context of the US where this is absolutely not the case. In the UK the wealth inequality would be less of a big deal than in the US precisely because the UK takes better care of it's poor (with the unfortunate abuse that comes with that).

pg's comments about wealth are correct: me going out and creating something that makes me a billion dollars doesn't take anything away from anyone. But this is provided I'm a one man show and have no team. As soon as it's not "me" but a company, then me having enormous compensation very much does take away from others. The more money I take out of the pot, the less there is for workers, new positions, etc. It wasn't so long ago that top CEO's were making 70k/yr. :)

Re: Inequality in Equalland

#132

Post by loewenskind »

rmk wrote: post #123
yummyfajitas wrote: post #114

Earlier quoted context omitted.

That seems absurd on it's face. If there is no one to consumer what exactly are the producers selling? So a loaf of bread is eaten just so that it can be produced? Also, the developer I mentioned is in the top 3%, not the top 1%. Does that substantively change the nature of my assertion? Lastly, when discussing CEOs who fail to turn a company around, you are comparing CEOs to other CEOs. Similarly, while most program…

It looks like the OP doesn't like CEOs. Fair enough, what with CEOs raking in the moolah while the stock underperforms / short-sighted decisions that pander to the 'analysts' are taken etc. But, the OP also seems to be making the mistake of implying CEOs == the rich. This is patently absurd. There are plenty of rich people who are not CEOs. How about Larry Page, Sergei Brin, Michael Jordan, Barack Obama, Senators of…

>It looks like the OP doesn't like CEOs.

Not at all, it's a needed and valuable position to be sure. And I have no problem with them being the highest paid person in the company, even by several times. I just think the vast majority are ridiculously over paid.

>But, the OP also seems to be making the mistake of implying CEOs == the rich.

No, I was singling this group out as a big source of inequality. Larry and Sergei are founders. Their wealth (initially) didn't negatively impact anyone else. Michael Jordan made his money directly from advertising which means he was paid what companies thought was fair [1]. Politicians get rich from corruption and gaming the system. The difference between them and overpaid CEO's is that what they do is obviously illegal or at least immoral. Lots of people herald overpaid CEO's as something to aspire to.

[1] This is different from a typical mid to large size company CEO who's pay is decided by a board (i.e. often totally shielded from any market forces). The board will mostly be composed of people who are themselves CEO's of companies for which this CEO is a board member...

Re: Inequality in Equalland

#133

Post by speleding »

loewenskind wrote: post #98
speleding wrote: post #76

Earlier quoted context omitted.

Capitalism, and the income inequality it causes, has proven itself time and again as the most efficient organizing principle to create wealth. You may not like that but I don't think there is any way around that fact. If you want to go to a less efficient organizing principle you will have to accept that there will be less wealth. If history is any guide the people who will suffer the most from there being less wealt…

>Capitalism, and the income inequality it causes, has proven itself time and again as the most efficient organizing principle to create wealth. Bizarre statement. Compared to what? Primitive cultures that didn't have money? At what do you mean by "wealth"? Fiat currency (in which case Mugabe has been the most successful)? Accumulated toys and gadgets? Because if you're talking about anything else you're talking about…

I'm talking about capitalism as organizing principle: where people create wealth for society as a whole by pursuing their own interests. Wealth does not have to be money, I was talking about the economic definition of wealth. For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism. But it does cause income inequality as a necessary side effect.

Nations label themselves in various confusing ways, as you point out. China may label itself communist but it is quite far removed from using communism as an organizing principle to create wealth.

Re: Inequality in Equalland

#134

Post by speleding »

s_jambo wrote: post #80
speleding wrote: post #76

Earlier quoted context omitted.

Capitalism, and the income inequality it causes, has proven itself time and again as the most efficient organizing principle to create wealth. You may not like that but I don't think there is any way around that fact. If you want to go to a less efficient organizing principle you will have to accept that there will be less wealth. If history is any guide the people who will suffer the most from there being less wealt…

I think a large amount of our monetary inequality is down to the way we've allowed our markets to become warped. The numerous examples of CEOs who kill their company but still make out like a bandit. The traders who're supposedly part of price discovery mechanisms but who actually just seem to keep blowing bubbles. The musicians who're granted a government monopoly to sell something we already have too much of (pop m…

I agree. My position is not that capitalism is infallible, far from it, and the distortions of incentives you mention can and should be addressed. But you will find even worse excesses in nations organized around communism.

Re: Inequality in Equalland

#135

Post by loewenskind »

speleding wrote: post #133
loewenskind wrote: post #98

Earlier quoted context omitted.

>Capitalism, and the income inequality it causes, has proven itself time and again as the most efficient organizing principle to create wealth. Bizarre statement. Compared to what? Primitive cultures that didn't have money? At what do you mean by "wealth"? Fiat currency (in which case Mugabe has been the most successful)? Accumulated toys and gadgets? Because if you're talking about anything else you're talking about…

I'm talking about capitalism as organizing principle: where people create wealth for society as a whole by pursuing their own interests. Wealth does not have to be money, I was talking about the economic definition of wealth. For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism. But it does cause income inequality as a necessary side e…

>For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism.

Citation please? Where has communism seriously been tried? Russia was trying a lot of things at the same time while simultaneously engaging in wars and dealing with their own in fighting. Communism didn't flourish in this environment, but what would? Capitalism itself depends on rule of law which was spotty at best.

>But it does cause income inequality as a necessary side effect.

Again, if you're talking about US levels of inequality I'm going to need another citation. I can't think of any developed country that isn't capitalist but I can think of a lot that don't have US levels of inequality.

>China may label itself communist but it is quite far removed from using communism as an organizing principle to create wealth.

Exactly. Granted, China does interfere in their markets a great deal (e.g. pinning their currency to the dollar artificially) but market interference isn't communism. It's a capitalist market their interfering with not a communist one.

Re: Inequality in Equalland

#136

Post by loewenskind »

yummyfajitas wrote: post #114
loewenskind wrote: post #110

Earlier quoted context omitted.

>Consumption isn't useful to society. That seems absurd on it's face. If there is no one to consumer what exactly are the producers selling? >A developer (potentially earning $200k/year) who builds an application can be hundreds or thousands of times more productive than a secretary (potentially earning $20k/year). Exactly. Surely you're not under the impression that programmers are in the top 1%? Maybe one or two of…

That seems absurd on it's face. If there is no one to consumer what exactly are the producers selling? So a loaf of bread is eaten just so that it can be produced? Also, the developer I mentioned is in the top 3%, not the top 1%. Does that substantively change the nature of my assertion? Lastly, when discussing CEOs who fail to turn a company around, you are comparing CEOs to other CEOs. Similarly, while most program…

>So a loaf of bread is eaten just so that it can be produced?

Are you arguing in good faith here? Do you seriously believe that if we got rid of the "useless majority" in the US that the GDP would remain the same or even grow? Where would this extra wealth be coming from when the majority of the actors in the economy would be gone?

It's not that society exists to support people consuming, it's that the US' wealth is almost exclusively based on consumption. If you get rid of the consumers you get rid of... (fill in the blank).

>Also, the developer I mentioned is in the top 3%, not the top 1%. Does that substantively change the nature of my assertion?

Well, the conversation was about the top 1 or 2%, but even so. You mention a developer in the top 3%. Most developers, even most very good ones are not there. Is pg in the top 3%?

>Lastly, when discussing CEOs who fail to turn a company around, you are comparing CEOs to other CEOs.

No, I'm comparing what they accomplish to what they're paid. In my mind it would be pretty hard to do something worth a yearly compensation of e.g. 20+ million/yr.

For a founder it's pretty clear. He/she made something and received that level of compensation with a very small team so obviously what he/she did was worth that much to the market. But CEO's are generally shielded from market forces on salaries. Your "you are comparing CEOs to other CEOs" even seems to acknowledge this. If you aren't comparing them, how exactly are we arriving at the value they are providing?

>Unless you believe that a company would be better off making the secretary into the CEO, it is ridiculous to assert that the CEO is less productive than the secretary.

I never asserted that [1]. I concede that a CEO is very valuable and concede that he should be the highest paid person in the company. What I don't concede is that he should get hundreds or even thousands of times more compensation than any non-executive.

[1] I did assert that for a given task that a given CEO does I bet I could find someone paid a normal salary who works harder on that specific task but that's not the same thing and it was to address the patently ridiculous claim that the most wealthy people are also the hardest workers. Some are hard workers.

Re: Inequality in Equalland

#137

Post by speleding »

loewenskind wrote: post #135
speleding wrote: post #133

Earlier quoted context omitted.

I'm talking about capitalism as organizing principle: where people create wealth for society as a whole by pursuing their own interests. Wealth does not have to be money, I was talking about the economic definition of wealth. For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism. But it does cause income inequality as a necessary side e…

>For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism. Citation please? Where has communism seriously been tried? Russia was trying a lot of things at the same time while simultaneously engaging in wars and dealing with their own in fighting. Communism didn't flourish in this environment, but what would? Capitalism itself depends on ru…

> Citation please? Where has communism seriously been tried?

Actually communism works well on a small scale and even in the US it is practiced widely: the family. No one presents their kids with a bill at breakfast. There have been attempts of various success to scale this up in communities / kibuts / etc especially in the sixties. But everywhere it was tried on a nation wide level it failed, which was my point exactly.

> Again, if you're talking about US levels of inequality I'm going to need another citation.

I'm not claiming the US has the "right" level of inequality. They do have one of the highest inequalities and also one of the highest per capita incomes (discounting a countries with natural wealth like Norway). The OECD.org web site has all the numbers you are looking for. I'm not claiming that this is fair, I'm claiming the US has more wealth, albeit not equally divided. If you make things more equal there is a good chance you destroy wealth, and there is also a good chance less wealth hurts those at the bottom, although it can take a few years for the effects to show.

Re: Inequality in Equalland

#138

Post by loewenskind »

speleding wrote: post #137
loewenskind wrote: post #135

Earlier quoted context omitted.

>For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism. Citation please? Where has communism seriously been tried? Russia was trying a lot of things at the same time while simultaneously engaging in wars and dealing with their own in fighting. Communism didn't flourish in this environment, but what would? Capitalism itself depends on ru…

> Citation please? Where has communism seriously been tried? Actually communism works well on a small scale and even in the US it is practiced widely: the family. No one presents their kids with a bill at breakfast. There have been attempts of various success to scale this up in communities / kibuts / etc especially in the sixties. But everywhere it was tried on a nation wide level it failed, which was my point exact…

>But everywhere it was tried on a nation wide level it failed, which was my point exactly.

But I don't think it's been conclusively demonstrated to fail on it's own "merit" (so to speak) but rather due to "too many cooks in the kitchen" and/or outside interference. I don't know if this idea could every seriously work or not (I currently lean against), but I do know that people enjoying lots of power and wealth today don't even want to know due to the off chance that it might work.

>discounting a countries with natural wealth like Norway

Why are you discounting natural wealth? The US has natural wealth and a lot of size. We're either comparing it to other countries/regions or we're not.

>I'm claiming the US has more wealth, albeit not equally divided.

I would also question this. It's more or less true as a country but the US has 300 million people and 50 states, many of which being as large as European countries. So a better comparison might be US vs. the Euro zone in which case Europe has more wealth and it is more equally divided.

>there is a good chance you destroy wealth

There is some chance, but I think we're starting to see that it might not be the case and the opposite may even be true.

Re: Inequality in Equalland

#139

Post by MrDunham »

jshen wrote: post #43
MrDunham wrote: post #10

Earlier quoted context omitted.

I believe that was the promise of communism - which failed due to most people's inherent desire to be better than others or to excel. Also, people realized that they could/should do the absolute minimum, as there was no benefit for working harder. They did end up adding incentives (in the USSR) which started looking more and more like capitalism.

I'm so glad linus did the minimum when working on Linux, you know, since he wasn't getting paid and there was no perceivable financial gain in it. This meme that money is the only significant benefit from ones efforts should be plainly false. Why smart people believe it is beyond me.

There's a fantastic video on What Motivates Us. Link is [video] http://www.youtube.com/watch?v=u6XAPnuFjJc .

One of the things they showed an inverse correlation on amount someone gets paid and what they produce when it's anything above menial labor.

Highly worth a watch.

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