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Economists Are Rethinking the Numbers on Inequality

economist.com

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Re: Economists Are Rethinking the Numbers on Inequality

#131

Post by carlob »

xorfish wrote: post #106
carlob wrote: post #89

Earlier quoted context omitted.

> But someone who earns more will also have a higher marginal tax rate. Not currently on capital > But someone with $10M will be able to get the same risk adjusted return as someone who has a net worth of $100k. That's exactly what Piketty has shown to be false. If you look at stuff like endowments and sovereign funds you'll see gains that are nowhere near what's possible even for funds that have $100M in capital. Th…

> Not currently on capital I said in my comment that return on capital should be taxed the same as labor income. > That's exactly what Piketty has shown to be false. If you look at stuff like endowments and sovereign funds you'll see gains that are nowhere near what's possible even for funds that have $100M in capital. Do they really outperform a basic index fund strategy? Any data on this? There isn't a market that…

> Do they really outperform a basic index fund strategy? Any data on this?

Yeah, Piketty's book. But of course the Norwegian government and Harvard administrators are just a bunch of idiots, they have billions of dollars to invest and didn't think of a basic index fund! Now they can save a lot of money firing whoever was managing it for them!

Re: Economists Are Rethinking the Numbers on Inequality

#132

Post by BurningFrog »

joshklein wrote: post #17
hervature wrote: post #11

Earlier quoted context omitted.

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.

It's always done intentionally, by printing money one way or another.

Re: Economists Are Rethinking the Numbers on Inequality

#133

Post by leto_ii »

bhupy wrote: post #116
leto_ii wrote: post #99

Earlier quoted context omitted.

Well, in the US, as possibly in other places, elections are usually won by the candidate who receives the most corporate support. On top of this, a bipartite political system can quite easily keep out candidates with views that are unpalatable to the rich and powerful (e.g. see how Bernie Sanders was treated by the Democratic establishment in 2016). Individuals mostly rubber-stamp one of the two mainstream candidates…

> Well, in the US, as possibly in other places, elections are usually won by the candidate who receives the most corporate support Again, this is orthogonal to the point about inequality. Insofar as corporations or money are involved in politics in America, it's for campaigning — buying TV ads, flyers, etc. While it's true that this makes it easier for richer people to get their message out there, the fact of the mat…

In a society there are may levers (official or not, transparent or not) that the powerful can pull to get politics to lean their preferred way. This is true of all places and all times. The more power is concentrated, the easier it is for a very small group of individuals to have a very large impact on decision making.

All the billions poured in campaign funding, lobbying etc. do actually buy a lot of influence albeit not in a direct, transparent way.

The same billions can also sway public opinion through deliberate and persistent propaganda in support of certain view points and against others.

Nowadays (and probably throughout most of modern history) you have to be highly committed and quite fanatical if you want to develop well grounded opinions that are not very much affected by propaganda. Most people don't have the time and resources for this -> most people are easily swayed by corporate propaganda.

Re: Economists Are Rethinking the Numbers on Inequality

#134

Post by dwiel »

cjjuice wrote: post #74

Why when we talk about inequality we never talk about the tide of economic progress that capitalism produces. If the rich get richer but the middle class has a better quality of life than what the rich had 200 years ago, is strict inequality still the only thing that matters?

How do you measure quality of life though? People say this kind of thing all the time "the poor are better off now than rich of the past". My guess is that most poor of today would switch places with the rich of the past in a heartbeat.

My point is just that "quality of life" is more complex than just longer expected lifetime, or has access to faster internet, as nice as those things are.

Re: Economists Are Rethinking the Numbers on Inequality

#135

Post by tathougies »

onion2k wrote: post #109
kofejnik wrote: post #94

Earlier quoted context omitted.

yes, exactly; to have equality, you'll have to reduce everyone to the lower common denominator, which will be rather low Also, I don't see why exactly inequality is inherently bad. I'm poorer than Bezos, _and that is a good thing_. Pretty much like Steph Curry is better than me at basketball and so he should have a lot more ball possesion should we be playing on the same team, Bezos is much better than me in allocati…

to have equality, you'll have to reduce everyone to the lower common denominator, which will be rather low Why must everyone go down to the lower common denominator? Wouldn't moving everyone to the average also be equality? For most middle-class Westerners that would be a reduction, but for most people on Earth that would very likely be a small improvement, and in some cases a significant improvement. The real proble…

Of course the technology exists to bring food to the desert. Move to california if you think this is what the hold up is.

Re: Economists Are Rethinking the Numbers on Inequality

#136

Post by simonsarris »

taffer wrote: post #24
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…

> This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez [...] that capital is a positive feedback loop in a way that labor is not Well the article mentions that: > Matthew Rognlie, now of Northwestern University, argued that the rise in America’s capital share was accounted for by growing returns to housing, not by the shares and bonds which are held d…

Yeah the most succinct criticism of Piketty is simple: The gains in r > g are almost exclusively down to housing, not other sources, and you can fix the housing problem without touching (and potentially cocking up) the rest of the economy if you wanted to.

Instead, people want to take Piketty's conclusion, not look at where the r > g comes from, and then go on to fuss about with other things (like forms of wealth distribution, taxes, etc), instead of directly addressing the one thing that causes most of the r > g, which is housing, which does not need massive economic intervention to solve, but something entirely different (relaxing of building laws, etc).

Re: Economists Are Rethinking the Numbers on Inequality

#137

Post by xorfish »

carlob wrote: post #131
xorfish wrote: post #106

Earlier quoted context omitted.

> Not currently on capital I said in my comment that return on capital should be taxed the same as labor income. > That's exactly what Piketty has shown to be false. If you look at stuff like endowments and sovereign funds you'll see gains that are nowhere near what's possible even for funds that have $100M in capital. Do they really outperform a basic index fund strategy? Any data on this? There isn't a market that…

> Do they really outperform a basic index fund strategy? Any data on this? Yeah, Piketty's book. But of course the Norwegian government and Harvard administrators are just a bunch of idiots, they have billions of dollars to invest and didn't think of a basic index fund! Now they can save a lot of money firing whoever was managing it for them!

Most fund managers are very intelligent people, yet most of them fail to outperform a basic index fund.

The Harvard endowement underperformed the sp500 by more than 3% annually for the last 10 years. So instead of a plus of 220% it produced a plus of about 130% over the same period.

There is lots of data that shows that passive strategies outperform hedge fund and these university funds.

Re: Economists Are Rethinking the Numbers on Inequality

#138

Post by Matticus_Rex »

CharlesColeman wrote: post #61
rguzman wrote: post #31

Earlier quoted context omitted.

it seems odd to dismiss papers that challenges Piketty's and Saez's conclusions as nitpicky. in complex systems the devil is most often in the details. and not only that, but the sort of project that Piketty took on has many potential methodological pitfalls. so, small details could actually mean a given premise or conclusion is invalid. how would you suggest someone go about assessing whether a paper is nitpicky vs…

> note that i'm not taking a position on the conclusions of Piketty and Saez, just pointing out that re-stating their claims does not say anything about the papers that argue against them and calling such papers nitpicky seems like a particularly weak critique in this instance. There's another angle: in a general-interest publication like the Economist, over-emphasizing nit-picky flaws that fail to effect the core ar…

I'm fairly well acquainted with the literature on this topic, and I think the opposite; the fact that most people don't understand why these "nitpicks" actually seriously undermine the premise and totally butcher the prescriptive suggestions makes it easy for readers to dismiss the criticism, especially in a general-interest publication. While there's a contrary effect for the skimming reader who just accepts that P&S' work is flawed without understanding it, I think that tends to be a much lower risk with the Economist audience.

Re: Economists Are Rethinking the Numbers on Inequality

#139

Post by bhupy »

leto_ii wrote: post #133
bhupy wrote: post #116

Earlier quoted context omitted.

> Well, in the US, as possibly in other places, elections are usually won by the candidate who receives the most corporate support Again, this is orthogonal to the point about inequality. Insofar as corporations or money are involved in politics in America, it's for campaigning — buying TV ads, flyers, etc. While it's true that this makes it easier for richer people to get their message out there, the fact of the mat…

In a society there are may levers (official or not, transparent or not) that the powerful can pull to get politics to lean their preferred way. This is true of all places and all times. The more power is concentrated, the easier it is for a very small group of individuals to have a very large impact on decision making. All the billions poured in campaign funding, lobbying etc. do actually buy a lot of influence albei…

Unless you provide data or empirical evidence, it's just a vague intuition. There's more than enough evidence to the contrary (as I've provided).

At the end of the day, people act as individuals, and they have their beliefs and biases. For example, a small group of wealthy individuals can pour as much money as they want into pro-abortion propaganda, but it's unlikely that it will sway pro-lifers' opinions (especially evangelical Christians).

Money doesn't influence opinions directly, it just affords you a platform to try and change someone's mind. The only way to change one's mind is if the message is compelling, and because the US requires broad buy-in for any democratic action, the message needs to be compelling to a broad audience, not just a small group of wealthy people.

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