Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#151

Post by CharlesColeman » Wed, Dec 04, 2019, 4:39 PM UTC

Matticus_Rex wrote: post #138

CharlesColeman wrote: post #61

Earlier quoted context omitted.

> 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&…

> I'm fairly well acquainted with the literature on this topic

How so, exactly?

> 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

Personally, I'm inclined to withhold judgement until the dust settles, yay or nay. The topic is technically difficult, and there are a lot of actors with political interests in the outcome of the discussion that muddy the waters.

Re: Economists Are Rethinking the Numbers on Inequality

#152

Post by bhupy » Wed, Dec 04, 2019, 4:39 PM UTC

dwiel wrote: post #134

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.

Great question.

Check out [1] and scroll down to Table A-7 (it's an Excel file). It's the real earnings data (in 2018 dollars), by gender, from 1960 to 2018 (though it's kind of spotty before 1967). What sticks out:

* For men (looking at Total Workers), real earnings are currently around 10% higher than they were in the 70s (moving from low-$40K's to recently just past mid-$40K's, with some peaks and valleys along the way). Doesn't sound like much, but...

* For women, earnings have roughly doubled in that timespan

* The number of men in the workforce has increased by almost 50%

* The number of women in the workforce has increased by almost 100%

From a certain perspective, it's kind of amazing that real earnings haven't gone down significantly.

In the last 20 years, median earnings, in real terms (adjusted for inflation), are up. Unemployment is at its lowest, and that's at the broadest definition of "unemployment" (U6) [2].

As for poverty, check out [3] from the US Census Bureau and scroll down to Table 6 (it’s an Excel file). It’s the percentage of people in America that are below 125% of the poverty line (I.e. near poor to absolutely poor) between 1959 and 2018. That percentage has gone down from 31% to 16%.

The median number of years to recoup the cost of a Bachelors degree in America, adjusted for inflation, has gone down since the 1980’s, from about 22 years to about 10 years. [4]

[1] https://www.census.gov/library/publications/2019/demo/p60-26...

[2] https://twitter.com/jmhorp/status/1201903269095698432

[3] https://www.census.gov/data/tables/time-series/demo/income-p...

[4] https://libertystreeteconomics.newyorkfed.org/2014/09/the-va...

Re: Economists Are Rethinking the Numbers on Inequality

#153

Post by freen » Wed, Dec 04, 2019, 4:40 PM UTC

BurningFrog wrote: post #130

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…

> capital is a positive feedback loop in a way that labor is not If that's true, capital sounds awesome! An automatic wealth generator is something everyone should have, not something you want to tax out of existence!

Congratulations, you've invented taxes.

In all seriousness, that is precisely what government is intended to do: take a portion of the private surplus and apply it to the public interest, thus increasing total productivity.

Re: Economists Are Rethinking the Numbers on Inequality

#154

Post by SketchySeaBeast » Wed, Dec 04, 2019, 4:43 PM UTC

pksdjfikkkkdsff wrote: post #145

SketchySeaBeast wrote: post #129

Earlier quoted context omitted.

How is that proof of ability more than luck?

He has been going at it consistently for many, many years now. He just happened to be lucky year after year? Most people don't even try, but it doesn't stop them from accusing people who put in the work and who take the risks from just being lucky.

The problem I think is that people attribute all of success to the sheer iron will and willingness to suffer of the individual, when that just isn't the case. Are you attributing all of Amazon's success to Bezos solely? If he left do you assume Amazon would immediately start to fail? Was it Bill Gates alone who kept Microsoft afloat?

You have to consider luck, there's a ton of people in the world who put in the work and didn't get anything, and it's not just because they didn't work hard enough.

Re: Economists Are Rethinking the Numbers on Inequality

#155

Post by ianleeclark » Wed, Dec 04, 2019, 4:46 PM UTC

pksdjfikkkkdsff wrote: post #141

ianleeclark wrote: post #128

Earlier quoted context omitted.

> People starving, having no health care, low life expectancy, that sort of thing, are problems. Their neighbor having more money in the bank is not really a problem. Most people, when they critique wealth inequality, aren't critiquing their neighbors because most people in the same zip code are going to be at similar levels. When people critique wealth inequality, they're talking about the Koch brothers, or other pa…

"Unfair capital advantage" Well, again, start accumulating capital, if it is such an unfair advantage. "I, too, am in favor of a 100% wealth tax upon death. No more freeloading failsons." I am absolute against such a thing, in fact I consider it an insane proposal. It seems one of the fundamental human rights should be people being allowed to provide for their children. People work to have successful children. It is…

> I am absolute against such a thing, in fact I consider it an insane proposal.

44 minutes ago

> Whether it should be possible to be arbitrarily rich is another question.

You were so close to getting it, what happened to you?

> Well, again, start accumulating capital, if it is such an unfair advantage.

Hey, person who can barely make it to get by and spends all of their income on subsistence-level living, why don't you just get more capital?

> The acts of their parents are not the children's fault, of course, and everybody should be given a fair chance to make it in life. But there are limits.

You continually try and straddle the line with these declarations, but just draw completely arbitrary distinctions: everyone should be given a fair chance to make it--but what is fair, how is this decided, who enforces it? What are these limits and why are they decided? There's no rhyme or reason to what you're saying, just whatever sounds the best to you.

> And even more basic than that: people should be allowed to do with their money as they please.

So it's perfectly acceptable when Coca Cola sends death squads to kill labor organizers. The ancap fever dream is terrifying.

Re: Economists Are Rethinking the Numbers on Inequality

#156

Post by bhupy » Wed, Dec 04, 2019, 4:46 PM UTC

ranie93 wrote: post #97

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?

There is contention about what this supposed progress entails; if its as great as touted, if we could be doing much better, etc. This open letter is a good starting point: https://www.jasonhickel.org/blog/2019/2/3/pinker-and-global-... >There is nothing worth celebrating about a world where inequality is so extreme that 58% of people are in poverty, while a few dozen billionaires have more than all of their wealth co…

The problem with this line of thinking is

1) The amount of wealth held by ultra-billionaires isn't nearly enough to solve our poverty problems. If you seized literally all of the wealth of the the entire Forbes 400, it would fund the US federal government for 8 months.

2) Wealth is illiquid, and if one were to seize it, you can only seize it once. It isn't an ongoing stream unlike, say, income. So to amend the last statement, if you seized literally all of the wealth of the entire Forbes 400, it would fund the US government for 8 months, one time.

3) Wealth is not zero-sum, it is created. The global inflation-adjusted GDP has gone up from ~$2T in the mid 20th century to ~$110T today. The ultra-wealthy have enjoyed most of that growth, but one can argue that it's because they created that wealth. I.e. Bill Gates' net worth is only as much as it is because he created Microsoft, which has added ~$1T (its market cap) to the US GDP.

Re: Economists Are Rethinking the Numbers on Inequality

#157

Post by baron816 » Wed, Dec 04, 2019, 4:48 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…

> they promote a view that the solution to all ills is lower taxes and less regulation.

I’ve read the Economist for a long time and have never gotten that impression. That’s more the Republican Party platform, who they really don’t support. In the articles, they explicitly argue for more regulation in the form of enhanced anti-trust laws and enforcement.

Re: Economists Are Rethinking the Numbers on Inequality

#158

Post by leto_ii » Wed, Dec 04, 2019, 4:48 PM UTC

bhupy wrote: post #139

leto_ii wrote: post #133

Earlier quoted context omitted.

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…

You hardly provided more than enough evidence on the contrary. I can however point you to the work of Thomas Ferguson for example: https://en.wikipedia.org/wiki/Investment_theory_of_party_com...

Re: Economists Are Rethinking the Numbers on Inequality

#159

Post by FeloniousHam » Wed, Dec 04, 2019, 4:52 PM UTC

ianleeclark wrote: post #128

pksdjfikkkkdsff wrote: post #119

Earlier quoted context omitted.

Why exactly is inequality a problem? Because people suffer from their envy? People starving, having no health care, low life expectancy, that sort of thing, are problems. Their neighbor having more money in the bank is not really a problem. There are also actually differences in skills, performance, diligence, and so on. It would be very unfair if some people weren't allowed to earn more money than others. Whether it…

> People starving, having no health care, low life expectancy, that sort of thing, are problems. Their neighbor having more money in the bank is not really a problem. Most people, when they critique wealth inequality, aren't critiquing their neighbors because most people in the same zip code are going to be at similar levels. When people critique wealth inequality, they're talking about the Koch brothers, or other pa…

> I, too, am in favor of a 100% wealth tax upon death. No more freeloading failsons.

I am very far from an economic leftist, but the elimination of inheritance seems to me the fastest, fairest, path to equality of opportunity (the disposition of the confiscated assets is a separate argument). Tax the dead guy.

Re: Economists Are Rethinking the Numbers on Inequality

#160

Post by Merrill » Wed, Dec 04, 2019, 4:55 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…

>that mid-20th-century laws that put brakes on this feedback loop have been removed;

I don't believe that the purpose of mid-20th-century laws was to promote equality. Things were more equal then because: a) World Wars I & II destroyed huge amounts of capital, and b) fighting wars requires lots of money which requires raising taxes on people who can pay, since borrowing cannot fully fund general wars.

Economics are cyclical in the sense that in normal times people with power and wealth accumulate more power and wealth. Then a general period of war/revolution/epidemic/famine breaks out which disrupts power relationships and consumes wealth. This is the pattern in Europe since the 1300s and it also applies to dynastic changes in other societies, such as China.