Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#161

Post by bhupy » Wed, Dec 04, 2019, 4:59 PM UTC

leto_ii wrote: post #158

bhupy wrote: post #139

Earlier quoted context omitted.

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...

I'm familiar with Ferguson's work. As with most economic work based on theoretical models, the empirical facts are more than enough to disprove them.

The famous IMF rebuttal of Piketty was an exercise in exactly the same. "rich in data, [but] the book provides no formal empirical testing for its theoretical causal chain". The same applies to the Investment Theory of Party Alignment. You can make an argument that poor people will follow rich people ideologically, but you can't 1) draw a causal line between the wealth and the influence, and 2) most importantly, you can't prove that poor people would ideologically follow rich people against their own self-assessed interests.

[1] https://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf

Re: Economists Are Rethinking the Numbers on Inequality

#162

Post by harryh » Wed, Dec 04, 2019, 4:59 PM UTC

js2 wrote: post #98

rayiner wrote: post #77

Earlier quoted context omitted.

But not the kind of capital people usually think about when railing about billionaires and wealth taxes.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes.

You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Re: Economists Are Rethinking the Numbers on Inequality

#163

Post by lifeisstillgood » Wed, Dec 04, 2019, 5:03 PM UTC

Merrill wrote: post #160

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 c…

I wish I could upvote this more - it is probably the one cycle that replacing with redistribution via tax will solve more suffering than anything else

Re: Economists Are Rethinking the Numbers on Inequality

#164

Post by rayiner » Wed, Dec 04, 2019, 5:06 PM UTC

harryh wrote: post #162

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Wow this just blew my mind.

Re: Economists Are Rethinking the Numbers on Inequality

#165

Post by undefined3840 » Wed, Dec 04, 2019, 5:08 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 don’t really understand why people say a tax on owned capital is so far fetched when we are all okay with property taxes which is literally a wealth tax on a subset of owned capital. The only difference is that property taxes are regressive and not progressive

Re: Economists Are Rethinking the Numbers on Inequality

#166

Post by harryh » Wed, Dec 04, 2019, 5:10 PM UTC

jimbokun wrote: post #112

bjornsing wrote: post #84

Earlier quoted context omitted.

INHO we should be looking much more at consumption and a lot less at income or (worst of all) assets. In what way does it matter that Warren Buffet has X times my income and Y times my assets, if he drives the same kind of car and lives in about the same kind of house? It means he has more power than me in a capitalistic system, sure. But is that really so wrong or unfair? I think it’s actually kind of a good thing:…

> INHO we should be looking much more at consumption and a lot less at income or (worst of all) assets. At what age can you retire? Can you afford education for yourself and your children? Can you afford the home in the district with the good schools? How much debt will you and your children be in after finishing college? What are the odds you go bankrupt from a medical incident, even with "insurance"? "Consumption"…

Can you afford education for yourself and your children?

Education is counted in measures of consumption.

Can you afford the home in the district with the good schools?

Housing is counted in measures of consumption.

How much debt will you and your children be in after finishing college?

To the extent that this debt reduces one's ability to purchase other things, it's counted in measures of consumption.

Re: Economists Are Rethinking the Numbers on Inequality

#167

Post by Nasrudith » Wed, Dec 04, 2019, 5:11 PM UTC

BurningFrog wrote: post #124

taffer wrote: post #24

Earlier quoted context omitted.

> 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…

Housing is rising in value because of regulatory capture. It's illegal to build competing housing in most major cities. Money is power, and the powerful make the regulations. So maybe regulation is really the positive feedback circuit?

I suspect the answer is that there is no "the" positive feedback circuit as not only can things get messed up in many ways interactions between components can make the issue that none involved intended. A simpler comical example is medical marijuana in California.

* Federal legislature dogmatically denies a medical usage. * State approves it for medicinal use. * Federal regulators threatens to arrest any doctor perscribing it. * Intended medical gatekeeping loses power

Neither party wanted that laxer level of enforcement (regardless of outcome) but together they did so.

Re: Economists Are Rethinking the Numbers on Inequality

#168

Post by harryh » Wed, Dec 04, 2019, 5:16 PM UTC

rayiner wrote: post #164

harryh wrote: post #162

Earlier quoted context omitted.

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Wow this just blew my mind.

Well I will take this small piece of credit in return for all the times your comments have blown my mind. :)

Re: Economists Are Rethinking the Numbers on Inequality

#169

Post by solipsism » Wed, Dec 04, 2019, 5:18 PM UTC

rguzman wrote: post #31

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…

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…

in complex systems the devil is most often in the details

The devil is sometimes in the details, but it's not in all the details. The sun is an incredibly complex system. But you could tweak an incredibly number of small variables and yield very little noticable change. An oncoming tsunami is an incredibly complex system, but the devil is in the overall brunt of the phenomenon.

It's a valid criticism to say an argument doesn't get at the meat but merely picks at the scraps. It's easy to frame such nitpicking in a misleading way -- by pointing out so many details that are not quite right you can sow doubt in the overall conclusion. And that's the accusation that's being made about this Economist article.

Re: Economists Are Rethinking the Numbers on Inequality

#170

Post by romey » Wed, Dec 04, 2019, 5:19 PM UTC

claudiawerner wrote: post #42

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…

Not to mention that Piketty has a relatively soft list of proposals and research compared to the 'old guard' of critics of capital. The Economist's arguments against Piketty are only there because he's the most radical economist on capital's horizon. By presenting Piketty as radical on the issue of inequality, the arguments from modern, radical economists on every other aspect of capital are shut out. For example, be…

Would you happen to have some suggestions on where to start further reading of radical economics? I'm halfway through "Doughnut Economics" right now, but it's a bit simple -- I was looking for something more challenging.