Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#181

Post by AnimalMuppet » Wed, Dec 04, 2019, 5:46 PM UTC

dcolkitt wrote: post #118

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...

True. But housing is also tax-privileged in other ways. Most notable is the mortgage interest on federal income tax. More subtle is the fact that the value of the imputed rent from owning your own home is not taxed. I.e. if you rent your home to someone else, you pay income tax on the rent you collect. But if you "rent to yourself" by owning your own home, you don't pay tax on this implicit form of income.

I hate the "implicit income" viewpoint.

If I own my own house, I do so because I already paid for it. That cost me more at that time than the person who's renting pays in rent. So why should my owning my house be considered "implicit income" because I don't have to pay rent? It should be considered money I've prepaid.

And then there are similar situations. If I've paid off my car, is it implicit income because I don't have a car payment? If I don't own a cell phone, do I have implicit income on the amount of a cell plan?

For that matter, the homeless have lots of implicit income. That's not a useful way of analyzing their circumstances, though.

I feel like the "implicit income" idea has an unstated assumption: The "normal" situation is for you to be paying out every dime you receive, and if you don't, that part you don't spend is "income". I absolutely reject that view. The world is not entitled to my spending.

Re: Economists Are Rethinking the Numbers on Inequality

#182

Post by AnimalMuppet » Wed, Dec 04, 2019, 5:49 PM UTC

xorfish wrote: post #50

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 on income or cap gains Why does it matter how it is taxed? If the capital returns 4% and is taxed at a 30% rate, you will have the same effect as if the capital is taxed at a rate of 1.15%. I think the biggest injustice is that return of capital isn't taxed at the same rate as income from labor. Someone who earns $100'000 from labor and $50'000 from return on capital should be taxed at the same rate as someone…

> If the capital returns 4% and is taxed at a 30% rate, you will have the same effect as if the capital is taxed at a rate of 1.15%.

But what if capital earns a return of 0%. Then you have the same effect as if the capital is taxed at a rate of... 0%.

That's why it matters how it is taxed.

Re: Economists Are Rethinking the Numbers on Inequality

#183

Post by AnimalMuppet » Wed, Dec 04, 2019, 5:51 PM UTC

maxsilver wrote: post #82

xorfish wrote: post #66

Earlier quoted context omitted.

But hoarding wealth isn't a problem for inequality. It is that capital can be used to generate income. Inflation is the process that incentivizes capital to be put to work.

> But hoarding wealth isn't a problem for inequality. It absolutely can be, especially for wealth that is finite. (Like land for housing) > Inflation is the process that incentivizes capital to be put to work. Does it though? Inflation mostly just punishes labor alone, labor feels the effects of inflation far more severely than anyone else. With enough capital (the amount anyone 'hoarding wealth' already has), the ca…

> With enough capital (the amount anyone 'hoarding wealth' already has), the capital automatically buys itself out of any problem of inflation, because the returns to sit on that cash are routinely higher than inflation itself is.

I remember the late 1970s, when inflation was 14%, and sitting on cash paid 5%. There have been times when your "just sit on cash" approach meant losing your shirt.

Re: Economists Are Rethinking the Numbers on Inequality

#184

Post by [deleted] » Wed, Dec 04, 2019, 5:52 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.

[deleted]

Re: Economists Are Rethinking the Numbers on Inequality

#185

Post by claudiawerner » Wed, Dec 04, 2019, 5:53 PM UTC

romey wrote: post #170

claudiawerner wrote: post #42

Earlier quoted context omitted.

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.

J.E. Roemer's classic 1982 book[0] on exploitation from a game-theoretic standpoint is generally the beginning of the post-Marxian era of radical economics. However, his is not the only approach, now there are theories which attempt to reformulate the Marxist concept into a theory of unequal exchange of labour. Roberto Veneziani[1] has a great many papers on this theory of exploitation, expressed mathematically, in particular, two principles: profit-exploitation correspondance principle, and the class-exploitation correspondance principle. Andrew Kliman[2] and Fred Moseley[3] are two economists with very contrasting approaches to Marx's labour theory of value and its application today, as well as other "problems" in Marx (such as the transformation problem). Moseley also criticizes some of Piketty's methods[4]. Kliman and Patrick Murray agree that, providing the labour theory of value is true, then we can deduce Marxian exploitation - however their approach is less economic and more philosophical. This is because Murray objects to the use of neoclassical models and methods, with good reason[5]. Vrousalis[6] takes a non-Marxian approach to dominatiton and exploitation under capitalism.

For the latest stuff in the field, check out the main journals[7][8] and Brill's Historical Materialism book series, and this one[9] in particular.

[0] https://www.hup.harvard.edu/catalog.php?isbn=9780674435865

[1] https://academic.oup.com/cje/article-abstract/41/6/1607/4598...

[2] http://digamo.free.fr/kliman2007.pdf

[3] https://www.mtholyoke.edu/~fmoseley/Working_Papers_PDF/macro...

[4] https://www.tandfonline.com/doi/abs/10.1080/08911916.2015.10...

[5] https://www.cpp.edu/~jet/Documents/JET/Jet15/Schuler19-28.pd...

[6] https://www.tandfonline.com/doi/full/10.1080/00346764.2019.1...

[7] https://journals.sagepub.com/home/rrp

[8] https://www.jstor.org/journal/worlrevipoliecon?refreqid=exce...

[9] https://brill.com/view/title/35142

Re: Economists Are Rethinking the Numbers on Inequality

#186

Post by nybble41 » Wed, Dec 04, 2019, 5:54 PM UTC

dls2016 wrote: post #29

pksdjfikkkkdsff wrote: post #16

Earlier quoted context omitted.

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.

What the hell use is capital without labor?

What use is labor without capital? Labor needs tools to be productive.

Re: Economists Are Rethinking the Numbers on Inequality

#187

Post by StacyRoberts » Wed, Dec 04, 2019, 5:54 PM UTC

StacyRoberts wrote: post #140

I read Piketty's capital. It's very long. My current best solution to the problem of capitalism is this: once a year the richest n people must divest themselves of all assets minus the median annual salary and start over.

Explanations for the down votes are appreciated. I've put a lot of thought into this.

Re: Economists Are Rethinking the Numbers on Inequality

#188

Post by Pfhreak » Wed, Dec 04, 2019, 5:56 PM UTC

koheripbal wrote: post #125

_qwfv wrote: post #30

Isn't this one of the thesis of Marx's Capital? That there's a loop in the flow of commodities, money, and labor that generally results in capital extracting more capital from the economy. (Typically from wage labor.) It seems to me that without someone applying the brakes to that loop and changing the way distribution or production is done, we're just going to keep riding this positive feedback loop.

But that's an oversimplification. The system has its own brakes in the form of corporate bankruptcies and liquidations. The market landscapes are constantly changing and companies get destroyed regularly. ... and this returns that stored capital back into the liquidity system. There's little evidence of a persistent imbalance.

Is it? Or is it a useful abstraction?

Fundamentally, capital is seeking to take money, temporarily convert it to commodities, and convert those commodities back into money + some additional value. (Compare this to a more traditional/historical market where you brought commodities, exchanged them for currency, which you turned into an equivalent value of different commodities.)

That additional value has to come from somewhere. It could come from buying low and selling dear, from usury, or from buying wage labor at a price less than its value to you.

> There's little evidence of a persistent imbalance.

From 1989 to 2018 the top 1 percent increased its total net worth by $21 trillion. The bottom 50 percent saw its net worth decrease by $900 billion over the same period. In 2018 dollars. [1]

[1] https://www.peoplespolicyproject.org/2019/06/14/top-1-up-21-...

Re: Economists Are Rethinking the Numbers on Inequality

#189

Post by AnimalMuppet » Wed, Dec 04, 2019, 5:57 PM UTC

thanatropism wrote: post #59

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 feedback loop Come off it, it’s not like this isn’t a staple of political economy since the 1800s or so. A very charitable description of Piketty’s big ted talk of a book is that it suffers from the same flaws of classics like “A monetary history of the United States” by Friedman and Schwartz: it uses empirics as gargoyles, not as structural beams. It seems to be a great argument that’s backed by numbe…

> ... as extensively documented by dozens upon dozens of important scholars.

Do tell. In particular, give some references to those who you are talking about rather than leaving us to do our own searches (and then guessing which results are those you are talking about).

And also tell who we should believe the criticisms of these "important scholars" and not the criticisms of the criticisms.

Re: Economists Are Rethinking the Numbers on Inequality

#190

Post by sergiosgc » Wed, Dec 04, 2019, 6:00 PM UTC

bhupy wrote: post #148

jimbokun wrote: post #142

Earlier quoted context omitted.

> If the rich get richer but the middle class has a better quality of life than what the rich had 200 years ago So no changes are called for until quality of life is literally as bad as it was 200 years ago? In more recent times, quality of life and economic metrics are flat or down in the USA, at least. Life expectancy has gone down multiple years in a row now, for example.

> Life expectancy has gone down multiple years in a row now, for example It's been established that the cause of this, in America, is opioids and obesity, none of which are the fault of billionaires, broadly.

Obesity must have a clear link with free personal time, which is essential for cultivating physical fitness. If you work two full-time jobs, there's no time for proper meal preparation, hitting the gym or going for a swim. Add poor quality meals to sedentarism, and obesity is an expected result.