Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#21

Post by brnt » Wed, Dec 04, 2019, 2:45 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…

Have not read his latest "People, Power, and Profits: Progressive Capitalism for an Age of Discontent", but I think Stiglitz has basically been saying the same as the gist of this article: equality is essential to sustainable capitalism.

Re: Economists Are Rethinking the Numbers on Inequality

#22

Post by logicchains » Wed, Dec 04, 2019, 2:46 PM UTC

aguyfromnb wrote: post #12

mamon wrote: post #9

Earlier quoted context omitted.

Interest rates are set by FED, who can print arbitrary amount of money out of thin air, there is no supply/demand mechanism involved in setting them. Basically every rate change is an experiment testing whatever monetary theory is currently popular among FED board members.

> Interest rates are set by FED, who can print arbitrary amount of money out of thin air One interest rate is set by the Fed, which serves as a benchmark for other market rates. But it's a simple question: if I can borrow money at 3%, why would I borrow your money at 7% so you can earn a return? And if someone wants to lend me money at 3%, why is that "artificial"? > who can print arbitrary amount of money out of thi…

>Should we do pretend mining, like Bitcoin?

Real mining seemed to work okay in past. American GDP grew faster in the 1800s under the gold standard (avg. 4%+) than any time after the creation of the federal reserve.

Re: Economists Are Rethinking the Numbers on Inequality

#23

Post by awrence » Wed, Dec 04, 2019, 2:46 PM UTC

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.

Inflation comes in different flavors. If all you do is print and hand out 1bn to each citizen, they'll just be able to outspend other dollar holders in the world. Prices will adjust, but the amount of real goods in the world per capita is unchanged. You're just reallocating who gets what amongst monetary savers. If your wealth is in the actual stuff people end up buying, this is very much a side concern for you. Bezos is in that camp.

Re: Economists Are Rethinking the Numbers on Inequality

#24

Post by taffer » Wed, Dec 04, 2019, 2:46 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…

> 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 disproportionately by the top 1% of American households.

So it seems that housing is really the positive feedback circuit.

Re: Economists Are Rethinking the Numbers on Inequality

#25

Post by chumali » Wed, Dec 04, 2019, 2:47 PM UTC

averros wrote: post #2

Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.

The Cantillion effect describes a phenomena of relative inflation due to the uneven distribution of new money and access to credit.

This doesn't really translate to "a flow of wealth from working classes and savers to the bankers and the managerial class". Rather, the impact on inequality is that it reduces the purchasing power of those not benefiting from the increased supply of money and credit. As these tend to be the poorest individuals in society, inequality is made worse.

Re: Economists Are Rethinking the Numbers on Inequality

#26

Post by macinjosh » Wed, Dec 04, 2019, 2:47 PM UTC

aguyfromnb wrote: post #6

averros wrote: post #2

Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.

> artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? > wealth flowing from working classes and…

> The working class in America are debtors and have no savings.

There are plenty of working class people that avoid debt and save money. Why should those people, who are acting responsibly, lose out on savings interest? We should be encouraging people to save, not make it cheaper to go into more debt.

Re: Economists Are Rethinking the Numbers on Inequality

#27

Post by SamBam » Wed, Dec 04, 2019, 2:47 PM UTC

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.

If my wealth is in anything beyond cash -- say I own a huge hotel chain, or the largest retail company in the country -- how is inflation a tax on my wealth? My businesses will still be generating the same proportion of the economy as they were before.

Re: Economists Are Rethinking the Numbers on Inequality

#28

Post by Orou » Wed, Dec 04, 2019, 2:48 PM UTC

hervature wrote: post #11

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 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.

Is there any aggregate data on how the money printed by the U.S. government has been distributed historically? Inflation only helps the average person if they get a slice of the money printed, and I have a feeling the vast majority of it hasn't been going directly to John and Jane Doe.

Re: Economists Are Rethinking the Numbers on Inequality

#29

Post by dls2016 » Wed, Dec 04, 2019, 2:48 PM UTC

pksdjfikkkkdsff wrote: post #16

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…

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?

Re: Economists Are Rethinking the Numbers on Inequality

#30

Post by _qwfv » Wed, Dec 04, 2019, 2:48 PM UTC

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.