My simplified response to Paul Graham's simplified essay • Hacker News Board

Re: My simplified response to Paul Graham's simplified essay

#201

Post by wordbank » Wed, Jan 06, 2016, 1:05 AM UTC

jernfrost wrote: post #83

Great reply, although I disagree with the typical simplified assertions that the Soviet System didn't work. Without doubt the system had major flaws. But it is perhaps much more shocking that the system worked as well as it did given so many obvious problems with it. Taking a primitive peasant society and turning it into a space traveling civilisation was quite astonishing. One has to also keep in mind that for decad…

You should read about the amount of slave labour and deaths by purges that was required for these "astonishing" results.

Also "space travelling" means nothing when more than half of your citizens don't have access to toilet paper and use newspapers for wiping until 90s. (Sorry, no sources on this but I'm Russian born in 80s.)

Re: My simplified response to Paul Graham's simplified essay

#202

Post by tomp » Wed, Jan 06, 2016, 9:29 AM UTC

amelius wrote: post #39

tomp wrote: post #10

PG's simplified essay seems like attack on a strawman; he's mainly arguing that inequality is good, but then mostly everybody agrees with that. The issue people see (and PG conveniently ignores) is increasing inequality - not locally increasing (i.e. an enterpreneur becoming rich because of a successful business idea), but globally increasing inequality, which happens because of rent-seeking, tax avoidance, buying po…

> I'm mostly concerned about the last one - inheritance What about rent-seeking? Like the article notes, this is a way for the rich to become richer, without creating anything new. At least with "inheritance", there are "resourceful genes" passing from one generation to the next :)

The problem with rent-seeking is that I don't really know what to do about it.

Rent seeking seems to happen wherever there is some scarcity or monopoly (natural or artificial). E.g. patents (artificial), real estate, infrastructure (both natural).

In the case of infrastructure, the answer is relatively simple - nationalize it (or strictly regulate it), and offer it to multiple operators at fair (and equal) prices. This is what is happening already in e.g. Europe (for electricity and mobile networks). It can even work for other scenarios - for example, when the Greeks were forced to "privatize" their airports, they didn't actually privatize them, they just rented them out for a number of years - that way, whenever the lease is up for renewal, there is still a market happening, so it's more competitive than ownership/monopoly.

For patents/copyright, it's considerably more complex; I think we can all agree that current regimes in e.g. copyright law and software patents feature way too long monopolies, but it's not so clear if that's the case in other fields, especially farmacy.

For real estate, it's hard to come up with any solutions. As long as there's a benefit to living close to other successful people, rents/prices in high-prodoctivity areas will keep on rising. Taxes could help (e.g. by making buy-to-let less profitable), but they won't solve the underlying issue. I'm hoping that eventually technology will improve to such an extent that there will be no advantage in living in the cities (i.e. remote working/communications technology or much faster transport).

Are there any other worrying examples of rent-seeking that you had in mind?

Re: My simplified response to Paul Graham's simplified essay

#203

Post by tomp » Wed, Jan 06, 2016, 9:31 AM UTC

FLUX-YOU wrote: post #104

tomp wrote: post #10

PG's simplified essay seems like attack on a strawman; he's mainly arguing that inequality is good, but then mostly everybody agrees with that. The issue people see (and PG conveniently ignores) is increasing inequality - not locally increasing (i.e. an enterpreneur becoming rich because of a successful business idea), but globally increasing inequality, which happens because of rent-seeking, tax avoidance, buying po…

Non-avoidable seems very hard to do to me. Within the law, there only has to be one loophole per generation. Existing structures (I have no knowledge of this stuff) may hide the transfer of inheritance. It's really hard to look at every transaction and verify that it's not inheritance. That money can always leave for a different set of laws, so it might be convenient to go die in a different country. Crypto currencie…

> How would we convince every country on the planet to enforce this tax?

A simpler solution would be to prevent wealth being "exported" to countries that don't have the same tax regime (or alternatively, tax the wealth when it's being exported). What's happening right now with various tax havens/bank secrecy havens (Cayman Islands, various British isles, Switzerland) is ridiculous (from the point of view of the public; if makes perfect sense for the ruling elite, of course).

Re: My simplified response to Paul Graham's simplified essay

#204

Post by circlefavshape » Wed, Jan 06, 2016, 11:35 AM UTC

tomp wrote: post #197

Rusky wrote: post #181

Earlier quoted context omitted.

Depending on what you mean by "inequality" and "equality," loads of people. While I doubt you could find many people who want some artificial straw-man world where everyone is completely and totally equal in every way, you should have no trouble at all finding people upset about the vast difference in quality of life between the rich and poor of humanity.

> upset about the vast difference in quality of life between the rich and poor of humanity Absolutely; I am, for one. But that's not inequality , it's extreme inequality. Which I agree is a bad thing. But if you believe inequality is bad, then it must follow that you believe only complete equality (in the economic sense) is good. Which is so unrealistic that we can almost say it's a logical fallacy.

> if you believe inequality is bad, then it must follow that you believe only complete equality (in the economic sense) is good

You claim inequality is good. Must it follow that you "believe only complete inequality is good"?

Re: My simplified response to Paul Graham's simplified essay

#205

Post by cLeEOGPw » Wed, Jan 06, 2016, 11:41 AM UTC

unprepare wrote: post #184

bko wrote: post #144

Earlier quoted context omitted.

Inter-generational wealth is often wasted and doesn't last more than a few generations so perhaps it's not as big a problem as some make it out to be > Indeed, research shows that family money rarely survives the transfer for long, with 70 percent evaporated by the end of the second generation. By the end of the third? Ninety percent [0] [0] http://www.wsj.com/articles/SB100014241278873246624045783346...

Even if its only 10% (and 10% of a billion is still 100 million dollars) do you really think its reasonable that 100[1] years after my death my family should still be spending the money that I myself earned? To put that in perspective, people who died in 1916 are: Hetty Green - the 'witch of wall street' one of the first ever successful women investors Charles Taze Russell - the creator of a religion that would later…

> do you really think its reasonable that 100[1] years after my death my family should still be spending the money that I myself earned?

Your thought process seem to be like this: a man earns huge amounts of money, then he has children who live ordinary lives, except they don't work, just spend money earned by father/grandfather. A real situation: a man creates a business that generates profit, his children inherit the business and continue working on/are shareholders of said business/ but the value of the business decreases over time.

If you think it's unfair that someone can live rich life without working, while you can not, how would it be fair if someone earn money, but is not allowed to give it to his children? It just sounds like you are jealous.

Re: My simplified response to Paul Graham's simplified essay

#206

Post by lucianomt » Wed, Jan 06, 2016, 1:57 PM UTC

grecy wrote: post #136

jernfrost wrote: post #83

Great reply, although I disagree with the typical simplified assertions that the Soviet System didn't work. Without doubt the system had major flaws. But it is perhaps much more shocking that the system worked as well as it did given so many obvious problems with it. Taking a primitive peasant society and turning it into a space traveling civilisation was quite astonishing. One has to also keep in mind that for decad…

To extend on this with an anecdote; A buddy of mine lived and worked in Cuba for many years, and has very positive things to say about life there. He lives in Canada, and enjoys life in Cuba as much as he does in Canada, which I think says a lot. Every single person has healthcare, food and shelter. Every single person has a job, and their kids go to a good school. Because everyone is paid the same, work is not the f…

I find it very ironic that someone would mention Cuba in this post. Cuba is the epitome of income inequality where the ruling party (Castro and friends) controls all the capital, while the 99.9% hold virtually nothing.

You may argue there are benefits and people can be happy under a communist regime, but you cannot deny that income inequality is extremely high. If anything, your argument actually corroborates PG's statement that income inequality is not inherently bad.

Re: My simplified response to Paul Graham's simplified essay

#207

Post by astazangasta » Wed, Jan 06, 2016, 4:49 PM UTC

AnimalMuppet wrote: post #166

astazangasta wrote: post #7

The preface to all further discussion: wealth is power, and nothing else. In our highly capitalist society, monetary wealth is perhaps the only useful form of power, from which all other power (violence, social influence) ultimately flows. The Soviet Union attempted to produce equality of income, but not power: power was highly centralized. The equality I want is one that is diffusive.

> The preface to all further discussion: wealth is power, and nothing else. Okay, you made a dogmatic statement. That proves nothing, except that you are capable of making dogmatic statements. Wealth is the promise (perhaps false) of satisfaction, it is (perhaps false) identity, it is security, and it is the freedom not to have to work. I suppose you can say that all those are forms of power, but... If you define eve…

>Wealth is the promise (perhaps false) of satisfaction

I think, perhaps, you are speaking of the kind of wealth accumulated by middle class families. I'm speaking of the billions accumulated by Jeff Bezos, which allows him to purchase the Washington Post (etc). You might call this "satisfaction", but at this scale it's raw power - the ability to command resources and bend them to your purpose.

>Democracy is another form of power. It is influenced by money, but not totally.

Democracy is quite strongly influenced by money. I'm sure you've seen this study: http://scholar.princeton.edu/sites/default/files/mgilens/fil... which purports to demonstrate that American democracy responds exactly to the interests of economic elites and not to popular will. Popular will is much weaker than the influence of money. There is an entire (unelected) arm of government that is devoted to lobbying and writing legislation on behalf of monied interests; half of Congress leaves and joins this arm when their term is up.

I'm not saying these things are inevitable, that monetary wealth cannot be constrained by democratic power, etc., just that this is not how things currently stand.

Re: My simplified response to Paul Graham's simplified essay

#208

Post by Spooky23 » Wed, Jan 06, 2016, 8:04 PM UTC

bko wrote: post #143

Spooky23 wrote: post #109

Earlier quoted context omitted.

Forbes 400 represents mostly principals of public business enterprises that are super-successful, and is dominated by stock wealth. It doesn't capture private assets. It's also ephemeral -- for every Bill Gates, there are plenty of multi-billionaires who decend into the depths of multi-millionairehood when their stocks implode. Beyond that, you're going to have trouble measuring stuff. There are folks in upstate NY s…

Forbes 400 is not perfect. If you have a better measure of wealth that would suggest that inherited fortunes are a significant contributor to wealth inequality, you can cite that. Perhaps self-made wealth dominates the .001% of wealthy individuals but doesn't apply for the 0.999% of the top 1% but I don't see any evidence or better proxy for the source of wealth so I'm using the Forbes 400. What I'm trying to say in…

There isn't a lot of data about this for the US. There is, however, writing on the subject that should be of interest:

http://www.economist.com/blogs/buttonwood/2014/03/inequality

"Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance (of fortunes accumulated in the past) predominates over saving (wealth accumulated in the present).... Wealth originating in the past automatically grows more rapidly, even without labour, than wealth stemming from work, which can be saved."

Per the article, there is extensive data available from France on wealth, and in France inheritances as a proportion of income went from 24% in 1900 to 4% in 1950, but has increased to 11% today. If that proportion regressed to 1900 levels, 90% of wealth would be inherited by mid-century.

IMO, we're at the start of this process in the US, as tax-insulated retirement schemes like Roth accounts, trusts and other mechanisms allow for long-term/generational transfer of wealth without taxation.

Re: My simplified response to Paul Graham's simplified essay

#209

Post by jernfrost » Wed, Jan 06, 2016, 8:06 PM UTC

vezzy-fnord wrote: post #117

jernfrost wrote: post #83

Great reply, although I disagree with the typical simplified assertions that the Soviet System didn't work. Without doubt the system had major flaws. But it is perhaps much more shocking that the system worked as well as it did given so many obvious problems with it. Taking a primitive peasant society and turning it into a space traveling civilisation was quite astonishing. One has to also keep in mind that for decad…

It's not as astonishing as you describe it. It's basic intuition that the relative growth of something will be greater in real terms the lower your starting point is. Robinson Crusoe finding a second stick to pluck berries with has doubled his capital structure and his output, but that's not particularly impressive. Starting from nothing, you can afford to just pump resources and treat the economy like it's a hydraul…

It is astonishing because if you look around the world at other countries you will find many many countries in the developing world which were not fully socialist like the USSR, which yet failed to ever develop even remotely at the level Soviet did. You could pick India as an example. While they did have a lot of state intervention they non the less had a market with market prices. People could start their own private companies and they did. Yet India did not see the kind of development that the USSR experienced. And if you look beyond mere economic factors and look at health care, education, literacy etc, they were completely outperformed by the USSR which had a very highly regarded educational system and health care.

You have to add to this story as well that the USSR was devastated from WWII and received no marshal help, and yet managed to recover surprisingly quickly.

Re: My simplified response to Paul Graham's simplified essay

#210

Post by tomp » Thu, Jan 07, 2016, 11:41 AM UTC

circlefavshape wrote: post #204

tomp wrote: post #197

Earlier quoted context omitted.

> upset about the vast difference in quality of life between the rich and poor of humanity Absolutely; I am, for one. But that's not inequality , it's extreme inequality. Which I agree is a bad thing. But if you believe inequality is bad, then it must follow that you believe only complete equality (in the economic sense) is good. Which is so unrealistic that we can almost say it's a logical fallacy.

> if you believe inequality is bad, then it must follow that you believe only complete equality (in the economic sense) is good You claim inequality is good. Must it follow that you "believe only complete inequality is good"?

Depends what you mean by "complete" inequality.

From the two, "equality" is much more limited than "inequality". For example, of all numbers, only 2 is equal to 2. All other numbers (2.0000001, 1, -100, 10^1412) are not equal to 2. So obviously if you claim "inequality is bad", this means you eliminate all numbers, except for 2 exactly. On the other hand, if you claim "inequality is good", you only eliminate the number 2, and no other numbers (also, I don't see how any of them are more "completely" inequal than others).