Joseph Stiglitz Says American Inequality Didn’t Just Happen • Hacker News Board

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#201

Post by TangoTrotFox » Mon, Apr 30, 2018, 5:47 AM UTC

sgt101 wrote: post #91

TangoTrotFox wrote: post #77

Earlier quoted context omitted.

I also wondered the same thing and sought out data on it a while back. I provided those data in this thread here [1]. The gist of it is that our hypothesis does seem to be supported by the data. And I think it makes sense if you consider things in a thought experiment. In a nation with a king and a 100 impoverished citizens inequality would be mostly invisible. But now imagine our king decides he's been cruel keeping…

Most people are not interested in being as wealth as the king, or the nobles, but they are interested in having an extra pig and a hut that doesn't leak.

Until they have that pig and hut that doesn't leak. Look at the typical poor in the US just a matter of decades ago. No indoor plumbing, no electricity, certainly no air conditioning, etc, etc. Flour and feed sacks would even come with patterns and designs on them. The reason is that people were regularly fashioning clothes out of those sacks and the companies saw it as a selling point. Many of these things we really can't even imagine today.

But of course people are not suddenly content. When the standard of living changes people take it for granted and then seek more. It's not a bad thing. This never-ending desire for more is undoubtedly a big part of the evolutionary drive that's brought us to where we are, but it also means people will never be content. Describe the life of the poor today to people from not all that long ago and it would seem like we live in a utopia - air conditioning, electric toys, color television, cars, regular access to food, indoor plumbing? But of course we see things quite differently! And I expect in a few hundred years we'd see the lives of the poor of that time as something like utopia, but they too will undoubtedly see things quite differently! Man's nature is a great and awful thing!

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#202

Post by WalterBright » Mon, Apr 30, 2018, 5:48 AM UTC

specialist wrote: post #200

WalterBright wrote: post #197

Earlier quoted context omitted.

Any explanation for the wealth of the US would also have to explain why it didn't happen for S. America. After WW2, the Soviets trucked every asset they could out of Germany to the USSR, but what was left still produced a much wealthier middle class than in the post war USSR. I suggest the historical record is that massacring and seizing doesn't produce a middle class.

I found Hernando de Soto's Mystery of Capital compelling. https://www.goodreads.com/book/show/86154.The_Mystery_of_Cap... Though I haven't kept up on all the subsequent criticisms and refinements, I'm confident his central thesis is solid. At least solid enough to be worth criticizing.

Reading the synopsis, it seems his thesis is that free markets require a government to provide a legal framework for property rights and justice. That is correct.

When people cannot own property, and/or there is no enforcement of property rights and contractual obligations, there's little to no economic progress.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#203

Post by TangoTrotFox » Mon, Apr 30, 2018, 5:55 AM UTC

kieranmaine wrote: post #98

TangoTrotFox wrote: post #75

I think the first thing that conversations like this need are data. I ran into this [1] when actually searching information on the chiseling out of the middle class. And that paper does describe that. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. There's…

And here's some extra info that accompanied this data: "The growth in the rich and upper middle class and the declining proportion of the population in the middle and lower classes indicate widespread economic growth between 1979 and 2014, but that growth was not distributed equally. On average, incomes grew 53 percent over the period. If the growth had been equally distributed (figure 3), then the shift upward would…

Absolutely. But at the same time I think most people have a fundamentally incorrect view of society. If we just break those classes into rich/middle/poor we have in a very short period of time (1979 to 2014) gone from:

- rich: 13% -> 31.2%

- middle: 38.8% -> 32%

- poor: 48.2% -> 36.9%

There has been a major migration of people upwards in society. The poor are becoming middle class and the middle class are becoming rich. I think most people instead think society is remaining stagnant with all the wealth going to the same people, even more incorrectly that society is becoming more poor except for a small handful of people.

We are doing some things seriously right. You would never imagine this from how things like inequality are normally framed. Like mentioned I certainly didn't. I found this study looking to confirm my bias that society was actually deteriorating (or at best stagnating) socioeconomically. The problem is that is utterly and absolutely wrong!

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#204

Post by specialist » Mon, Apr 30, 2018, 6:04 AM UTC

WalterBright wrote: post #196

specialist wrote: post #190

Earlier quoted context omitted.

Phillips gives the https://en.wikipedia.org/wiki/Homestead_Acts as one of three times the US government choose to create a middle class. The alternative proposal was selling the land to raise money directly for the government. Imagine if that had happened. We probably would have had South American style share croppers in toiling in usury and enduring inequity.

The Homestead Act applied in the slave south, too, but the slave south did not grow wealthy nor did much of a middle class arise. It could not even provide shoes for the rebel army. There was also a system for allocating land to the pre-Revolutionary colonists, but I don't recall the details.

I infer that you're suggesting the failure of the Southern Homestead Act of 1866 disproves Phillips' thesis.

I'm pretty sure the American Civil War was over before then.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#205

Post by eecc » Mon, Apr 30, 2018, 7:17 AM UTC

closeparen wrote: post #192

Jill_the_Pill wrote: post #181

Earlier quoted context omitted.

It's not scorn for Couple A, but rather for their cheerleaders. There is a real problem with setting an expectation for everyone to have had the financial skills and good luck of Couple A. I think that's more what people mean when they say "that's why there are unions and pensions . . . " -- to give security to large numbers of retirees regardless of their personal situations along the way.

>"To give security" Missing an /s? The expected value of my Fidelity account is >$0, which is more than I can say for Social Security or public pensions in almost any state.

Thank Reagan, Thatcher, Third Way Neoliberals for that...

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#206

Post by patricius » Mon, Apr 30, 2018, 7:18 AM UTC

ComradeTaco wrote: post #156

patricius wrote: post #135

Earlier quoted context omitted.

Just remember that inequality per se is not a bad thing. Capitalism seems to me to be the only way to get people out of poverty, which is, of course, what we want.

Right, inequality isn't inherently a bad thing, its when it get so extreme that it impedes class mobility and shrinks the middle class. We have to strike a really careful of regulations and freedom to create a desirable society.

I think it is impossible to ever reach consensus on what is the right balance between freedom and regulation, especially because regulation is not decided upon with that goal in mind. Whatever gets votes or whoever has the most lobbying power will decide what is regulated.

With regard to class mobility, can we say at what level it gets too extreme or conversely at what level it is just perfect? A country such as Albania has a lower Gini coefficient than the US but is much, much poorer, but as such has less income inequality. I don’t believe that social mobility is much better there (I happen to have a good friend that lives in Tirana).

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#207

Post by dredmorbius » Mon, Apr 30, 2018, 8:58 AM UTC

dcow wrote: post #195

dredmorbius wrote: post #173

Earlier quoted context omitted.

Source?

An old economics major roommate.

A storied though difficult-to-cite source.

Sounds vaguely Schumpertarian.

Though your first description is mor National System / Friedrich List.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#208

Post by dredmorbius » Mon, Apr 30, 2018, 9:07 AM UTC

WalterBright wrote: post #187

dredmorbius wrote: post #180

Earlier quoted context omitted.

http://2.bp.blogspot.com/-pSBLtgulQvo/To6RGPsHfAI/AAAAAAAAY1... Microsoft eventually climbed above its Dec 9, 1999 close. In late 2016.

Only if you want to argue that the 2000 stock market crash was due to Microsoft's short term thinking. (and Microsoft's profits continued to rise during the 2000's, their P/E dropped, not their profits)

Microsoft's relative standing within the tech world also fell, though slightly later,, 2005-ish.

PG's essay, as with most realisations, postdates reality, and specifically suggests by 2005.

http://www.paulgraham.com/microsoft.html

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#209

Post by WalterBright » Mon, Apr 30, 2018, 1:56 PM UTC

specialist wrote: post #204

WalterBright wrote: post #196

Earlier quoted context omitted.

The Homestead Act applied in the slave south, too, but the slave south did not grow wealthy nor did much of a middle class arise. It could not even provide shoes for the rebel army. There was also a system for allocating land to the pre-Revolutionary colonists, but I don't recall the details.

I infer that you're suggesting the failure of the Southern Homestead Act of 1866 disproves Phillips' thesis. I'm pretty sure the American Civil War was over before then.

Land was allocated to people before the Civil War, too.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#210

Post by WalterBright » Mon, Apr 30, 2018, 1:59 PM UTC

dredmorbius wrote: post #208

WalterBright wrote: post #187

Earlier quoted context omitted.

Only if you want to argue that the 2000 stock market crash was due to Microsoft's short term thinking. (and Microsoft's profits continued to rise during the 2000's, their P/E dropped, not their profits)

Microsoft's relative standing within the tech world also fell, though slightly later,, 2005-ish. PG's essay, as with most realisations, postdates reality, and specifically suggests by 2005. http://www.paulgraham.com/microsoft.html

Can you show that was the result of sacrificing the long term for the next quarter's profits?

I'm not hypothesizing that corporations don't make strategic errors, of course they do. I'm saying they are not rewarded for sacrificing the long term to pump up quarterly results - and I've seen no evidence of Microsoft doing that.