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Economists Are Rethinking the Numbers on Inequality

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Re: Economists Are Rethinking the Numbers on Inequality

#201

Post by VladimirIvanov »

pksdjfikkkkdsff wrote: post #145
SketchySeaBeast wrote: post #129

Earlier quoted context omitted.

How is that proof of ability more than luck?

He has been going at it consistently for many, many years now. He just happened to be lucky year after year? Most people don't even try, but it doesn't stop them from accusing people who put in the work and who take the risks from just being lucky.

Bezos also had parents that gave him a several 100 thousand dollar loan that they never expected to be paid back. He's a product of Montessori and Ivy League education. Definitely not a rags to riches story

Re: Economists Are Rethinking the Numbers on Inequality

#202

Post by jimbokun »

harryh wrote: post #166
jimbokun wrote: post #112

Earlier quoted context omitted.

> 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.

That was my point...?

Re: Economists Are Rethinking the Numbers on Inequality

#203

Post by hundt »

AnimalMuppet wrote: post #197
hundt wrote: post #196

Earlier quoted context omitted.

I don't think that's the assumption that it's based on. It's more like, when you own an asset, you get to benefit from the consumption of that asset. You did not "prepay" for the consumption of that asset. You paid to own the asset, which entitles you to consume it while you own it, but the value you get from consuming it is not deducted from the resale value of the asset. Example: you buy a house in 2010 for $500,00…

Well, dcolkitt was talking about imputed income in the context of tax advantages. I assumed (perhaps wrongly) that the subtext was that people who own houses should be taxed on the "imputed income" as if it were real income. That raised my hackles - perhaps wrongly. Still... there's something funny in the "imputed income" accounting. Let's say I buy a house for $500,000. I live in it. I don't pay rent, though the hou…

I think your example actually helps make the case for imputed income, because whether you happen to live in the same house you own has huge tax consequences, which doesn't seem optimal. Without imputed income you are incentivized to live in the house that you own, even if it is worth less to you than what you could rent it for, because that way you don't have to pay taxes on that consumption value.

If you had to pay taxes on the imputed $4k a month then you would prefer to rent it out to someone who actually values it at $4k a month, and move yourself to a house that is better suited to you.

Re: Economists Are Rethinking the Numbers on Inequality

#204

Post by simonsarris »

vanderZwan wrote: post #191
simonsarris wrote: post #136

Earlier quoted context omitted.

Yeah the most succinct criticism of Piketty is simple: The gains in r > g are almost exclusively down to housing, not other sources, and you can fix the housing problem without touching (and potentially cocking up) the rest of the economy if you wanted to. Instead, people want to take Piketty's conclusion, not look at where the r > g comes from, and then go on to fuss about with other things (like forms of wealth dis…

> which does not need massive economic intervention to solve, but something entirely different (relaxing of building laws, etc). Nitpick: you're probably thinking of directly intervening with the economy through regulations and subsidies, but isn't disrupting the housing market technically going to be a massive economic intervention in practice? As in, kind of by definition? Also, I'm not sure if it's actually that e…

Well, I agree on both points, but "We should tax X [and maybe redistribute Y]" is very different from "We should de-regulate or fundamentally change Z", is all.

It's hard to actually address Piketty's inequality at all if people think it spawns from something fundamentally different from land/real estate appreciation.

> I'm not sure if it's actually that easy to change the laws surrounding housing

Totally agree, but I don't mean to make any claims about how hard it would be, only that it would actually address the thing in question, whereas other interventions would not.

Re: Economists Are Rethinking the Numbers on Inequality

#205

Post by ranie93 »

bhupy wrote: post #156
ranie93 wrote: post #97

Earlier quoted context omitted.

There is contention about what this supposed progress entails; if its as great as touted, if we could be doing much better, etc. This open letter is a good starting point: https://www.jasonhickel.org/blog/2019/2/3/pinker-and-global-... >There is nothing worth celebrating about a world where inequality is so extreme that 58% of people are in poverty, while a few dozen billionaires have more than all of their wealth co…

The problem with this line of thinking is 1) The amount of wealth held by ultra-billionaires isn't nearly enough to solve our poverty problems. If you seized literally all of the wealth of the the entire Forbes 400, it would fund the US federal government for 8 months. 2) Wealth is illiquid, and if one were to seize it, you can only seize it once. It isn't an ongoing stream unlike, say, income. So to amend the last s…

Without checking the figures, I can agree with the idea that a one-time seizement wouldn't assuage much.

Certainly Bill Gates and his endeavors have created immense value for many.

None of these points are being contested or purported in the "line of thinking" you mention (the letter I linked I assume?)

Re: Economists Are Rethinking the Numbers on Inequality

#206

Post by onion2k »

kofejnik wrote: post #194
onion2k wrote: post #109

Earlier quoted context omitted.

to have equality, you'll have to reduce everyone to the lower common denominator, which will be rather low Why must everyone go down to the lower common denominator? Wouldn't moving everyone to the average also be equality? For most middle-class Westerners that would be a reduction, but for most people on Earth that would very likely be a small improvement, and in some cases a significant improvement. The real proble…

If everybody is forced to be average, what's the point of even trying? I'd probably noodle on my guitar all day and play Fallout, rather than work

A huge number of people work very hard for much less than middle class Westerners have. They would all get more than they have now. I suspect that would lead to better global productivity even with the loss of your input.

Re: Economists Are Rethinking the Numbers on Inequality

#207

Post by ranie93 »

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.

Some additional sources to inform opinions

Wage Stagnation in Nine Charts:

https://www.epi.org/publication/charting-wage-stagnation/

The Pay of Corporate Executives and Financial Professionals as Evidence of Rents in Top 1 Percent Incomes:

https://www.epi.org/publication/pay-corporate-executives-fin...

Re: Economists Are Rethinking the Numbers on Inequality

#208

Post by Merrill »

toyg wrote: post #177
Merrill wrote: post #160

Earlier quoted context omitted.

>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…

That’s definitely not the case in Europe. Socialist movements were on the verge of power in many countries before WWII, and actually ruled or heavily conditioned the political life all over the continent until the end of the Cold War. The war effort had been dealt with by the early ‘50s at the latest; the following 40 years were dominated by the fight for social and economic equality. The war “helped” only in the sen…

Socialism gained only after World War I disrupted incumbent powers and wealth. World Wars I and II really need to be considered as a unit. War continued into the '20s in Eastern Europe and then resumes in 1936 in Spain. See "War of the World" by Niall Ferguson.

Socialism was not that strong before WW I destroyed the power structures of the German, Russian, Austro-Hungarian, and Ottoman Empires. The resumption of war in World War II destroyed the Japanese and Chinese Empires and enervated the British and French sufficiently that the British and French Empires dissolved after the war.

Re: Economists Are Rethinking the Numbers on Inequality

#209

Post by take_a_breath »

frockington1 wrote: post #115
tkyjonathan wrote: post #46

I would rather focus on reducing absolute poverty than reducing inequality (gini-coefficient).

It's sad that we live in a world where reducing poverty is somehow a hot take on society. I do not understand why some people believe it is impossible to rise out of poverty without seizing someone else's property. Capitalism is not a zero sum game

One the whole capitalism is not zero-sum, as we can observe by continued GDP growth. I think a lot of the frustration comes from the feeling that within certain classes, it is zero-sum.

Imagine an economy that grows by $1 trillion. Suppose all that wealth goes to a select group (Top 5%). Everyone in the other 95% is essentially in a zero-sum game. If the paths to that Top 5% diminish (low capital gains tax, increasing education/housing costs), it becomes worse.

At the same time, the rich are running for political office and supporting things like Citizens United that re-enforce their power.

Re: Economists Are Rethinking the Numbers on Inequality

#210

Post by CharlesColeman »

sokoloff wrote: post #100
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.

Exactly. Tax the capital that those other bastards have. My house? Oh, that’s totally different.

> Exactly. Tax the capital that those other bastards have. My house? Oh, that’s totally different.

So, progressive taxation, basically?

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