Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#241

Post by beerandt » Wed, Dec 04, 2019, 9:59 PM UTC

AnimalMuppet wrote: post #223

hundt wrote: post #203

Earlier quoted context omitted.

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…

Right. But then you've changed the default from "not having to pay tax" to "having to pay tax". That is, far more people live in the house they own than rent out the one house they own and live somewhere else. Right now the 5% (say) who rent out the house they own get taxed, the 95% who live in the house they own don't. The change you propose would result in the 95% now also being taxed. That's fair, I suppose, but i…

It's insane, but we're basically already there, on some levels.

Politicians have been using that method of accounting for years, when describing taxpayer savings.

And it's not quite the same, but the method of tabulating the number of deaths in Puerto Rico after Maria also comes to mind. No "receipts", just statistics of what the numbers should be.

Re: Economists Are Rethinking the Numbers on Inequality

#242

Post by hueving » Wed, Dec 04, 2019, 10:00 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…

> that capital is a positive feedback loop

This requires a lot of the investment environment that isn't a given. Capital loses its feedback loop if inflation outpaces economic growth or if the quality of investment opportunities declines significantly.

There is no given that just having $10 million dollars means it will be easy to outpace inflation and not end up with less.

Re: Economists Are Rethinking the Numbers on Inequality

#243

Post by Domenic_S » Wed, Dec 04, 2019, 10:00 PM UTC

chipotle_coyote wrote: post #225

thorwasdfasdf wrote: post #179

Earlier quoted context omitted.

this is a huge problem because if you're in the top 1% then you're probably also living in the top 1% most costly cities and towns (at least in terms of housing cost). take into account the much higher taxes and you'd only be doing a tiny bit better than the average person nationwide.

I think "a tiny bit better" underestimates how big the gap is between "median income" and "1% income." The median individual income for the US in 2019, from data I can find (on "Don't Quit Your Day Job," which uses census data rather than Social Security data), is $40,100; the average income is $48,380. The threshold to enter the top 1% is $328,551. I live in one of the most expensive cities in the country (San Jose,…

GP is overstating a bit but not by too much. I have friends in non-coastal states and $50k is a kingly amount of money out there. As in, renting a nice family-sized house for $500/month.

At san jose's going rate of roughly $4k/month for the same thing, that would be the equivalent of a $400k/yr salary.

Re: Economists Are Rethinking the Numbers on Inequality

#244

Post by sandstrom » Wed, Dec 04, 2019, 10:05 PM UTC

hueving wrote: post #242

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…

> that capital is a positive feedback loop This requires a lot of the investment environment that isn't a given. Capital loses its feedback loop if inflation outpaces economic growth or if the quality of investment opportunities declines significantly. There is no given that just having $10 million dollars means it will be easy to outpace inflation and not end up with less.

I think capital would usually be some real asset (building, factory, stocks, etc) and not cash, and if so shouldn't be affected by inflation.

No expert though, I may be wrong :)

Re: Economists Are Rethinking the Numbers on Inequality

#245

Post by throwawaymanbot » Wed, Dec 04, 2019, 10:06 PM UTC

Merrill wrote: post #208

toyg wrote: post #177

Earlier quoted context omitted.

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…

You are qouting Niall Ferguson??? haha

Re: Economists Are Rethinking the Numbers on Inequality

#246

Post by xorfish » Wed, Dec 04, 2019, 10:10 PM UTC

sokoloff wrote: post #220

xorfish wrote: post #198

Earlier quoted context omitted.

https://globalbetaadvisors.com/the-yale-myth-analyzing-the-p... Endowements have mostly a negative alpha when using a 4 factor model.

That article states they outperformed when measured over a 10, 15, 20, and 25 year period and underperformed over a 5 year period. (See the table. The longer periods include the more recent periods meaning they had strong outperformance early that more than made up for the recent under.) Is that evidence that they’re dramatically underperforming? It seems the story is mixed and you could argue either way depending on…

The endowements averaged the market over the last 25 years. There will always be some funds that will outperform the market. In the majority of the cases this will be luck. (Except for exposure to known risk factors like size or value)

Re: Economists Are Rethinking the Numbers on Inequality

#247

Post by corporate_shi11 » Wed, Dec 04, 2019, 10:10 PM UTC

WhompingWindows wrote: post #65

airstrike wrote: post #44

Measuring income inequality in the US without looking at outsized wage gains abroad feels remarkably inaccurate. I'll copy-paste my reply to another thread from earlier this year: > But, wages haven't improved in the last 40 years for the average person ...in the US. Growing inequality in the US is driven by the fact that capital gains domestically have improved dramatically alongside wage gains abroad , while wage h…

Education just isn't a priority for Americans, it's not about partisan anger and vitriol --both sides don't prioritize educations. Polls of both parties' voters show that education is not a top issue, but rather social concerns, the economy, guns, immigration, trade, climate change, these are all given as much if not more political oxygen than education.

The problem with education in America is not government and policy, but individuals, families and culture. Many school districts across the country have horrid graduation rates and median test scores. The amount of money you pour into these districts has very little impact on student outcomes.

How different would wage growth and average wages look like if the people in these districts took school seriously? The numbers would probably be much better.

Re: Economists Are Rethinking the Numbers on Inequality

#248

Post by beerandt » Wed, Dec 04, 2019, 10:14 PM UTC

rayiner wrote: post #77

Marazan wrote: post #64

Earlier quoted context omitted.

Housing is capital

But not the kind of capital people usually think about when railing about billionaires and wealth taxes.

Which is a big part of the reason that they're not billionaires.

Re: Economists Are Rethinking the Numbers on Inequality

#249

Post by Pfhreak » Wed, Dec 04, 2019, 10:19 PM UTC

nwah1 wrote: post #240

_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.

Failure to distinguish land from capital is an enormous possible pitfall for those trying to fight poverty. Land titles, and all other types of access rights to natural opportunities, are means by which "rent-seeking" occurs. Rent=seeking is any type of of zero-sum extractive activity that adds nothing to the economy, and simply serves to make the rich richer. Examples include: holding a prime piece of real estate id…

For sure. I'm a big advocate for removing the benefits of holding land in this way. Especially in cities, where the land could productively house people rather than be empty or have a surface lot on it.

> Solving inequality by making everyone poor is not going to get you very far.

For sure. I'd like to see more wealth equality, and I'd like to see it done by raising the amount of wealth of the working class.

Re: Economists Are Rethinking the Numbers on Inequality

#250

Post by StacyRoberts » Wed, Dec 04, 2019, 10:21 PM UTC

SgtBastard wrote: post #222

StacyRoberts wrote: post #187

Earlier quoted context omitted.

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

For any arbitrary n, those clustered at the top will arrange their affairs to maintain the n-1 wealthiest person in society to avoid the reset. Giving away 100s of millions to keep billions makes rational sense - especially if you can arrange it to flow to your spouse/children/trust/charity you control. In fact, you could game such a system by spiking a competitors net-worth right before the reset i.e. by suddenly bu…

Those are games within with the current system as well. The difference is that once you begin to approach the top your incentive becomes altruistic, because you are thinking about increasing the wealth of other people more than yourself.

That's the key. Capitalism only rewards greed. There is no altruistic component. What I suggest rewards altruism after the game is won. There is currently no end to the increasing gap, except violent revolt, which has always been the solution.

Violent revolt is not a good solution to the wealth gap.