Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What Paul Graham Is Missing About Inequality – Tim O'Reilly

medium.com

Post reply on HN
Print view View original

41–50 of 55 posts

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#41

Post by bobby_9x »

UK-AL wrote: post #29
bobby_9x wrote: post #25

Earlier quoted context omitted.

The poor are moving up, the middle class are moving toward the poor (they will meet at some point), and the rich continue to get richer in the process. So yes, inequality is technically decreasing between the poor and middle class, but the end result will be the middle class being non-existent. It might be better for someone from a poor country, but not that good for someone from the US.

I don't believe that it is the divine right of the middle class of one country to live better lives than other people, simply because of location. Besides, globalisation will overall increase the total wealth of the poor + middleclass combined.

"Besides, globalisation will overall increase the total wealth of the poor + middleclass combined."

It won't really increase the overall wealth of the middle class. It will pull wealth away from the middle class to pay the poor at a cheaper rate. This is what's happening right now and why people in the tech industry are so upset by it. It's a form of global wealth redistribution.

I also don't think the middle class has any divine right. They just need to start preparing for job loss and overseas competition.

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#43

Post by spangry »

hackuser wrote: post #2

It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry talk about what they know (IT).

I'm an economist (sort of), with some IT domain expertise. I've been thinking about the below issues for some time now:

1) As productive capital becomes increasingly digital, it becomes cheaper to acquire or create. If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result.

2) Additionally, digital capital often enables production at near 0 marginal cost (e.g. it costs facebook virtually nothing when a person registers a new account). Markets where the marginal cost of production is near 0 are generally 'winner-takes-all' markets (e.g. natural monopolies, network monopolies etc.), due to always increasing economies of scale. So the returns to capital become larger, as monopolists can capture more 'consumer surplus' as profit. In addition, the more a monopolist can price discriminate (i.e. set different prices for different consumers, based on how much those consumers value the product), the more they can convert consumer surplus into profit for themselves.

The net result of the previous two points: significantly more wealth becomes concentrated in fewer hands

3) Digital capital is highly mobile. For example, AWS instances can be moved to another country almost instantaneously and without cost. This makes it hard for governments to tax returns to digital capital, barring some global tax agreement, as raising the tax rate on capital returns will simply cause it to relocate to lower taxing jurisdictions (e.g. Ireland). So governments have limited scope to redistribute this increasingly concentrated wealth using taxation.

I think that we badly need to have a global conversation about this: do we consider these good or bad things? are we ok with the resulting society? what should we do (if anything) about this?

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#44

Post by spangry »

delish wrote: post #3
hackuser wrote: post #2

It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry talk about what they know (IT).

I agree. Paul Graham's essays on income inequality expressed my views on income inequality more clearly than even I was thinking them. I appreciate this, but now I need to hear a critique by someone who understands the issue how I understand it and disagrees with me. I've been looking, but I've found ad hominem attacks.

Although I basically agree with PG's essay, the one plausible critique I can think of is this:

1) We don't care about wealth distribution per se. What we actually care about is utility maximisation (in other words, maximising the sum of 'human happiness').

2) Once we get pass some basic wealth level, to meet some set of basic needs like food and shelter, a person's utility is a function of relative wealth rather than an increasing function of absolute wealth.

3) If you accept points 1 and 2, we therefore should care about wealth inequality in and of itself.

There's also probably another argument to be made along the lines of 'decreasing marginal utility with respect to wealth'. Which is a fancy way of saying: a poor person derives greater utility from an additional $1 in wealth than a rich person does. This would mean that the sum of human utility is increased by taking $1 from the richest person and giving it to the poorest person.

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#45

Post by x5n1 »

danans wrote: post #31
vannevar wrote: post #22

Tim writes: But in formerly rich countries, many people who used to be paid well for their work now have to compete for lower-paid jobs, while those who already own meaningful capital take a larger and larger share of the pie. This is the real “pie fallacy” — the idea that as long as the pie is getting bigger, everyone is better off. It’s true that through technology, trade, and the spread of knowledge, we have made…

We've also somewhat institutionalized the belief that all innovation would cease if those laws were even slightly more re-balanced in favor of more redistribution downward. PG's essay seemed to hint at that kind of thinking, but I couldn't tell if he was advocating against higher taxes on the very wealthy, or whether he was more vaguely saying "don't mess with the startup machine's incentive system" without being spe…

There are many ways to re-engineer the system to lead to better outcomes. Say you gave everyone twice what we are giving them now. But that extra 50%, you don't give them that as income, but instead as money that can be spent on certain kinds of investment. Not commodities, food, finance, or real-estate. What sort of outcomes would that cause in the system? The standard argument for giving people any sort of wealth is, well that causes inflation. That only causes inflation only because of the way the money is used. If it is used different it can cause innovation and better distribution of wealth.

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#46

Post by JBReefer »

x5n1 wrote: post #45
danans wrote: post #31

Earlier quoted context omitted.

We've also somewhat institutionalized the belief that all innovation would cease if those laws were even slightly more re-balanced in favor of more redistribution downward. PG's essay seemed to hint at that kind of thinking, but I couldn't tell if he was advocating against higher taxes on the very wealthy, or whether he was more vaguely saying "don't mess with the startup machine's incentive system" without being spe…

There are many ways to re-engineer the system to lead to better outcomes. Say you gave everyone twice what we are giving them now. But that extra 50%, you don't give them that as income, but instead as money that can be spent on certain kinds of investment. Not commodities, food, finance, or real-estate. What sort of outcomes would that cause in the system? The standard argument for giving people any sort of wealth i…

Those things are all fungible, and thus can be exchanged for cash. This would only introduce friction, not prevent inflation.

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#47

Post by x5n1 »

JBReefer wrote: post #46
x5n1 wrote: post #45

Earlier quoted context omitted.

There are many ways to re-engineer the system to lead to better outcomes. Say you gave everyone twice what we are giving them now. But that extra 50%, you don't give them that as income, but instead as money that can be spent on certain kinds of investment. Not commodities, food, finance, or real-estate. What sort of outcomes would that cause in the system? The standard argument for giving people any sort of wealth i…

Those things are all fungible, and thus can be exchanged for cash. This would only introduce friction, not prevent inflation.

I don't see how they are fungible. At the end of the day the people are investors. They invest in a real company that carries out real business. Is that business any of those listed above? If not, then yes you can invest, if not no you can not invest. Obviously the investors would at some point see a return on their income. And you simply don't give them the returns. You put the returns back in the same fund. You can get that money back when you are 65 to pass to your children. You can only get back a certain amount, depending on the number of children, enough to pay for their schooling and a home. That way everyone has an education and a home, and the banksters don't get rich off mortgages and loans. The residual the government can keep for social programs or something as such.

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#48

Post by shadowsun7 »

delish wrote: post #3
hackuser wrote: post #2

It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry talk about what they know (IT).

I agree. Paul Graham's essays on income inequality expressed my views on income inequality more clearly than even I was thinking them. I appreciate this, but now I need to hear a critique by someone who understands the issue how I understand it and disagrees with me. I've been looking, but I've found ad hominem attacks.

@delish: have you seen this? http://praxtime.com/2016/01/12/paul-graham-inequality-cowens...

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#49

Post by hackuser »

spangry wrote: post #43
hackuser wrote: post #2

It would be much more interesting to hear economists, who have expertise in this domain, discuss this issue and hear people who happen to be in our industry talk about what they know (IT).

I'm an economist (sort of), with some IT domain expertise. I've been thinking about the below issues for some time now: 1) As productive capital becomes increasingly digital, it becomes cheaper to acquire or create. If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result. 2) Additionally, digital c…

> If capital is cheaper to acquire or create, it means fewer people are needed to pool money to attain it. In other words, capital ownership becomes more concentrated as a result.

I see how that would cause ownership of a specific asset (e.g., one program) to become more concentrated, but wouldn't the lower barrier to entry cause ownership to become less concentrated market-wide?

Re: What Paul Graham Is Missing About Inequality – Tim O'Reilly

#50

Post by UK-AL »

bobby_9x wrote: post #41
UK-AL wrote: post #29

Earlier quoted context omitted.

I don't believe that it is the divine right of the middle class of one country to live better lives than other people, simply because of location. Besides, globalisation will overall increase the total wealth of the poor + middleclass combined.

"Besides, globalisation will overall increase the total wealth of the poor + middleclass combined." It won't really increase the overall wealth of the middle class. It will pull wealth away from the middle class to pay the poor at a cheaper rate. This is what's happening right now and why people in the tech industry are so upset by it. It's a form of global wealth redistribution. I also don't think the middle class h…

Trade has ability to create wealth. If we increase global trade, it will also increase the total wealth available to the poor + middle class. Some portion of the surplus value will also go to rich providing the capital.
Post reply on HN