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

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

#41

Post by api » Sun, Apr 29, 2018, 4:09 PM UTC

lajhsdfkl wrote: post #37

ppereira wrote: post #10

The distincion between creating value and hacking the economic system is interesting. “Think of Alan Turing, whose genius provided the mathematics underlying the modern computer. Or of Einstein. Or of the discoverers of the laser (in which Charles Townes played a central role) or John Bardeen, Walter Brattain, and William Shockley, the inventors of transistors. Or of Watson and Crick, who unraveled the mysteries of D…

I think it should be obvious that you won't get rich unless you sell something... None of those people sold things or seemed to be interested in the process of selling things (except Shockley and that point is moot since the coinventors/creators reaped the rewards). Is it really that surprising to people that you wont become rich unless you convince thousands upon thousands of people to hand you money? What our syste…

Your last paragraph is no longer really correct. The largest rewards have for some time been going to equity plays and financial schemes. You don't build a company for customers but for the next round of investors, and your product is its stock. In the extreme these can be highly clever and polished versions of the "big store" scam where nearly all actual value is flimsy or illusory.

This is because all the money is now at the top. Your customers are the ones who can pay.

A related phenomenon is Internet companies where the user is the product. Advertisers and others who want user data or access to attention have far more money to spend than users. Computing has transformed into a surveillance platform to monetize users because users are not the ones paying for anything.

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

#42

Post by Retric » Sun, Apr 29, 2018, 4:11 PM UTC

sokoloff wrote: post #7

I half wonder if the issue of inequality is that America may have a fatter right tail on the distribution rather than an ever-narrowing tail. Instead of only having the Rockefeller, Vanderbilt, etc 0.001% wealthy, we have a 5-6% band of households who are millionaires[0] and that makes the wealth more visible when it’s a handful of people in your town or social circle than when it was only a handful of people in the…

Top 0.1% has more than 3x what it used to as a share of the total economy.

It's not really that the top 1% has more money it's mostly that the top 0.1% has vastly more money. https://www.theguardian.com/business/2014/nov/13/us-wealth-i...

PS: People often think of themselves as middle class but frankly 5million is far from it. 5 million means you can pull 250k per year safely and really should consider retiring because more money has diminishing returns.

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

#43

Post by UncleEntity » Sun, Apr 29, 2018, 4:12 PM UTC

ItsMe000001 wrote: post #8

quantumofmalice wrote: post #6

As is so often the case, the first comment explains more than the entire article: "Economic division was built into USD: you either pay interest on Treasury bonds, or you live off it."

I don't see it. Money moves the real world each time it changes hands (except for in purely financial transactions), so why would only the two tax paying and the getting-interest-from-government-debt steps have a real world impact? The cycle of money is far larger than that. It's certainly possible I'm overlooking some larger aggregate effect because I'm not taking a far enough step back. I also don't think it is all…

> It's certainly possible I'm overlooking some larger aggregate effect because I'm not taking a far enough step back.

Inflation has a large aggregate effect, the people who first get the newly minted dollars can spend them at the current dollar value before their distribution dilutes the value of the dollar as a whole.

The effect of each newly created dollar may be immeasurably small but over time may result in things like, perhaps, growing wealth inequity and the "destruction" of the middle class.

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

#44

Post by WillReplyfFood » Sun, Apr 29, 2018, 4:13 PM UTC

api wrote: post #41

lajhsdfkl wrote: post #37

Earlier quoted context omitted.

I think it should be obvious that you won't get rich unless you sell something... None of those people sold things or seemed to be interested in the process of selling things (except Shockley and that point is moot since the coinventors/creators reaped the rewards). Is it really that surprising to people that you wont become rich unless you convince thousands upon thousands of people to hand you money? What our syste…

Your last paragraph is no longer really correct. The largest rewards have for some time been going to equity plays and financial schemes. You don't build a company for customers but for the next round of investors, and your product is its stock. In the extreme these can be highly clever and polished versions of the "big store" scam where nearly all actual value is flimsy or illusory. This is because all the money is…

Its basically rewarded to be a black hat hacker- you scam your way into a industry, take it over from its previous owners - repackage the whole thing and try to get out before any liability could hit you.

Obviously nothing of value is here created- a bank-robber doesent create value, he redistributes it - from the bank to himsel. Same goes for Ueber- it takes pre-existing value (taxi services)- reduces the wages and worker protection- and leaves with its share before the police arrive.

To call that innovation is really a insult to the likes of tesla and einstein.

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

#45

Post by jessaustin » Sun, Apr 29, 2018, 4:15 PM UTC

I suspect this is covered in greater detail in the book from which TFA is excerpted, but this description of rent-seeking through control of the government is incomplete. In addition to one-sided transactions with the government, large firms benefit from their regulatory control of the commercial environment, enforced by the government. Smaller firms and individual people will always negotiate and compete from a disadvantage, because they have no say in how business will be conducted. Regulators like SEC and FCC pretend that their purpose is to rein in the excesses of big firms, while spending almost all of their time and resources ensuring that we cannot do business with anyone besides big firms.

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

#46

Post by montrose » Sun, Apr 29, 2018, 4:16 PM UTC

alex_young wrote: post #4

montrose wrote: post #2

His thesis is that changes in government policy are the cause of the increasing economic inequality in America. But a simple thought experiment is enough to disprove this: imagine what Larry Page would have done in 1950 vs 1998. In 1950 he would have become a professor or gone to work for Bell Labs. In 1998 he was able to start his own company and become a billionaire. But it wasn't changes in government policy that…

> In 1950 he would have become a professor or gone to work for Bell Labs. Why wouldn't he have started one of the numerous profitable companies of the 50s? It seems more likely that an entrepreneur would do that rather than work in another field. > In 1998 he was able to start his own company and become a billionaire. This appears to prove Stiglitz' point doesn't it? There was no deficit of innovation in the mid 20th…

Because far fewer (eventually big) companies were started in 1950 than in 1998. In 1950 "the major sectors of the economy were either organized as government-backed cartels or dominated by a few oligopolistic corporations." (Michael Lind, Land of Promise)

The innovation that happened in 1950 consisted of General Electric getting into a new line of business, not a grad student starting his own company.

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

#47

Post by gaius » Sun, Apr 29, 2018, 4:17 PM UTC

ItsMe000001 wrote: post #28

gaius wrote: post #19

Earlier quoted context omitted.

It's just money we owe ourselves Not quite true: it’s the money we owe our future selves. So you can arrive in the future and find that the pension that should have been waiting for you there was borrowed by past-people and they never paid it back. And you can’t go back in time to demand it back.

We don't have a time machine. Everything consumed today is produced today (disregarding short term storing in warehouses, that only goes so far). I don't buy the argument "but... future generations!" Future generations have to deal with whatever their situation is at their future time. They don't have to send anything back through time to us. If they are so impressed by abstract numbers in computers that their econom…

Future generations have to deal with whatever their situation is at their future time

I’m not talking about “generations”, I’m talking about us.

The people who enjoyed an easy credit-fuelled boom in the 00’s didn’t fully understand that they were merely spending their retirement money now (or rather, then)

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

#48

Post by ComradeTaco » Sun, Apr 29, 2018, 4:19 PM UTC

sokoloff wrote: post #7

I half wonder if the issue of inequality is that America may have a fatter right tail on the distribution rather than an ever-narrowing tail. Instead of only having the Rockefeller, Vanderbilt, etc 0.001% wealthy, we have a 5-6% band of households who are millionaires[0] and that makes the wealth more visible when it’s a handful of people in your town or social circle than when it was only a handful of people in the…

I think part of the problem is that the price of more inelastic things in our society is driven by that top 5%. The housing market is especially dominated by that demographic, but so is healthcare and college. And since all of those things are priced for the wealthy first and then marginally discounted for middle class needs, they've become completely unaffordable.

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

#49

Post by IkmoIkmo » Sun, Apr 29, 2018, 4:19 PM UTC

sokoloff wrote: post #7

I half wonder if the issue of inequality is that America may have a fatter right tail on the distribution rather than an ever-narrowing tail. Instead of only having the Rockefeller, Vanderbilt, etc 0.001% wealthy, we have a 5-6% band of households who are millionaires[0] and that makes the wealth more visible when it’s a handful of people in your town or social circle than when it was only a handful of people in the…

Yeah I've wondered about this a lot. I mean, what kind of inequality are we talking about, and in which cases does it matter.

(A) 3 people earn 25k a year, 4 people $30k, 3 people 40k.

moves to:

(B) 4 people earn 50k a year, 4 people earn 60k a year, 1 person earns 300k a year.

B is typically viewed as both preferable and less equal to A. I'm not saying we were at A and got to B. What I'm saying is that I don't know, and a treatise of A/B is always left out from every single article I come across on the topic of inequality. What kind of inequality are we talking about and is it an issue?

It's like the gender gap. Tons of studies indicate if you correct for things like job choice, experience, overtime etc, the gender gap is about 2 or 3 cents on the dollar (and shifts in favour of women under certain conditions. Cultural gender roles likely influence things like job choice and you can make a sensible claim that this ought to be fixed. But the framing of unequal pay (20% less!) for equal work just isn't the case. However, plenty of data now shows the gender gap isn't as big as we think, mostly unrelated to blatant discrimination and quickly becoming smaller and smaller. The literature is more nuanced than some of the political movements behind it. But in the realm of inequality all I read is 'top x% makes y% of the money', without delving much deeper into why this is a problem, there's no nuance or depth in most news articles on the topic, and I'm not familiar with (or too interested in reading) super technical research on the topic.

Don't get me wrong, I'm a leftist, I'm aware that inequality correlates strongly with a whole range of shitty social outcomes like crime or teenage pregnancy. But I want to know what I'm arguing against and why, and I've got no clue whether we're talking about inequality between regular folk growing, or inequality between equal regular folk and a few bill gates types growing, and which is problematic and why.

So point me to some (not too extremely academic) literature if you can! Thanks.

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

#50

Post by kaycebasques » Sun, Apr 29, 2018, 4:22 PM UTC

bilbo0s wrote: post #31

sokoloff wrote: post #7

I half wonder if the issue of inequality is that America may have a fatter right tail on the distribution rather than an ever-narrowing tail. Instead of only having the Rockefeller, Vanderbilt, etc 0.001% wealthy, we have a 5-6% band of households who are millionaires[0] and that makes the wealth more visible when it’s a handful of people in your town or social circle than when it was only a handful of people in the…

I know this will sound provincial to the HN crowd since it's very Silicon Valley oriented, but a thought occurred to me while reading this comment. The thought that it's pretty amazing that there are places in the US where, say, 5 million in assets is "middle class". I understand the thinking, it's just that where I come from all of the guys with 5 million in assets are considered to be pretty F'n rich. I don't know…

We can all stay on the same page by expressing the numbers as percentage-above-cost-of-living. Or, we just represent this dollar amount as X, where X is how much money you need to live comfortably off passive income for any given region. In the case of SV, it’s $5-10M. In other places, it’s $1M.