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Joseph Stiglitz Says American Inequality Didn’t Just Happen

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

#61
post #41

Earlier quoted context omitted.

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…

> The largest rewards have for some time been going to equity plays and financial schemes The largest rewards are going to people using their money to finance the creation of businesses that create products people want to buy? Yeah that makes sense to me.

The last part about value for customers is optional for as long as there are deeper pocketed investors. Given the concentration of wealth at the top that might be a long long time. I also edited my comment to mention user monetization, which is a related phenomenon.

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

#62
post #61

Earlier quoted context omitted.

> The largest rewards have for some time been going to equity plays and financial schemes The largest rewards are going to people using their money to finance the creation of businesses that create products people want to buy? Yeah that makes sense to me.

The last part about value for customers is optional for as long as there are deeper pocketed investors. Given the concentration of wealth at the top that might be a long long time. I also edited my comment to mention user monetization, which is a related phenomenon.

> The last part about value for customers is optional for as long as there are deeper pocketed investors

I don't understand what you mean by this? Is this a comment about the current startup funding phenomenon?

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

#63
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,…

> B is typically viewed as both preferable and less equal to A.

Your examples involved totals of 325k and 740k, so yeah, of course the one with more than twice the wealth (and divided among one fewer person) is considered more deisreable.

An example to match the inequality we have today would be closer to 1 person earning 900k, 90 people earning 10k, and 9 people earning 100k.

The issue isn't just inequality, your point that some level of inequality is?expected and even good in a capitalist system is correct. The issue is EXTREME inequality and increasing inequality.

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

#64
post #55

Earlier quoted context omitted.

You're mixing up levels of indirection. Financing the creation of businesses that create products people want to buy isn't itself an example of "practical products that provide value that the average working class person would want to spend money on". You can say that what our system rewards is always derived from practical products the average person wants, but that doesn't seem like a useful way to think about thin…

Can you explain to me in simple words what you are refuting in your comment? Nowhere did I suggest that the only way to become rich was to sell practical products. I will state that this is the primary way people acquire vast amounts of money and that whether people become rich via second order and abstract systems such as financing makes no difference. Ultimately the products would not exist without the financial sy…

It's a lot easier to get a $250k position at Morgan Stanley than build a business generating $250k in profit. If more people go the latter route, that's just a matter of a larger denominator, not an indication of what's actually being rewarded.

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

#65
>> The theory that came to dominate, beginning in the second half of the nineteenth century—and still does—was called “marginal productivity theory”; those with higher productivities earned higher incomes that reflected their greater contribution to society. Competitive markets, working through the laws of supply and demand, determine the value of each individual’s contributions. If someone has a scarce and valuable skill, the market will reward him amply, because of his greater contribution to output. If he has no skills, his income will be low.

"Productivity" here means the amount of income one generates, for their employer or themselves. So in other words, if someone is good at making money, they are productive and should be rewarded with more money.

For instance, people like me, who make their living sitting in front of a computer screen all day are paid significantly higher salaries than people who do back-breaking, physical work, like fruit pickers.

Picking fruit is really hard work and although you don't need a university degree to be employed as one, it is not the kind of job that everyone can easily do. Now that the UK is leaving the EU, fruit producers are starting to have problems with employing people to pick their fruit, because local workers will not do the job. "Will not" but also to a large extent "cannot" [1]. Agricultural work is not just a matter of good will- one needs to be able to accomplish very physically demanding tasks. People who have spent most of their working life as office workers do not have the experience, or the stamina, to do agricultural work, even if they had the inclination. They might be enticed to give it a try, if only the salaries for this type of job were comparable to their usual fare. They're not- fruit pickers typically make minimum wage.

And yet, agricultural work is an important part of the economy. Not to mention that, without it, city-dwelling, office-working types like myself have nothing to subsist on. We depend on the work of those low-paid workers who are poor in formal skills but high in ability and determination, but we treat their job as inferior, indeed less "productive" and therefore deserving of rewards than ours.

Inequality is certainly constructed, and ideas like "marginal productivity theory" are at the root of this construction. Much like god-given ruling rights of Western monarchies their use is to justify and legitimise absurd social injustices, so that we can all cling on to the belief that the current state of affairs is not so bad after all.

___________________

[1] https://www.theguardian.com/politics/2018/feb/11/british-far...

Catalin Constandis, a Haygrove farm manager, said British workers did not want to pick fruit because it was too physically demanding.

“In my team in the past two years, no English people have worked here. We had some graduates once; they didn’t last a day,” said Constandis, who has just become a British citizen.

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

#66
Favorite quote: "Those at the top have learned how to suck out money from the rest in ways that the rest are hardly aware of—that is their true innovation." Rings true to me. That's why labor markets are purely competitive but the markets for products are dominated by price fixing. It's why you get more jail time for stealing a car than cheating your employees or customers to the tune of millions of dollars. And so on.

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

#67

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…

>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

Obvious under the current system maybe.

Obvious that it should be so, and that it's better that it's so, or that it can only ever be so? Not so much.

I, for one, think that society would be so much better if production of value like what Einstein did or what Tesla did etc, was rewarded with richness, rather than selling something.

For one, we'd have gotten rid of fucking SPAM email and social media leeching on private data to sell ads...

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

#68

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…

> 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 system rewards are practical products that provide value that the average working class person would want to spend money on.

Hmm. The first statement either tautologous or ignores the importance of inheritance and marriage; the second one ignores the importance of property.

http://uk.businessinsider.com/sunday-times-rich-list-2017-ri...

In addition to fairly standard retail I can see: gambling, property, inheritance, diamonds, inheritance (Earl Cadogan, Duke of Westminster, Heineken), property, actual inventions (Dyson, Rausing), corruption/oil oligarchy (Abramovich, Usmanov, Blavatnik), and war profiteering (Fredriksen).

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

#69

Earlier quoted context omitted.

What's the economic value of the World Wide Web? How tiny a portion of that should we really allocate to the innovators who create the concepts our economy is built on?

So do you have an actual proposal for how we should be rewarding these people? Your rhetorical question provides no value. I want to know how we should decide who should be rewarded, how we can obtain the money to reward them and what benefit does rewarding them in this fashion provide to society.

>So do you have an actual proposal for how we should be rewarding these people?

Sure.

An innovation tax, and a group of cross industry and academic people (e.g. a mix of successful founders, engineers, great researchers, Nobel winners, plus a jury of common folk etc) that decides, every e.g. 5-10 years, who gets to share the money among a shortlist of potential benefactors.

"Hmm, looks like this Turing person did good work in retrospect that hugely helped our society. Let him have $100 million of the $1 billion innovation fund".

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

#70
post #31
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…

I don’t think it’s really that intractable. The traditional middle class lifestyle in the US for the past several decades involves getting married, probably having a few kids, and buying a 3 bedroom house to live in. Probably even in the towns you’re thinking of, that describes a middle or upper middle class lifestyle.

The thing that’s crazy is that this can cost 2-3 million dollars in many places in the Bay Area. The housing crises in affluent cities is absolutely the driving factor of our growing inequality issues. It’s been shown in different ways in many studies. We need to build a lot more housing if we hope to make any real progress on these issues (and in desirable places like the Bay Area it probably requires shifting the ideal to be a 3 bedroom condo rather than a standalone house).

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