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

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

#81

Post by klenwell » Sun, Apr 29, 2018, 6:04 PM UTC

fallingfrog wrote: post #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 o…

ChuckMcM offered an illustration of how this innovation has played out in higher education here a few years ago that has stuck with me:

I think it is even worse than simply "easy credit", I think the rewards built in encourage exploitation. Allow me to explain.

1) You have capital seeking a return.

2) There exists a basic need that can be facilitated by the application of capital (a degree for a "good job").

3) You remove all the risk out of providing capital for filling the need through government guarantees.

4) You provide a rate of return that is higher than the government guaranteed rate on their own capital instruments (treasury bills).

#4 there, which gives you higher returns on low risk investments, creates a demand for those instruments. And that demand causes a supply of instruments to be created. And the regulation on that supply is minimal.

The result is you get financial institutions giving loans to students for useless degrees at inflated cost institutions knowing that the government has made defaulting nearly impossible (hence the low risk) and they can offer better rates than t-bills.

Students are being exploited exactly like unqualified home buyers were being exploited in the mortgage fiasco of 2008.

What annoys me about the journalistic coverage is that the 'rage views' are "Students are graduating with few prospects from college and a mountain of debt" whereas the bigger story is that "Rich people demanding higher returns, enslave unsuspecting youth through their loan seller proxies."

https://news.ycombinator.com/item?id=6225976

Then there is this observation by dsirijus a few years back which now with the ICO craze seems ever truer:

Any sufficiently advanced business model is indistinguishable from a scam.

https://news.ycombinator.com/item?id=8227941

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

#82

Post by dragonwriter » Sun, Apr 29, 2018, 6:10 PM UTC

UncleEntity wrote: post #78

ComradeTaco wrote: post #52

Earlier quoted context omitted.

High inflation benefits those who have high debts and little savings. Low inflation benefits wealthy people with minimal debt and large savings. The federal reserve driving limited inflation has occurred for around 100 years, and the time in America with the least income inequality fell squarely in the middle during the 1950s and 1960s. The Federal Reserve and it's monterary policies aren't the issue.

I can actually use that exact same argument to claim the opposite. The federal reserve driving high monetary inflation (ie low interest rates) has fallen squarely in the times of the most income inequality, the 1920's and today. The Federal Reserve and its monetary policies can not be ruled out as the issue.

> The federal reserve driving high monetary inflation (ie low interest rates) has fallen squarely in the times of the most income inequality

[...]

> The Federal Reserve and its monetary policies can not be ruled out as the issue.

The current easy-money policy postdates the trend of rising inequality by around four decades; it can unequivocally, therefore, be ruled out as the cause of that trend, unless one accepts retrocausality as plausible.

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

#83

Post by [deleted] » Sun, Apr 29, 2018, 6:13 PM UTC

fallingfrog wrote: post #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 o…

[deleted]

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

#84

Post by coldtea » Sun, Apr 29, 2018, 6:14 PM UTC

lajhsdfkl wrote: post #80

coldtea wrote: post #69

Earlier quoted context omitted.

> 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 go…

And this innovation tax takes priority over all of the other things that need to be funded? What about the millions without healthcare? Also are we really going to trust some bureaucratic institution to dispense billions of dollars in a fair manner?

>And this innovation tax takes priority over all of the other things that need to be funded?

Who said that? For one, we can tax people more. For another, we could do a better job on spending the tax money (e.g. stop trillions going to tax cuts or military spending or BS projects).

>Also are we really going to trust some bureaucratic institution to dispense billions of dollars in a fair manner?

I mentioned a panel of non-government successful people, on academy and the market, who votes, not an "institution", much less a "bureaucratic" one.

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

#85

Post by tux1968 » Sun, Apr 29, 2018, 6:17 PM UTC

kaycebasques wrote: post #50

bilbo0s wrote: post #31

Earlier quoted context omitted.

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.

I'm not sure it should be based on cost-of-living at all. If it is, then you're middle class while living in SV, but all of a sudden rich when you sell your home, collect the equity, and move to Montana.

It should be enough to say, only rich (or soon to be rich) people can live in SV.

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

#86

Post by scroot » Sun, Apr 29, 2018, 6:29 PM UTC

nitrogen wrote: post #71

scroot wrote: post #11

Earlier quoted context omitted.

> But it wasn't changes in government policy that made this possible. It was the rise of microcomputers and networks that made this possible The history of computing is precisely one of government policy, namely the ARPA funding from the 60s and early 70s.

Microcomputers came in part from the homebrew computer scene in the 70s.

That's true, but these were iterations on materials and systems that already existed — things that came from the research community. Much of what we call personal computing today wouldn't exist if it wasn't for the ARPA research community that was funded and established during the IPTO's existence. That includes the Internet and everything created at Xerox PARC.

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

#87

Post by specialist » Sun, Apr 29, 2018, 6:32 PM UTC

Also true:

Creating the middle class was a deliberate, hard fought policy choice. The USA has done it (massive redistribution of wealth) three times. We're overdue for the fourth cycle.

Wealth and Democracy: A Political History of the American Rich [2003] http://a.co/6rMyoc1

"The Second Gilded Age has been staggering enough in its concentration of wealth to dwarf the original Gilded Age a hundred years earlier. However, the tech crash and then the horrible events of September 11, 2001, pointed out that great riches are as vulnerable as they have ever been. In Wealth and Democracy, Kevin Phillips charts the ongoing American saga of great wealth–how it has been accumulated, its shifting sources, and its ups and downs over more than two centuries. He explores how the rich and politically powerful have frequently worked together to create or perpetuate privilege, often at the expense of the national interest and usually at the expense of the middle and lower classes.

With intriguing chapters on history and bold analysis of present-day America, Phillips illuminates the dangerous politics that go with excessive concentration of wealth. Profiling wealthy Americans–from Astor to Carnegie and Rockefeller to contemporary wealth holders–Phillips provides fascinating details about the peculiarly American ways of becoming and staying a multimillionaire. He exposes the subtle corruption spawned by a money culture and financial power, evident in economic philosophy, tax favoritism, and selective bailouts in the name of free enterprise, economic stimulus, and national security.

Finally, Wealth and Democracy turns to the history of Britain and other leading world economic powers to examine the symptoms that signaled their declines–speculative finance, mounting international debt, record wealth, income polarization, and disgruntled politics–signs that we recognize in America at the start of the twenty-first century. In a time of national crisis, Phillips worries that the growing parallels suggest the tide may already be turning for us all."

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

#88

Post by bobthechef » Sun, Apr 29, 2018, 6:32 PM UTC

fallingfrog wrote: post #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 o…

"labor markets are purely competitive"

Purely?

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

#89

Post by whataretensors » Sun, Apr 29, 2018, 6:47 PM UTC

Lets not forget how the rich have gated out the young intelligent from early markets, where 1000xs happen, through the corrupt SEC's accredited investor regulation. This ensures that rich can keep shotgunning into YC batches and be successful.

This is why I'm all in on cryptocurrency.

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

#90

Post by sgt101 » Sun, Apr 29, 2018, 6:52 PM UTC

ergothus wrote: post #63

IkmoIkmo wrote: post #49

Earlier quoted context omitted.

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 po…

The other side of the equation should be rebalanced too - there is every reason to believe that less extreme inequality would lead to greater overall economic activity and wealth (so more money in the pot). So the it should be $740k distributed more evenly vs $325 skewed to the right.