Earlier quoted context omitted.
I am not sure if the story of "creating" wealth is correct. When I look at people like Bezos or Gates I am not sure they created as much as they were able to gain a larger share of a market. I think without them we would have been fine and other players would have been in the market. So I think to some degree they took wealth from others. I also don't believe that the top 1% (or pick another number) are creating more…
> are creating more wealth than they did 50 years ago But they are - this is due to the huge productivity gains brought about by the application of computers. For a small example, in the 1960's and 70s, my dad was writing a book, using a typewriter. Every set of revisions meant typing the book over again (to get a clean manuscript). My mom helped out, spending hours and hours banging out a new manuscript. I still fee…
Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
81–90 of 102 posts
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#82> At the same time that the major factors expanding the economic pie were losing momentum, other powerful forces emerged that would push toward dividing the pie more unequally The framing of the issue influences what conclusions one draws. Here, the authors think of the economy as a "pie" created by "factors" that gets "divided up". What naturally follows is that if some get a bigger "slice" than others, it is inhere…
Sure, I think this is pretty much universally recognized. But if Bob creates 10x the wealth but receives 100x the income, that is unfair. And that is the situation that many believe we find ourselves in, where the wealthy are being systematically over-rewarded by the system we have in place to distribute the wealth that is being created.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#83> At the same time that the major factors expanding the economic pie were losing momentum, other powerful forces emerged that would push toward dividing the pie more unequally The framing of the issue influences what conclusions one draws. Here, the authors think of the economy as a "pie" created by "factors" that gets "divided up". What naturally follows is that if some get a bigger "slice" than others, it is inhere…
I don't think inherent unfairness logically follows - in many cases, this is not true (which I think is your point). However, from the ~fact that it is not always "unfair", it does not then logically follow that it is always "fair". Reality is extremely complex - clever semantics and non-comprehensive, low-dimensional perspectives (intentional or not) can easily hide the full spectrum of all that is happening. This phenomenon can be observed in many domains, from relationships to economics to geopolitics.
> But a free market economy is not a pie. It's a collection of people that create wealth. Some create more wealth than others. Bob creating more wealth than Fred does not mean that Bob took it from Fred. There's nothing unfair about Bob creating more than Fred.
At a given snapshot in time, is there not in some sense a finite pie, the makeup of which derives from an individual or organization recognizing and exploiting opportunities(!) for wealth creation that existed (but were not yet discovered) in reality? And is it not at least sometimes true that the one who happens to ~unlock this opportunity first [1] can realize a significant advantage over competitors who may have only been a few steps behind? And once dominance is established in certain categories, are there not other phenomena [2] that sometimes kick in to further expand and cement this dominance, potentially permanently?
[1] https://www.investopedia.com/terms/f/firstmover.asp
[2] https://www.investopedia.com/terms/n/network-effect.asp
There are many different perspectives from which one can view and evaluate reality - it is not difficult to find two perspectives that are perfectly valid (within their constrained domain), but also diametrically opposed. This norm we seem to have developed in society where an articulation of a single constrained/non-comprehensive perspective (out of a pool of many possible accurate perspectives) is broadly accepted as comprehensively true, or an evaluation of reality that is singularly sufficient for setting policy, seems not only highly flawed, but I would say getting into the realm of immorality, in that: if the one who is positing/marketing such a perspective has the intellectual capability to see the other valid and conflicting perspectives, but ~chooses not to (to the detriment of broad swaths of society)...I don't think their mother and father would be very proud of how their child is conducting themselves in society.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#84Earlier quoted context omitted.
I don't have a source. I make this claim based on: 1. The observation that very wealthy people like Bill Gates and Elon Musk saw their net worth increase at a far faster pace earlier in their career. 2. Basic complexity theory. Managing less assets is less complex than managing more. 3. The range of investments that can absorb one's entire capital without market distortions grows as one has less capital to invest. Sa…
Most investments are not $50k into an ice cream stand but $50k into the stock market. Also someone with $50 million can still invest into an ice cream stand but someone with $50k cannot be an early investor into a tech company.
>Also someone with $50 million can still invest into an ice cream stand but someone with $50k cannot be an early investor into a tech company.
That is mostly due to regulatory restrictions on public offerings, and yes, that contributes to greater income inequality.
In a free market however, you'd see low-friction token sales, with thousands of contributors, providing the tech company with its initial capital, not a small cadre of VCs.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#85Earlier quoted context omitted.
I’m not sure what you are objecting to. The section you quoted does not use the word unfair, but unequal. The linked article does not seem to be a call for socialism, but rather a series of proposals to increase growth via normal economic measures, like removing regulatory barriers to new housing, or being less hawkish on monetary policy since inflation has been consistently over-estimated. If you are arguing that fa…
> The section you quoted does not use the word unfair, but unequal Calling unequal a problem means it's unfair. > If I inherit (or even buy) a house in Palo Alto and it undergoes millions of dollars of appreciation due to a growing industry nearby that I do not work in, did I create that wealth? Yes. I speak as a person who has repeatedly lost money in real estate. Real estate is hardly a slam-dunk guaranteed money m…
It's easy to develop a knee-jerk reaction to bad economic ideas that are frequently justified by "fairness", which IMO is such a fuzzy term as to be pretty much useless. But this does not seem to be a collection of those ideas, but instead reasonable ones based on examining cause-effect relationships and where current regulations may be leading to negative outcomes. Do you really mean to object to this?
Rather than price being determined by "wealth creation", I think a more nuanced view is price is determined by supply and demand. But that the real wealth of countries in the long run is determined by productivity (units of output per unit of labor), and that these things may be correlated but not perfectly so (shortages and inflation make prices go up but don't create wealth).
Anyway, the article doesn't seem to be a call for dramatic expansion of government but rather a call to examine cause-effect relationships and to use existing policy tools in a smarter way, including removing harmful regulations, in the interest having economic opportunity be more widespread. I think this is exactly the sort of thinking we need, and rejecting it because it sounds a bit superficially similar to bad economic thinking is a mistake. Bad economic ideas are likely to be the alternative.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#86Earlier quoted context omitted.
This is inline with my reasoning. Certain circles say that the affluent are causation for capital markets operating efficiently. More specifically, that the purchasing power of the affluent are the source or "spring" from which economic activity is generated. It's just not true. Economic activity is generated by the act of expenditure. The act is a threshold behavior relative to the an economic agent's ratio of liqui…
>>Economic activity is generated by the act of expenditure. The tendency toward expending money for products is not a scarce economic resource. It is always abundant, and leads to almost everything produced being consumed, as it reaches its market clearing price. What's scarce is capital and production, and only the profit-motivated investment that emerges when people are secure in their right to their private proper…
The aggregation of wealth in a subset of individuals, with respect to the cost of living, will leave them more free or willing to make nonessential purchases which generate an expansion in economic activity. I'm getting at the point that distributing those liquid assets across more individuals will lead to an increase in the magnitude, distribution, and frequency of aggregate economic expenditure (i.e. monetary velocity). It's tricky because, as you referenced, there are markets for fixed resources which could be negatively impacted if that debt to income ratio gets too large for the majority of market participants. Although I think the trajectory of consumer markets further favors my view point as purchases are transitioning from physical goods to services and digital goods.
In that same vein, I believe profit-motivated investment is only reinforced by a greater diffusion of economic expenditure. The diffusion only increases the frequency of opportunity available for firms to enter an arbitrary market.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#87Earlier quoted context omitted.
Why is open source not meaningful? Open source software has proven to be very competitive and often superior to closed source, protected software. People even make money writing open source software.
Not a meaningful comparison. Open source software has indeed been successful in the presence of closed source software. However this is not true for films or books. Thus the fact that OSS is successful today is not evidence that books and films will be successful without copyright protection. It’s not evidence they won’t either. Thus it is not a meaningful comparison. The economics of open source software and fiction…
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#88Earlier quoted context omitted.
> are creating more wealth than they did 50 years ago But they are - this is due to the huge productivity gains brought about by the application of computers. For a small example, in the 1960's and 70s, my dad was writing a book, using a typewriter. Every set of revisions meant typing the book over again (to get a clean manuscript). My mom helped out, spending hours and hours banging out a new manuscript. I still fee…
My point was about the top 1% creating more wealth or not. I think society as a whole is creating more wealth with many people contributing. But somehow we ended up with a situation where there top 1% percent are taking an increasing share of that wealth.
Here's where framing comes into play. Let's reframe your statement as:
"there top 1% percent are creating an increasing percentage of that wealth."
"taking" implies some pie someone is taking a bigger slice of that they had no hand in creating.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#89Earlier quoted context omitted.
The creation of Google, for example, has added immeasurably to the wealth of the world. Ditto spreadsheets, operating systems. Thanks to Amazon, I waste a tiny fraction of the time my parents historically did shopping, since I don’t have to run to the store basically ever. I’m taking a free university course from one of the top people in the field in between bottle feedings, thanks to YouTube. The economy is not a fi…
> The creation of Google, for example, has added immeasurably to the wealth of the world. Google and other software advancements have offered amazing utility to everyone, freeing up people to do other tasks by reducing many hours spent on previously tedious tasks. However, unless there is opportunity for the people who used to perform the obviated tasks to produce something others will value, then all of the wealth t…
An effective search allows all kinds of businesses to exist that couldn't have before.
It's similar to while cars replaced horses and the horse industry, it created far more industry that couldn't have existed before.
Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy
#90Earlier quoted context omitted.
> The section you quoted does not use the word unfair, but unequal Calling unequal a problem means it's unfair. > If I inherit (or even buy) a house in Palo Alto and it undergoes millions of dollars of appreciation due to a growing industry nearby that I do not work in, did I create that wealth? Yes. I speak as a person who has repeatedly lost money in real estate. Real estate is hardly a slam-dunk guaranteed money m…
Again, the article is proposing things like allowing the market to build new housing . So, according to your framing of the issue, doing this would hurt "wealth creators" that sit on a house they inherited (in a growing location by chance), and reward wealth destroyers, like people who build new housing for people to live. Does this framing seem more useful than the article's? It's easy to develop a knee-jerk reactio…