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

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

#91

Post by sgt101 » Sun, Apr 29, 2018, 6:54 PM UTC

TangoTrotFox wrote: post #77

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 also wondered the same thing and sought out data on it a while back. I provided those data in this thread here [1]. The gist of it is that our hypothesis does seem to be supported by the data. And I think it makes sense if you consider things in a thought experiment. In a nation with a king and a 100 impoverished citizens inequality would be mostly invisible. But now imagine our king decides he's been cruel keeping…

Most people are not interested in being as wealth as the king, or the nobles, but they are interested in having an extra pig and a hut that doesn't leak.

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

#92

Post by sgt101 » Sun, Apr 29, 2018, 6:55 PM UTC

ebbv wrote: post #15

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…

You don’t have to wonder. The data is out there. While there are “more millionaires” than before, that’s a bogus metric due to inflation. You have to look at concentration of wealth as a percentage and a ratio between. Wealthy and poor and “middle class”. If you do that it’s obvious what the issue is; wages have stayed very flat for the poor and middle class and almost all wealth gain has been concentrated in the top…

Also "middle class" in the USA is used to talk about what is known as "working class" in most of the rest of the world.

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

#93

Post by klenwell » Sun, Apr 29, 2018, 6:55 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 suppose there is some truth to this. Elsewhere in this thread I quote a sharp observation by ChuckMcM which I find tragically applicable to the current American poltical-economic system:

Rich people demanding higher returns, enslave unsuspecting youth through their loan seller proxies.

But it's not even rich people demanding higher returns. As Planet Money observed in what I consider a seminal piece for understanding the 2008 financial crisis, The Giant Pool of Money, what helped precipitate the bubble and collapse was institutional investors demanding a simple reliable 3% ROI:

https://www.thisamericanlife.org/355/the-giant-pool-of-money

After Greenspan had warned money managers not to expect the US government to provide it with T-bills any more, Wall Street stepped forward with their innovation: NINJA loans, ARMs, CDOs, and the other crap covered in The Big Short. These had the effect of inventing new ways for everyone, but especially working and middle-class people, to go into debt to cushion returns for a wealthier investor class. Just as many people who traditionally would have never gone to college can now go to college by taking on huge nearly unmanageable amounts of debt, people who would have never bought a house before were sold the illusion of being able to afford a house -- by taking on huge unmanageable amounts of debt.

So yes, I agree, more millionaires fattens the right side of the tail. But it still seems to come at the expense, and the exploitation, of their down-class fellow citizens.

I also doubt that this new class of millionaires is evenly distributed geographically and the resentment being bred among, for example, Trump supporters, has less to do with observing the local Rockefellers tooling around town in their limousines, than watching the Kardashians on television and, nowadays, Potemkin Lifestyle Celebrities on Instagram.

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

#94

Post by grzm » Sun, Apr 29, 2018, 6:57 PM UTC

sgt101 wrote: post #92

ebbv wrote: post #15

Earlier quoted context omitted.

You don’t have to wonder. The data is out there. While there are “more millionaires” than before, that’s a bogus metric due to inflation. You have to look at concentration of wealth as a percentage and a ratio between. Wealthy and poor and “middle class”. If you do that it’s obvious what the issue is; wages have stayed very flat for the poor and middle class and almost all wealth gain has been concentrated in the top…

Also "middle class" in the USA is used to talk about what is known as "working class" in most of the rest of the world.

I hear both used to refer to different segments in the US. Do you have a reference for the translation you describe?

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

#95

Post by walshemj » Sun, Apr 29, 2018, 7:09 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…

Wealth doesn't map exactly to class - you can be poorer than some one but still not be in the Upper class.

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

#96

Post by walshemj » Sun, Apr 29, 2018, 7:12 PM UTC

But the American revolution being a revolution (as many of the others at the time) was for the benefit of the rich landowners.

And the devolved nature of the Republic meaning that reforms that the UK and Europe went through haven't happened has nothing to do with it?

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

#97

Post by RodericDay » Sun, Apr 29, 2018, 7:13 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…

Labor markets are extremely uncompetitive, because prices (salaries) are not public information.

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

#98

Post by kieranmaine » Sun, Apr 29, 2018, 7:14 PM UTC

TangoTrotFox wrote: post #75

I think the first thing that conversations like this need are data. I ran into this [1] when actually searching information on the chiseling out of the middle class. And that paper does describe that. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. There's…

And here's some extra info that accompanied this data: "The growth in the rich and upper middle class and the declining proportion of the population in the middle and lower classes indicate widespread economic growth between 1979 and 2014, but that growth was not distributed equally. On average, incomes grew 53 percent over the period. If the growth had been equally distributed (figure 3), then the shift upward would have been much greater. At the extremes, the proportion of the poor and near-poor population would have dropped to 12.8 percent, and the proportion that is rich would have barely increased (to only 0.5 percent of the population) because the growth among the near-rich with even growth would have been much less than what happened with uneven growth. With even growth, the size of the middle class would have declined but the growth in the upper middle class would have added another 6 percentage points and reached over a third (35.2 percent) of the nondependent adult population."

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

#99

Post by sokoloff » Sun, Apr 29, 2018, 7:21 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…

I certainly didn't mean to imply (nor state) that a net worth of $5MM was middle "middle class", merely that someone with $1MM was technically in the dastardly "millionaires and billionaires", but wasn't someone that confiscatory and redistributive tax policies should heavily target, and that single digit millions wasn't outrageously wealth hoarding.

If our family had $5MM net worth and paid off our house, we'd be looking at a passive income stream of somewhere around $120K/yr, or about what two median public school teachers make. That's hardly Scrooge McDuck or "day drinking mojitos on the fantail" territory...

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

#100

Post by ItsMe000001 » Sun, Apr 29, 2018, 7:21 PM UTC

paulryanrogers wrote: post #40

ItsMe000001 wrote: post #28

Earlier quoted context omitted.

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…

Resources processed into consumables (soon to be waste) and waste byproducts will have a meaningful impact on future people. And with fewer easily processable resources available they'll be less equipped to clean up our messes. Economics and money are tools that could help mitigate the consumption-at-all-costs problems we have today.

> with fewer easily processable resources available

I don't think that that is true. For one, the meaning of "easily" shifts all the time, second, I don't see the problem when people actually have something worthwhile to do with their lives.

I am very concerned about what we do to the environment (as someone who had chronic heavy metal poisoning treated by chelators in a university clinic when I hear about mercury in sea fish it actually has a deep personal meaning), but that is a different issue than resource extraction (which of course may make the environmental situation even worse).

On the other hand, I see researching and developing capabilities to understand and manipulate the environment on a large scale much much better as a very worthwhile economic endeavor. For example, this also gives us a starting point for future projects in space, including "terraforming". It's obviously something we could have lots of fun developing - instead of selling insurance, "financial tools" (on top of financial tools), and other BS "products". People working in that sector, which could very well be(come) a major part of humanity, would not have the problem of finding their job meaningless, as so many do today. That the control system we use to steer humanity is incapable of steering us into such an obviously useful and worthwhile direction, but instead steers us towards environmental destruction, creating meaningless jobs, gets people to cheat one another like there's no tomorrow and being honest actually takes a real effort tells me our control system is really bad and out of control. Th eproblem is that the control system (e.g. "finance") has become the final target, instead of being seen as a tool. Instead of optimizing the tool for society we try to optimize society for the tool ("everybody has to be in the stock market - for retirement!" -- Wallstreet approves).