
Technology and wealth inequality - gatsby
http://blog.samaltman.com/technology-and-wealth-inequality
======
haberman
The discourse around inequality in this article and elsewhere is frustrating
to me, because it advances the idea that inequality is fundamentally unjust,
using the lives of the poor as the example.

To me this misses the point. The problem is not inequality, the problem is
poverty. If everyone had enough that their basic needs were met and they were
not struggling to survive, the fact that some people can afford Lamborghinis
and some cannot would not be unjust in my opinion.

Without inequality, there are no Elon Musks. Bootstrapping SpaceX and Tesla
required more than 1/6,000,000,000'th of the world's resources. Big results
require investment, and it's not practical to crowdfund a multi-million dollar
investment. So who should we entrust to make big bets? Doesn't it only make
sense that the people who have already been the most successful in creating
wealth should have the freedom to take that wealth to try out new ideas?

Inequality is not the problem. Poverty is the problem. Lack of access to
education is the problem. We should strive to see that everyone can focus on
improving their life and doing interesting things without struggling to
survive. And if the most successful people take their spoils and build a
150-foot yacht, or take a ride into space, or invest in the next big company,
more power to them.

~~~
JDulin
Inequality not being fundamentally unjust does not imply it isn't a huge
problem for society.

First of all, it makes it easy for the wealthy to lock the poor (and the rich)
into their locations on the income graphs. The systems the wealthy can set in
place are an impediment to a meritocracy by ensuring the rich stay rich and
the poor stay poor, whether that is through boarding schools and trust funds
or the Drug War and a toothless minimum wage. If the resulting massive
disparity in wages implies one thing, it's that our civilization is wasting a
lot of untapped human productivity on the low end of the wealth graph.

Secondly, it creates social resentment, fragmentation, and stratification.
These are just emotions and Sociology Major words, yes, but that doesn't mean
they aren't real. If the people at the bottom of the ladder feel like they
don't have the power to climb, a society can end very badly as its political
process becomes more polarized and communities are segregated.

Finally, it creates large gaps not just in material wealth, but political.
Whether you're a liberal or a conservative, you think either the Koch Brothers
or George Soros are destroying America. Either way, it can be agreed that
democracies are undermined by a few unelected individuals wielding huge
amounts of power. Less income inequality means less political inequality.

Nothing you said is wrong, but it's unhelpful. It distracts from how important
dealing with growing income inequality will be in the future by saying "The
discourse... is frustrating to me, because it's not pedantically right." It
might be necessary if sama was arguing against large wealth disparities in a
post-poverty civilization, but that is not what we have. Like you said:
Poverty is the problem. And while we have poverty, poverty and inequality are
closely linked.

~~~
haberman
> It might be necessary if sama was arguing against large wealth disparities
> in a post-poverty civilization, but that is not what we have. Like you said:
> Poverty is the problem. And while we have poverty, poverty and inequality
> are closely linked.

This is where you lose me. Solving the problem of poverty is a matter of
making sure that the poorest people have enough. Solving the "problem" of
inequality is a matter of making sure that nobody has "too much."

~~~
dllthomas
As long as resources are finite, there is _an_ upper bound on how much one
individual can have without depriving others. I'm not convinced we're near it,
though...

~~~
haberman
That's zero-sum thinking.

~~~
dllthomas
When resources are fixed, zero-sum (in resources) thinking is appropriate.

~~~
pdonis
Resources are not fixed. Our planet, our solar system, and our universe are
awash in resources. The question is, how much does it cost to extract them,
compared to their value once extracted? As technology advances and human
ingenuity finds new ways to do things, more and more resources become
available at a cost less than their value. That's been happening all through
human history, and continues to happen now. Even if particular resources
(e.g., oil) turn out to be finite, we find substitutes (e.g., nuclear, solar,
or even oil from algae), so that in a practical sense we never run out.

~~~
dllthomas
There are finite resources in our light cone. Resources _are_ fixed. I _said_
that I didn't expect we were _nearing_ those limits. Quite obviously we aren't
nearing _that_ limit, but I don't rule out the possibility that there may be
other, more relevant ones.

~~~
pdonis
_There are finite resources in our light cone_

Actually, if the universe is spatially infinite (which it is according to our
best current models), this is not true even if we equate "resources" with
"quantity of matter", which is what you are implicitly assuming.

However, this implicit assumption is false: what counts as a "resource", i.e.,
how much of what kind of matter it takes to accomplish a particular goal, is
not fixed. It changes as technology and human knowledge changes. In principle
there is no lower bound to how much of what kind of matter it can take to
accomplish a particular goal, which means that in principle there is no upper
bound to the amount of wealth that can be created with a fixed quantity of
matter.

~~~
dllthomas
Quantity of matter, quantity of energy, necessary structure... What of it we
can access is limited by our light cone.

 _" In principle there is no lower bound to how much of what kind of matter it
can take to accomplish a particular goal, which means that in principle there
is no upper bound to the amount of wealth that can be created with a fixed
quantity of matter."_

On the contrary, in principle such a bound _exists_ , for any specific task
(and accompanying present configuration of the universe). We are similarly not
likely to be near the theoretical limits imposed by physics and the well-
ordering principle, but again practical constraints _may_ bind much tighter -
particularly in the short term.

~~~
pdonis
_What of it we can access is limited by our light cone._

What of it we can access, and what use we can make of it (I notice that you
have left out this point completely), _at this point in time_ is limited by
our past light cone and our current knowledge and technology, obviously. But
what of it we can access, and what use we can make of it, _indefinitely into
the future_ is not; it is only limited by the entire universe and our future
knowledge and technology.

 _On the contrary, in principle such a bound exists, for any specific task_

For any specific task undertaken at a specific point in time, in a specific,
fixed state of knowledge and technology, yes, there is such a bound in
principle; but you made a much stronger claim than that.

Also, whether or not that in principle limit has practical significance even
over "short" time scales such as a human lifetime depends on how fast our
technology and knowledge changes, not just on what they are at a given
instant.

~~~
dllthomas
This is getting silly.

 _" (I notice that you have left out this point completely)"_

No, I didn't. I addressed it in the other half of my post, which you obviously
saw since you responded to it. If every sentence must address all parts of the
argument, we're all guilty of flagrant violations up and down this thread (and
every other) and will need to be writing some awfully convoluted sentences.

 _" What of it we can access, and what use we can make of it [...] at this
point in time is limited by our past light cone and our current knowledge and
technology, obviously. But what of it we can access, and what use we can make
of it, indefinitely into the future is not; it is only limited by the entire
universe and our future knowledge and technology."_

Per my understanding of relativity and the present state of physics
(significantly received from others but I think that I followed it at the
time) this is simply not the case (in particular, if time is finite then
"everything our light cone will encompass before the end of time" is finite -
and I think an expansionary universe makes things worse). I think we're going
to need to bust out some math or expert testimony instead of simply making
assertions at each other if we're going to get anywhere.

 _" For any specific task undertaken at a specific point in time, in a
specific, fixed state of knowledge and technology, yes, there is such a bound
in principle; but you made a much stronger claim than that."_

There is a set of possible futures from any present. You hold that, for any
task in any situation, with sufficient knowledge, the resources it can take
can approach _arbitrarily close_ to zero?

 _' Also, whether or not that in principle limit has practical significance
even over "short" time scales such as a human lifetime depends on how fast our
technology and knowledge changes, not just on what they are at a given
instant.'_

I don't think the bounds given by physics have any impact yet. I'm not
convinced they ever will - my point was there is _a_ theoretical bound, and
there may be more practical bounds that matter at any time-scale.

Let's try to get this back closer to useful.

My original point, which I think too much was read into, was simply that there
are situations in which some having more _can_ lead to others having less, and
that paying attention to _whether_ we're in such a situation is worthwhile. I
stated right there in that first comment that I didn't think we presently
were, in most respects.

That was followed by a levelling of a charge of "zero-sum thinking" in an
explicitly hypothesized zero-sum situation, which (again) I said I thought
unlikely to be relevant. I found this amusing.

~~~
pdonis
_I addressed it in the other half of my post_

I see that you did say "for any specific task", but, as I noted in my response
to that, it seemed inconsistent with the much stronger nature of the claim
that seemed to me to be either implicit or explicit in the other things you
said. So I was confused about exactly what position you were taking. I'm
clearer about it in view of this post; see below.

 _Per my understanding of relativity and the present state of physics
(significantly received from others but I think that I followed it at the
time) this is simply not the case (in particular, if time is finite then
"everything our light cone will encompass before the end of time" is finite -
and I think an expansionary universe makes things worse)._

If you think this, then your understanding of relativity is wrong. As I
responded to your other post upthread, "time is finite" only if space is
finite, per the Einstein Field Equation. And the expansion of the universe
does not "make things worse" in any sense that I can see, because the only
reasonable solutions for the universe as a whole are dynamic (the only static
solution, Einstein's static universe with a nonzero cosmological constant, is
unstable, like a pencil balanced on its point, so it's not really reasonable
as a real-world solution).

 _You hold that, for any task in any situation, with sufficient knowledge, the
resources it can take can approach arbitrarily close to zero?_

Yes (with an appropriate definition of "any task in any situation"). Julian
Simon, AFAIK, was the first to defend this claim in detail, in a series of
economics papers in (IIRC) the 1980's. It was in this same time period that he
made his famous bet with Paul Ehrlich (of "Population Bomb" fame) about
whether the price of 5 common resources would fall (Simon's bet) or rise
(Ehrlich's bet) over a period of some years. Simon won the bet for all 5.

 _I don 't think the bounds given by physics have any impact yet. I'm not
convinced they ever will_

Then what's the point of talking about them? If you think there are more
practical bounds, what are they?

 _My original point, which I think too much was read into, was simply that
there are situations in which some having more can lead to others having less,
and that paying attention to whether we 're in such a situation is
worthwhile._

But this is a different statement from "resources are finite". Some having
more can lead to others having less even if there is plenty to go around (for
example, consider investment banks and the economy tanking in 2008). I would
say that skewed incentives, and our failure as a society to properly punish
people who undermine basic institutions, are far more pressing problems than
resource limits.

------
pdonis
One key point that is missed in this article: why do people making minimum
wage have trouble making ends meet? Because all this advance of technology has
_not_ made the necessities of life cheaper in the same way it's made, say,
computers cheaper. For a few hundred dollars today, you can buy orders of
magnitude more computing power than existed in the entire world when I was a
child. Yet it's still difficult for people working low wage jobs to afford
food, housing (meaning housing in an area that's reasonably safe to live in),
and transportation (again, that's reasonably safe to use).

Why is that? Why has all this enormous improvement in productivity not made
the necessities of life so cheap that even someone making minimum wage can
easily afford them? It seems to me that fixing that would go a long way
towards fixing the problems Altman is talking about, yet nobody talks about
it.

~~~
patio11
Do you agree with the statement "Food is at least as expensive in America in
2014 as it was in 1974"? If so I have some really great news for you, but I
don't want to put words in your mouth.

~~~
dllthomas
Do you agree with the statement "For a few hundred dollars today, you can buy
orders of magnitude more [food] than existed in the entire world [in 1974]"?

I kid, of course - and I'm actually interested in hearing the parent poster's
response - but clearly food hasn't fallen _in the same way_ that electronics
have.

~~~
pdonis
_clearly food hasn 't fallen in the same way that electronics have._

Exactly; that was my point, or at least part of it. For the rest, see my
response to patio11.

------
natural219
Another great post. I love this guy.

I think a lot of our discussion about this topic is limited because we're
still a capitalist society that largely views social trends through the lens
of economics. At some point in time, things like "GDP" and income distribution
where fairly good proxies for notions like "overall well being" and
"aspirational stability" (more thought is required on this second term).

I think as technology progresses, we're going to see the use of money as a
proxy for social measurement drift further and further away from actual
reality. Any new social paradigm is going to have to start with fundamentals
of human nature -- human competitiveness, equal opportunity, etc.

In short, I think our failure to respond to these changes is mostly a failure
of us to think clearly about what actually going on in the day-to-day lives of
actors in this new technological world. I don't know where we start, but
existential philosophy seems like a good jumping board.

My thoughts are jumbled. I'd flush them out, but I need to get back to work.

------
joelrunyon
Honest question: are people surprised at the wealth distribution?

It seems quite a few HNers are familiar with Pareto's principle & 80/20 and
the current wealth distribution reflects that almost perfectly (Top 20% = 84%
of wealth).[1]

I'm not saying that being in that top 20% doesn't bear certain
responsibilities, but it shouldn't necessarily be surprising.

[1]
[http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/t...](http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/this-
viral-video-is-right-we-need-to-worry-about-wealth-inequality/)

~~~
scarmig
Even if wealth and income will roughly fall along a Pareto distribution
(plausible, but needs some argument), that doesn't mean the 80/20 is
universal. Only some Pareto distributions (characterized by certain
parameters) display the 80/20 principle.

e.g. the Gini coefficient for an idealized Pareto distribution displaying the
80/20 principle is by definition 0.60. But Gini coefficients can obviously
vary a lot from that, so societies definitely can exhibit either more or less
wealth inequality.

------
baddox
The thesis of the article seems to be that wealth inequality, even if
accompanied by a total wealth increase (and perhaps even if accompanied by a
wealth increase for every single person, although that's not made explicit),
is still "unfair" and therefore worth combating.

But I'm confused when the article shifts between talking about what "is really
unfair" and what "feels really unfair" (i.e. normative vs. descriptive
fairness). I would have preferred a more consistent foundation for the thesis.
Either argue why the normative view is valid, or demonstrate that a large
portion of people _do_ think wealth inequality is unfair. I think the latter
is a more potent argument, especially paired with the claim that "the
traditional endings to extreme wealth inequality in a society are never good."

~~~
jedmeyers
Let's say a large portion of people do think that it is unfair that they do
not have the same amount of wealth as other, smaller group of people. Would
you consider it to be acceptable for the larger group to appropriate smaller
group's wealth using that premise?

~~~
scarmig
False frame. Wealth--meaning a state-granted monopoly to some amount of
capital, and a government promise to perform violence on anyone who disregards
that monopoly--is a social contract. People are only talking about
renegotiating the exact terms of that contract.

~~~
baddox
Wealth/property/capital can definitely exist without a government promise to
perform violence on violators.

~~~
scarmig
It definitely can and should, but it looks very different from the way it
looks with a government present to perform violence on violators. And even
what counts as a violation is very different with a government than without.
That's the point--and if it didn't, there'd be no reason to add in the extra
administrative costs of government to get the same results.

And to be clear: government enforcement of property through violence provides
plenty of social value, but those reformulated property rights are socially
defined and subject to change, and not natural in any sense.

------
seiji
In the Types Of Economies That Work wars of the early 1900s, Marx kept
pointing out the end result of capitalism will be the rich few controlling
most of the wealth. It's only natural after all, the profit flows to the
owners, not the workers:
[http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx](http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx)

We do the same thing today. Everybody knows you're a rube if you're just
working—that's why there's Founder Mania around here. Get your fake 60%
ownership, hire people to create value under you, capture most of the
profit/exit yourself.

Congrats on including actual charts (and some infographics too). Much nicer
than just another "X is happening. Oh noes!" perspective.

------
iambateman
It's easy to talk about inequality from a macro perspective, but imagine
this...

Imagine Bill Gates is sitting next to a McDonalds employee. Bill is _millions_
of times wealthier than this guy. He could afford to hire 100,000 minimum wage
employees for _life_.

By all accounts Bill is lucky. He's smart and works hard too, but he's
basically lucky.

And increasingly, society suggests that we deserve some slice of his luck,
because we have less. But why? Our government guarantees your right to private
property. Once you own something, it's yours. When we choose to believe in a
threshold at which the rules of private property cease, we erode Bill's
incentive to participate in the market. If that doesn't feel like a big deal
now, wait until the disincentive slides down to your level of income.

I'm not saying that civic society shouldn't do anything for marginalized
people. Education can have a meaningful effect on their wages and technology
is going to shake the markets and people need help to smooth their individual
outcomes, but to say that they deserve Bill's money simply because he's rich
is a nasty nasty attitude.

We need to seek an environment that allows everyone to grow through profitable
employment, not artificially rebalance the top-end.

~~~
benched
This (rather Randian) model of things is so contrived. Focus on the
individual, their achievements, and personal wealth as untouchable property
are half-truths, mythology, and contrivances.

The economy is a collective thing. It's a network of people with money, goods,
and services flowing between them. Serious wealth is and has always been
primarily about one's positioning in the system, and only indirectly about
their abilities or value delivered. Yes, presumably ability and achievement
often have some influence on that positioning, but it's that mechanical fact
of sitting in the thick part of the flow that matters when it comes to making
a lot of money. (E.g. I get paid the same pretty much no matter what I do,
while my blue-collar friends have to log hours and really work. Yeah,
eventually I could potentially lose my job if I really do nothing, but in
reality I can get away with doing very little - direct deposit still happens,
because that's the system. I am so positioned with respect to the company's
payroll system.)

I don't see the problem with making changes at the systemic level to how the
flow works (taxes, basic income), as well as making it easier for people to
move around (which you addressed, re: education. e.g. returning college to
affordability would be truly great).

~~~
ahomescu1
> This (rather Randian) model of things is so contrived. Focus on the
> individual, their achievements, and personal wealth as untouchable property
> are half-truths, mythology, and contrivances.

> The economy is a collective thing.

The economy is a collective of individuals, all of which must put in effort
into making things work; people generally don't put in effort unless rewarded.
For real-world examples of societies that put the collective above the
individual, take a look at communist countries. Most of them failed, whereas
the individualistic West still stands (I say this coming from Eastern Europe
and seeing how much damage collectivism can do).

------
flyinglizard
The problem of inequality is mostly a local thing where gentrification is
taking progress, or on a wider scale, a media debate. No one seriously feels
inadequate because of how the people on Forbes 500 live. They are so far out
of the average person sphere that it has no significance on anyone.

Likewise, I doubt a person from Mississippi genuinely feels a disparty with
his investment banking brethren in NYC.

In short, I don't think inequality is something people _feel_ unless there's
an ongoing public debate. People judge themselves by their immediate
environment, which I believe follows a normal distribution nearly anywhere
(there are always some more successful than others; business owners,
entrepreneurs, paid workers and homeless. It's like that nearly anywhere).

It's should be also noted that while nationwide inequality among western world
countries is rising (all across the board), it's shrinking on a global level
[1].

[1] [http://i.imgur.com/B4vI8Y8.png](http://i.imgur.com/B4vI8Y8.png)

~~~
bdcs
Wealth is almost always Pareto distributed -- not normally (Gaussian)
distributed as you claim:
[http://en.wikipedia.org/wiki/Pareto_distribution](http://en.wikipedia.org/wiki/Pareto_distribution)

~~~
flyinglizard
I meant normal as in "common", not Gaussian - sorry!

------
nostromo
Here's an idea a friend and I have been throwing around. It's probably
terrible to be honest, so I'd love to hear why it's dumb.

Implement basic income, which HN is well aware of. But, instead of funding it
entirely through income taxes, fund it primarily with what the Fed would call
"Quantitative Easing" but what I will call "printing money."

Right now, I believe the Fed has actually made inequality much worse by
printing a metric ton of money and pumping it into government and the
financial sector. The hope is that this will, to use a loaded term, "trickle
down" to everyday Americans. Instead, it seems there isn't much trickling.

So, why print money? Because it's a wealth tax. It's also the easiest tax to
implement: you don't have to collect anything! No IRS. A huge amount of the US
government would be gone: no more means testing government expenditures
(benefits), no more tax collecting for revenue.

~~~
dllthomas
Printing money isn't a tax on wealth, it's a tax on _dollar denominated_
wealth. If I have a $5 million dollar home and a $20 million dollar stock
portfolio, and the dollar falls 2% tonight, tomorrow I probably have a
(roughly) $5.1 million dollar home and $20.4 million dollar stock portfolio.

That said, I'm not convinced it's a _terrible_ idea. What it would likely do
is get businesses to stop sitting on cash reserves... if they do that by
increasing production, that might lead good places. If they do it by fleeing
into other assets, we'll just see the dollar crater. Increased demand
expressed by those whose increase from the money they've been handed is less
than their loss from inflation _might_ mean that increasing production is the
better move for them. I'm not sure I'd want to bet on it, though. Printing a
_portion_ of what is handed out (particularly in down times) seems less crazy.

------
allthatglitters
This article supports many of the common fallacies that accompany most
discussions of "wealth inequality" \- and as usual believes it should be
rectified... (by whom?) For a refreshing point of view on this topic, read
[http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-
homogen...](http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-homogenous-
dough.html) . It may not change your mind but it is certainly another way to
think about the issue.

~~~
benched
And where in that conception of things is the relief for the bottom 50-60% of
the population? The main audience for this type of drivel seems to be wannabe
entrepreneurs who want to believe they're on that straight and narrow to
fortune, and deserve to be.

------
ojbyrne
This seems to be lacking some historical perspective ("Those who forget
history are condemned to repeat it"). This happened before:

[https://en.wikipedia.org/wiki/Gilded_Age](https://en.wikipedia.org/wiki/Gilded_Age)

~~~
spikels
Funny how the Gilded Age, a pejorative term BTW, gets a bad rap because a few
people got extremely rich. It was actually one on the most economically
successful periods in US history. As pointed out by Wikipedia real wages were
up 60% in 30 years despite a doubling in population including around 8 million
very poor new immigrants.

For comparison we have had around 5% real wage growth over the past 40 years
and are having difficulty absorbing a similar number of poor immigrants
despite being almost 10 time more populous.

To paraphrase Santayana: "Those who cannot remember the past are condemned to
be UNABLE to repeat it."

------
invalidOrTaken
It's important to note that over time, wealth _always_ gathers itself into a
few hands. Money will flow to the rich because they're good at getting it to
flow to them. That's why they're rich, duh. _As_ they grow rich, any sensible
person looking to sell something will try and sell it to the rich, because
they have discretionary income. The problem is that the rich are good at
making money flow to them (remember---that's why they're rich), and so most of
what they buy are investments of some kind. Which means they make more money,
etc.

In the past this has been mitigated by crazy amounts of philanthropy a la
Carnegie or Rockefeller. I get the impression this is less so now, for two
reasons. The first is that we're a more global culture, so philanthropy
efforts go toward the third world rather than the third precinct. The second
is that I suspect some of the rich feel persecuted by all this talk about the
rich, and aren't kindly disposed towards donating their money to people who
hate them. I'd love to hear recordings of Bill Gates's phone calls gone bad.

As for solutions: I don't know. One that I've been working on is better
financial software for the common man (to run on a phone, rather than a PC);
perhaps that will at least stop him from being suckered by predatory lending.

~~~
ojbyrne
I don't see how you can reconcile "always" with the fact that the US had a top
marginal tax rate of 92% in 1952.

[https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...](https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates)

You're leaving out the role of social upheaval.

~~~
invalidOrTaken
You're right, I am.

But what does _that_ tell you about where we're headed?

------
strlen
Basic income or negative income tax are great ideas: they're cheaper to
administer than the current welfare state, are more humane (people are treated
as adults and allowed to spend the basic income on whatever they wish), and
avoid perverse incentives. With the current system, getting a job easily has
the same impact as a 100% tax -- all benefits go away, all income goes goes to
deal with lost benefits (and free time goes to -- given this is an entry-level
and menial/service job -- an activity that's not intrinsically rewarding).

Yet, people have (initially surprising to me) visceral reactions against these
proposals -- despite these proposals coming from all over the political map --
as unfair.

Jonathan Haidt has an excellent article on morality of fairness:

[http://www.democracyjournal.org/28/of-freedom-and-
fairness.p...](http://www.democracyjournal.org/28/of-freedom-and-
fairness.php?page=all)

In short, individuals see fairness on a scale -- from "what people receive
should be proportional to what they contribute" to "from each according to his
ability, to each according their means".

It also makes sense to add a slightly more nuanced pole to this, namely "just
desserts": "people should be able to keep everything that they earn, with the
exception of fees for services they use and externalities they impose on
others"; in other words, fairness concerns should also be balanced against
negative liberty.

This could explain why there's such strong opposition to a basic income:
significant chunk of the population people see it as less fair as opposed to
more fair, another chunk views it as just another form of theft. It's also why
many aren't easily bothered by supposed excesses of idleness of the rich, as
long as the wealth was acquired legitimately. This isn't to endorse these
views, but to acknowledge that these positions are sincerely held by
individuals of all races, genders, and incomes.

This is also why many of the wealthy vote for politicians that (on paper)
promise to reduce wealth inequality and one of the reasons why many of the
poor vote for candidates that don't think inequality is a problem. In short,
these are moral views as opposed to matters of rational self-interest.

Contrary to Marx not everyone is fighting for their class interests, contrary
to popular view of economics (which is different from how economists actually
see it) not everyone is trying to maximize their own net worth by any means
possible. Economists say individuals try to maximize their utility, which to
nearly all means -- to some extent -- wanting to see good in the world, but
with their own definition of what is good.

So here's a proposal: when speaking on inequality and social justice, let's
identify who the audience is, and justify policy proposals according to their
values. If someone is a libertarian, address the negative effect concentration
of wealth (which often begets political power) has on liberty (e.g.,
politicians buying their way into office to push Nanny state policies, wealthy
funding campaigns that lead to criminalization of vice, etc...)

Likewise, if someone cares about proportionality, point out that labour theory
of value is false: law of supply and demand means it's inevitable that people
will get rich as result of sheer luck or doing something that seems trivial.
That's not to mention that many of the wealthy are wealthy as result of rent-
seeking -- and fight both rent-seeking and the inequality it leads to.

Otherwise, quite frankly, these ideas will remain dead in the water
politically.

Edit: one thing that should be noted is that it's unlikely that in a free
market (which is generally a good thing) wealth distribution will be anything
other than power law (which isn't to say we can't smooth it out, but we can't
turn it to a normal probability distribution). However, wealth isn't
everything: why not divorce wealth from status (to the extent, we already do
this)? For example, Silicon Valley (it's getting hard to use that term non-
ironically, unfortunately) does tend to praise the value of individual
contributors as well as that of entrepreneurs and managers, yet there's
disconnect in mainstream culture -- where remaining an individual contributor
(or even a mid-tier manager) is _not_ considered a successful outcome. This
change will have to happen organically, of course.

~~~
andrewfong
One way to make basic income work politically is make it conditional upon
providing something other than the actual market value of said something, at
least initially.

For example, the Earned Income Tax Credit in the U.S. already effectively
creates negative taxes for certain people, but only if they have "earned"
income. While this isn't as efficient as a pure negative income tax or basic
income, it's a good start.

You could also try paying people a basic income for community service, voting,
registering for the draft, etc.

~~~
scarmig
Unfortunately once you start doing that it loses its appeal because its
foundation has been ripped out from beneath it.

First you start with basic civic duties. Then there are the things that are a
bit more problematic in principle but'd still have a broad base of support--
denying it to murderers and pedophiles and then all of a sudden anyone who's
been convicted of a felony. Then, whoah, anyone who's committed a misdemeanor,
and then you've got to start pre-emptively giving drug tests to anyone who
might want to claim it. And then you add in ideas like "well, if you're
disabled or a civil servant you should get more" and "obviously if you're a
billionaire you shouldn't get any," and then if you make seven figures, then
six, then five. And then "well, people shouldn't be spending money on
Obamaphones, let's make it so that only food and housing can be purchased with
it." And then only certain kinds of food and certain kinds of housing, TBD by
policymakers and the helpful white papers that corporations specializing in
those areas are happy to provide for free.

And then at the end of it all you end up with the deeply broken welfare system
we have now, one that encourages dependency, dehumanizes recipients, and
incentivizes against work, while simultaneously throwing away huge gobs of
social value through administrative costs and corruption.

~~~
andrewfong
The scenario you outline is pretty speculative. Moreover, we're assuming that
a pure basic income is politically unpalatable. Given that constraint, I'd
rather take a half-assed version over nothing at all.

Also, if you keep the narrative simple and consistent, and the initial base is
broad enough, I think it can maintain its appeal. The message behind Social
Security is that you're entitled to payments because you put money in
initially -- even if you ultimately get out more than you put in. As such,
it's proven to be surprisingly resilient to attempts to impose restrictions on
it.

Likewise, because the EITC is administered through the tax system, which
everyone participates in -- regardless of whether you're a felon or not.
Because it's framed as a tax benefit that everyone is potentially eligible
for, it's also held up surprisingly well.

------
tn13
When it comes to debating ideas the supporters of big-
government/Communism/Socialism has lost the battle long back.

In modern times I see that these people have changed skins and they are not
talking about "inequality" and "environment" as tools to counter mostly free
market enterprise and small government arguments.

Eventually it all boils down to which policy would fetch more votes. Number of
unproductive freeloaders in American society is probably increasing, there is
tendency to look down upon the legal temporary job seekers in USA as job
thieves depriving Americans of their jobs and we are told to be compassionate
about the illegal migrants.

The vote bank in favor of taxing the productive and paying the unproductive is
increasing at a rapid pace. Yes, it will bring equality where everyone will be
poorer and no hope for future. (Note: Big ships take longer to sink, I have no
doubt USA will continue to be a leader over next 20 years or so but the
decline after that will be catastrophic).

------
argumentum
These ideas (negative income tax/minimum income) have been proposed for
decades by classical liberals / libertarians _as a replacement_ to the welfare
state, and (less often) _as a supplement_ by progressives.

This distinction is critical. _But_ , I'd wager that many libertarians (like
myself) would happily _match_ the total welfare spend + proposed minimum
income on a per person basis as long as we cut out the middle-class
bureaucrats and administrators.

It will be hard to reach consensus for the reasons Sam mentioned, but _not
impossible_ , since some elements are supported by otherwise diametrically
opposed politics. I _much_ prefer the debate be between libertarians &
progressives (or even anarchists & socialists) than the center-left and
center-right.

> _But this still doesn’t address the fundamental issue—I believe most people
> want to be productive._

I'm not _too_ worried about that people will be lazy or feel alienated due to
not being productive. Science and Technology are not the only outlets for
human creativity: my prediction is that we will see a flowering of the Arts
and Recreation: more music, more writing, more painting, more sculpture, more
sports & games etc. This will enhance all of our lives ..

As an aside, I think its a mistake to measure the delta in wealth distribution
primarily in terms of assets. Technology, while increasing wealth disparity in
measurable ways, often decreases it in immeasurable (and more important) ones:
for example, wikipedia vs encyclopedia britannica.

------
pchristensen
I generally agree with this, my only input would be to this:

"Technology makes wealth inequality worse by giving people leverage and
compounding differences in ability and amount of work."

to "differences in ability, amount of work, and utilizing existing wealth and
assets."

Technology helps the rich get richer, so it's naive to chalk its benefits up
to only hard work and ability.

------
calbear81
I think the San Francisco average price of $5MM is quite a bit inflated. It's
closer to $850K ([http://www.trulia.com/real_estate/San_Francisco-
California/m...](http://www.trulia.com/real_estate/San_Francisco-
California/market-trends/)).

~~~
sama
oops--fixed. i changed from an extreme specific example to averages, but
forgot to update the text. thanks!

------
firstOrder
> Technology makes wealth inequality worse by giving people leverage and
> compounding differences in ability and amount of work. It also often
> replaces human jobs with machines. A long time ago, differences in ability
> and work ethic had a linear effect on wealth; now its exponential.

This is a factor, but not much of one.

Let's see who is wealthy. The top ten of the Forbes 400 wealthiest Americans.

#1 Gates - grandfather ran a bank, and had a million dollar trust fund for
him. #2 Buffett - father a Congressman, grandparents owned a chain of stores
#3 Ellison - grew up middle class, self-made #4 Koch - inherited oil company
#5 Koch - inherited oil company #6 Walton - inherited Walmart #7 Walton -
inherited Walmart #8 Walton - inherited Walmart #9 Walton - inherited Walmart
#10 Bloomberg - grew up middle class, self-made

The incubi hovering over Silicon Valley are the limited partners whom VCs
raise money from. Like the Forbes 400 list, or like the Federal Reserve Survey
of Consumer Finances, most of the wealth is inherited.

I've sat next to too many Chinese and Indian guys, running the whole show for
some Fortune 500 company in terms of their databases, storage, or some
programming group, who were on H1-B visas and making a pittance and living in
a small apartment in some crappy neighborhood to think that "work ethic" and
"ability" is what is making all the money. These people not only have a work
ethic (like many in society), they also have the technical ability. They have
the ability and they're using the ability. And making nothing.

Those who get wealthy expropriating the surplus labor time profits of we
workers who work and create wealth - they are the ones who are benefiting, not
the "hard working" or "able". Watch the documentary "Born Rich" by one of
their tribe. How many of the people interviewed their have the ability to know
which data structure is proper for a certain project? Or how to set up BGP
connections on a Cisco router? And so forth. They are benefiting due to the
new technology, but it is they who benefit, the hard working able people
building and implementing these things are getting scraps from the table.

While GDP per capita has risen over the past decades, inflation-adjusted wages
per hour have fallen. Things have gotten better for those who do not work, and
worse for those who do work and create wealth.

The only answer from those who parasitically expropriate profits from the
surplus time of those of us who work and create wealth is this - "spend more
of your time studying math. Go into debt to pay for college and spend four
years paying for your own job training. Then you might live as well as your
parents did, who did not have to do these things (or who would live better
than you ever will by doing these things."

Ultimately an economic system built on this has too many self-contradictions.
Once you drain all the spare money from the average worker, no one has any
money to buy the things these companies make. They can go into debt, but that
just kicks the can down the road and makes the ultimate crash work.

In fact Sam Altman's business, Green Dot, is predicated on this new reality.
Poor people don't have the credit to get credit cards, so they go to Green Dot
and get charged exorbinant amounts of money. His business is one of the
heaviest into the transfer of wealth from the poor to the rich.

~~~
FD3SA
Precisely. Most intelligent people understand very quickly that it isn't their
technical ability that will make them wealthy, but the ability to commandeer
the technical ability of others at the lowest possible price. Hence, the H1-B,
or voluntary indentured servitude with the carrot of a green card.

Why does this perpetuate? Informational asymmetry aided by naive hope,
marketing, and desperation. The "American Dream" is the most viral marketing
campaign in the history of mankind, spread by Hollywood around the globe. As
such, there's a never-ending lineup of suckers waiting to take the plunge.

------
johnrob
I think health care and education should absorb the misplaced workers. The
demand for those services is infinite and there should (in theory) always be
incremental value created by additional workers (assume their salaries were 0;
they would be paid for by the government instead of the employing
institution).

~~~
andrewfong
I'm not sure that's true. By the same argument, you might say that free
vaccines would encourage overpopulation, but (according to Bill Gates at
least) the data shows the opposite:

"In society after society, he saw, when the mortality rate falls—specifically,
below 10 deaths per 1,000 people—the birth rate follows, and population growth
stabilizes." ([http://www.forbes.com/sites/matthewherper/2011/11/02/the-
sec...](http://www.forbes.com/sites/matthewherper/2011/11/02/the-second-
coming-of-bill-gates/))

~~~
johnrob
You may have somehow responded to a comment that I deleted?

~~~
andrewfong
Oops -- yes, not sure how that happened.

------
jamiequint
Most implementations of basic income actually taper off as your income
increases so the cost doesn't have to be adults_in_us*basic_income, but
actually significantly less.

It would probably be possible to support a basic income system just by getting
rid of existing entitlements (although that is a big 'just')

~~~
scarmig
No. Basic incomes, by definition, do not taper off. That's what makes them so
compelling to economists: schemes that do taper off create steep marginal
disincentives to work. Tapering off is the type of thing that sounds appealing
--why give multimillionaires a regular check?--but it's a bad idea.

(The name for the policies that do include that tapering off is a guaranteed
minimum income, not a basic income.)

~~~
jamiequint
Thanks for the clarification, I did not realize the two were different.

> Schemes that do taper off create steep marginal disincentives to work

There is no reason the marginal disincentives need to be steep. You could
otherwise make the same argument about progressive income taxes. Those don't
seem to disincentivize people from making more money, neither does guaranteed
minimum income need to.

~~~
scarmig
I can and do make the same argument about progressive income taxes =) And, to
be totally clear about my perspective, I believe all taxes on income are taxes
that disincentive work and are economically destructive.

It's not an on-or-off switch: you've got to look at the margins. At the
margin, you'll work less if you get $100 in return for an hour's labor than if
you get $200 in return for it. Maybe still more than half as much work, but
you'll still decrease the amount of labor you perform. Income taxes do exactly
that.

It's possible to make the marginal disincentives less steep, but the more you
do that, the more you lose the cost savings you were hunting for in the first
place.

E.g. imagine a basic income of $20k. And suppose you make it phase out such
that at $40k you don't get one. That amounts to a whopping 50% marginal tax
rate. And that tax rate is _on top of_ existing taxes, and it's not hard to
end up with a result where someone making $30k/year is paying a 75% marginal
tax rate. Which is much too high for anyone making so little.

So let's try spreading it out. If it phases out at $60k, that's a 33% marginal
tax rate; $80k is 25%; $100k is 20%. That's much better, though still a
significant tax. But you've also made the guaranteed minimum income much
closer in cost structure to a simple basic income. At least 90% of individuals
make less than $100k, and their average per capita income is probably below
$40k (remember we're cutting out the long tail that accounts for a large
percentage of income). So we're paying out around $12k to each of them on
average; and since we cut out the people making above $100k, that's around
$11k per person, 55% the direct financial cost of a basic income.

Cheaper, definitely, but you're still going to face sticker shock. And you've
paid for the cheapness in the disincentives due to taxes; administrative
costs; and in creating incentives to misreport income.

------
natmaster
Your ideal wealth distribution is that everyone has the exact same amount of
wealth? Next you're going to be telling me some animals are more equal than
others...

------
benched
Meta, but I cannot believe this excellently written post has already dropped
from the front page, while some bullshit about "suhvuhbtle" and medium is
still sitting in the top spots for hours. Like ever more _hip_ ways for echo-
chamber attention-seekers to share their amazing epiphanies about productivity
with each other, is so much more interesting than poverty.

------
callmeed
Random thoughts ...

 _> We are becoming a nation of haves and have-nots—of prosperous San
Francisco vs. bankrupt Detroit._

Based on the people protesting/blocking the shuttles, San Francisco has plenty
of have-nots.

 _> and we’d presumably cut a ton of government bureaucracy._

LOL. A $3.5T govt program is going to _cut_ bureaucracy? Even if it swallowed
up other existing entitlement spending, I don't see this happening.

