Ask HN: How exactly apart from taxes, can  income inequality be reduced? - max_
======
Broken_Hippo
1\. Universal, affordable health care and strong policies to help families
out. This reduces this sort of inequality of life.

2\. Fair and equal access to both preschools and end-of life care. For
example, Norway's nursing homes cost 80% of your pension, no matter what your
pension is. And you are only eligible after you need more than a (free) nurse
coming to your home 6 times a day... because it is cheaper.

3\. Fair and equal access to quality schools, including college, university,
and trade schools. This should be decoupled from the property / income taxes
of an area. One school might have higher maintenance needs one year, while
another does not and providing it at a large scale makes it easier on all.

4\. Job contracts for all, no matter if you work part-time in a fast food
place or you are the head of a coopration. In addition, unions being available
for all - including management. This reduces some strife between the two since
it is the different unions that are actually negotiating.

5\. Being able to easily find out other people's pay and tax rates. This is
going to be uncomfortable for many, but it will encourage transparency.

6 Support for those that aren't making enough to fill their individual needs
so that they have access to all the tools that are needed for the modern world
- this includes cell phones, clothing, computers, and internet access. This
also would mean that caseworkers have the ability to make exceptions for those
that have higher expenses for whatever reason. Strict poverty lines are rough
for many folks and leave lots out in the cold.

~~~
eecks
How does number 2 work?

If I have saved my whole life into a pension, 80% gets taken for my end-of-
life care. If I only saved for the last 5 years of my career, 80% gets taken.
Not sure how that makes sense.

~~~
exolymph
A pension is dispensed by your employers or by the government. It doesn't come
out of your own savings.

~~~
eecks
Sorry, I use the word pension to mean DC scheme as well

------
tmaly
We did not exactly get a fair shake when it came to those trade deals like
NAFTA that Clinton signed back in the 90s. It hollowed out all the decent jobs
in manufacturing that were supporting families in this United States.

I am not arguing for protectionism, but just go and try to do business south
of our border in the same way they do trade with us. The trade deal is not
symmetric on both sides.

People who craft these trade deals do some in secret, just look at the TPP
deal going on now that is very controversial. Then the deal is rammed through
approval, and there is little transparency.

How about making things a little more transparent? How about letting the
public take a peak and have a little more time to digest what is being
written?

~~~
manopeace
Tarrifs on any goods coming from countries whose environmental and labor laws
do not match or exceed our own.

What good are our laws to protect our environment when the goods that are sold
here destroy some other part of the world?

What good are our labor laws when your sneakers are made by a ten year old
across the oscean?

Don't like tarrifs? Then raise your standards to ours. It's not protectionism,
you can lower these barriers with a few pieces of legislation. It's on them to
fix the problem not us.

Fair trade not free trade.

------
MrTonyD
We live in a time of Big Data. I think of Walmart - where they use hidden
cameras with facial recognition to track all their employees (as well as
monitoring every call.) This makes me think that money and power in a society
should come with obligations - and one obligation should be to submit to
monitoring. We need to track the wealth of rich people - and all their
backroom deals to avoid taxes, manipulate laws, influence politicians, and
their use their money in our society. Our society should have a say in all
those decisions, since they impact and define our society. This would also
allow our society to put a fee on their transactions.

We need much less monitoring and regulation of typical citizens, and much more
monitoring and regulation of those who control our lives. That will help us
get control of many of the non-transparent tricks used to hide their huge
wealth - offshores, derivatives, fake accounting, charities, trusts, and
offshore payoffs with under-valued stock.

~~~
shams93
Not only that but we need to look at just how much of the current tax income
is diverted into the military industrial prison complex around the world, if
that money went back to ordinary people you wouldn't necessarily need to raise
current tax rates to support basic income.

------
sharemywin
You could start by making option pools bigger than 10% for employees. Right
now facebook is work 340B and has 13k employees that's about 26M per employee.
Adding an extra 10% for employees that went deeper into the workforce would
have transferred a lot of wealth.

------
lsiebert
Taxes actually encourage spending, whereas low taxes seem to encourage holding
onto wealth. If you can spend X to build your company and write that off,
that's better then giving it to the government. There is the persuasive
argument that when rates were super high (90%), this spurred investment and
jobs.

Also make exec compensation a bigger issue to stockholders. I think I read the
Norwegian capital fund is trying the latter.

------
meric
The gold standard. The decoupling of currency to gold corresponded with
increasing income inequality. Decoupling currency from gold put control of
interest rates in the hands of central bankers, who lowered those rates as
times passed. The inflation of the prices of financial assets and lowering of
yields as a result of lowering of interest rates meant it became harder and
harder for the working class to save their way into financial independence.
The group of people who originally held the assets reaped the benefit of
higher asset prices, allowing them to borrow more against their assets to
purchase more capital, and as prices rose, it was like the ladder to financial
independence slowly lifted away from the ground, too.

------
zaro
Well changing the main focus of human existence from making profit and
consumption to something else will help a lot :)

------
kwikiel
By making everyone poorer by hurting free trade

"You can't prevent great variations in wealth without preventing people from
getting rich, and you can't do that without preventing them from starting
startups. "

[http://paulgraham.com/ineq.html](http://paulgraham.com/ineq.html)

~~~
smt88
Paul Graham deeply misunderstands the argument against inequality, and he's
also dead wrong that starting startups is what makes most people reach. Most
wealth is institutional and/or based on rent-seeking. Starting startups is not
rent-seeking.

After writing this article, Graham was justifiably annihilated by journalists,
fellow VCs, real economists, and founders.

YC-funded founder: [http://www.inc.com/jeff-bercovici/paul-graham-wrong-
inequali...](http://www.inc.com/jeff-bercovici/paul-graham-wrong-
inequality.html)

Mark Suster: [https://bothsidesofthetable.com/why-i-don-t-celebrate-
income...](https://bothsidesofthetable.com/why-i-don-t-celebrate-income-
inequality-84290db74956)

Harvard sociologist: [http://qz.com/586563/paul-graham-just-accidentally-
explained...](http://qz.com/586563/paul-graham-just-accidentally-explained-
everything-wrong-with-silicon-valleys-world-view/) and also
[https://medium.com/@girlziplocked/paul-graham-is-still-
askin...](https://medium.com/@girlziplocked/paul-graham-is-still-asking-to-be-
eaten-5f021c0c0650)

Roundup of several economists:
[https://www.washingtonpost.com/news/wonk/wp/2016/01/14/what-...](https://www.washingtonpost.com/news/wonk/wp/2016/01/14/what-
silicon-valley-doesnt-understand-about-inequality/)

------
Kratisto
I don't know the answer, but I think education should be the first step. For
me that's the best way to give everyone a "fair" chance. I don't know near
enough about policy to suggest how to stop the top 1% from getting even bigger
until they own everything.

~~~
MrTonyD
Actually, I don't think that will work. I understand that the increasing wages
for education over the past decade have been a chimera. In fact, those wages
have been stagnant compared to economic growth in the USA, while others wages
have fallen. So there is the impression of higher wages for more education
only because we look at wages relative to other peoples wages.

In addition, I think the requirement for education for everybody to do well
just doesn't make any sense for a society as automated as ours. We should be
able to have a great life for everybody - with much fewer requirements that
everybody get advanced degrees. Our focus on education is a symptom of our
broken economic system.

------
manopeace
Break up corporations that have grown to large and powerful into smaller
chunks, turn the chunks into worker co-ops.

IMO, regulating bad behavior of huge international corporations is a losing
game. It addresses the symptoms of the size of corporations, but not the
problem.

If you're a small government fan:

Doesn't it make sense that governments have to grow to compete in power with
these huge NGOs? If they were smaller, the regulation of these entities could
be passed onto city and/or state level governments where the people are
(supposedly) better represented.

------
DrNuke
Basic universal income and let machines do the menial work.

------
Spooky23
Introduce moderate inflation. Make it a losing proposition to hoard wealth.

Tax estates at a level that breaks dynastic wealth building. Cap retirement
generational tax-exempt IRA rollovers.

Require more transparency for LLCs and other corporate structures to use the
banking system. Corporate ownership should be conpetely transparent.

Reduce the ability of large real estate holders to harvest losses.

~~~
meric
We want inflation in wages, deflation in assets like houses, stocks bonds.
i.e. the opposite of what's occurring, and what's occurring is the suppression
in interest rates. Raising interest rates will cause the inflation you're
talking about over the long run - predicted by the Fisher equation: nominal
interest rates = real interest rates + inflation. (Real interest rates are
constant over the long run).

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

------
miguelrochefort
What's wrong with income inequality? I see no reason to attempt to reduce it.

The goal is to become the very best, not accept mediocrity to please the less-
ables.

Surely, you wouldn't like the idea of penalizing smarter students just so that
everyone get equal grades. What's different about income?

~~~
Broken_Hippo
Some income inequality is natural and needed. Some people strive for that sort
of success. Others are perfectly happy making less because their life focuses
on other things - like artwork and family and other such things.

But when income inequality grows to the point that people are having trouble
even getting what the "best" have decided is needed to make it in the world,
or even having enough healthy food to eat, it becomes a big problem.

And you are mixing things up - it isn't about giving everyone the same grades.
A smart student would be challenged more, and the dyslexic student would have
education so that they can keep up. The thing boils down to having unequal
access to basic things in life and unequal access to _opportunities_. Health
care, choice in healthy foods, which college you go to and the quality of your
education are often linked to what your family income is when you are young.
Even those sorts of things up, and the inequality in income doesn't matter as
much.

In countries that have helped those sorts of things greatly, the bottom level
isn't so low. You can still get filthy rich and other such things, but you get
more responsibilities in the form of taxes. It just winds up that this sort of
system winds up with less of a difference between people's incomes, but if you
can do it without fixing the income thing, income itself won't be an issue.

------
insoluble
We must first consider the purpose of money and the purpose of employment.
Money's purpose is to allow distribution of credit based on the amount of
_value_ that an individual or other entity has provided to society.
Employment's purpose, in the broader sense of the term, is to allow an
individual to provide services to society while expecting _fair_ compensation
in return. By "fair", I mean not unbalanced like slavery, where slaves indeed
were compensated (with food and shelter) but not in a manner commensurate with
their production.

Perhaps the biggest problem with common understanding on the topic of value is
that people fail to distinguish not only _how much_ value an entity produces
but also _what type_ of value an entity produces (or _doesn 't_ produce). If I
buy a bank repo house for $50k and sell it for $250k after doing essentially
nothing but posting some pictures and descriptions of the place Online, then
the only value I actually created is in the pictures, descriptions, and
paperwork that I did. Say I spent 30 hours doing all these tasks. Then say the
average person would agree that a fair pay rate for this type of work (papers,
pictures, descriptions, and some phone calls) is $50/hour. The real value that
I would have created would thus be 30x50, or $1500. Yet the sale of this
property would net me at least $180k, after any expenses. Note the difference
between value created (<$2k) and net gain ($180k).

The problem here is the discrepancy between value created and money "earned".
It seems that a large portion of society is okay with this discrepancy. For
example, many people see nothing wrong with gambling or Lottery, despite both
involving accumulation and distribution of money without any value being
created. Until the majority of society agrees that people shouldn't be paid
more than the value they personally create, we can expect extreme income
inequality to exist and persist. If ever society can change its mind on this
matter, we might expect the following:

1\. There is an income cap, based on the realistic maximum amount of value
that a human can create. The actual value is based on scientific investigation
into the amount of value (not money, but actual value to society) created by
the smartest and most skilled humans. The cap would be somewhere in the ball
park of this maximum value (perhaps a little higher, just for good measure).
For example, I am willing to bet that a human is not capable of creating more
than 100x that of the average (median) human in terms of real value. Every
time we look at a scientific advancement of the past, we see that although
person X came up with the idea first (and hence usually got all the credit for
it), there were a bunch of other people working on the same idea, many of
which only a handful of years behind X. Not only that, but the person usually
was in the right place and right time, with the right connections, to achieve
what he or she did. If you took random other persons and put them into that
exact same situation, many would have accomplished a similar feat. Certain
discoveries were meant to happen around certain times.

2\. All now known and future known types of exploitation are prohibited. Any
accumulation of wealth where the person gaining the wealth is not producing
significant real value is outlawed. Such accumulation of wealth is deemed to
be in the same category as counterfeiting since it funnels money from the
actual producers to someone else. Examples such as the real-estate investor
described above would be eliminated by government programs whose purpose is to
deal with such situations as bank repo properties in a responsible and
production-centric manner.

3\. There are well-funded government programs whose purpose is to facilitate
relocation of individuals currently working in non-productive positions into
positions that make a positive difference for society. These programs are
optional for these individuals, but nevertheless any non-productive positions
are phased out of society.

4\. Inheritance is capped at half of one lifetime's worth of median income
(based on society in general). Hence, if the average person makes $6M in his
or her lifetime, then $3M would be the maximum allowed by _anyone_ to be
passed on to any heirs. Remember: The goal is to promote productive
individuals, so we cannot have people born into a life that doesn't require
being productive.

I'm sure a bunch more changes would be needed for the best result, but the
above may serve as food for thought.

