
Economic Inequality Is Worse Than We Think (2015) - kimar
https://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/
======
Super_Jambo
Looking at the charts from Capital in the 21st Century [1] it's obvious that
previous relative equality of wealth was largely due to the incredibly
destruction of the two world wars. Factories blown up, colonial lands lost and
war debts inflated away wiped out many fortunes.[2]

So the reduced power of post war rich, combined with fear of communism
resulted in the Democratic Socialist consensus that gave us high taxes and a
big middle class. (And Vietnam but I digress).

Since fear of Communism has eased and the rich have again massed giant
fortunes there's little to stop them weakening the rules that prevent our
Democracies from being bought.

To me this is a compelling explanation for how you end up with Trump running
against Clinton two historically disliked candidates. Almost everything in the
news is just noise to the slow grinding power of wealth accumulation.
Occasionally you get a glimpse as WaPo is bought by Bezos, Trump gets elected
and Zuck clearly starts to form some presidential ambitions. But largely
everything is a distraction to pull your eyeballs, after all that's what our
media is paid to do.

[1]
[http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014Fig...](http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014FiguresTablesLinks.pdf)

[2] Capital in Britain 1700-2010:
[http://piketty.pse.ens.fr/files/capital21c/en/pdf/F3.1.pdf](http://piketty.pse.ens.fr/files/capital21c/en/pdf/F3.1.pdf)

------
bjourne
I think everyone should read Nickel and Dimed
([https://en.wikipedia.org/wiki/Nickel_and_Dimed](https://en.wikipedia.org/wiki/Nickel_and_Dimed))
by Barbara Ehrenreich. She goes undercover and tries to survive working
minimum wage jobs. I don't think I'm spoiling the book by revealing that she
wasn't able to. After three months she were so deep in debt that she had to
abort the experiment.

~~~
viridian
I wonder if this is just a lack of knowledge on how to survive while poor. I'm
in a good economic position compared to most of the US and certainly most of
the world, but I can't see myself having much of an issue with this. Growing
up there were times where my family was homeless, and my first job I was a
carpenter's apprentice, paid under the table, for less than minimum wage.

It's not that being poor is extremely difficult in the US in particular, but
rather that those born wealthy who have never been poor, have no idea how to
operate in that environment.

~~~
bjourne
It's probably more about lack of liquidity than the lack of knowledge. Housing
costs are higher if you are living in a daily motel and can't afford to pay
2-3 months of rent in advance. Food is also more expensive if you don't have
access to proper cooking utensils and your own oven and so on.

It was a long time since I read the book, but I recall that the experiment
ended because she had more unforseen expenses than she could keep up with. I
think her car broke down a few times and as she had no money in her pocket,
she had to take out payday loans to get it repaired. Eventually she couldn't
do that anymore so no car, no way to get to work, no job and no income.

~~~
wolfgke
> I think her car broke down a few times and as she had no money in her
> pocket, she had to take out payday loans to get it repaired. Eventually she
> couldn't do that anymore so no car, no way to get to work, no job and no
> income.

Why not do carpooling instead?

~~~
bjourne
Part of her experiment was to move out of her social network. And carpooling
doesn't work unless you know other people who also needs to move from point A
to point B at time C. She didn't know such people.

Besides, she worked as an hourly employee which meant that she, as most hourly
workers, didn't have a fixed schedule but would receive one on a weekly basis
from her manager. Making car pooling even harder.

------
averagewall
I can tell this article is preaching to the choir because it doesn't bother to
explain why inequality is bad. It just assumes that we agree it is. So why is
it bad? Especially since most Americans don't even know about it, how can it
be hurting them? Two possibilities I can think of: A) Jealousy B) Risk of
revolution

~~~
DarkKomunalec
"since most Americans don't even know about it, how can it be hurting them?"

By spending limited resources on yachts instead of schools and hospitals?

~~~
nine_k
US hospitals charge exorbitant money for their services. Spending on schools,
while not nearly as exorbitant, is still higher than in many previous decades.
(Don't get me started about college tuition.) it's not lack of finite
resources that is the source of their problems.

Of course, medicine and education could put some more money to good use, but
likely invested very differently.

------
throw2016
These threads are always depressing on HN. They reveal a worrying sociopathy
that one can only hope is not reflective of a wider pattern and limited to a
small subset of readers here.

This is why more power in the hands of SV companies like Google, Facebook and
other VC funded startups become worrying as with power they will build a
desolate soulless uncaring world.

Devaluing other human beings is like cutting the branch you sit on, you only
devalue yourself. You can't build a healthy country or society without a
collective and empathy. What happens during harder times?

One wonders if this is because of religious ideologies like calvinism and
others in their ilk or some taking sociopathic ideologies by people like rand
designed purely to appeal to egoistic individualism and the rich seriously.

~~~
JCzynski
It uses wealth as a measure of inequality, which is an _instant_ sign that
it's not written by someone who has thought about the problem and tried to
honestly change minds. I'm about to start a first job at one of the big
programming shops next month and have been able to pay for Bay rents;
according to a wealth calculator, 0% of Americans are poorer than me. This is
an idiotic result.

------
autokad
Its really important to take a step back and see what they really mean. They
are talking about NET WORTH. Its an almost guarantee that a fresh college
student has a negative net worth, but does that mean they are poorer or worse
off than an begger who just received a dollar? To use their logic, the day I
broke 0$ net worth, I owned more than 50% of the nation's wealth.

hardly. The only thing that video shows me is people dont really think very
hard about their expectations between the very top and the very bottom.

------
trentnix
I've never understood using income inequality as a measure of the health of a
society. As Milton Friedman said, the only place where people are equal is in
a prison and in the grave.

Milton Friedman on greed and income inequality:
[https://youtu.be/RWsx1X8PV_A](https://youtu.be/RWsx1X8PV_A)

~~~
DarkKomunalec
That is a strawman - total equality (prison, grave) is not being advocated,
merely reducing the current extreme inequality.

And inequality is a good measure because the benefit of an extra N dollars is
greater, the less money one already has. So, all else being equal, smaller
inequality leads to greater average quality of life.

Inequality is also a measure of for whose benefit a society is working - the
benefit of the ones accruing the most wealth. So the more concentrated that
wealth, the more the rest of society is being ignored in favour of the richest
few.

A common counterargument is saying that as long as the wealth of the lower
classes also rises, then why worry about inequality. But it has been stagnant
for several decades in the US, the poor have to work long hours, all while
more and more wealth flows to the top. So it becomes clear that merely
improving the economy won't help, as the benefits are captured by those
already rich.

~~~
sambe
It's not a strawman. This topic is now so fashionable as a news item
(regardless of your view) that people will target any kind of inquality in
western democracies as _inherently_ wrong.

What counts as extreme? Has much really changed in the last few years since
this became something discussed daily? Why do such articles ignore payments in
kind and fail to address subtleties to do with the different measures
(personal income, household etc).

I don't personally consider the existing situation extreme, and the fact that
people underestimate it doesn't change my view.

~~~
DarkKomunalec
So because _some_ people advocate total equality, it's not a strawman to
respond to them, instead of to the article?

Do you always address only the arguments of the least reasonable people in
some arbitrarily defined group?

~~~
sambe
The article doesn't set the standard based on any kind of cogent argument. It
assumes the ideal is what people say it is based on instinct, and the result
is not 100% extreme, but it is pretty extreme. This is even more true if you
consider the other questions I raised. The researcher compares this to living
on a kibbutz, although the article then assumes this is a good thing.

There are many other examples of people's instincts being off by surprising
amounts, including in ways that do not affect them positively.

That's what I intended to address. Don't really see the need to get personal
and extrapolate hypocritically.

------
JCzynski
>The average American believes that the richest fifth own 59% of the wealth
and that the bottom 40% own 9%. The reality is strikingly different. The top
20% of US households own more than 84% of the wealth, and the bottom 40%
combine for a paltry 0.3%. The Walton family, for example, has more wealth
than 42% of American families combined.

>We don’t want to live like this. In our ideal distribution, the top quintile
owns 32% and the bottom two quintiles own 25%. As the journalist Chrystia
Freeland put it, “Americans actually live in Russia, although they think they
live in Sweden. And they would like to live on a kibbutz.” Norton and Ariely
found a surprising level of consensus: everyone — even Republicans and the
wealthy—wants a more equal distribution of wealth than the status quo.

You'd think they'd sanity check their poetic description against professed
beliefs. If your metric says that most Americans "would like to live on a
kibbutz", then your metric is _wrong_.

What this actually shows is that most Americans _have no idea what wealth
inequality looks like._ Ask the same group of people their predicted and ideal
_income_ inequality measurements. I predict you'll get the same numbers, plus
a little noise.

A closely related question: is asking in terms of percentages biasing? And the
answer is: __Very Yes
__.[http://journal.sjdm.org/12/121027/jdm121027.html](http://journal.sjdm.org/12/121027/jdm121027.html)

>Norton and Ariely (2011) set out to answer a remarkably important set of
questions: How much inequality do ordinary Americans believe exists in the
U.S.? And how much inequality do they desire? These questions have a range of
important policy implications. However, the initial answers to these questions
need to be reconsidered. Our findings indicate that the remarkably low
estimates of wealth inequality given by Norton and Ariely’s respondents
depended on the particular measure (quintile percentages) that was used. When
asked to state quintile percentages for either household wealth, teacher
salaries, or web page clicks, our respondents seemed to use an anchoring-and-
adjustment heuristic leading to very similar responses across very different
domains.

>When respondents were relieved of aggregating their intuitions about
inequality into quintile percentages, another picture emerged. According to
this new picture, Americans do not tend to have extremely biased perceptions
of current levels of inequality. Nor do they entertain an ideal of near-
perfect egalitarianism. Rather they seem to prefer a world where the poor are
not as poor as they are today. Further investigation into this more tractable
ideal might provide a basis for workable policy prescriptions.

------
wolfgke
To me the worse problem is: While I can understand that it is an inconvenient
situation to be poor (and I have some kind of compassion for them), I really
cannot understand how one could even come to the idea to give rise to children
if one is not in a high quantile of earning. If people applied this
reproduction strategy consequently, poverty would simply die out.

~~~
Quarrelsome
jesus. Pick from: alcohol, depression, boredom, dynasty building, genetic
programming.

I apologise for being rude but it sounds like you have limited compassion if
you haven't been able to think this one through. What do you want to do,
sterilise the poor?

I would remind you that despite a poor background children can and do still
excel and even if they don't these children are often the backbone of our
industry. You might not approve but these people are still the workforce and
generation of tomorrow so you should afford their inception a little more
respect and empathy.

~~~
eeZah7Ux
> despite a poor background children can and do still excel

Only occasionally. And that does not justify raising children in a difficult
environment!

> What do you want to do, sterilise the poor?

I agree that the parent phrased that post very poorly.

However many countries did a lot of effective work to prevent unplanned
parenthood, including education and access to contraceptives and abortion
rather than sterilization or punishment.

> even if they don't these children are often the backbone of our industry

This sounds like the world need enough desperate people to accept exploitative
jobs or go to war and so on? I hope humanity can do better than that.

~~~
Quarrelsome
> Only occasionally. And that does not justify raising children in a difficult
> environment!

You and I both know neither of us have enough information to assert how often
it happens. I am merely stating it DOES as a counter weight to effectively
killing off poor geniuses or rather poor "good enoughs".

> However many countries did a lot of effective work to prevent unplanned
> parenthood, including education and access to contraceptives and abortion
> rather than sterilization or punishment.

Yes! This is the available path to us which we should take.

> This sounds like the world need enough desperate people to accept
> exploitative jobs or go to war and so on? I hope humanity can do better than
> that.

That's a very extreme way of interpreting my words. Many of these children
will become construction workers, carpenters, plumbers, administrative types,
catering workers, chefs, musicians, entertainers, IT admins, etc, etc, etc. I
am suggesting that my parent post is underestimating the reach of some of
these children and falling for the gutter-press focus on the worst case
examples. Many of these people will become good enough citizens. I live in a
vaguely deprived area and the kid across from me isn't educated and is
definitely working class but he's learnt from his tough upbringing and has a
pretty good head on his shoulders. For every worst-case example there are tons
of kids like this. Baby => bathwater.

