
Tired Of Inequality? One Economist Says It'll Only Get Worse - 127001brewer
http://www.npr.org/2013/09/12/221425582/tired-of-inequality-one-economist-says-itll-only-get-worse
======
Zarkonnen
So "There will be a certain fragility to this existence." but "They may have
lives that are quite happy and rewarding" \- how? If you are constantly one
minor incident away from doom, you are not happy, you are stressed. Welcome to
the precariate.

"I think for a lot of people, upward mobility will be much easier." This does
not follow. In a more unequal society, upwards mobility falters as the wealthy
form an exclusive layer of society. The best you can hope for in this scenario
is to be useful enough that you will be kept compensated. But without the
right connections, you will not be permitted to tryly rise. And this
theoretical upwards mobility will be dangled in front of you to prevent you
from feeling solidarity with everyone who isn't so "useful".

Sound familiar?

~~~
graeme
Precariate - I like that. We need such a word.

Upward mobility might be easier though, even as poverty and precarity
increases. Elites would have to shutdown Internet wealth generation somehow to
prevent upward mobility.

Right now it's never been easier to start a business and generate income for
yourself. We're seeing easier upward mobility for those equipped to take
advantage of this, even as others see their opportunities shrink.

~~~
talmand
I think Zarkonnen was trying to say that as the inequality increases then it
becomes more and more difficult to rise above a certain threshold. As the
inequality increases then that threshold becomes more difficult due to
standard economic situations and due to interference from the elite that
likely would eventually want to control access.

Today it may be easy to raise your economic standing, but that doesn't mean
that will continue into tomorrow.

------
127001brewer
_Economist Tyler Cowen has some advice for what to do about America 's income
inequality: Get used to it. ..._

In the interview, the economist basically says "give up" because that's the
way things are going. The economist attributes (mostly) this to computers.

 _" Computers will play a larger role and people who can work with computers
can make a lot."_

But those who aren't in the "top 15%" will be okay, since:

 _"... But I think people who are not rich can be extremely happy. And I think
the chances to be happy in this new world, with many more opportunities to be
creative, to be online, to educate yourself — there'll be a lot more chances
to be happy. It's not to say everyone will take them or be equipped to take
them, but there will be a lot of new paths to opportunity."_

I do not subscribe to this wishful thinking...

~~~
yummyfajitas
_I do not subscribe to this wishful thinking..._

This isn't wishful thinking. It's simply recognition of the fact that feeling
materially superior to others is only one of many routes to happiness.

If income doubles for the poor and quadruples for the rich (Cowen's postulated
mechanism of increasing inequality), the poor have many new sources of
happiness. For example, currently only 38% of the poor have a Playstation or
XBox [1]. If the income of the poor doubles, probably every poor person could
gain some happiness from video games.

[1] [https://explore.data.gov/Energy-and-Utilities/Residential-
En...](https://explore.data.gov/Energy-and-Utilities/Residential-Energy-
Consumption-Survey-RECS-Files-A/eypy-jxs2)

~~~
_delirium
Empirically, however, societies with higher income inequality have lower
happiness (and this is fairly robust to confounding factors and different
kinds of society, and even shows up internally when comparing different time
periods of the same society, e.g. when you look at different U.S. decades).
Perhaps in principle it's possible to have a happy and highly unequal society
(in sci-fi this is commonly imagined as involving happiness drugs or VR), but
we haven't seen one yet.

~~~
yummyfajitas
_Empirically, however, societies with higher income inequality have lower
happiness..._

Could you link to some data on this? Ideally something other than "The Spirit
Level", which basically just observes that many negative traits are correlated
and then puts inequality on the x-axis.

~~~
_delirium
A fairly arbitrary sampling of studies (there are many on more specific
subjects, if you're interested in researching more specific aspects of the
question):

* A general literature survey as of 1995, of the evidence on whether increasing the incomes of everyone (with no change in relative incomes) improves overall happiness: [http://ibe.eller.arizona.edu/docs/2010/Martinsson/easterlin9...](http://ibe.eller.arizona.edu/docs/2010/Martinsson/easterlin95.pdf)

* Income inequality and happiness 1972-2008 in the U.S. and causal hypotheses: [http://inside.bard.edu/~luka/documents/Oishi-Kesebir-Diener-...](http://inside.bard.edu/~luka/documents/Oishi-Kesebir-Diener-InequalityandHappiness-PsychScience.pdf)

* Relationship between regional inequality, happiness, and confounding factors in Japan: [http://www.sciencedirect.com/science/article/pii/S0277953610...](http://www.sciencedirect.com/science/article/pii/S0277953610000791)

* Empirical alignment of utilitarian happiness-maximization and other desiderata often seen as opposed: [http://repub.eur.nl/res/pub/22129/JHS_11_2010_605.pdf](http://repub.eur.nl/res/pub/22129/JHS_11_2010_605.pdf)

~~~
yummyfajitas
These are more of the same - vague correlations without any causal analysis.

The ones based on happiness surveys are even worse, since there is no way to
know whether a score of 7 happiness points (on a scale of 1 to 10, or whatever
the scale of the survey is) for someone in Denmark in 1976 is comparable to a
score of 7 happiness points for someone in Japan in 1996.

~~~
_delirium
Incorrect— they have causal analysis.

------
rayiner
So the future of America looks like San Francisco?

A 0.1% - Capitalists: LP clients of VC firms, very successful founders and VCs

A 10% - Service professionals: rank-and-file VCs, engineers, managers,
lawyers, accountants, consultants

A 90% - Unskilled service workers: baristas and waiters at trendy SF hotspots

~~~
LekkoscPiwa
That's not capitalism, that's feudalism: A 0.1% - Aristocrats, Barons, Kings,
etc. A 10% - service professionals: shoemakers, weapon makers, creditors
(bankers), accountants and whoever else the 0.1% might need to run their
empires A 90% - Peasants - born in debt, will die in debt. Wage slaves - get
enough money to perform the work and nothing else.

That's called neo-feudalism. At the top are private creditors of nations -
central bankers. The rest owes feud to them from the moment they are born
(i.e. the US newborn already has to pay off few hundred thousand in debt
through their live-time)

Please don't call it capitalism.

And one more thing -- what really destroyed neo-feudal society was the French
Revolution. We need Robespierre's and Danton's guillotining banksters and
their whore neo-feudal political class.

That's the only way to revert back to capitalism and liberalism.

~~~
zanny
Or we could just build a colony of smart people on the moon. Or Mars. Or my
favorite, a floating city in the climate stable upper atmosphere of Venus. A
lot easier to generate renewable power there.

I think that is what is really missing in the world, a frontier to go to when
your oppressors get out of hand.

~~~
PakG1
Unless it becomes like Elysium? :D

------
devx
Maybe this wouldn't be such a problem if those with the money wouldn't use it
to pay Congress to help them make even more money to the detriment of others.
I think that's really what bothers most Americans, and not necessarily the
fact they can make more money _on their own_.

~~~
ihsw
Who is worse, the one begging for the money, or the one supplying it? You're
portraying Congress as some kind of passive conduit when in fact they're quite
active in their own schemes.

~~~
mcv
I don't see him portraying Congress as anything like that at all. Those people
use their money like that because Congress allows it. Congress allows it
because voters aren't organized enough to vote them all out. Voters aren't
organized for that because the media keep playing the tribal Reps vs Dems
game. And I guess the media keep playing that game because there's profit in
it for them. It's a vicious cycle that needs to be broken.

------
DanI-S
One way to deal with income inequality is to shrug your shoulders and pretend
it's okay - _" let them drink latte"_ \- which is what this guy is
recommending.

Another way is to claw back some of the financial regulation that once
protected America's middle class from the full force of market instability.
Take a look at this chart comparing income inequality and bank failures over
the previous century:

[http://www.tobinproject.org/sites/tobinproject.org/files/ass...](http://www.tobinproject.org/sites/tobinproject.org/files/assets/BankFailures_ChartwithComments_Moss.pdf)

There's not some magic force of technology driving growing inequality. In
fact, even in this writer's argument, technological aptitude provides one of
the only routes out of the lower classes. Inequality is growing because of
financial deregulation since the 1980s.

------
Pxtl
You can't have the Brooklyn Bohemian life without Brooklyn city planning. The
modern suburban sprawl demands two-car households, and two-car households
demand full-time middle-class employment.

~~~
jacobbudin
Unless this Bohemian class anticipates living with roommates through old age,
living in Brooklyn is considerably more expensive than living in suburbia.[1]
Perhaps the economist meant Detroit.

[1] The Council for Community and Economic Research:
[http://finance.yahoo.com/news/10-most-expensive-places-to-
li...](http://finance.yahoo.com/news/10-most-expensive-places-to-live-in-the-
u-s--163648923.html)

~~~
wahsd
These issues are the outcomes and culmination of corrupt and pernicious
actions taken a long time ago in the USA. If you look at Europe and other
places around the world, there are sufficient models to emulate to solve these
problems; but the corrupt master class has no interest in solving the
"problems" that serve their interests and they have no interest in letting us,
as a people, realize that we are not exceptional and therefore could learn by
looking outside of our own culture and borders.

What America doesn't realize, even the supposed most intelligent and informed,
is that we are no different than any other people living under a controlling
regime, we just have more resources to burn that allow the margins for error
to be humongous compared to other places. The controlled media, corrupt
politics, the rationalized abuse of laws you are destroyed for not abiding by,
the propaganda, the war mongering, the racist subjugation of certain groups.
It's all there, we just don't see it, as a people, because as with the same
form of national socialism that destroyed Germany in the early 20th century,
the American version of national socialism has brain-washed people into doing,
thinking, and saying things to and about others that they would never want
happen to themselves.

------
jacobbudin
Where's the guy who links to the Guaranteed Basic Income when you need him?

------
Aqueous
In the future, there won't be enough work for everybody to do.

Technology won't just produce cars. Technology won't just produce our food and
our clothing. Technology will do everything. Technology will make the
allocation of resources very, very efficient, including the allocation of
wealth. Technology will take electrical energy and convert it into wealth. In
the middle-distant future, the wealth that technology produces will be enough
for a whole society of humans to subsist on without doing much work. However,
in the beginning this wealth will be concentrated with the people who write
the software, make the robots, and otherwise are technologically proficient.

The inescapable conclusion that I'm coming to is that this technology has the
possibility of transforming society economically. It has the capacity to lift
everyone out of poverty. But we need to adjust our fiscal policy so that the
wealth doesn't become so concentrated with so few people. In the future we
will be able to afford a safety net for everyone, where everyone is guaranteed
a minimum quality of life, without much effort.

We need to go about setting up a Rawlsian framework where inequality is
accepted, just as long as the least well off person is still reasonably well
off. We can do this by paying for people's health care, paying for their food,
paying for their housing. Self-interest and capitalism will still be the
paradigm, but it won't be so brutal.

If we do it right.

~~~
ajuc
If you go back in time to 1913, and told someone about all the machines we
have in 2013, he would say "surely there are no jobs for even 5% of your
society". Even not counting that in 2013 bigger percentage of women work than
in 1913.

But then, how could he predict that there will be these billion-dollar
industries that do things not even invented in 1913. Huge majority of what
people do in 2013 just didn't needed to be done in 1913.

I don't doubt people will invent something to waste our time on ever greater
scale.

~~~
Aqueous
I'm not sure I agree. The technological revolution hadn't happened yet in
1913. We saw an increase in new types of jobs over the course of the 20th
century because any innovation that occurred still required a significant
amount of human labor. I believe we will see a slow acceptance that we are not
going to see a high level of full time, high paying, high skill jobs. After
the recession, employment has slowly creeped up again but you can see that the
types of jobs that people are working now are different than they were in the
early 2000s. More jobs might have been created, but they are of a lower
quality in terms of hours, pay, benefits, and the amount of skill they
require.

We are at a point with technology where any conceivable manual task that we do
will almost certainly be automated away at some point, and many tasks
requiring high degrees of skill - including intelligence tasks - will also be
automated away. It will be increasingly hard for us to find pockets of value
in areas that we can offer the marketplace that it hasn't already seen. I do
believe the decline won't be rapid - our expectation for full employment will
slowly but steadily fade away - but over the course of decades I think we will
come to the idea that we are all entitled to a minimum quality of life,
regardless of our ability to hold a job, and that we will have to be
guaranteed such in order to maintain a stable society.

------
msluyter
On the topic, there was a thought provoking article in the NY Times recently
entitled "Can the Government Actually Do Anything About Inequality." The
answer is unclear:

[http://opinionator.blogs.nytimes.com/2013/09/10/can-the-
gove...](http://opinionator.blogs.nytimes.com/2013/09/10/can-the-government-
actually-do-anything-about-inequality/?src=me&ref=general&_r=0)

~~~
clavalle
Of course they can.

Possessing things is as fragile as a human life.

It would take a tectonic shift in how policy is crafted and implemented but if
the US government decided to turn on a dime tomorrow and redistribute wealth
who could stop them?

------
nahname
>The low paying jobs today are in the service industry - largely retail and
fast food chains. These jobs are dead end without paying anyone enough to live
on.

Friend of mine went to work at McDonalds during high school. By 22 he was a
manager and making over 80k a year. It may be dead end, but that is more than
enough to live on.

~~~
clavalle
$80K as a manager at McDonalds? Wow. I really thought it would be around $45K,
$55K tops.

~~~
nahname
It may actually have been closer to 100k. They have a pretty good bonus
structure. I don't remember for certain though and know it was over 80.

------
Symmetry
It's worth remembering that while inequality in first world countries has been
going up and will continue to do so, global inequality has been going down.
China is growing especially fast, but India and Africa and pretty much the
whole third world has been growing quickly this last decade.

------
gexla
In other words, much of the U.S. is going to start looking more like a 3rd
world country like the Philippines, though probably a richer version (less
grinding poverty.)

You don't travel much.Your possessions are likely your smart phone, maybe a
family computer and clothes. Because there isn't as much money to go around,
families tend to stick together more rather than every generation scattering
at age 18. This trend expands into the community. So, perhaps you are closer
to your neighbors and certainly to your family.

I wonder how much longer the car culture is going to last. It seems that you
have to be rich to justify buying a car these days. Maybe we will be driving
scooters like people in Asia instead of cars?

~~~
talmand
I would hope that would finally trigger the acceptance of working from home,
or even satellite offices, instead of large groups of people converging in the
same set of buildings on a daily basis in a specific area of the city for
little benefit.

It would probably even save the city itself large amounts of moneys not having
to maintain such an inefficient infrastructure.

------
joseflavio
IMO, there is some kind of correlation between efficiency in the economy and
the inequality in the society. I believe that it is part of the government job
to reduce the inequality... but the devil is on the details on how to do it.

~~~
neolefty
Wouldn't inequality make efficiency _worse_? On an individual level, it would
seem that poverty makes your life less efficient -- you end up treating your
own time as less valuable, and so you do less productive things, such washing
out your paper towels to reuse them, using more energy and water in the
process than was used to manufacture them in the first place. When if you had
more income, you could, hypothetically, do more productive things? Or would
you just around watching Netflix more?

~~~
yummyfajitas
Poverty != inequality, provided poverty refers to a fixed material standard of
living (which is how you seem to be using it, since you are referring to
specific material goods).

To illustrate the point, consider India and the US. India has little
inequality but lots of poverty (if we take the 5'th percentile of the US as
the poverty line, then 95% of India is poor). The US has lots of inequality
but little poverty.

[http://economix.blogs.nytimes.com/2011/01/31/the-haves-
and-t...](http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-the-have-
nots/?_r=0)

~~~
JDShu
Does that graph take into account PPP at all? It doesn't sound like it from
the description in the article.

~~~
yummyfajitas
From the article: "...the chart adjusts for the cost of living in different
countries, so we are looking at consistent living standards worldwide."

------
circlefavshape
Why are we taking economists seriously again?

------
marknutter
No, I'm tired of moaning about income inequality. If every person in the US
had their income doubled we would have even greater income inequality than we
do now, but everyone would be better off. Everyone benefits from technological
advances. The poor can buy better goods for a cheaper price and the rich can
maximize their profits.

~~~
zanny
But this is exactly the problem that perpetuates growing economic inequality.
You have 99% of people that are interested in things, and 1% that are
interested in profits. We are all playing the capitalist game from birth, and
to opt out is to isolate oneself from the market. But very few people
acknowledge they are in a gambit with those seeking profits over who gets
better value in a transaction, so they end up siphoning their wealth into
means of production owners pockets but that money will never come back because
the wealthy only need a very limited subset of goods and services, and after
that they will invest that revenue to make more money by robbing others of
their productive gains.

~~~
marknutter
And when the wealthy make more money does it sit in big Scrooge McDuck style
money bins, or is it reinvested into the markets or spent? If you don't want
to "siphon wealth into the means of production owners pockets" then get your
own means of production. Start a company and spread the stock out to your
employees as evenly as you see fit. It is easier now than it ever has been to
start and grow a company.

~~~
zanny
They don't evenly reintroduce their money into the market across the board (a
consumer does much better at that) and they are not reintroducing money for
the purposes of goods exchange but they are exchanging money now for money
future. And they actively try to avoid risk (such as bank bailouts, golden
parachutes, guaranteed dividends, etc) so you either make a little or a lot,
and rarely lose your shirt.

That means inevitably you have more money than you started with, just
siphoning more and more off of the populace. Even if you keep cycling the
money back in and people get to use it in a theoretically good way, you still
concentrate ownership of resources, businesses, and workers as your
reinvestments give you ownership of all these things that make you more money
to own more things in perpetuity.

