
Is Inequality Inevitable? - viburnum
https://www.scientificamerican.com/article/is-inequality-inevitable/
======
SiVal
There is a popular political perspective that rules on campus these days that
treats wealth as something that just magically exists and is simply
"redistributed" by one means or another like, say, a phase change in physics
where no magnetism/charge/energy/etc. is ever created or consumed. I waited
for a point in their model where people actually produced wealth and consumed
it, made something or ate it, in addition to redistributing it. Not part of
the model.

And the idea that things have a "true" value, the one put on them by
enlightened campus philosophers, so a transaction not controlled by the wise
and just will have a winner and a loser. I waited for the idea that I,
shoeless but with ten loaves of bread, and you, hungry but with ten pairs of
shoes, might reasonably value bread and shoes differently and BOTH win from
the "redistribution" of bread and shoes, but it was not part of the model.

But their model (which they claim "reproduces inequality with unprecedented
accuracy") could also (they claim) be fitted to a variety of different
observed power law distributions when its parameters were adjusted, and the
more parameters, the better the fit became. Yes, and they could probably get
their model to describe the frequency distribution of English vocabulary (also
a power law), with remarkable accuracy which probably does say something about
economics but maybe not as much as they seem to think.

~~~
vannevar
It's not part of the model because, if you're studying how wealth gets
distributed rather than how it is produced, it doesn't matter.

I'm guessing that your disquiet at this notion comes from the possibility that
everyone is creating their own wealth, and to some extent that is no doubt
true. But if you start with the simplifying assumption that everyone's wealth
creation ability is equal, and you just look at distribution, and you find
that your model pretty accurately reproduces the real-world distribution of
wealth, it's at least some evidence that wealth-creation ability is not that
different from person to person, and what's driving inequality is the
distribution mechanism.

Since virtually all human traits follow a Gaussian distribution, it seems like
whatever the wealth-building factor is, it would also follow a Gaussian
distribution. But wealth follows more of a power law distribution. You never
encounter anyone 1000 times taller than average, but there are many people
1000 times wealthier than average. This casts some doubt that wealth
accumulation is down to individual human ability.

Couple that with the micro-economic observation that someone with 1 million
dollars is astronomically more likely to make another million dollars than
someone with 100 dollars, even if the two people are otherwise identical, and
it seems pretty unlikely that wealth creation has much to do with the
distribution we see.

~~~
username90
> Since virtually all human traits follow a Gaussian distribution, it seems
> like whatever the wealth-building factor is, it would also follow a Gaussian
> distribution. But wealth follows more of a power law distribution. You never
> encounter anyone 1000 times taller than average, but there are many people
> 1000 times wealthier than average.

This is nonsense. Lets take an easy example, books, people don't want to waste
their time reading bad books so only the most palatable books gets a good
amount of sales. This means that a small difference in skill leads to a large
difference in sales, which would recreate the power-law of wealth creation.
Similar arguments can be made about engineering skills, management skills etc.

~~~
pytester
If you look at the actual richest people in the world though, they largely
make their wealth off the hard work of others (walmart family), through some
kind of gamble (finance), some kind of parasitism (unearned income like
interest) or by monopolizing that "magically existing wealth the OP doesn't
believe in" (e.g. saudi arabian oil).

For every JK Rowling or Steve Jobs there's maybe 100 who either fully or
mostly extracted their wealth while going to great efforts to pretend that
they're really just another JK Rowling or Steve Jobs.

~~~
qnsi
More than half billionaires are self-made.

------
Empact
It should be self-evident that the accelerating inequality we’re witnessing is
not the natural inequality of competition and the power law, easily explained
by simple arithmetic.

An _accelerating_ and _historically high_ broad societal effect is naturally a
product of broad and unique properties of the current regime, rather than
fundamentally consistent properties, which would naturally be seen across all
time.

What is more broad and far-reaching than manipulation of the money supply
itself? “We have found that inflation (1) worsens income distribution; (2)
increases the income share of the rich; (3) has a negative but insignificant
effect on the income shares of the poor and the middle class; and (4) reduces
the rate of economic growth”
[http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295...](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295.848&rep=rep1&type=pdf)

It’s not difficult to see why - under an inflationary regime, those holding
currency lose out relative to those holding assets, because the former’s
wealth is not preserved; and low income wages are facing a constant headwind
that their earners are less equipped to navigate.

We in the US have been engaging in an experiment since 1971, which has
resulted in a marked discontinuity and a shift in to whom productivity growth
accrued: [https://wtfhappenedin1971.com/](https://wtfhappenedin1971.com/)

This is not necessarily the true or only explanation of our accelerating and
historically high inequality, but it has the properties of a realistic
explanation, in that it identifies a broad, historically distinct cause.

~~~
dre54673
I've noticed an increasing trend in people using phrases such as "it is
trivial", "it is obvious", "it is self evident" to defend their arguments. I
have yet to encounter a case where it made their argument better.

This might be off topic but it has become a pet peeve because I've even
started to encounter it in real life. It is similar to starting a discussion
with "if you disagree with me, you are stupid".

~~~
Empact
IMO it's incoherent to say that a locally extreme and accelerating quality of
society is a consequence of broad and fundamental forces that have been in
place for millenia. Fair enough that "self-evident" is inappropriate because
it presumes perspective of the reader, but it's the coherence that I'm
referring to.

~~~
dre54673
I'll add that I think your comment was interesting which is part of why I
commented on it. My comment was meant to be generic and the only reason I
commented here was that I saw this thread was popular and your comment was
near the top. So it is not a critique of the information and it was a bit
unfair to call you out. I am hoping others consider not using those phrases so
often. I've noticed very smart people use it a lot, probably because these
things are indeed trivial to them. But it does not help anyone understand
their arguments. Many times just removing the statement makes the argument
more understandable as there is less noise.

~~~
throwaway0xb
There's plenty of excess that can be removed or revised for simplicity and
understanding in Empacts writing style that would would help in clarifying and
simplifying their point...

------
lmilcin
A lot of it misses the point.

Equality is unavoidable as long as people are allowed to compete for stuff.

If people are allowed to compete for property then those that are better at
competing will have more property.

It might be possible to have property equality when people have access to same
things but compete for different things, for example status, choice of
partners, etc.

And the most important point people seem to forget:

Inequality does not mean we need to have people who can't satisfy their most
basic things. It is possible for people to be allowed to compete for wealth
and at the same time ensure those that don't want or can't compete have their
basic needs like food, shelter and medical care satisfied.

~~~
cryptonector
You make it sound as though the economic pie is fixed and economics zero-sum.
But that's clearly not the case, otherwise we'd still be living with stone age
per-capita GDP (i.e., ~0).

And it's not just that "those that are better at competing will have more
property". Every person is free to make a variety of choices for themselves,
including how much they prioritize wealth creation. Since each one of us has
only one life to live, and only one way to live it (i.e., the way each one of
us choose to), and so many choices to make, there's no way we'll all make the
same choices. Some will prioritize love, others family, others art, others
business, or some mixture of these and other things. And that's just fine. We
can't all pour ourselves into our work the way Elon Musk does, and we can't
all only pick great ideas to pursue, and we don't all have the same talent or
drive.

> Inequality does not mean we need to have people who can't satisfy their most
> basic things. It is possible for people to be allowed to compete for wealth
> and at the same time ensure those that don't want or can't compete have
> their basic needs like food, shelter and medical care satisfied.

Indeed!

~~~
ska
Isn't it also important to note that wealth acquisition activities and wealth
creation activities are not the same thing?

~~~
lmilcin
This is excellent point.

If it is too easy to gather wealth so you can gather wealth without actually
having to create any value (through corruption, extortion, monopoly, theft,
deception, enslavement, etc.) then you will have the bad kind of inequality
where most people are not compelled to put hard work to create value for
others in order to create wealth for themselves.

Again, GINI does not differentiate between the good and the bad kind of
inequality, so two countries with same GDP and same GINI might be very
different. One may be on the rise, with a number of enterpreneurs creating
huge progress and value and the other might have couple of oligarchs who were
able to amass their wealth with corruption.

~~~
amelius
> (through corruption, extortion, monopoly, theft, deception, enslavement,
> etc.)

rent-seeking should be there too

~~~
ndarwincorn
In the financialized world we live in rent seeking should be the top of the
list.

------
knzhou
I find the creation of physics-inspired sociological models distasteful. It's
often a way of manufacturing certainty and authority through mathematical
obsfucation.

It always runs the same way. First, you think of some political opinion you
want to support. Then you come up with a mathematically trivial toy model that
throws away 99% of the structure of the problem, whose few dynamical rules are
artificially chosen so that they obviously will produce the result you want.
(Though this part may look intimidating, it's not once you know how the game
is played; I can easily cook up a toy model that "proves" any given political
opinion upon request.) Then you put a lot of energy into solving the model in
all kinds of cases, showing off your mathematical skills.

The end result of all such social models is a set of predictions that are only
tenuously linked to reality. A common example of such a claim is "X follows a
power law". But the models are usually too weak to actually calculate the
_power_ in the power law, and the data too tenuous to even show you have a
power law at all. (Most of the time this is done by showing a fuzzy cloud of
points on a log-log plot with a tiny range, drawing a line through it
(ignoring the fact that literally anything can be fit with a line if you zoom
in enough) and declaring victory.)

The point of mathematics is to make your postulates and predictions precise.
If your postulates are obviously unrealistic, and your predictions are too
vague to be meaningful, then the mathematics isn't serving any purpose --
except for giving your work a false authority.

~~~
anotherone15
Would you rather sociological models not contain any physics or math? What do
you propose?

~~~
knzhou
I would prefer an empirical approach, as some take in macroeconomics. Just
parametrize things you care about in terms of measureable quantities, and go
out and measure them.

Once you have that, there's no need to slap on some model that says, like
people are a frustrated antiferromagnetic spin lattice on a random small world
graph. It doesn't add anything. If you want to explain the _results_ of the
measurements, you can do it just as well with words.

~~~
anotherone15
What about parameters that are hard to measure?

Take for instances infectious disease models, often a very simple set of ODEs
that are capable of capturing the wide ranging dynamics that we observe. One
of the crucial parameters in these models is the transmission parameter, which
determines the rate at which susceptibles become infected upon contact with an
infected. Transmission is a function of a long string of physical, chemical,
biological, social and economic variables. I am not sure how feasible it is to
determine from first principles this parameter and so it is obtained from
fitting the model to data. So in this case, one does not directly measure the
parameter, but infer it from the data conditional on the model.

------
lordnacho
This is a lot more satisfying than just r > g, which although seeming to be
well supported in a rather large book somehow is dissatisfying. Specifically,
I was looking for some kind of agent model like what this author is presenting
here.

I've often thought about the "it's expensive to be poor" adage. What's
interesting is he takes in this risk preference idea, in which you naturally
expect the poor to have to be cede certain opportunities in order to secure
further existence. I've played a lot of poker where you see this dynamic where
the big stack guy can take chances and still win, and the cards (and skill)
don't matter that much.

~~~
viburnum
Sugarscape is probably what you want.

~~~
lordnacho
Yeah that's a good start, and pretty much where I started to think about this
kind of thing. This seems like a much more developed version of it.

------
dnprock
I come from Eastern/Asian culture. I'm surprised to see Western culture
swings. When I first got to live in Western culture, everyone was talking
about equality as truth. There was equality everywhere: gender, income, race,
marriage, geography. Now we talk about inequality as, maybe, the accepted
truth. People talk about tail, asymmetric risk taking.

I think Eastern philosophy has a balanced view on this. There're Yin & Yang.
The system eventually needs to find a balance. Stop swinging, start living.

~~~
ativzzz
Because real life and philosophy are often in conflict with each other. On top
of that, cultural values change and fluctuate with time.

> Stop swinging, start living.

Swinging is living. Life is constantly changing, or "swinging". It is
inevitable.

------
ryeguy_24
> "388 individuals possessed as much household wealth as the lower half of the
> world's population combined"

My goodness! This completely shocked me. I wonder if we are all complicit in
allowing this to happen. I know wealth buys power and vice versa, so it likely
would be hard to change but aren't we all indirectly allowing this to happen?

~~~
turc1656
It's even more shocking than you may have realized. Not sure if you caught it
because you may have been too surprised or just read quickly, but that was the
2010 number. The current number is estimated to be a mere 26 people that hold
as much as the lower half!

~~~
pietrod
yes, source: [https://www.oxfam.org/en/5-shocking-facts-about-extreme-
glob...](https://www.oxfam.org/en/5-shocking-facts-about-extreme-global-
inequality-and-how-even-it)

------
NovemberWhiskey
My perspective on this might be too naive; but it seems _wealth_ inequality
(which is the topic of this article) is inevitable since a significant
proportion of the population will spend their entire income and therefore
never save.

It seems like about 19% of all Americans have zero net worth, and something
like 44% of single American retirees are dependent on Social Security for 90%
or more of their income, implying they saved very little throughout their
entire lifetimes.

~~~
AnimalMuppet
Hmm. If they depend on Social Security for 90% of their income, should Social
Security be included in their savings? It's not conventional savings, and yet
it's funding their retirement.

In the same way, should pensions be counted as part of savings?

And if you run the calculations that way, what does it do to the distribution
of wealth?

Note well: I am not saying that this is the _right_ way to run the
calculations. But I think it could be a somewhat informative alternate way to
do them.

~~~
turc1656
I would argue not to include SS benefits as savings purely because SS payments
are a tax levied upon the rest of society rather than any sort of fund, trust,
etc. that actually has money allotted to someone. It's basically just an IOU
from Uncle Sam that they will tax other people to pay you.

Therefore, that is subject to change at the whim of those in charge of
changing the laws. Sure, it's politically ugly to reduce/eliminate, but a
severe recession could easily change that.

~~~
AnimalMuppet
Yes and no. There actually is a trust fund with actual money in it. That money
is invested in Treasury bonds. Individuals don't have "accounts", exactly, but
they do have benefits allotted to them.

Yes, it's a tax (though they don't call it that). No, it's not a savings
account. And yet...

~~~
turc1656
True, but that general fund/account is routinely raided by congress
periodically to pay for things so it being separated is purely for show and is
totally meaningless since they take money from it from time to time.

------
vfc1
It's inevitable and a direct consequence of the labor system that we live in.
The internet makes it worse but its not the problem of the internet, its a
problem of the system.

In our labor system, a small number of individuals are by definition going to
be payed, as employees, a small amount of the value that they add in order to
make their boss wealthier.

Over time, the employees get paid a constant amount of money that they need to
spend for living expenses, but the employer wealth will compound and
accumulate over generations.

It's a system that comes directly from medieval serventry, designed to
concentrate the wealth in the hands of the noble.

Take for example a large surface supermarket, with 100 employees making
minimal wage. If those same persons would each own their small family shops
and serve the same amount of customers, you would have 100 families well off
making way more than minimal wage.

Serve those same customers through a supermarket, and most of the wealth will
be concentrated in the hands of the supermarket owner, while the employees
make only scraps.

~~~
dorgo
>If those same persons would each own their small family shops and serve the
same amount of customers

Prices would increase (no economies of scale). 100 persons would have to deal
with 99 problems (accounting, supply, marketing, ...) they didn't have before.
And risks and competition.

Most people don't want to deal with all those problems. Even if it pays
better.

~~~
vfc1
> Most people don't want to deal with all those problems. Even if it pays
> better.

It depends, if raised on a family of shop owners with the values that you
should have your own business, that would simply be seen as part of life.

Those problems are not that hard, its not that hard to run a small shop. I
think anyone could do it.

------
sdfin
I don't get why lately the trend it to focus in inequality instead of focusing
in poverty.

I mean, if the % of poverty decreases, then economy is moving in a good
direction, in spite of inequality, right? Suppose you had one million, and
somebody else has one thousand millions, there would be a large gap, but I
wouldn't consider it as negative.

If there are arguments against what I wrote I would gladly read them and
consider them.

~~~
pietrovismara
Because both inequality and poverty matter. Solving poverty is a matter of
decency for all humanity and it would greatly improve our society. Solving
inequality is as important, why? Because in a society where greed and profit
motive trump any other ethic, we can't have individuals as powerful as states,
thanks to the wealth they accumulated, partly, stealing from states. Earning
billions and finding ways to not pay any taxes is equivalent to stealing for
me.

~~~
zygimantasdev
If you are taxed involuntary - isn't that stealing? Well technically by law it
is legal and enforced for everyone, but it still is stealing. For example: if
everybody is under the immoral law and some people are better than others at
avoiding the immoral law - is it morally okay for those people to avoid that
law?

Edit: by involuntary I mean if person can't choose. Not talking about
businesses

~~~
pietrovismara
No it is not, for a very obvious reason: you get all the advantages of living
in a society. Even just for infrastructure alone. Roads, sewages, electricity,
internet. Last but not least, safety and order. Any income you might have
developed is built upon this foundations. It is the very minimum that you pay
back for it, especially if you have more than most others. The only thing I
don't like is that we don't have a choice about it. We are born in nations and
we're subjected to their laws, like it or not. But you can still give up
everything and not pay taxes...

~~~
zygimantasdev
I think your point about a choice of taxes is very close to my argument of
involuntary taxes. While I agree there are some things that you must
contribute to have law and order - there are other things I don't want to
subsidize. If my town lacks sidewalks, cars drive too fast and etc. - why
should you pay for other towns problems first? Because somebody needs more
votes from that other town they get to take my money against my will?

Also, for example, I don't like some study programs and I really like some of
them. Problem is - I can't choose which ones to subsidize for students. If
that's the case - I wouldn't subsidize any of them, but I am forced to do so.
Even if I think its harmful.

I think this problem arise/will arise in many different places: North vs South
Italy, Catalonia vs Spain, young people to carry aging population and etc.

------
tunesmith
Have there been any efforts to quantify what level of inequality is
reasonable?

For instance, the GINI coefficient ranges between 0 and 1, where 0 means
everyone has the same amount, and 1 means one person at the top has
everything. Depending on how it's measured, the US is somewhere between 0.4
and 0.5.

You don't want to be at either extreme, so some level of inequality is
desirable. Is there an appropriate amount of inequality that is generally
accepted? Has anyone tried to identify the appropriate target level?

~~~
jlongr
Why shouldn't the coefficient be zero? I'm curious what your reasoning is.

~~~
tunesmith
I'm more reflecting the general consensus. That's communism, which is
generally seen as a failed economic system, and difficult to practically
enforce. Although maybe that all changes in a post-scarcity economy, like is
Star Trek technically communist? Should the goal actually be GINI-0?

~~~
endtime
Star Trek isn't communist; capitalism and communism are both approaches to the
allocation of resources. Neither really applies in a post-scarcity society.

~~~
pbhjpbhj
Which Star Trek is post-scarcity. They all [within the Federation] have
trading and limitations of resources, no?

They're entirely egalitarian either, perhaps that's why you say they're not
communist, see for example the luxuries that a captain has that crew do not
and the preferences (larger quarters) that accrue with seniority.

~~~
bena
Next Generation is post-scarcity. Replicators make fighting over a slice of
pizza pointless. Just replicate another slice.

It's both a story-telling crutch and obstacle. It's a crutch in that they
never have to explain how they provide for the entire crew while out in space.
They just transform energy into matter.

It's an obstacle as they can't really tell a story that involves a limited
resource unless they explain why it can't be simply replicated. Now,
sometimes, they say just that. But it's always something they have to
acknowledge.

And we have to bow to the fact that Star Trek is entirely fiction. We don't
really know how a post-scarcity society will function. So we will wind up
still projecting contemporary mores on them. So the captain gets a special
office and larger quarters.

DS9 has replicators, but they're also trying to be the "wild west frontier"
Star Trek, so they're not available to everyone and there are non-Federation
societies present. And _those_ societies aren't post-scarcity, so money
exists. (And then there are the societies that are both technically post-
scarcity, yet still materialistic which is just weird)

Voyager has replicators on the ship, but their solution is to remove the ship
from the Federation and handwave the fact that for the most part, starships
don't require fuel in a traditional sense. I think the fuel for starships
would be antimatter, but it's never an issue on the show unless it needs to
be.

------
WalterBright
Without inequality we would not have airplanes, transatlantic cables, jet
engines, electric cars, SpaceX, cloud computing, radar, internet phones,
steel, automobiles, the textile industry, fuel, plentiful food, fresh fruit
year round, etc.

~~~
gpvos
I think we would develop these in due time, just slower. One could also argue
that some of these (textile industry, cloud computing) are bad.

Actually, I am not against some inequality, as long as there is some kind of
limit to it.

~~~
WalterBright
> One could also argue that some of these (textile industry, cloud computing)
> are bad.

You could, but the textile industry freed women from endlessly spinning thread
and making cloth. Pretty much nobody does that anymore. I don't want to spend
my life making cloth the pre-industrial way. Do you?

In colonial America, archaeological bone evidence shows the colonists worked
like dogs and died young. Not very romantic.

------
danhak
Of course it is...it's a natural consequence of compound interest. One's
ability to accumulate additional wealth scales exponentially with their level
of existing wealth.

~~~
billions
If course it is...it's a natural consequence of compound interest. One's
ability to accumulate additional wealth scales exponentially with their level
OF EFFORT.

Even a wealthy person can lose their money if they don't make an effort
investing it properly. How do people build wealth from the ground up? They
work hard each and every day and that effort COMPOUNDS. They get smarter, more
opportunities present themselves, they get better creating value for others.
When you make strangers happy, they reward you with their money- a fair
exchange! This is how wealth is made - compound effort.

~~~
petemill
Classic. Poor people just aren't working hard enough!

~~~
billions
How did you get the computer you're writing on, if not by the method described
above?

~~~
lucideer
(not op but) parents supported me through a high quality education, in the
safe wealthy western country they brought me into, helped me to develop social
skills, and provided a stable upbringing which—all combined—gave me the
confidence, comfort and skills to navigate the labour market, secure a well-
paying job, and eventually use my wages to purchase this computer.

~~~
billions
Sound like you got there exactly by the method described above.

~~~
mikepurvis
Um, but the point is that most of that is stuff he had no control over. The
Econ 101 fantasy of "work hard, get ahead" doesn't apply if being a straight
white male born into a middle class western family means you're starting 80%
of the way to the finish line.

------
peterwwillis
There's been hundreds of years of writing on this subject from political and
economic theory, but the article doesn't touch on it at all; it's just a weird
mathematical model.

Then there's this:

    
    
      You might, of course, wonder how this model, even if mathematically accurate,
      has anything to do with reality. After all, it describes an entirely
      unstable economy that inevitably degenerates to complete oligarchy,
      and there are no complete oligarchies in the world. It is true that, by itself,
      the yard sale model is unable to explain empirical wealth distributions.
      To address this deficiency, my group has refined it in three ways to make it
      more realistic.
    

So, they started with a model that made no sense, and modified it to make it
match "reality", and finished with this:

    
    
      Given how complicated real economies are, we find it gratifying that a simple analytical approach
      developed by physicists and mathematicians describes the actual wealth distributions
      of multiple nations with unprecedented precision and accuracy. Also rather curious is that
      these distributions display subtle but key features of complex physical systems.
    

Yeah... curious....

------
beefman
Peter Norvig did one of these.[1]

The authors can fit data better by adding parameters, which is no surprise.
But these models omit an important feature of the real world: growth. "Yard
sale" models are zero-sum.

[1]
[http://nbviewer.ipython.org/url/norvig.com/ipython/Economics...](http://nbviewer.ipython.org/url/norvig.com/ipython/Economics.ipynb)

------
anm89
Let's pose the opposite:

Is it possible to enforce that 8 billion people be and have exactly the same?
Seems pretty obviously absurd.

~~~
WilliamEdward
Is it not worth trying to get as close to that as possible, though?

~~~
anm89
How do you even measure? How do you decide how effort and talent should factor
in. What system should be used to enforce it?

The answer to all is you can't because it's inherently utopian. You can set a
legal framework and follow and that's the best you can do. That can involve
programs that are designed to help the poor or redistribute but the notion of
trying to micromanage everyone into being equal or even close is absurd.

------
stretchwithme
Income inequality is a sign that an economy is functioning properly. For
people vary greatly in their talents, ambition, tolerance for risk, vision.
Some can lead, delegate and inspire, while others cannot.

Some are great at collaboration, others love confronting difficult challenges.
Some are great at squeezing suppliers and others good at pushing people to
adopt the next wave of technology. Some know exactly what people want and
others are incredibly creative. Some never stop learning.

Some do none of the above and only want everything defined for them with no
risks or growth required.

How could anyone analyze all of this incredible variability and decide whether
people get too much money for their contributions?

Income inequality rewards the development of all of those qualities.

~~~
woander
Income inequality can also be a sign that an economy is functioning
improperly.

North Korea, Soviet Union, Zimbabwe, Venezuela, etc all have income
inequality. I don't think anyone would say their economies are/were
functioning properly.

> Income inequality rewards the development of all of those qualities.

Not necessarily.

Your statement would be true if every generation started a 0, on equal footing
and the system/environment was fair. Would you say that income inequality in
Confederate South was a result of rewarding "talents, ambition, tolerance for
risk, vision"?

Income inequality is a very complex subject. People who try to frame it in a
simplistic black and white worldview really do it a disservice.

------
selfishgene
Let's assume for sake of argument that "inequality" is in fact "inevitable."

Then what policy conclusions are we supposed to draw?

~~~
zhoujianfu
Universal Basic Income to even it out a bit I assume!

~~~
eeZah7Ux
...which would significantly decreasing inequality - immediacy disproving the
belief that inequality is some sort of inevitable natural phenomenon.

------
arcticbull
Income inequality I'm totally in favor of as a reward for creating value.
Outsized value, outsized reward. With that in mind, I have a few caveats. To
function properly:

\- Social mobility must exist: income inequality is available for everyone
based on their merits, not coupled to things like circumstances at birth.

\- Wealth inequality must only exist for the generation that earned it.
Passing on your largesse to your children is just as bad as the plutocracies
that the founding fathers tried to escape. They should be rewarded for the
value they create, not the value I created.

\- The bottom line is pulled up to the extent that you can live a comfortable
life even if you fail.

------
pietrod
tl;rd if you always bet x% on a fair coin you are going to lose in the long
run, ex. 0.95*1.05 = 0.9974999999999999 < 1 (you will win and lose the same
number of bets)

so if world is a casino, where everything is a bet for utility with someone
else, since the best strategy is not betting (or betting the less %) the
richer is always in an advantageous position, and on the long run will have
anything: this is intuitively true, but it has to be said that this passive
force is way inferior compared to the active skill of a good better, that can
completely override this force (that on a single life span would be like 1% of
the force coming from skills). Basically the system is too chaotic to even
notice this little force.

Interesting idea, but this one from margrit kennedy
[https://vimeo.com/71074210](https://vimeo.com/71074210) is even better, here
it's another passive force, but with way more impact than that, can be
considered a real case of the general idea that "inequality" is a natural
phenomena (that is a quite lazy concept cause it makes humans totally dumb and
with no free will, like, sure, even war is natural, and murder, etc etc).
honestly these ideas are so basic that shouldn't have names on them, and
surely they are not the first people to have notice that.

------
mikorym
This question only worries me in the context of philosophy or in the context
of the developed world.

My experience, being born on the African continent and with my (known) family
having lived on the African continent for 10 generations, teaches me that this
question is not a matter of philosophy but of pragmatism. The impression I
have, whether illusory or not, is that the more fundamental human endeavor is
towards Mazlo's pyramid of needs. One example that I can give is that often
those that "defend" the position of the rich are not rich themselves, but
rather believe in the value of personal property ownership.

And with regards to those in developing countries in general, I think the
feeling is that you simply want to better your life up to a point of some kind
of perception of equal access to opportunity (whether attainable or not). My
point is thus that inequality in wealth is perhaps like inequality in
everything else, including inequal distribution of personal preferences (in
everything). It's easy to say this as a person with access to education and
opportunity and pretend to say it on behalf of others, and could of course be
misguided, but I don't know if relative spread of opportunity is important in
the way that absolute spread of opportunity is.

------
dustinmoris
Unfortunately I cannot read this article, because of the pay gate, but I can
confidentily say that inequality is most certainly inevitable.

Inequality is the core concept which keeps everything in balance on this
planet. Humans are destroying this planet by trying to achieve a utopian world
of perfect equality. The only equality that we should strive for is equality
of opportunity, but we can't aim for equality of distribution of resources as
this would lead us into eating up our entire planet.

If everyone in this world would get the medical care to live until 100, if
everyone would get fed with the same amounts of fish, meat, eggs, fruit,
vegetables, etc. then we would pretty quickly end up in the tens of billions
of human beings consuming everything around us until nothing will be left and
we have killed ourselves.

Resources are limited and unless we can build more planet Earths at random
will, then resources will always remain scarce and the only fair way to
distribute these resources without looting everything to its extintion is to
let all animals on this planet (including humans) compete for it. The
strongest lion will catch the Zebra, the smartest human will afford a big
mansion, etc.

Humans need to become comfortable with accepting the laws of nature which kept
our planet flourishing for so many million years or we will put an end to it
very quickly. No human has a right to anything. Whatever you are given is what
you have either earned, stolen or you've been given out of mercy, but never
because of entitlement. The sooner everyone can accept that fact the better
things will turn out for us as a species.

Also it's important to understand that what's good for humans (today) is not
necessarily good for humanity. It's good for humans to burn fossil fules like
mad people to keep our homes warm in the coldest areas of the planet or to
install energy wasting air cons in hot places which we want to inhabitate, but
in the long run this is damaging our environment and bad for humanity. It's
good for humans to fly everywhere and drive everywhere today, but it comes at
a cost for humanity at some point in the future.

Humans are ego centric, self entitled and selfish animals which think that
what's good for them today is good for us tomorrow, but it's often quite the
opposite. The truth is, the more we live in animalistic conditions like
survival of the strongest, the better it is for us as a species in the long
run.

------
amelius
If a model shows that inequality is inevitable, then perhaps we can extend the
model such that equality is achieved, e.g. by adding a certain amount of tax
to the equation, where the tax is redistributed over the population. This
could be called the "fairness tax", and of course would still allow inequality
where wealth is created.

------
adrianmonk
Inequality is a tricky word. At first I disliked it because, for me, it's a
non-goal to have everyone equal.

I know there are some people who are willing to work harder than me, and I
don't mind if they have more wealth. I also know there are people who don't
want to work as hard. (This isn't meant as judgement, I'm just saying I'm
somewhere in the middle.)

But let's not be black and white about it. I'm OK with some variation, but
with some kind of limits. It wouldn't be reasonable for someone to receive a
million times the reward for working twice as hard.

And although I'd prefer a better term, many people seem to use "inequality" as
concise term for that. I don't love the choice of terminology (too prone to
misinterpretation), but I can handle it.

------
thayne
Why is this surprising? Wealth provides the means to acquire more wealth, so
of course any initial inequality will tend to intensify without some mechanism
to redistribute wealth among those with less wealth.

------
bronzeage
I have to question the meaning of their result.

it's a known and inituitive result that a random walk on a lattice eventually
reaches every point. This has no practical meaning whatsoever. it's not an
interesting result because, just like the random walk on a lattice, after one
person becomes an oligarchy, eventually a different person will also become an
oligarch.

why did you choose to stop when the first became an oligarch? to make a click
baity title?

people need to understand probabilities to read through bullshit like this
article.

~~~
bronzeage
If you want to judge a random walk in a meaningful way, you never ask "what's
the probability of reaching X started?" you ask "how long do you stay in
states like X".

the expected time to exit "oligarchy" states should be pretty small. the whole
discussion is completely meaningless, they intentionally asked a misleading
question.

~~~
anotherone15
They are pointing out the existence of a fixed point in the oligarch state.

Yes, you can estimate the time to leave this fixed state by invoking an
analogy to a classical mechanics problem, where the time to leave is
proportional to the exponential of the action.

------
nkkollaw
Inequality is inevitable.

We are not born equal. Some people are smarter, some people are better-
looking, some people have more energy, are more motivated (or the opposite).

We can try and do everything we can so that everyone has the same opportunity
to succeed, but if you want the same outcome you'd have to limit the smarter,
better-looking, more energetic people so that their outcome is lowered to be
the same as everyone else, and I don't think this would be positive for
anyone.

------
RickJWagner
According to Dave Ramsey, 79% of millionaires inherited $0.

Globally, poverty is on the decline.

What's the problem with wealth distribution, exactly? Besides jealousy.

------
miguelmota
Inequality will always be inevitable. Striving to better yourself by learning
new skills and improving your abilities is to produce inequality because
you're rising above the mediocre masses anytime you make an effort at
anything. People should focus on equity, not equality. Equality of outcome is
more fair than equality of opportunity.

~~~
aantix
>Equality of outcome is more fair

How so? To equalize outcomes for all parties, you must take from those that
performed better?

~~~
miguelmota
I might have phrased it incorrectly but the message I was trying to convey is
that those that perform better and produce more results should be rewarded
more (as expected) because they put in the effort to achieved better outcomes,
rather than giving someone a head start because of their race or economic
status (ie affirmative action) which is inequality.

~~~
chii
> rather than giving someone a head start

so you're saying your children should not inherit any wealth, and must be
taken away to a state institution to be raised like everybody else?

I think inequality being inevitable isn't bad, as long as the floor is at an
acceptable humane level.

Why does it matter if 1 person owned 99% of all the world's wealth, if the
remaining 1% is enough to give basic human needs?

~~~
miguelmota
You're pulling a strawman so not going to dignify your first statement. On the
latter, you're right in that who cares how people spend their money but nobody
should be obligated to give it away.

------
xyzzyz
That's an interesting model, especially with respect to how well it matches
the reality. Since the transactions in the reality definitely do not look like
the coin flip transactions in the model, it definitely warrants some more
investigation as to why exactly it matches reality so well, despite not
resembling reality as we see it.

------
Mikeb85
Of course inequality is inevitable. Some people are bigger/stronger/faster
than others. They will naturally out-compete the others for resources. And
once they have those resources, they will then use them to accumulate even
more wealth, buy off politicians and institutions to siphon even more off,
etc...

~~~
mLuby
> Some people are bigger/stronger/faster than others.

Yes, and smarter/more driven/more socially adept too.

> They will naturally out-compete the others for resources

Only if they feel it is _necessary_ to compete. A hungry animal will risk
injury to for food. A sated animal rarely does.

> And once they have those resources, they will then use them to accumulate
> even more wealth, buy off politicians and institutions to siphon even more
> off

Only if their greed is boundless and unchecked.

I understand these cynical sentiments (having felt this way myself) but it is
a product of the abnormal system we temporarily inhabit, not the inevitable or
natural state of things.

------
anovikov
My point in favor of the present income distribution being "natural" is that
statistically, income is even somewhat more equally distributed than Tinder
likes. Both are indicators of how good you are/how much people want to deal
with you: give you cash or have sex with you. If there is no 'trick' in either
distribution, they must be distributed equally. They are. Income slightly more
equally because of the minimum wage/social pressure on businesses to hire
useless workers/government providing some crappy employment to useless people.

Wealth is less equally distributed than income or Tinder likes, because it's
an antiderivative of income distribution, also completely natural. And also
because of the generational factor: you are very unlikely to get swiped right
because of who your dad was, but your dad could have left you some cash or
connections.

And yes, income is less equally distributed now than in 2008 exactly for the
same reason as millenials having less sex on average than X-ers had in 2008:
because we now have Tinder and it makes picking best partners a lot easier,
resulting in top 1% best having sex with everyone with just scaps left for
others. Money follows the same way due to the same factor of the smartphones
and the Internet in general: success has become infinitely scalable.

It's extremely hard to do anything at all about it. Maybe we just need to know
about this as a fact of life and build social constructs to contain the
resulting pressures.

[1] [https://medium.com/@worstonlinedater/tinder-experiments-
ii-g...](https://medium.com/@worstonlinedater/tinder-experiments-ii-guys-
unless-you-are-really-hot-you-are-probably-better-off-not-wasting-
your-2ddf370a6e9a)

------
sytelus
It's a simple side effect of _money creates money_. If you have X dollars, it
_almost_ automatically can create Y dollars in time T. Integrate over time and
you have exponential growth. People starting with low initial number will have
exponentially growing differential.

~~~
duxut_staglatz
So why has inequality not grown exponentially? There are many periods where it
is about constant and/or declining.

------
bhupy
There's one glaring issue with this simulation, and it's that it keeps the
amount of wealth static — it models a zero-sum world, which is not our
reality.

I would like to see this simulation run where the agents are also creating
wealth into the system.

------
Mikhail_Edoshin
What if there's a need for inequality? I.e. if everyone is about same as
everyone else, how would the society organize any work that requires
coordinated effort of many people? How would it maintain the required
discipline?

~~~
Uhuhreally
what then is the optimum level of inequality ?

What if 1 person owned all the money and everybody else worked for the promise
of money ? Would that be enough inequality ?

~~~
Mikhail_Edoshin
Enough to get things going, I guess, but very inefficient, because he would
have to make too many decisions himself and there would be no way to actually
control the operations. This is the Soviet Union model where the recipe for a
cake in Estonia had to be approved in Moscow and the level of falsifications
in what should be reliable internal reports was unprecedented.

My point is that to organize coordinated work there must be some way to
persuade people to comply and endure hardships, like working at nights. I see
roughly three: slavery (inequality in offensive power?), "economic inequality"
in capitalism, and spiritual leadership (inequality in wisdom). I like the
latter the most, but it's hard to scale, and I prefer economic inequality to
slavery any day.

------
tammet
A simple demo of the algorithm described in the article:
[http://dijkstra.cs.ttu.ee/~tammet/oligarch.html](http://dijkstra.cs.ttu.ee/~tammet/oligarch.html)

------
clarkmoody
The question is not how to reduce or cope with inequality. Rather, the
question is: why is there wealth in the first place? Why have billions of
people risen out of poverty over the last few centuries?

------
n9
Is it inevitable? That indicates a teleology and feels to this reader like a
bogus question.

Is it _structural_? Oh hell yes it is.

------
Uhuhreally
No. It's because some people lie and cheat and exploit other people.

------
jeromebaek
it's really simple. the world is exponential, not linear. wealth grows (or
decays) exponentially. that's it. too bad very few understand exponentiation.

------
classified
This question isn't decided by market theories but by human nature. And human
nature, sadly, makes inequality inevitable. Or, to put it another way,
avoiding inequality will always be an ongoing struggle.

------
teksimian
inequality is the natural state of things.

The worst form of inequality is to try to make unequal things equal. –
Aristotle

------
rozularen
Finally found a cached version of the site without a paywall

[https://webcache.googleusercontent.com/search?q=cache:u4UoSf...](https://webcache.googleusercontent.com/search?q=cache:u4UoSfLPWBYJ:https://www.scientificamerican.com/article/is-
inequality-inevitable/+&cd=3&hl=en&ct=clnk&gl=us&client=firefox-b-1-d)

------
growlist
Obviously there needs to be a balance. Too little inequality and we end up
with communism, destruction of incentives for innovation, and a 10 year wait
to drive a Trabant - if you're lucky! Too much inequality and there's too
small a market to sustain the extraction of wealth by the elite.

------
joshuaheard
This article has several fatal flaws. The first one is that there is a loser
in every transaction. Generally speaking, economic actors will only
voluntarily engage in a mutually beneficial transaction. A person generally
does not enter into a transaction where they are injured. To do so on a
consistent basis is self-destructive. A shoe maker makes a shoe and sells it
to me for a value greater than it costs to produce. I buy the shoe because the
value of having my feet warm and protected is greater than the price of the
shoe. We both win. The shoe maker would not sell a shoe for less than it costs
to produce and stay a shoe maker for very long. I would not pay for a shoe
that did not give me enough value.

The authors claim people make a "mistake". In a very small amount of
transactions, this may be true, but you cannot base a model on every
transaction containing a mistake. But let's look at the math. The authors use
an example where every transaction that costs $1 nets either $1.2 or $.83.
Over ten transactions, the net is less than $10. But this assumes that the
person puts their whole net worth on every transaction. This is false. Each
transaction costs a $1. So, the first one costs $1, and the second costs $1,
etc. You cannot accumulate the past values of the previous transactions into
the current one. This is the coin toss fallacy. If you flip a coin and get 99
heads in a row, the coin toss fallacy says the odds are greater the next flip
will be tails. But, each flip is independent of the previous flips, so the
100th flip has a 50/50 chance of being tails, regardless of the results of the
previous 99 tosses. So there is no "loser" in every transaction as the authors
posit. Both parties win, or the transaction would not occur.

Their next claim is that becoming a billionaire is just "luck" and could
happen randomly to anyone at any moment. Bill Gates is a billionaire because
he created Microsoft. Mark Zuckerberg is a billionaire because he created
Facebook. John Smith a fast food worker in Hoboken, Nebraska doesn't just wake
up a billionaire one day by luck.

And what is bad about being a billionaire. Gates and Musk are doing wonderful
things with their money that disbursing it to a million people would not
accomplish. The authors never give a reason why income equality is bad. In
fact, inequality is the natural order. They never mention the Pareto
Principle, popularly manifested as the Bell Curve, which is found everywhere
in nature.

The authors claim income equality is destabilizing and must be corrected by
redistributing all the wealth in equal amounts. However, as stated, income
inequality is the stabilized form. It might be increasing slightly now due to
faster movement of information, but class mobility is highly dynamic.
Yesterday's billionaires are not today's, and today's billionaires might not
be tomorrow's. Income inequality is the stable distribution of scarce assets
in a free market economy.

------
hagreet
Do people not mind the paywall or do you just not get it?

------
robomartin
Inequality is inevitable. It is baked into everything in nature, from the
stars to ocean depths. When was the last time you looked up at the night sky
and saw a uniformly spaced and evenly lit field of stars?

Evolution itself would not exist without inequality. Yes, some animals were
better than others at certain tasks and evolutionary pressure did it's thing
over time.

I suck as a dancer. I suck as a painter. I suck at a lot of things. And yet, I
am a better than others at certain things and I am massively better than
others in other areas. My life and that of everyone around me has inequality
as a positive element rather than a negative. This is why I hire a plumber and
an electrician and don't do everything myself.

EQUALITY OF OUTCOME IS A FANTASY.

Equality of opportunity is important and should be promoted far and wide.
Trying to force equal outcomes is just silly, sorry.

Hence the Pareto distribution. It's real and it is a fact of nature everywhere
you look. There is no such thing as equally distributed outcomes in but the
most esoteric corner cases (having trouble thinking of one example).

As for the scale of inequality. That's another red herring.

The way I live today is beyond the equivalent of a rich person a hundred years
ago. It is WAY beyond the super-rich before that. Kings did not live this way
centuries ago. And yet I don't have Bill Gates level money. Not even close.

The average person today lives far better than the wealthy lived not too long
ago. They certainly have greater access to amazing medical advances as well as
technology. There are over FOUR AND A HALF BILLION people world-wide using the
internet. When you consider that, in rough terms, about two and a half billion
out of the 7.7 billion on the planet cannot use the internet (too young or too
old) that means that approximately 87% of those able to use the internet use
it. You start slicing that further and you might just discover the percentage
is much higher than that. For example, my father certainly falls under the
category of not too old to be counted as a potential internet user. However,
he has less than zero interest and doesn't use it. My mother, on the other
hand, is on the 'net every day.

Anyhow, the point is that this business of vilifying the "1%" is just silly.
It has no bearing whatsoever on how people live. In other words, they are not
taking oxygen out of the room, quite to the contrary.

We do need to raise even more people out of poverty, with some areas of the
world notable for a desperate need for improvement. Nobody is saying we can't
and should not do better, we always can. What isn't sensible is the constant
finger-pointing to this mythical "1%" as the problem. Every year we raise
millions of people out of poverty. Life, in general, has been getting better
and better over time. Even in places where people have difficult lives you'll
find they wear clothes and have things that are markedly better than what was
available to them just a decade or two ago.

If we want to make things better for more people we just need to continue to
focus on growing economies through free market capitalism. It's the only force
in known history that has elevated so many people out of the dark ages.
Everything else is a formula for disaster and misery, also a historical fact.

OK, I'll duck now. Let me have it.

~~~
HammockWarrior
I think most people promoting redistribution would agree on the benefits of
equality of opportunity over outcome (obviously not all). They would simply
argue that equality of opportunity is not there yet and the Gini coefficient
can perhaps be used to measure that. For example if the Nordic countries
operate well and have better equality of opportunity in the 30s as opposed to
the US's 40s and we have seen in the past that the 30s worked well for the US
then perhaps it's the 30s we should be shooting for with our efforts.

~~~
robomartin
Sure, but you have to consider that the often-touted Nordic countries have a
very different demographic composition than the US. Easy example:

Estimates place the illegal immigrant population of the US somewhere in the 25
million range (as a conservative estimate). Assuming half of them are of
working age, that is, in rough terms, over 10% of the portion of the US
population that is working (about 108 million).

The vast majority of the people who enter the US in this manner do not have
college degrees or high-value professions. Which means their earning potential
will be severely reduced.

Take 10% of the workforce in any Nordic country, replace it with people who
are educationally challenged and the numbers will look very different.

Please note: I am NOT, by any stretch of the imagination, arguing that we
should not try to do better. However, certain things are simply inescapable
realities that simply take tons of time and effort to improve. Not to go too
far, the US is famous for spending more money per student than, dare I say,
most nations in the world, and yet our educational results in mathematics,
language and other areas don't rank very well at all when compared to nations
with much less to spend.

Inequality at work. Money isn't the only variable.

Perhaps that's the real thing that bothers me about these discussions about
inequality. These are complex multivariate problems and these discussions make
it sound like the only variable worth considering is how much money the top 1%
have. It isn't. In fact, I would venture to guess that this factor or variable
might not even make the list of the top 100 factors if we were to make such a
list from a framework of being brutally honest rather than political.

Simple example of this: Brutal dictatorial regimes hold back their population,
cause misery, suffering and inequality. That's a big one. Places like Latin
America, North Korea, the Middle East and a good deal of Africa are afflicted
by this. Do we, the "civilized world" in the name of creating equal
opportunity and access to better outcomes, invade all of these countries,
depose all tyrants and institute one hundred years of external benevolent
control?

This is crazy, of course, but it is also reality. As a single example, I
researched the Paris Accord in great detail and learned that dictators were
enriching themselves, their families and associates with the money put into
the system by the US and Europe. Money that was supposed to be devoted towards
these nations becoming "greener" ended-up buying the ruling class new jets,
cars and other "energy efficient" luxuries. So, yeah, the "do we invade and
rule" scenario isn't too far fetched if we truly care about creating equality
of opportunity and elevating millions out of truly deplorable conditions.

Not an easy problem. Not a single variable problem. And the "richest 1%" thing
is a complete red herring.

~~~
HammockWarrior
Illegal immigration and what happens in other countries are at best a red
herring here because illegal immigrants aren't typically eligible for benefits
and are typically working off the books. The US government has responsibility
for its citizens, not those of Mexico or Latin America.

Also keep in mind many of the proposed redistribution efforts fall squarely in
the "equality of opportunity" column which you claim to support. For example,
free or very cheap higher education. If we want to be as educated as the
Nordic countries this would go a long way. Or taxpayer funded healthcare. This
would both reduce the total cost of healthcare and also greatly improve
access. It's hard to pull yourself up by your bootstraps when you're sick and
can't afford to see a doctor.

Perhaps let me turn this conversation around. Rather than throwing up your
hands and saying "it's complex", what specific policies would you support to
improve equality of opportunity?

~~~
tropo
It is misleading to say that "illegal immigrants aren't typically eligible for
benefits".

Eligibility for benefits happens via children and partners. The group of
people thus receives benefits that are then shared.

Via this mechanism, families containing non-citizens consume more benefits
than families composed purely of citizens.

------
klaudius
...

------
noja
Wrong question. Better question: why is the scale of inequality acceptable?

~~~
danhak
Because capitalism and free enterprise are predicated on fair competition and
equal access. In theory, the best and most innovative ideas thrive and lead to
economic growth.

Extreme inequality undermines this by allowing those who already have
significant wealth to put their finger on the scales (lobbying,
anticompetitive practices, etc.)

~~~
AnthonyMouse
The thing that always irks me about this is that we keep talking about the
individuals even though that's not the real issue.

Sure, Jeff Bezos has a lot of wealth, but really what he has is a lot of
shares of Amazon. It's Amazon that really has the money. Even if Bezos is the
CEO, he has a duty to the other shareholders to act in their interests. He
can't just donate all the company's assets to charity even if he wanted to.

The real problem is that corporations are too big. The fact that this makes
their founders very rich is more of a side note. Increasing the capital gains
rate isn't going to make Apple or Microsoft smaller or give them more
competition. It isn't even going to collect more money from the largest
shareholders until they sell their shares, which many of them never actually
do.

This is a competition problem, not a wealth problem. If there were ten times
as many companies then there would be ten times as many founders who each had
a tenth as much money -- or less, if the added competition directed more of
the money to the customers and workers.

~~~
zepto
This isn’t accurate. Amazon doesn’t ‘have the money’ that counts as Bezo’s
wealth. It is the value of Amazon to others that produces his wealth.

Bezos may not be able to donate Amazon’s assets to charity, but he can donate
his assets - in this case his shares of Amazon.

He can equally well sell his Amazon shares and buy something else with the
proceeds, so the wealth that is attributed to him really his his.

Of course there is a point at which Amazon’s value might be impacted if Bezos
sold his shares, but he could probably realize well over 50% of his holdings
before that became an issue.

~~~
AnthonyMouse
The problem with your theory is that somebody would have to buy the shares
from him. At scale that's zero sum, and the money can't come from people who
don't have any.

Think about it this way. Alphabet owns Google. When that happened, did it
create an additional company out of whole cloth with the value of Google, on
top of the value of Alphabet? No. That's double counting. The value only
exists once. Moreover, unless Amazon is _dissolved_ , the corporation controls
that value (and is required to act in the interests of all the shareholders),
regardless of who owns the shares at any given time.

~~~
zepto
Your alphabet / google analogy has zero connection to what we are talking.

There doesn’t need to be anyone with the cash available to pay the entire
price of Amazon.

If Jeff Bezos wants to purchase something, he can trade Amazon stock for it.

The corporation doesn’t have any control over whether he does that or not.

It is exactly equivalent to money.

~~~
AnthonyMouse
> It is exactly equivalent to money.

By this logic Google has an infinite amount of money because it has the
ability to issue new shares. It can create a zillion dollars of new shares and
sell them in the market and now it has a zillion dollars higher market cap
because it has an extra zillion dollars in cash.

But it's not actually infinite, for two reasons. First, the money (or whatever
you're exchanging the shares for) still has to come from somewhere. There
isn't unlimited demand. It's not possible for every billionaire to sell their
shares at once because then there would be nobody to sell them _to_. If they
all tried to at once, the share prices would crash into the floor.

More importantly, if Bezos sells some shares in Amazon, it doesn't cause
Amazon to have less capital. The company is still the same size. All you've
changed is who owns it -- and unless the price he sells it for is dramatically
lower than its current market value, it has to be some other rich people
because nobody else has the money to buy it from him. The only way for a rich
person to reduce their holdings in a corporation in order to spend the money
is for some other rich person to reduce their _spending_ by the same amount
and use the money to buy the shares in their place -- and then the corporation
is in control of _that person 's_ wealth, in the same amount as the original
shareholder's.

The things that cause corporate officers to control less wealth are things
like corporate spinoffs, taking existing public companies private (which then
puts actual control into the hands of the owner), competitors eroding the
incumbent's market share, corporate bankruptcies, etc. Two rich guys trading
shares for real estate doesn't do that. At the end the corporation still has
the same amount of wealth and the two rich guys have the same amount of
wealth, you've just changed which one has their wealth in stock vs. land.

~~~
zepto
The statement you made about google issuing more shares has nothing to do with
my logic and is completely irrelevant.

You are right that Bezos selling shares does not change the amount of capital
Amazon has.

The fact that nobody has enough money to buy all of Amazon from Bezos is also
completely irrelevant.

You are right that Bezos exchanging stock for real estate doesn’t reduce his
wealth unless the real estate is overpriced.

When you buy something with money, the same thing happens - the amount of
wealth held by both parties doesn’t change unless the goods are overpriced or
are consumed.

You haven’t refuted anything I said in the previous comment.

Bezos can use Amazon stock to buy whatever he wants, the same way you and I
can use money, and the corporation has no control over this.

Bezos’s wealth is exactly what it looks like. He can indeed use it just like
money.

~~~
AnthonyMouse
> The statement you made about google issuing more shares has nothing to do
> with my logic and is completely irrelevant.

Your logic is that shares are money, but companies can print shares, which
would imply that they could print money.

The shares are only valuable because they represent the company. The value in
the shares isn't independent or duplicative of the value of the company. If
the company burned to the ground then the shares would be worthless too --
it's the same wealth, and as long as the resources are invested in the
corporation, it's the corporation that has control over it.

You're trying to make a lot out of the fact that the owners could sell their
shares, but there are two reasons that doesn't do it. The first is, that
doesn't come into play unless they actually do sell their shares. But if they
did that in practice and spent the money (not just move it to another
investment security) then we wouldn't be having this debate because then they
would no longer be billionaires.

And the second is that they can't actually do that at scale, because in order
for that to happen, you would need somebody else to buy the shares from them,
which would mean that _that_ person would have to commit an equivalent amount
of resources which then couldn't be used for some other purpose. As long as
Amazon exists, it necessary that somebody be foregoing their own use of an
Amazon-sized quantity of wealth.

> When you buy something with money, the same thing happens - the amount of
> wealth held by both parties doesn’t change unless the goods are overpriced
> or are consumed.

The most relevant part of that being _consumed_ , because that's what the
disposition of resources is really about. Trading one investment for another
is still investment -- and investment in corporations is giving control of
your resources to someone else. Actual spending is consumption. You burn fuel
or use electricity. You pay a person to do a job and their time is consumed
and can't be used for something else. You occupy some land that then nobody
else can use at the same time. Those are the things that actually matter to
people and affect the world, not whether Jeff Bezos owns shares of Amazon and
Larry Page owns shares of Google or vice versa.

What I'm getting at here is that if you want to reallocate resources from
adtech to something else, it is actually necessary to _deallocate it_ from
adtech, not just sell your shares in the adtech company to somebody else so
that the same total amount of resources are allocated to adtech but now it's
somebody else's name on the documents. If the same amount of labor continues
to be spent on targeting ads, that labor is not being spent on curing cancer,
regardless of whether ownership of the shares changes hands.

~~~
zepto
“Your logic is that shares are money, but companies can print shares, which
would imply that they could print money.”

That is not my logic. You have made that up our of nowhere.

Obviously printing more shares leads to dilution and doesn’t increase the
overall value of the outstanding shares.

But that’s just like money too - printing more money leads to devaluation of
the currency.

So you are wrong, and clearly shares can be used just like money.

I agree with you that selling AdTech/Google shares doesn’t anything to reduce
the resources that Google can spend on targeting ads.

But that’s not what our conversation has been about.

------
michelinman
Animals on both ends of the bell curve. Serial Killer avg. 10 deaths? Last
billionaire I met killed 17 and poisoned 30,000. Silicon Valley is essential
viewing at the moment on that subject.

~~~
michelinman
Downvotes? At least explain.

~~~
anm89
This is totally incoherent. What are you trying to say?

~~~
michelinman
Apologies, I'll try again. At both ends of the human spectrum you have people
who are so basic human life means nothing to them. In both respects these
people want power over others. I suggest the least intelligent are the serial
killer types but the most dangerous are the rich and powerful. Wiki
commodities brokers.

~~~
anm89
Fair enough. I think people are people and good and evil are probably normally
distributed between the poor and the wealthy more or less. There are certainly
bad people at both ends.

I'm familiar with what commodities brokers are and don't see anything wrong
with it. I'm quite happy for the existence of modern financial markets.

~~~
michelinman
These are the public versions, I promise it's much worse; A little light
reading for you:
[https://en.wikipedia.org/wiki/Marc_Rich](https://en.wikipedia.org/wiki/Marc_Rich)
,
[https://en.wikipedia.org/wiki/Glencore](https://en.wikipedia.org/wiki/Glencore)
,
[https://en.wikipedia.org/wiki/Trafigura](https://en.wikipedia.org/wiki/Trafigura)
. Claude died.

~~~
anm89
Ok, so someone was indicted for fraud.He's in jail as he should be. Many
janitors have committed felonies. No one tries to shut down janitoring.

You seem to have a very simplistic worldview.

~~~
michelinman
Back at you? You've never worked in finance or you are a shill. Bye, bye. Good
Luck.

------
Glosster
Reading through the comments, I was hoping that someone actually pasted the
article itself... because it's behind a paywall. But it seems that most
comments can be TLDR'ed as the title of the post.

------
tkyjonathan
Yes, we are all different.

------
zacharytelschow
Absolutely - and that's a good thing. Those who produce more should earn more
as well.

~~~
billions
It's a fair statement. Can HN provide a logical response instead of downvotes?

~~~
SketchySeaBeast
Because "produce more" and "have more" aren't actually related. Have you
produced more if you're born rich? Does Jeff Bezos actually produce billions?

It's a statement that doesn't actually represent reality.

~~~
billions
Jeff Bezos improved global quality of life EXACTLY the amount he's been paid.
Otherwise, why would anybody volunteer their money his way?

~~~
CharlesColeman
> Jeff Bezos improved global quality of life EXACTLY the amount he's been
> paid. Otherwise, why would anybody volunteer their money his way?

That's just the repetition a rather circular dogma: the market is assumed to
be right (typically demonstrated by some oversimplified textbook example), so
right is whatever our market does.

If you want to use Bezos's wealth to justify the value he's created, you
should at least _try_ to make an independent estimation of that value.

