
A game theorist breaks down the effects of inequality - dnetesn
http://nautil.us/issue/79/catalysts/how-the-rich-imperil-cooperation
======
awb
> How can cooperation remain stable when people have unequal wealth? It
> depends on your explanation for why cooperation can evolve at all. What
> makes cooperation work, in our paper, is direct reciprocity, which means
> that we play repeatedly. I can hurt you next round if you hurt me this
> round, even if you are slightly more wealthy than I am. And, depending on
> how much I can hurt you next round, this might still be enough to make you
> cooperate in the present round.

It sounds like you want to cooperate just enough to avoid violence but as
little as possible to maximize your wealth. Seems pretty on par with history.

~~~
platz
> we play repeatedly

so, basically the stuff taleb has been touting for years.

~~~
bo1024
This setup goes back at least to Axelrod 1984. Not sure what the link is to
any of Taleb's ideas.

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logicchains
This ignores the fundamental insight of economics that people can cooperate
motivated entirely by self interest. Poor person needs food and housing to
survive, so they cooperate by working for someone. Rich person needs people to
work their factories, so they cooperate by hiring poor people. From this
traditional perspective the "common good" is a result of insufficient property
rights: if everything is owned by something, then by everyone looking after
their private good, everything will be looked after (because all "common good"
is somebody's "private good").

It also ignores that redistribution results in less "private good" (GDP) for
everyone, because by definition it's taking wealth from people who on average
have demonstrated more ability to grow wealth and giving it to people who have
demonstrated less ability to grow wealth. Imagine two otherwise identical
people, one who's capable of generating 5% returns on his wealth and the other
who's capable of generating 2% returns. If they both start with the same
endowment, after 100 years the total amount of wealth they've generated will
be much greater if they're allowed to keep their own wealth than if the 5%
guy's is continuously redistributed to the 2% guy (because every dollar
redistributed will earn only 2% return instead of 5%, meaning it's been used
to produce less value for society).

More practical example: imagine if after Paypal, Elon Musk's entire wealth had
been redistributed to all Americans. Assume generously he had 50 billion
(pretty sure he had less than that). 50 billion / 300 million is around $166
per person. So now every person in America is $166 richer, and the world has
no Tesla or SpaceX.

~~~
elfexec
> This ignores the fundamental insight of economics that people can cooperate
> motivated entirely by self interest.

How is that a fundamental insight of economics. It's the insight of the
smallest group all the way to cities and civilization. Self interest, by
definition, motivates cooperation.

> From this traditional perspective the "common good" is a result of
> insufficient property rights: if everything is owned by something, then by
> everyone looking after their private good, everything will be looked after
> (because all "common good" is somebody's "private good").

What you are describing isn't "insufficient property rights", you are
describing "insufficient property".

> It also ignores that redistribution results in less "private good" (GDP) for
> everyone, because by definition it's taking wealth from people who on
> average have demonstrated more ability to grow wealth and giving it to
> people who have demonstrated less ability to grow wealth.

Wealth is always "stolen". Behind every great wealth is a great crime. Wealth
is generate by theft of assets ( land, oil, resources ) or theft of labor.
Bill Gates didn't generate his wealth. His workers generated the wealth, he
and the shareholders just siphoned the largest part of it. Look at the
fundamental wealth of the US - the land and resources that provides
unimaginable amount of wealth. All stolen from the natives.

Wealth = clever robbing the less clever with the protection of the law which
they created. And it isn't necessarily a bad thing.

> If they both start with the same endowment

What an ideal world you must live in.

> More practical example: imagine if after Paypal, Elon Musk's entire wealth
> had been redistributed to all Americans.

Who is even advocating for taking all of anyone's wealth?

> and the world has no Tesla or SpaceX.

Why not? Using your argument, PayPal couldn't exist since Musk didn't have
that PayPal money to fund his business.

You have an agenda and you are using obvious extremes and lies to push your
agenda. The other side does the same. Instead of being driven by agenda, try
to think objectively. Look at the problem from afar.

Extremes in either direction is bad for the individual and society.

~~~
logicchains
>Wealth is always "stolen". Behind every great wealth is a great crime. Wealth
is generate by theft of assets ( land, oil, resources ) or theft of labor.

You're making misleading use of language so it's hard to believe you're
arguing sincerely. Offering someone compensation for doing something for you
is not what most people would consider "theft". You can't just take a word
meaning one thing, change its meaning, then assume all the judgements about
the old meaning also apply to the new meaning.

~~~
elfexec
> You're making misleading use of language so it's hard to believe you're
> arguing sincerely.

Misleading? I thought I was being straightforward and honest, hence "stolen".

> Offering someone compensation for doing something for you is not what most
> people would consider "theft".

It all depends on perspective. Hence "stolen". If you were "compensating"
someone "$0.10" for something worth "$1000", a lot of people would consider it
"theft".

> You can't just take a word meaning one thing, change its meaning, then
> assume all the judgements about the old meaning also apply to the new
> meaning.

But that's not what I did. The reason why I wrote "stolen" is that this is
complex issue that isn't black or white. The only people who think so are
agenda driven opportunists. Slaves were compensated with housing and food, I'd
consider it "theft".

As I said, you have an agenda and your agenda drives you thinking. Not
rationality. That's the problem. As I recommended before: "Look at the problem
from afar."

------
allovernow
>cooperation dynamics too complex to model realistically. “We want to distill
the essence or the logic of this problem, make it as simple as possible, and
then understand this very simple model

So you're taking a high (100s-1000s) dimensional problem and projecting it
onto a 2-10 dimensional space where your conclusions are based on a form of
clustering which itself is purely dependent upon your (probably ideologically
driven) assumptions. In such drastic oversimplifications it is _extremely_
east to paint whatever picture you want, even unintentionally.

>So if it’s the case that only the two of us are playing and you get 99
percent of the initial endowment, then we will never get cooperation started.
Simply because of the fact that you already have 99 percent of the wealth,
right? You have zero incentive to cooperate with me, because there is very
little you could gain from me

Case in point. Those evil fat cats simply hoard stolen money and don't
interact with greater society in any other way, right? Nevermind driving
social policy, producing jobs, and building indirect relationships where large
and small actors do benefit from cooperation. Those evil tech CEOs wouldn't
have any cash if there wasn't incentive for the poor exploited proletariat to
spend their money on goods and services, and offer their time to provide the
same.

This study also ignores that competent individuals can be highly socially
mobile in modern Western societies, even from vastly unequal starting
conditions. It further ignores that most of us aren't competing with the 1%.
The pitting of one 99%er against one 1%er is totally removed from reality.

I don't understand how anyone can take modern economics seriously.

~~~
solinent
> So you're taking a high (100s-1000s) dimensional problem and projecting it
> onto a 2-10 dimensional space where your conclusions are based on a form of
> clustering which itself is purely dependent upon your (probably
> ideologically driven) assumptions. In such drastic oversimplifications it is
> extremely east to paint whatever picture you want, even unintentionally.

It's possible there are only a few main dimensions which matter for showing
the majority of the benefit, with the error being negligible. For example, in
computer graphics, to solve the rendering equation you're sampling an infinite
dimensional space (all paths a photon might take), but you can do it with one
dimension (direct bounces from light->surface->camera + deterministic shadow)
and the error is almost negligible depending on the application, because most
photons get absorbed after the first bounce.

> Case in point. Those evil fat cats simply hoard stolen money and don't
> interact with greater society in any other way, right? Nevermind driving
> social policy, producing jobs, and building indirect relationships where
> large and small actors do benefit from cooperation. Those evil tech CEOs
> wouldn't have any cash if there wasn't incentive for the poor exploited
> proletariat to spend their money on goods and services, and offer their time
> to provide the same.

Perhaps these effects are negligible? If you consider the worst case with one
person hoarding all the money, it certainly would be unless he distributed it
equally through the means you mention.

I'm not disagreeing with you however, you could be right. It's hard to tell
without a large number of empirical studies to be done. The gain from such a
change could be worth it, or the effects might be negligible.

~~~
SpicyLemonZest
It's possible there are only a few main dimensions, but the article doesn't
describe anything in particular Hilbe did to evaluate that possibility. We
can't accept any model we're presented with just because it's possible that
it's correct.

In fact, I'd argue there are obvious reasons to be skeptical of this
particular reduction. In the game, fantastically rich people never contributed
to the public pot; in real life, most fantastically rich people toss piles of
money at public goods like hospitals, schools, and charities.

~~~
solinent
> In the game, fantastically rich people never contributed to the public pot;
> in real life, most fantastically rich people toss piles of money at public
> goods like hospitals, schools, and charities.

It's easy to make an argument that this is negligible, and far more
experienced people can make this argument quite well. The money should trickle
down, but I think it might help if we had more wealth to trickle down in the
first place.

Many contribute to charities do this to avoid taxes, I've had first-hand
experience with this type of "charity". The people who actually want to help
tend to want to pay taxes, in my experience.

So who is really donating to the charity ultimately?

I'm not saying these benevolent people don't exist, it's just that if you
distributed all of Bezos's wealth to each person individually it would only be
~1000 per person once or less, a meager stimulus package. How is that wealth
going to trickle down fast enough to have any meaningful effect? Money tends
to accumulate towards those who value it the most, but perhaps more wealth
could be accumulated if more of it could flow through the system without being
trapped only in the wealthy hands.

It could be a win-win, or a win-lose, but it's not a lose for the rich at all
if they can now select from a much larger workforce--charity money rarely
reaches those that need it most. Just like how many homeless on the street
aren't in a desperate situation, and those that are probably can't monopolize
those good street corners.

Ultimately there's a feedback loop between supply and demand--any incentive to
increase either helps the majority.

~~~
SpicyLemonZest
I don't mean to be flippant, but I agree easy to make broad arguments about
how society in general ought to work. Those arguments just don't have much to
do with, and aren't particularly supported by, this game theorist's analysis
of how inequality affected the game he experimented with.

~~~
solinent
I honestly may have been unclear, so I apologize. It's directly related--these
are the extra dimensions not accounted for in the criticism of this game
theorist's analysis, which supposedly affect the outcome.

So if you can refute my argument, you can easily say that this criticism of
this game theorist's analysis is valid, but as I said, my experience does not
lie in this field at all, so you probably won't find any difficulty in doing
so. It's just pretty obvious to me given my mathematical background that this
criticism is meaningless without an understanding of the reasoning behind how
the dimensionality was reduced. My point is just that such arguments are easy
to make and probably easy to prove as well.

In any case, it leaves room for increasingly complex models to disagree with
the results of this one.

> We can't accept any model we're presented with just because it's possible
> that it's correct.

I agree with this completely, but it doesn't refute this particular reduction
of complexity either, which is the point of my post. I may have been too
verbose.

------
monkeydreams
The fact people feel so strongly about this article, taking it as an apparent
threat or attack, goes a long way to proving the intractability of the
problem.

------
blondin
off-topic but omg he is kevin spacey's lookalike!

------
lopmotr
What an arrogant narrow minded ideology this researcher has "If you just use
your money to, I don’t know, buy the tenth car for your garage, that will only
stay in your garage. [...] there are just way more effective ways of enhancing
the public good than being, in layman’s terms, “economically productive.”"

You can afford the tenth car because you already contributed to the common
good to earn that money! If you're supposed to also spend your money enhancing
the public good then it's not really your money so how are you rewarded for
the work you do?

~~~
mrow84
The researcher is not expressing ideology, but rather making a point about the
issues of using productivity to assess public good.

His point is that by buying your tenth car you will contribute to
productivity, but the use value of your tenth car is much lower than having
those same ten cars (and thus the same productivity) spread across ten people.

It is even more obvious in the extreme case: if a population of N people
produced N cars, the total public good of every person having one would (I
hope you would agree) be higher than the total public good of one person
having all of them for their own use. However, in both cases the productivity
is the same.

Thus, whilst productivity is a useful measure, it does not account for
everything we might be interested in when considering the effectiveness of our
economies.

~~~
lazyjones
> _but the use value of your tenth car is much lower than having those same
> ten cars (and thus the same productivity) spread across ten people._

But the point is that any (however small) value for the person who earned it
is justified, while whatever value it might have for other people is
irrelevant, since it's not theirs.

In the same way you could argue that buying a car in the first world is
immoral because buying it for someone else in the third world would provide
them with higher value.

Earned wealth is not public wealth, unless we live in communist utopia where
nobody earns or owns anything.

~~~
LaserToy
Well, that is a philosophical question. You could’ve used a bus a saved 1000
kids in Africa or you could’ve bought a car and let them die. Same applies for
people in another state or even city. We don’t want to pay for someone’s else
cancer treatment.

We just don’t think about it and most of us just don’t care. I did care more
when I was younger, but rose glasses tend to fall when you grow up. I now
leaning towards capitalism when I will treat you as bad as the law allows me
and extract as much money is possible as it is a fair game.

Welcome to corporate America.

~~~
cryoshon
>Welcome to corporate America.

enjoy it while it lasts. there will be more bloodshed soon

~~~
LaserToy
I don’t enjoy it.that is how the game is played. You either an object of
politics (and by politics I mean much more than just government) or you a
subject.

Here is interesting read for you: Dictator’s handbook. Helped me to finally
put the puzzle together.

