
Technology and Wealth Inequality - busterc
http://blog.samaltman.com/technology-and-wealth-inequality
======
abstractbill
"But it feels really unfair. People seem to be more sensitive to relative
economic status than absolute. So even if people are much better off being
poor today than king 500 years ago, most people compare themselves to the
richest people today, and not the richest people from the past."

I don't think this is the whole story. It's not just that it feels unfair,
it's that it really _is_ unfair. Rich people can buy political representation,
and unlike wealth, representation _is_ a zero-sum game.

~~~
allochthon
_it 's that it really is unfair._

Moreover, the the creation of wealth depends upon a functioning society with a
working police force, fire department, transportation system, etc., not to
mention the accumulative effect that inherited money brings to kids growing up
in a supportive environment and going to the best schools. It is a myth that
the wealthy earned their wealth all on their own, but one Americans love
because of their (our) infatuation with rugged individualism and personal
agency. I personally do not mind levying _tons_ of taxes to level the playing
field, but that's probably just my temperament. I want to live in a society in
which there is equal opportunity, not a plutocracy with a handful of perpetual
dynasties.

~~~
nickff
> _" I personally do not mind levying tons of taxes to level the playing
> field"_

The question that comes to mind is whether you mind paying the taxes yourself,
not what you think about foisting costs on others. It is very easy (and
inexpensive) to say that every problem should be solved on someone else's
dime; one might even care enough to vote with that in mind, but you are not
taking any personal responsibility, or even using clever rhetoric to convince
someone else to act.

~~~
allochthon
_It is very easy (and inexpensive) to say that every problem should be solved
on someone else 's dime_

It's not someone else's dime, full stop. The system misallocated the money in
the first place by giving them a disproportionate amount. The mechanism for
valuating people's contributions is self-serving and broken right now. A
teacher contributes 1000000 times more to society than a hedge fund manager,
despite what the hedge fund manager will tell you about the benefits of
liquidity that his activities are supposedly bringing about.

~~~
nickff
> _" The system misallocated the money in the first place by giving them a
> disproportionate amount."_

Though I have never seen convincing evidence (either way) on this subject, I
will accept it ad argumentum.

Using coercion to force someone else to pay for things I want is still a cheap
and lazy way for me to achieve my ends. My point is that one should convince
the hedge fund manager to donate money to important causes. Alternatively, you
might contribute your own hard-earned money to achieve the ends you profess
(or pretend) to value so highly.

~~~
ItendToDisagree
How very Randian of you. I don't imagine that you'd have much luck convincing
the hedge fund manager to donate to anything unless they themselves think it
is important. And it is very hard to convince them that others have it bad
when they have it so good.

Asking the parent to contribute their hard-earned money also seems sort of
disingenuous. How do you know they are not doing so? Even if they did, if they
are unable to contribute enough (for any number of reasons), it likely will
not effect the issue in a large enough fashion.

A Democratic decision is not 'coercion'. If the public decides something is
important enough to them to pass a law/change the tax code they are not
coercing the rich to pay more. The wealthy could just leave (with all that
would entail for both parties) and no longer make their money off/with said
public... Or they could stay.

~~~
nickff
> _" A Democratic decision is not 'coercion'."_

So if a state decides (through referendum or legislative measure(s)) to compel
slavery or imprisonment of one race or another, through police or military
action, that would not be "coercion"?

~~~
ItendToDisagree
Are you really attempting to equate slavery with the wealthy paying higher
taxes?

If we are reducing to absolute absurdity... This conversation is over. I have
no interest in an HN fallacy battle. A 'democratic' decision to enforce
slavery/commit genocide/etc is pretty clearly well outside of what was being
discussed.

~~~
nickff
> _" If we are reducing to absolute absurdity... This conversation is over."_

My example was based on the many governments which have treated certain races
as sub-human; I agree it is not directly analogous, but I was trying to
demonstrate that democracies are not always fonts of virtue.

You went and called me a "Randian" (without any demonstrated reason), I
believe it was you who was enjoining a "battle" through unsubstantiated
allegation.

~~~
mempko
That's a joke. Name me one democratic government that voted a race of people
into slavery?

~~~
nickff
I said "slavery or imprisonment of one race or another", and I believe the
three examples below are all debatable, as to which they exemplify.

Thirteen Colonies, 1705

Wood, Origins of American Slavery (1997), p. 92. "In 1705, almost exactly a
century after the first colonists had set foot in Jamestown, the House of
Burgesses codified and systematized Virginia's laws of slavery. These laws
would be modified and added to over the next century and a half, but the
essential legal framework within which the institution of slavery would
subsequently operate had been put in place."

Germany, 1933

[http://en.wikipedia.org/wiki/German_federal_election,_March_...](http://en.wikipedia.org/wiki/German_federal_election,_March_1933)

South Africa, 1948

[http://en.wikipedia.org/wiki/South_African_general_election,...](http://en.wikipedia.org/wiki/South_African_general_election,_1948)

~~~
mempko
Of course you realize these kinds of governments are labelled republics right?
Ironically to prevent "the majority abusing the minority." So again, where is
democracy involved here?

In other words I had a trick question. You first have to ask what democracy is
before you can even approach it....

------
ryandrake
Mentioned this link in another story, but relevant here as well: Americans are
surprisingly unskilled at judging where they stand in the income distribution,
and unskilled at predicting where they'll end up. 39% of Americans believe
that they either are or one day will be among the top 1% [1]. Out of the
people who believe they are currently in the top 1%, 95% of them are wrong.

Also, people don't realize that relative wealth/income matters. When someone
else gets richer and you stay the same (or increase at a slower rate), you're
worse off. The increased average wealth/income increases demand and makes
things more expensive for you. When LOTS of people around you get richer, and
you stay the same, well, look at what's happening with the Bay Area's housing
prices.

Take the above two claims, add in a scoop of "American Dream" mentality, and
it's not hard to understand how so many Americans don't find the current
situation troubling.

[1]: [http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-
hop...](http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hope-over-
self-interest.html)

~~~
yummyfajitas
_The increased average wealth /income increases demand and makes things more
expensive for you._

You are confusing wealth increasing and inflation.

The issue of the Bay Area housing prices is an issue of wealth (specifically,
building permits) not increasing with population. That's Malthusian depletion,
not inequality, and it would be a problem even if the newcomers to SF didn't
have money.

------
programnature
"The best thing one can probably say about this widening inequality is that it
means we are making technological progress"

This is not a considered analysis. It's perfectly possible for wealth
distribution to widen without technological progress.

Where is the economics? Where is the history? Where is the politics? I've
enjoyed Sam's posts before, but this strikes me as a flavor of SV hubristic
reductionism.

Not every human issue revolves around technology, and technology is not the
solution to every ill.

~~~
chubot
Yeah there is an assumption in the article that technology is the leading
cause of wealth inequality.

What about regressive government policies? The rich have more of an ability to
influence policy in this country. Therefore they can get laws passed that are
favorable to themselves, e.g. regressive policies.

It would be very surprising if you didn't see this, and if it were _not_ a
cause of huge income disparity.

But we don't have to look very hard to see it. For one, actually working for a
living is taxed at a greater rate than letting your money sit around in
various accounts. I'm glad Warren Buffett spoke out about this. Unfortunately
it doesn't seem to have done much.

Another example of a de facto regressive policy is the employer-provided
health insurance system. People in the middle class who work for corporations
generally get health insurance for free and don't have to worry about it,
while poor people went insured (hopefully this will be resolved by Obamacare;
it's not clear to me how it will play out).

There is a vicious cycle between being sick and poor. People are poor because
they're _sick_ , not necessarily because they are lazy. And they are sick
because they're poor and don't go to the doctor.

Also, I decided awhile ago that I think the minimum income idea is stupid.
Being fed and healthy are basic human rights. Having $15,000 of cash every
year isn't. We should get the former right first before even thinking about
the latter.

This philosophy also doesn't have the motivation problem. You should be
guaranteed the option to make money (i.e. by being healthy; sick people don't
have the option to make money). But the first dollar you make should come from
work.

~~~
AnimalMuppet
> Also, I decided awhile ago that I think the minimum income idea is stupid.
> Being fed and healthy are basic human rights. Having $15,000 of cash every
> year isn't. We should get the former right first before even thinking about
> the latter.

But the minimum income idea might be a much better way of getting to where
everyone is fed and healthy (or at least fed and has access to medical care).
It's probably more efficient than the massive bureaucracies that run the
massive programs that currently don't seem to manage to do a very good job...

~~~
chubot
The problem is it might take $0 to keep one person healthy, while it will take
$100,000 or $1M to keep another person healthy. In other words, it follows a
power law distribution.

It also varies widely based on location. I think this is a fatal flaw, and it
makes the "basic rights" approach strictly better than "basic income".

~~~
AnimalMuppet
See, that's why you use some of the basic income to buy medical insurance...

------
minimax
_I was recently in Detroit and was curious to see some of the neighborhoods
where you can buy houses for $10-20k. Here are some pictures_

Those houses in the pictures are probably perfectly good houses. We have the
same situation in certain neighborhoods on the south and west sides of
Chicago. Sturdy brick houses that will last forever but nobody wants to live
in because crime in the neighborhood is too high.

It was not too tricky to dig the zip code out of the pictures on the blog. You
can see the sort of crime that will make houses in your neighborhood basically
worthless:
[http://www.trulia.com/real_estate/48204-Detroit/crime/](http://www.trulia.com/real_estate/48204-Detroit/crime/)

~~~
tomp
Move to Europe!

On a more serious note, this is a problem relatively unknown in most of
Europe. Sure, there are some (poor) neighbourhoods with relatively more crime,
but it's a different kind of crime. You might get mugged, but you won't get
shot.

~~~
bananacurve
>Move to Europe!

If you are starting a technology company you may want to rethink that idea.

------
gatsby
Previous discussion:
[https://news.ycombinator.com/item?id=7140701](https://news.ycombinator.com/item?id=7140701)

------
PabloOsinaga
One thing that will take longer to be automated away is certainly art (in the
broader sense of the word art).

As I work with a lot of independent artists (mostly musicians) b/c of my
startup BandHub, I can feel how this is the profession of the future - not
automatable away. Everyone has something to say - and there is a huge long
tail of potential ( niche? ) audiences.

Things like Patreon are really cool. I wonder how we can really make it work
for anyone, anywhere in the world.

~~~
jotm
There was a tool long ago called N-Gen or N-Generate that made some pretty
cool digital art. It never got out of alpha but I used it for wallpapers -
it's weird that I can't find it anywhere, but my point is that art can easily
be automated, it's just that "art" also includes the human creators and their
reputation, which accounts for most of the high price on various paintings and
stuff. Van Gogh's paintings would be very cheap if they didn't have his name
attached to them.

[http://netart.org.uy/workshop/softart.htm](http://netart.org.uy/workshop/softart.htm)
\- only mention of N-Generate I could find...

~~~
wavefunction
>>Van Gogh's paintings would be very cheap if they didn't have his name
attached to them.

I suggest you discuss Van Gogh with an actual fine artist. I did recently with
a coworker and they amazed me with their description of progression of his
"style."

The artist made the point that his works are the result of his unique brain
chemistry, the same that chemistry that caused all his personal problems.

I don't see how your claim is defensible.

~~~
jotm
Would they be as highly regarded if they didn't have his name and personal
problems/history attached to them? Like if they were in a gallery credited to
"an unknown artist" next to Picasso's paintings?

~~~
wavefunction
I guess you mean mass acclaim? A piece of art only has that value to me that
matches the change it engenders in me.

It is either worth "something" (don't want to say worthless) or it is
priceless, there's no real continuum for me if that makes sense.

------
kohanz
Does anyone else look at those graphs and get the impression that a major
(e.g. depression-era) economic correction could be coming in the next decade
or so?

~~~
ItendToDisagree
It shouldn't have taken those graphs to point it out to you. All indicators
seem to point to a forced 'adjustment' of the current social landscape within
the next (couple) decades.

Inequality (of the social, political, wealth, access types in particular) can
only get so widespread before someone gets the idea that they could do better
for themselves leading a bunch of angry people with (metaphorical) pitchforks.

Perhaps (hopefully) the change wont be a violent upheaval though. There is the
possibility that we've progressed enough to avoid that sort of thing.

------
djs123sdj
Even if the income for the poor and working class has risen compared to
generations ago, something that many forget is that absolute quality-of-life
for many of them has gotten considerably worse in very important ways.

Examples: violent neighborhoods, failing schools, housing blight and decay,
lack of access to open space and parks, lack of preventative health care, lack
of access to role models for children, lack of access to healthy foods.

Even if they have a smart phone and a flat screen TV, what do those things
mean when you don't have the basics listed above?

I don't think the poor are as upset about differences in income as they are
about the fact that they are pushed into, IMO, sub-human living situations.

The real question is, why have we made a high income the price of avoiding
these terrible circumstances?

EDIT: Added a summarizing question.

------
pdonis
Already on HN:

[https://news.ycombinator.com/item?id=7140701](https://news.ycombinator.com/item?id=7140701)

------
wuliwong
I think the shrinking middle class has more to do with our monetary system
than technological advancements. It is well understood that devaluation of
money through inflation is not an effect evenly distributed. It is a
significantly larger effect the further from the "source" of the inflation an
individual is in the economy. The middle class and poor are quite far from the
source.

There is also the "feedback" of wealthy individuals being able to more
effectively lobby the government to pass economically favorable legislation
for themselves. I believe this is a very strong factor in the shrinking middle
class as well.

Although the author gives statistics showing the increase in wealth disparity,
there seemed to be little evidence supporting the thesis of the article which
is that technology is driving this phenomena. Also, more compelling data would
also be showing a period in US history when the middle class was expanding and
then began to decline. Then the author could give a better argument to what
changed. Though, I guess technology is always "advancing" so in that sense,
he/she would never be able to find a proper place in time. Maybe "the dark
ages"? :)

tldr;? Liked the data showing the increasing wealth gap, felt the argument
that it is fueled by technological advancements to be weak to nonexistent.

------
felix
He makes this article about technology, but talks consistently about the top
1%. He draws no direct connection between the top 1% and technology. Are
people in the top 1% taking the google bus to work? What percent of them are
in technology vs say... oh... finance?

I am not disputing that wealth inequality in the states has already reached
incredibly disturbing levels but making this argument about technology
(without any actual support for it) is not only silly but distracting to the
core point.

------
johngalt
What are the potential downsides to artificially lowering wealth inequality?

One of the first things you learn in engineering and life: nothing is free.
There are trade-offs and costs to every decision. I could even describe the
engineering process as mapping the valley of compromises between the mountains
of constraints. Where is the optimal valley between total equality and total
inequality? What happens when we end up too far in either direction?

------
incongruity
_" Many people have a visceral dislike to the idea of giving away money
(though I think some redistribution of wealth is required to reasonably
equalize opportunity), and certainly the default worry is that people would
just sit around and waste time on the Internet._

Well -- I don't think that completely does justice to all of the concerns
about this. What about inflationary worries? If it's taken as a given that
everyone gets X dollars, doesn't that just encourage inflation, much like what
has happened in education with the easy availability of student loans?

Right or wrong, that's an objection I've heard voiced before -- and it's more
sensible/understandable than just greed or an intrinsic aversion to generosity
towards the less well off as is painted in the quoted section.

------
csense
How sure are we that technology is the cause?

Another comment mentioned inflation [1].

I'd like to bring up the possibility that globalization is the culprit.

If there's a large pool of workers in poor areas of the world willing to work
for $1 / hour or less, then theoretically we should see a shift in capital and
infrastructure spending trying to connect them to the global economy, and
wages everywhere else will try to lower to that level. AFAICT that's more or
less exactly what's going on.

Also, in the US, from c. 1960-1990 labor unions had a monopoly on unskilled
labor in many domestic markets, which allowed the price of labor (i.e. wages)
to move away from a competitive pricing model and get closer to monopoly
pricing model. Globalization allowed companies to break the unions' monopoly
on labor by moving operations to other countries.

The solution is simple and obvious: If producing X in country Y saves you D
dollars due to lower wages, laxer safety/environmental regulations, lower
taxes [3], etc., you should tax those goods by D dollars when they cross your
border. However, the money that can be made by avoiding monopoly labor pricing
means that the business community successfully bribes / lobbies politicians.
Even educated voters are largely ignorant of economics, and politicians can
usually come up with rhetoric to support just about any economic policy they
want, so the voters don't provide enough political force to stand up for their
interests in a way that's effective.

Warren Buffett talked some years ago about why we need to have tariffs [2]. In
the State of the Union, Obama mentioned giving tax advantages to companies
that locate their operations in the United States.

We'll see what happens, but I'm skeptical about whether there's any political
will for meaningful policy change.

[1]
[https://news.ycombinator.com/item?id=7152014](https://news.ycombinator.com/item?id=7152014)

[2]
[http://money.cnn.com/magazines/fortune/fortune_archive/2003/...](http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/)

[3] Think of the case of small countries that don't have much of their tax
revenue go toward military, but benefit from the relative peace and stability
of the current post-cold-war geopolitical situation which is partially the
result of much greater military spending by the US.

------
mikemikemike
One thing that developers can do is think about how they can build products
that give other people an opportunity to make income online. Marketplaces,
payment processing, etc. Build sites that encourage people to learn to code or
design, build tools to enable web designers to launch better sites, give small
business owners new ways to monetize their sites and compete online. One of
the things I'm most proud of as a developer is that we can build things that
not only reward ourselves, but create opportunities for others.

------
pjungwir
Why are there no y-axis labels on the first chart? That seems manipulative to
me, so we just have to accept the author's own definitions of "rich" and
"middle class." It also seems manipulative in chart 2 to label the middle
quintile in big letters as "middle," as if just that 20% is the middle class.
I'd love to see more transparency in these charts so I can make my own
conclusions. It almost seems like the charts go out of their way to hide the
absolute dollar amounts.

------
amit_m
Inequality is not just about poor people feeling bad because the rich have
bigger TVs!

In modern countries, markets are the standard way of distributing finite or
growth-limited resources (e.g. apartments in San Francisco). In these games
the ONLY thing that matters is relative wealth.

As a result of this, poor people become measurably poorer as a result of other
people getting richer.

------
raldi
This is very interesting and well-written, but there were two usability issues
that distracted me from fully appreciating it:

1\. Why aren't the footnotes hyperlinks -- or better yet, mouseovers? Sam, if
you're reading, the minor effort needed to do that would pay for itself many-
thousandfold as your readers are spared from having to scroll up and down over
and over. Not doing that for them, intentionally or not, signals to your
readers that you don't care. And it wrecks their train of thought as they're
trying to follow along.

2\. Why does footnote [1] show up in the text _before_ footnote [0]?

~~~
philwelch
> 2\. Why is footnote [0] before footnote [1]?

Because Sam Altman is a hacker: [http://en.m.wikipedia.org/wiki/Zero-
based_numbering](http://en.m.wikipedia.org/wiki/Zero-based_numbering)

~~~
raldi
Sorry, I meant _after._

------
qwerta
This is just elitist bullshit.

Living on minimal wage is quite different in Detroit and San Francisco. I
think author has debt for next 100 years thanks to elite college and $1M
house.

