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> If you really mean globally, then inequality is in fact falling.

No.

Inequality is decreasing between nations as the developing world catches up with the west. But inequality within nations -- even developing nations -- is increasing. It's possible for inequality to increase as the the developing world catches up to the west; in fact, that's exactly what's happening.

So the old geographical distributions are very slowly eroding, but they are being replaced by obscene levels of inequality within individual borders. This trend is exacerbated -- especially in Europe -- by tax evasion and avoidance managed (and practiced) by large fintech companies. So the author's fear that concentrating power in the hands of a few large fintech firms would exacerbate global inequality -- and lessen nation states' ability to combat inequality with policy -- is well-founded in global trends.

edit: Instead of downvoting, go read Fran├žois Bourguignon's "Inequality and Globalization: How the Rich Get Richer as the Poor Catch Up", which states exactly the thesis outlined above and contains pointers to the data sets used to arrive at these conclusions.




Exactly. On a global scale, the very poor are getting richer, but so are the very rich, while the middle-classes are getting (relatively) poorer. If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling.

See https://publications.credit-suisse.com/tasks/render/file/?fi... - p35 is particularly relevant in this conversation.


> If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling.

The charts you reference are for wealth, not income. The chart on page 36 suggests about a 1/8 chance for a reduction in pyramid tier and about a 48% chance for an increase in tier. (Now, that's also a blended chart, but I don't see anything particularly dire in that data for North Americans.)


False. You kids might not make as much money but in realty their living standards jave grown quite a bit.


I think this is pretty debatable, at least in the US.

Being born during the middle or late-middle of the 20th century was extremely lucky if you managed to stay out of manufacturing and could put your retirement into funds that came close to matching public markets. A lot of people doubt we'll ever see that kind of economic growth in the first half of the 21st century.

Don't under-estimate the impact of three-four decades of financially comfortable retirement on "living standards".


> and lessen nation states' ability to combat inequality with policy

Ok, one person is a great programmer making good money and another person is not interested in any of that and makes less money. I do not see any inequality here that needs to be combated with policy. One possible result of such policy would be that both will turn out to be less interested.

You cannot turn the losers into winners, but you can certainly alienate the surviving winners and convince them to build their next factory in China instead, or do their next startup from a beach in the Philippines.

Instead of reducing inequality, the outcome will become very biased by profits made in China or the Philippines, and therefore lead to even more inequality. Lather, rinse, repeat.

At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter. Your policy will obviously not outsmart them. Therefore, if your policy has any effect, it will inevitably be exactly the opposite of what it was meant to be.


> At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter

Quite a bit is also caused by the undue influence rich people have over the policy-making process, helping them to ensure they remain rich by constructing 'glass ceilings'. Saying "well unless we give in to their demands otherwise they'll take our jobs to China" is simply not a good enough response.

As a middle-income web developer in the UK, I have more in common with a middle-income web developer in Bangalore or Shanghai than I do with a multi-millionaire in London or California.


> quite a bit of inequality is caused by the fact that some people happen to be smarter

Why does someone deserve to have a worse life because they weren't born that smart? Why do they deserve to be uncertain how they'll be able to pay medical bills, unable to send their children to great schools, and unable to afford healthy food?

In theory, "meritocracy" only favors the lucky -- for example, those born with a love of programming in the year 1985. In practice, "meritocracy" doesn't exist and never has.


I hope that globalization isn't inconsistent with national autonomy, especially when it comes to taxation and social policy. If these two things are inconsistent, then globalization will lose out in the long run. That would be a shame, because liberalized borders and economies -- if properly regulated -- would benefit everyone.

> One possible result of such policy would be that both will turn out to be less interested.

Tax rates on the top 1% or 0.5% of earners could double over-night and those people would still have more than enough money to make their effort worth-while. We are literally talking about people who have more money than the can possibly spend on personal luxuries in their lifetime.

At some point far before the 1% mark, wealth accumulation becomes much more about personal power and legacy than anything else. These people continue working hard for the same reason that tenured professors continue to publish prolifically or retired people work hard on their lawns or hobby projects -- for love of the work, and/or because they literally don't know how not to work.

(Whether or not those people deserve to be taxed heavily is kind-of irrelevant to the fact that your hypothesis about human psychology is wrong.)

> You cannot turn the losers into winners

What is a loser? Most middle class people are of average or above-average intelligence and work hard. The only thing separating these people from e.g. Donald Trump is access to an inheritance or some other means of attaining large amounts of capital.

I'm willing to bet your average middle-class accountant or actuary would much rather (pay someone to) manage a portfolio of investments than crunch someone else's numbers.

Also, FYI, almost all computer programmers in the world -- including skilled ones -- are solidly ouside of 1% territory.

> but you can certainly alienate the surviving winners and convince them to build their next factory in China

So your argument for not redistributing some percentage of the wealth of billionaires is that they're petty assholes who will take their ball and go home? But isn't that what losers do? ;-)

As a matter of fact, globalization and national autonomy aren't inconsistent. Tax havens aren't a fact of life, they are an engineered reality created by lawyers and lobbyists.


> Tax rates on the top 1% or 0.5% of earners could double over-night ...

They are not after the 1%, never have, and never will. They are after you and me, my friend. So, gear up for a good fight, because I am giving them zilch. I'd rather flush my money down the toilet.

> So your argument for not redistributing some percentage of the wealth of billionaires is that they're petty assholes who will take their ball and go home?

Yes, and that is why the factories have been rebuilt in China over the last 25 years. It is not going to get any better in the future. I don't know what they will be doing next, but it will certainly not include "redistributing some percentage of their wealth". Why would they? But then again, who cares? I don't want their money. I have my own.

In order to outsmart them, you will have to be smarter, but if you could, you would be one of them. ;-)


> They are not after the 1%, never have, and never will. They are after you and me, my friend.

Oh right. Those bastards trying to close corporate tax loopholes are totally doing so because they hate me and all the money I'm not saving due to those loopholes...

> Yes

> In order to outsmart them, you will have to be smarter

NO! It's really not that damn complicated. And there are even plenty of extant policy proposals for eliminating or greatly reducing tax avoidance schemes.

Public policy, most of the time, isn't rocket science. See e.g. https://www.oecd.org/ctp/BEPSActionPlan.pdf

There's a difference between globalization of unskilled labor, globalization of skilled labor, and tax avoidance. The first and second are, to varying extent, unavoidable and probably net beneficial to the bulk of humanity. The last is not unavoidable and is also decidedly unbeneficial for most of humanity.

(There's also a difference between off-shoring for the purpose of true cost reduction nand off-shoring for the purpsoe of tax avoidance. The former is far more common than the latter, although a decent amount of FDI is about tax/tariff avoidance.)

> but if you could, you would be one of them

Of course I would. But I'm not delusional and wasn't born into either connections or cash. So I do what I can to boost my odds, but I also cooperate whenever the opportunity arises.

And, if I ever do "make it", I'm sure as hell not going to become one of those "got mine, fuck you" types.


>Tax rates on the top 1% or 0.5% of earners could double over-night and those people...

> At some point far before the 1% [from context, presumably income] mark, wealth accumulation becomes much more about personal power and legacy than anything else.

False, IMO. 99th percentile income is about $400K gross per year (for household income). Two 40-year olds raising children, making $400K between them are technically "top 1% income", but are quite far from granting buildings to their alma mater and building monuments to themselves. They are more likely worried about college tuition, retirement savings, and healthcare than they are about whether the plaque on the front of their building should be silver or bronze.


>convince them to build their next factory in China instead

No, the government doesn't do this, the shareholders do this (this includes the CEO). It's a huge red herring that delays automation from happening. Even China nowadays invests heavily into automation.

>At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter

Everytime I hear the word "talented", "bright" or "smart" on HN I don't even know what it's supposed to even mean anymore.

Somehow you deserve to be called a genius because mommy got you a contract with IBM and you decided to buy off an OS from some random guy for $50,000 and then made it run on IBM's computers.

There was also that guy who screwed over his cofounder with some social network.

Yeah sure they are now two of the richest humans on this planet but I don't think their success can be attributed to their "talent" alone. They very likely are not capable of pulling it off a second time.


But, aren't "obscene levels of inequality" only obscene related to a few decades post WW2, which many people seem to take as a normal, but which is really rather unusual? The statement talks about "highest inequality ever", and I really don't see how any society can be much more unequal now than it was even 100 years ago -- not to mention any time before then...




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