2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie. The question is phrased as, "What percent of the total income pie did the 1% take" and not "How much pie did the top 1% of people produce to make the overall pie bigger?". I don't think either mentality is totally correct, but both are vitally important to understand (and the second belief is non-obvious to many). Did Steve Jobs producing the iPhone (and becoming a billionaire) take any of the poor people's money, or did it increase the overall output of the country? Steve jobs making the iPhone certainly made the country more unequal, but it also made the economy bigger and the country better off.
3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you? Would you rather live in a poor equal country or a rich unequal country?
Enough inequality allows information control. Enough information control allows government control.
Overall, if things were constantly getting better, I doubt people would care. But once things start stagnating for those at the bottom, they begin to consider not playing by the current set of rules.
I do agree with you, but I think it's worth nitpicking the examples. Is the Disney case an inequality problem? I'm not sure that it is. Suppose we waved a magic wand, and suddenly all of Disney's employees and shareholders were middle class people. Would that change Disney Inc's incentives around IP lobbying?
I think that rather than an inequality problem, cases like Disney are something like a "concentrated interests" problem. Even if every individual person had exactly the same amount of money in the bank, they wouldn't all be equally invested in the exact same things, and competing interests would still emerge. Disney's incentives follow just from the fact that it has shareholders, regardless of how much wealth those shareholders have. And for what it's worth, as a society, this is definitely the problem we want! Concentrated interests solve huge problems, like how to make a $100 million movie that everyone wants to see, but that no one person could fund on their own.
I'm not sure the shareholders are the actual issue, since it is Disney's concentration of wealth that allows it to change the laws (and gives it incentives to do so). It doesn't much matter who owns the wealth, since the chain from owner to actual employees carrying out the actions that change the laws ends up removing most impact of the share holders.
Oddly, that statement (which I completely agree with) has nothing to do with being rich or poor.
People in power want to stay in power - whether it's the US or a failing state like Venezuela, they use that power against others.
I'd much rather be in a rich but unequal society - it's much more peaceful.
You want a game in which early levels are easy enough that it won't take too much skill to get through. [Basics of society, access to housing, clean water, health care..]
As you get to higher levels, there will be challenges that some players can't get through [amassing enough money to buy a yacht], but that's OK.
Some players have cheat codes not available to other players [laws to help special interests] because they have an in with the game designers [government], and that's OK too as long as it doesn't go too far.
It's not a big deal if the most skilled players can get to really high levels - that's not the issue.
It's when the most skilled players make the game unplayable by the average player that you have a problem.
That's not true. Violence is caused by inequality. Areas where everyone's equally poor are about as peaceful as areas where everyone's equally rich. It's dramatic inequality that causes violence. This is true no matter whether you look at neighborhood level, city level, national level etc.
For one thing I don’t see how you can define areas where everyone is poor. Even looking at a place like North Korea, the top government officials are very well off compared to the average person.
In general, poorer countries are much less safe than richer ones. Poorer neighborhoods are much less safe than richer ones. I can see the point that even in those cases it’s often related to inequality, e.g. theres gang related violence because gang leaders are much richer than the average person in the area. But that’s a tautology, because there’s nowhere that has absolutely no inequality.
If you look at the graph on page 8, you can see obvious clustering of poor countries vs other countries. This study does not compare the overall wealth of the countries against crime.
The reason that is important, is that in a rich country, even poor people have many options. In a poor country like Venezuela, they don't. As a result, even if they had the same Gini coefficient, the crime would look much different.
So when you take that into account (which is what I tried to do in my statement, but probably could have worded better), then being in a "rich but unequal" society is much better than a poor country of either high or low inequality. I think the high clustering of OECD countries demonstrates this.
Yet the solution to income inequality is to increase government control of the means of production via confiscatory taxes and redistribution?
So some advocate increasing government's ability to take money from you a gunpoint through taxes in order to prevent the government from being able to control people?
> Overall, if things were constantly getting better, I doubt people would care.
Poverty rates in the United States have been between 11 and 15% consistently since 1965. However, worldwide absolute poverty has dramatically dropped over the past 100 years. There are 3 times fewer extremely poor people in the world today than in 1970. So things are absolutely getting better -- dramatically better in fact.
If people were unaware of how much "rich" people have and just looked at their own ability to buy food, housing and small luxuries, wealth inequality wouldn't even be a thing worth mentioning. Why should it matter what my neighbor has -- as long as I have what I need.
This whole "income inequality" cause is little more than Marxist class warfare rhetoric  rebranded for a modern audience: people are jealous that some people make more than them. So what. No matter what policies are enacted, poverty in the United States is practically unchanged since 1965 and vastly lower than it was in the 1950s when it was first measured.  The same crowd that cares about inequality also happen to be the same people who demand governments address climate change by essentially changing the balance of the means of production. Nobody cared about climate change in 1986. The first mainstream book on the subject wasn't even published until 1989. However, the industrial revolution started a low time before that. Apparently the climate change wasn't a catastrophic threat until someone wrote a book about it being a catastrophic threat? Were scientists simply sleeping for the past 100 years until some far-left journalist wrote a book about it?  But 1991, it started becoming a big thing. What happened between 1986-1991? Hint: something to do with the Soviets. Interesting more still is that the Palestinian cause is also supported by those who care about climate change and wealth inequality -- and the Palestinian cause was supported in a very big way by the Soviet KGB.
Interesting how climate change, income inequality, poverty and even the Palestinian situation all feature the same "cure" -- the end of US-dominated, global capitalism. Convenient how that all fits together so nicely.
Fascinating how everything that was important to the Soviets has become the lightning rod of the left wing of American politics -- but those causes weren't even on the radar before 1998. Actual environmentalists were trying to save whales and the rain forests in the 1980s and not trying to restructure the entire world economic system. Anti-Capitalism didn't become a semi-mainstream idea until mid 1990s. I honestly miss the Greenpeace of the 1980s.
Should the goal actually be 0% poverty? Is that even possible? If you took 100% of the wealth of the worlds 1000 richest people and distributed it equally among the poor -- it wouldn't make a dent. let's say that the world's richest combined assets were worth $2 trillion. And there are 2 billion people living in extreme poverty, that gives each of them about $500. But that's it. Because there'd be no more wealth to redistribute from those rich people because it would be all used up. So you go to the next 1000 rich people and so on until eventually everyone has just enough enough money to buy a pregnant chicken and five carrots -- with no pot to cook it in since nobody's going to bother making anything since it's just going to get taken away.
There does seem to be an issue where the government having more power results in things going even worse when the government gets corrupted.
Is it better to have the FDA/DEA approve what drugs are legal which allows them to be abused by outlawing competitors, or is it better to not have the FDA/DEA able to ban drugs, which let's meth be sold freely where ever a business chooses to do so? Most everyone I've seen discuss this issue gets caught up in the trap of wishing for a happy medium that won't last. They want a government that does good but won't be corrupted to do bad.
>So some advocate increasing government's ability to take money from you a gunpoint through taxes in order to prevent the government from being able to control people?
In the end, we will always threaten each other with violence. I've yet to see an alternative, as even extreme libertarian solutions just give way to fertile ground for governments to rise anew.
No matter what you do, a group of people which binds together will have more power than the strongest person who doesn't, and part of that power will be dedicated to keeping the group bound together (as groups that don't will eventually fall apart).
>worldwide absolute poverty has dramatically dropped
Looking world wide isn't really relevant when people make decisions based off of local ideals. Countries where poverty is going down will likely not have issues, and countries where wealth for the lower class stagnates or even reversed will.
>This whole "income inequality" cause is little more than Marxist class warfare rhetoric
And you have to fight class warfare with class warfare. Consider those who supported a culture where sharing one's salary is taboo, while businesses share the salaries of their employees quite openly (at least to other businesses on the inside).
>However, the industrial revolution started a low time before that. Apparently the climate change wasn't a catastrophic threat until someone wrote a book about it being a catastrophic threat? Were scientists simply sleeping for the past 100 years until some far-left journalist wrote a book about it?
Well look at how child abuse wasn't a significant problem up until the 1900s either. I wouldn't consider that evidence that child abuse isn't actually a significant problem.
>And there are 2 billion people living in extreme poverty, that gives each of them about $500. But that's it.
What is $500 in terms of their actual income? I'm not advocating seizing the wealth of the wealthiest, but to think that for the world's poorest $500 is the same as $500 is to even a poor American isn't quite right.
What I will say is that rights and morals and laws are all social constructs, and the true reality is we have never left the jungle. People will continue playing at society as long as certain conditions are met, and one of them is for things to be continually improving over the long term. If that doesn't happen, people will use what ever power they have to change the system, often to the detriment of those at the top. This isn't right or wrong, this isn't moral or immoral, this isn't legal or illegal.
No. The idea of income inequality assumes that no matter the size of the pie, everyone should have a decent slice of pie that lets them live comfortably.
Industrialization was supposed to reduce the amount of hours we work and increase our quality of life. We seemed to have reached a floor at 40/50 hours a week and many many people are struggling to make ends meet, even if the richest countries in the world. There's a problem.
And in actuality, the poorest quintile in the USA is the quintile that works the least hours, not the most! Why do the top 20% of Americans work so much, then they could potentially work less and earn less? Perhaps that's the tradeoff that they as a group make?
The comparison of note isn't between the present and the past, but between the system in place and alternative possible systems; between the present/future that is, and the present/future that could be. (Somehow, the same folks who love to proclaim "It's Econ 101…" also always go on to compare present to past to somehow prove the poor are getting a grand deal, instead of thinking about "opportunity cost" for the poor compared to alternative presents under alternative choices for how to structure society's wealth.)
As for the idea that the poorest 20% in the US are voluntarily choosing to live in poverty out of work-shyness, while the richest 20% have contrastingly simply opted-in to their different status along some trade-off curve, this is both laughably ignorant and cruelly smug.
As "knowledge" workers if you were treated like minimum wage employees how many hours do you actually work?
5 or 6 is usually the answer given on HN.
Source: Until early teenage years grew up poor. Still fighting the specter of
If course it isn’t that simple, and there are other effects (google the labor s curve), but that’s the general idea.
But having a cellphone and a TV doesn’t provide someone a reasonable standard of living if they can’t also afford housing, basic medical care, nutritious food, childcare, schooling, transportation, wintertime heating, clothing, and the like. People who are lacking basic necessities like shelter and access to transportation, and who often additionally suffer from injuries, mental illness, chronic depression/anxiety, substance abuse problems, etc., and even more often face systemic discrimination (if only for gaps in their resume, poor hygiene, etc.), find it incredibly difficult to fix every problem in their lives by themselves and pull off a complicated and time-demanding middle-class lifestyle. Blaming them for their own predicament is cruel and counterproductive, even in those cases where there were a list of poor choices involved, and often has the effect of whitewashing situations where people ended up getting screwed by fraud and abuse (either systematic or personal). It is based on a fallacious world-view wherein people are inherently virtuous or sinful, and the sinful are both irredeemable and deserve whatever misery they get.
(Which is not to discount the benefits of gadgets: The prices of consumer electronics have been pushed down to incredibly cheap levels by massive economies of scale, people have a strong demand for communications and entertainment, and having access to such tools makes a big positive difference on people’s lives. But it doesn’t replace food and shelter.)
You’re saying “poor people have a lot of difficulties.”
I also believe that capitalism is the reason for that improvement in standard of living, especially for the poor, which is why i make the point.
Maybe the US should be more like Denmark, maybe not. But when inequality comes up the socialists come out, so i make the point.
I took your initial posts as a sound argument I disagree with, now I think you're trolling.
In 2011, Bernie Sanders explained that "These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina..."
You argue in another comment that "you just want it to be said" that modern American poor are better off than the poor people in Laos in the 1800's. Congratulations, you've won that strawman argument.
Now you should move on to how to solve the actual current problems of the modern poor and the hollowing out of the American middle class rather than wasting your breath defending the current status quo and arguing against improving people's lives. It might be a better use of brainpower.
And as for capitalism, the core of it mandates a perfect information symmetry and rational actors, of which the latter is dependant on the former, and the former has never been actualised. The US (or any country really) doesn't have a fair capitalist market, nor does it need defending.
Homelessness has skyrocketed in the US. The poorest here have neither TVs nor refrigerators (except the few their salvaging for the scrap metal value). The homeless generally don't have paid employment (meaning ordinary waged employment) since their appearance keeps them from being hired by most businesses but being homeless is a hellish amount of work.
I would be interested in seeing your stats. I worked while homeless. I did freelance writing and, later, resume writing. I have known homeless individuals with regular jobs.
I don't know what the statistics are. But I would be very interested in seeing stats on how many/what percent of homeless have some kind of earned income, if you know of any reliable data on the topic.
(Edit: Or maybe clarify your intent. I had earned income, though no job. We could quibble at length about what constitutes earned income. For example, does recycling for money constitute earned income?)
I don't have statistics and I suspect that getting statistics here is very difficult. A homeless person has little interest in answering a survey and certainly no one wants to appear homeless so just about any data source is going to be iffy.
The example you gave here suggests you don't know what a difficult life is like.
I don't believe this statement to be at all accurate. We did not make that decision as a society.
Millions of individual people made the decision to buy or not buy the phone based on its price and value. Millions of workers decided to work (or not work) for Apple/Foxconn based on their wages and the work. One of those workers was Steve Jobs, and the owners of Apple decided to pay him a certain amount for his work (and of course some of his wealth was derived from his ownership of Apple).
A free market is a special economic system in that it's made up of completely voluntary agreements. There was no coercion involved to make Jobs wealthy.
So "as a society" applies here, in the loose sense of government decision-making.
There's no market in the abstract - there are courts, tax laws, civil laws, and many other things that mediate.
I think the tax thing is a huge misconception that just isn't backed up by reality. The US still has a progressive tax system, even after taking into account the many rules (or the mysterious and nefarious "tax breaks" that everyone alludes to).
The top 1% have around 20% of the income, but pay 40% of the federal income taxes!
Real federal income tax rate paid:
Top 1% - 27%
Top 5% - 23%
Top 10% - 21%
Top 25% - 18%
Top 50% - 16%
Bottom 50% - 3.45%
The top 5% pay 53% of all federal taxes including social security and Medicaid.
PS: Social Security pays money for blind people who have never worked, it's in no way a just a 'retirement' fund and is simply general welfare under a new name.
The consumer does not have an option at the point of purchase to direct those dollars to specific employees. Their choice is to buy the phone and pay the executive the most, or to not buy the phone at all. You cannot buy the phone and direct the bulk of its purchase price to the guy who wanted to save the TRRS headphone jack.
Your option in that vein is to purchase enough stock in a public company to get a board seat, then propose that the workers be paid more, and the executives less. And hope you get enough votes. This is not realistically possible for any individual consumer.
The choice that "society" makes is to allow that company to continue to exist, and to operate itself as it sees fit. The decisions about the distributions of profits are overwhelmingly made by rich people alone, who unsurprisingly vote to direct the majority of profits to themselves.
(Though Wikipedia tells me it means something else:
My assumption has always been that the phrase meant that 90% of law is related to who owns what, basically.)
But the problem is that anyone can build whatsapp. It's not technologically sophisticated or difficult to do.
> but in today's world you can build 1 billion times the communication tools as someone else.
Which depends on market access, free time ( wealth ) and most importantly - access to capital. Most people in the world don't have access to it.
> 2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie.
That is an argument. But it really doesn't matter if the pie grows if a small fraction of the population gets a greater share of the larger pie.
> 3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you?
Yes, if yachts = power. The problem in america is that money = power and more importantly, now money = speech.
> Would you rather live in a poor equal country or a rich unequal country?
Neither? You are offering a false dichotomy. It's the same argument posed by monarchists centuries ago. Either we have divine right monarchy or anarchy/complete chaos. How about democratic representative government?
You are offering us two extremes and falsely claiming those are our only two options. It isn't. Extreme poverty and extreme economic inequality are both terrible systems.
yes, if you are playing an ideal, rational, competitive economic game, one strategy is to "grow the pie" and as a result capture larger economic gains even if your proportion of the market remains the same (or even shrinks).
but when it comes to the real world, with all its complexity, we consider many more consequences than just the economic one (the profit motive).
to answer the false dichotomy (the last question), we care about both. we want fairness (not perfect equality) and we want less poverty. and yes, that's entirely possible and should be pursued rigorously and with singular focus.
Housing prices in the neighbourhood go up, because potential buyers have a large piece of the pie. This causes average house prices to rise, which causes taxes to rise.
Suddenly the original piece of the pie is no longer enough to afford the house you always lived in.
What happens when the next difference is not yatchs, but something substantially different like access to longevity medicine, bionic instrumentation, genetic engineering, armament, whatever.
The great problem of some people being subdued to others clearly stems from the difference in power between them. Marx accounts that an English capitalist of his time could command 3 thousand servants, and as soon as he took them to america, literally all of them scrambled because they didn't have a dependency on him any more.
Not only that, but, there is a big question on why is this happening at all. Is it because the upper classes are better at tax dodging? Is it because its just how capitalism normally works and provides the best results? Is it because we have a crushing difference on how the State benefits one over others?
These are open questions, even Capital by Piketty doesnt have clear answers.
Also, it’s relative positioning that determines happiness—i’d much rather live in a place where I can look my neighbor in the eye than one where I can leverage my privileges to provide myself many times a better life than my neighbor. I’m american; my quality of life could plummit without affecting my happiness much at all. But I have no idea what could compensate for someone living on my stoop in a tent.
2. Wealth isn't a fixed pie, but power is (also, real estate).
3. In fact, happiness correlates more strongly with relative income than absolute income.
As an aside, I think that multigenerational wealth is particularly corrosive to society - I would be happy to accept extremely high inequality as long as it couldn't be inherited.
No. It simply says group A has a big pile of stuff, whereas B has a small pile. Which is factually true.
It's about piles, not pies.
Sorry for the awkwardly mixed metaphors.
With software nowadays, you create the first product, and then with the push of a button, can duplicate and distribute it to billions, almost instantly, almost for free. What this means is you are not really making a commodity any more. Which means that in those parts of societies where this mode of production prevails, you're not even really working within a system of capitalism any more. The system of production outgrows the economic system it is in, just like town trade and manufacture outgrew feudalism centuries ago.
2/3) The helpful thing is to look at what is actually happening, as in a scientific experiment. The real world is not people sitting on top of piles of money, like a dragon in some fairy tale. Those who get the fruit of other's labor by rentier means - landlords, lenders and most importantly stockholders and owners, can only spend so much on luxury goods. They also need only so much as that aforementioned stacks of Credit Suisse gold bars stored somewhere for a rainy day. Most of the money is reinvested.
Where is the money invested? New construction projects, new companies, new loans - or further capital for existing projects. At companies owned, San Francisco apartments etc., more and more of wages go to profit and rent, as that is necessary for inequality. So the worker has less money to buy commodities. But more and more capital is being spent to build more and more commodities. The workers/consumers can not buy these increasing commodities made by the more enriched investors. Credit can kick the can down the road for a time, but if things don't go back to equilibrium, things get worse (see the 2008 taxpayer TARP bailout of banks, 2000 dot-bomb crash etc.)
There's a documentary called the One Percent, where a conversation between Bill Gates Sr., Warren Buffett and Chuck Collins (Oscar Meyer heir) is retold. He is talking about the inheritance tax (now corporate spinned to be called the death tax) and says if things are as unequal as they are now without an inheritance tax, what will happen when one does happen?
I myself don't think there's some liberal, social democratic solution. Idle class heirs have this self-destructive tendency to pull more and more power to themselves, to the point where they begin to undermine their own long-term power. At some point a very radical change comes. That has been the history of the past centuries. The US depression of the 1930s was so long ago, it's hard for Americans to fathom it, and I would guess most people think it could never happen again, but it could. It could even be worse.
Maybe one of the downsides of living in a democracy is that the upper class needs to pay the lower class hush money to keep them from rioting or turning the economy into complete socialism.
This is incorrect assumption.
The idea behind too much inequality being bad assumes feedback loop. If you want to grow the pie, every non zero-sum investment into production and innovation must be matched by equivalent increase in consumption that creates the ROI.
Post industrial economies are 60-70% private consumption, rest is government spending. All busines-to-business earnings flow from these two if you follow the money. Every product and industry has their money flowing trough private consumption or government spending, including WhatsApp.
If too much of the money flows into the richest people, they only consume fraction of what they earn. Rest of their money is spend buying property or investments (increasing property prices or recusing P/E values). Economy turns into rent seeking, ROI decreases and the pie stops growing.
All innovations that grow economy must pay themselves by producing money flow goes into the private consumers or to the governments pay collecting taxes. If private consumption is reduced, then either governments must step up and pay welfare benefits and invest into stuff like military or else the real economy slows down.
Growth economy is not a pipeline that has the beginning and the end. It's a loop where money flows to other direction and products flow to the opposite direction. Income equality is not categorically bad. __too_much__ income inequality creates a stunt that directs too much money into capital goods and reduces the overall flow.
The world as a whole is moving away from poverty and quality of life is improving which IMO is the most important metric here. Far more important to the average person than the relative wealth ratios at the top vs the bottom, which yes I know will skew the bottom end upwards in these averages, but regardless is still on an upward trajectory overall.
This should be the primary metric which success is measured by. And I hope in the effort to balance the wealth ratios this progress isn't crippled in the name of some abstract concept of equality.
How about Population C, where 9 people have $10 each and one person has $10,000?
Assuming wealth is the same, population B is better.
( If you don't like averages maybe we should also compute standard mean salaries )
Here's a hypothetical: If a person is moved from a situation where they have no money, but the food, services and mobility they need for a somewhat comfortable and stable life to a system of employment that is less stable and creates dependency on this employmenet is that progress? That person or family might have moved out of extreme poverty but is their situation improved?
I suppose my underlying point is a critique of how wealth and quality of life are connected. People in Cuba get $20 a month but they have have free healthcare and housing. I spend $20 a day and can't afford healthcare and worry every month about how I'm going to pay rent.
How much of the world is moving towards a situation where we're unable to see a doctor and hold down two or three jobs to make rent in a house we could never afford? Is this an upward trend?
It’s not really a fair point that Cuba has a better standard of living than the USA, for example.
When in doubt, look at the simplest metric - which way do the rafts flow. The desperate people flow from Cuba to Florida, and not the other way around.
A long term reduction in poverty and a more balanced relative income ratios has to come through self-sustainable economic development in the middle, and upward mobility from the bottom. Wealth transfer is just a temporary fix, an initial boost - but it is not an adequate endgame... as many pure socialist countries quickly learned after the glow of the early days wore off. Redistribution as a primary policy is also increasingly difficult to pull off via central policy, given global marketplace, technology's impact on finance, and the growth of countries which act as tax havens.
There is plenty of indifference in practice towards legitimately taxing the wealthy but it's been a hot topic globally for a while now and I fear this obsession has been a large distraction from figuring out how to help the middle/bottom develop their own jobs and businesses. To push up their wages and salaries as the primary goal, not just increasing the tax base for better government services and reduced tax burden on the middle.
When wealth generation is coming from rent collection on existing assets, redistributing wealth and redistributing wealth generation are equivalent.
> Georgism, also called geoism and single tax, is an economic philosophy holding that, while people should own the value they produce themselves, economic value derived from land (including natural resources and natural opportunities) should belong equally to all members of society.
> Any natural resource which is inherently limited in supply can generate economic rent, but the classical and most significant example of 'land monopoly' involves the extraction of common ground rent from valuable urban locations. Georgists argue that taxing economic rent is efficient, fair, and equitable. The main Georgist policy recommendation is a tax assessed on land value. Georgists argue that revenues from a land value tax (LVT) can be used to reduce or eliminate existing taxes (for example, on income, trade, or purchases) that are unfair and inefficient. Some Georgists also advocate for the return of surplus public revenue back to the people by means of a basic income or citizen's dividend.
For measuring the success of what, exactly? Economic success? Average incomes? Doesn't seem to be a very good metric for either.
Lowered inequality seems to me to be a good metric for measuring the success of attempts to lower inequality, and not much else.
But in this kid's day-to-day life after graduating, unless he becomes famous on his own, nobody will know who he is. They'll just see a dude that dresses well, lives in a well-off neighborhood, and got an education like everybody else. He won't have been raised in a violent neighborhood with poor access to education. And no employer will think twice about his application on account of his looks or the way he speaks.
Isn't that exactly the VC model?
The only loser here is the middle class of rich countries, not middle or poor class of poor countries.
100 years ago, they didn't have phase-change refrigeration, instead relying on ice. (That's why your grandmother might still call it an "ice box".)
50 years ago, they didn't have air conditioning.
25 years ago, they didn't have cars that would reliably run for 250K miles with airbags, anti-lock brakes, traction control, and which required very regular servicing to keep running.
10 years ago they probably didn't have a smart phone with the world's information in their back pocket.
All of those things are now readily affordable and very commonplace in the middle class.
And we have people complaining about housing and healthcare.... I know the solution to theses issues
If their only value prop was cheap labour then manufacturing could easily have flourished in plenty of other countries with cheap labour (eastern europe, latin america, africa?). And plenty are geographically closer and have more similar language/culture to the western markets than Asia. But there is more to it, Asian countries have a talent for it and have mastered manufacturing and related industries like steel production.
I doubt any American factories could legitimately compete with Asia, even if the wages were the same, without some heavy-duty automation. And Asia has many other advantages around vertical integration of factories, such as access to raw materials, from there and other countries they've developed relationships with.
Now it's possible these advantages are just a side-effect of the fact the industry residing in Asia in recent decades but I believe there's far more to it, even regardless of the wage advantages, they are very much deserving of that industry.
If you look holistically at what happened, you're more likely to find why so much moved to Asia. Geographically speaking there may have been closer low-wage countries, but distance alone does not determine where you can build appropriate facilities.
Geologically, China has access to large ports, allowing large amounts of tonnage to flow in and out. You have a generally easy path from China to California. Eastern Europe is out because you can't easily ship to and from. Similarly, jungles and mountains in Latin/South America and Africa keep large manufacturing bases from being built. Africa lacks sufficient ports - its largest ships 1/10 the tonnage that Shanghai does.
At a local political level, you have governments willing to subsidize manufacturing and tolerate certain working conditions that other governments wouldn't.
From an international perspective, you have incentives to bring capitalism to the borders of previous socialist countries as a destabilization measure (large increases in US-China trade in the 80s).
Yes, people in other countries are people too, etc., but they also have their own governance, their own resources, their own economics systems to manage and oversee.
I can take no active part in any of that--only my own country's.
Until we have one world government, I'm always going to prioritize the places where I have at least some capacity to pull the levers in ways I think are better for people.
(This is why I dislike, in general, the specious globalist argument, "but the poors overseas deserve wealth too," sure they do, but they also live in sovereign nations and it's up to them to guide and shape their own.)
And that I find to be a shame -- that we find it so difficult to see the logic in a position we may disagree with.
The other thing is, I don't just apply this to international politics, I'm a firm believer in working to change your local politics as much as possible above all else.
How your city runs is both more accessible to the layperson and has a far bigger impact on your day-to-day experience than federal stuff, for example.
That's not to say I'd eschew federal level politics--I'm a huge proponent for socialized medicine, stringent environmental regulations, and a host of other stuff.
But when I go out and campaign, I do it for local folks.
The world economy isn't homogeneous, and what we may be looking at is that the current system is pretty good at taking people in economic/industrialized state A -> B, but bad at going from B -> C. If that's the case, sooner or later more and more people will arrive at state B and we will have a problem. It's even more of a problem if we get to B and it has people slipping back to state A in life qualitative measures (irrespective of imperfect quantitative measures like GDP...).
Switch to middle 40% and it will be still an increase but definitely does not look exponential - which most likely is the main point of the site creators
In any case, it wasn't clear if he meant the average person or an average about wealth or income. Average could have meant a colloquial reference to the average person, or it could have been a misuse of the statistical term.
when it comes to wealth (in)equality, you basically want to balance greed on one side and anger on the other. sure, allow the greedy to amass a little weath to promote their playing by the rules, but only just enough for those ends. and the other side, make sure wealth is distributed enough that people feel collectively prosperous, so we don't have riots and the like (fairer wealth distribution should come from better ways to more equally value the work of all people, not just that of gatekeepers and rent-seekers; and it should especially not come from simplistic wealth redistribution schemes like universal basic income).
wealth inequality has risen sharply over the past 50 years. whether you're a lefty or a righty, most people agree that it's time to level that playing field. there's absolutely no need to worry about stifling progress as we do that.
the concept of stealing is entirely beside the point.
we create value
we create value and that is what we accumulate in the form of wealth
Still, its a problem that we don't understand yet, and we have no economic model to solve. Milton Friedman's economic paradigm does not help. We need something new.
It paints a picture of the rich milking the rest of the world for wealth. It does not paint a picture of global improvement for the commoner. (Though, tbf, there isn't data on quite a lot of countries, so we really don't know.)
I think ratio of top to bottom does matter, or can matter. I don't really care how rich the rich are, but I do care that upward pressure on size and amenities for housing in the US means that there is a long standing (going back decades) shortage of genuinely affordable housing in the US. There are people who are homeless in the US in part because they can't find anything for $400 or less a month in rent. We have largely done away with very basic housing, such as SROs and boarding houses. We tore a lot of those down (up to 80% of them in some cities) when the Baby Booomers were coming of age and didn't need something that cheap. We never rebuilt.
So, the US suffers from this idea that all housing needs to be appropriate for a family of four or five while our demographic has moved away from the nuclear family. We have a lot more single people putting off marriage, couples putting off having children or not having them at all or only having one child, seniors whose kids have all moved out, etc. But we don't really have housing designed for the needs of 1 to 3 people.
If we had strong policies to create enough very basic housing to house around 2 percent* of the population, then I likely would agree that I don't really care how rich the rich are compared to me. The problem is that the rich are the only ones being served here. There are huge challenges for the average person in the US.
I think the rich folks at the top are fools for doing this. This is the kind of thing that leads to bloody revolutions.
I won't be leading some bloody revolution. I am doing all in my power to reverse such trends. But I am an incredibly poor divorced single mom with health problems and adult special needs kids that still live with me. There are substantial limits on what I am likely to accomplish.
Doing a little blogging and making comments on forums is the majority of what I can do about this at the moment. Currently, I am also trying to put out flyers locally to promote some of my blogs to try to help put a dent in the high rates of poverty in the town I moved to. Unemployment and homelessness are rampant here.
But I am new to town and I lack connections and have credibility challenges. People think my "how to make money writing online" site is probably a scam. People don't want to approve the flyers for it. When they do get approved, people who see the flyers remain skeptical.
So, the reality is that the fools at the top who are milking the majority for money are the ones with the most power for trying to reverse such trends in some way (and, no, basic income is not the answer -- that is a lazy concept and won't work). I won't be leading the bloody revolution, but if it does happen, I will kind of sit back and laugh at the "victims" of it who brought it on themselves. Cuz, duh, you could see that coming from miles away and did nothing about it, you greedy dumbasses.
I am not talking about morality. I am talking about enlightened self interest here. (A la Henry Ford wanting all of his employees to be able to afford to buy a car.)
Enough to last you a scientific lifetime. If your neural net gives meaningful predictions of how institutions, inequality and other measures predict or explain growth or well-being, contact your local Peter H. Lindert, Geoff Williamson or Daron Acemoglu. Know any (worldwide, historic) datasets on institutional arrangements: please comment!
There are a lot of open questions in economic history and many, many more worldwide datasets taking the long view available. Used to be more theory and (econo)metrics than data in growth economics, finally it is starting to come around. Thank the scientists taking the time to create those datasets. Not the easiest route, nor the quickest to tenure so it takes those special ones to take it up.
 http://gpih.ucdavis.edu/ - Income History Group at UC Davis
 http://www.rug.nl/ggdc/productivity/pwt/ - Penn World Table currently at Rijksuniversiteit Groningen
 https://data.worldbank.org/data-catalog/world-development-in... - World Development Indicators at The World Bank
 http://www.macrohistory.net/data/ - Jordà-Schularick-Taylor Macrohistory Database
It seems income/wealth inequality got magnified because of the number of opportunities went exponentially higher. Those who were able, took advantage of those opportunities if they had education, business acumen, surplus income, liquid wealth, or were fortunate enough to have ownership in an industry that was not valued very highly before and became very valuable later.
Everybody else got left behind. The numbers everyone seems to be talking about day in and day out is the top 1%. What we should really be looking at is the bottom 50%. How did the bottom 50% end up from owning 20% of the wealth in 1980 and going to 5% of the wealth today?
They never had anything (like a door or opportunity or a donation box) that could collect some of that wealth flowing from A to B. And that has stifled opportunities for the middle class of the population.
To me, that is the opening of many opportunities on the private side and healthy cash flow to sustain it. The strong get stronger, and the weak get weaker. Feel free to disagree. I'd be interested in a different view.
To prevent it from growing even more, we need to fix education systems.
Education is very very demanding. Plus, the more people get educated, the more competition we have, meaning the more intense things become. There needs to be another route.
Wealth has been increasingly taxed, poverty increasingly subsidized. For the bottom 50%, this matters.
I don't know any poor people who wouldn't prefer to be wealthier, but being in poverty also reduces opportunity and a lack of opportunity means your situation stays the same.
I grew up poor, and without the assistance from government programs my family received I would not have had the opportunity to pull myself out of the cycle of poverty.
Welfare entitlements have grown so profitable there's a huge disincentive to working. Do nothing, profit. Start working, entitlements are withdrawn and you face a huge net income drop, made worse by taxes on earned income. Hence much of the bottom 50% are literally incentivized to minimize income & wealth - explaining in part why so much of their wealth has migrated to other classes.
I'm also suggesting we cut taxes so those who do earn aren't losing so much of their income.
While technically subject to the lowest tax rates, the bottom 50% have the lowest income & wealth rates, so find it harder to replace & augment what little they have that's taken from them by "embedded taxes" passed on from higher economic classes (corporate taxes -> higher prices, property taxes -> higher rent, etc). What they earn & retain is being siphoned away by taxation.
The question my prior post was trying to answer was: why has the wealth of the bottom 50% dropped so much? Well, between rewarding (subsidizing) unemployment and dis-incentivizing (taxing) earned income, we're giving the bottom 50% good reasons to earn & keep less. The result should not be surprising.
Ridiculous conclusion from a simplistic argument.
We're giving people reasons to stay in poverty: don't work, and their food/housing/healthcare will be provided for; start working, and all that gets yanked away and whatever is earned is diminished by taxation (direct and indirect). Faced with that, there's little reason to "escape poverty".
"Stop subsidizing so much" does not equate to "start taxing them". I'm all for massive reductions in both subsidizing and taxation. Help the abject & deserving poor, yes; the rest should have their disincentives to work removed and their punishment by taxation relieved.
I agree marginal rates should always be < 100% for the obvious reasons. I haven't seen numbers that it ever happens, but it is to be avoided in theory, yes.
Does this mean the bottom 50% in the US are in the red?
Combine the expectation a better tomorrow(the American Dream) with a declining middle class, and massive amounts of debt is what results.
Part of the economic story of the last generation (IMO) is embedded in this interplay. Financialization is largely the process of turning future income into current assets. EG, I buy a house, get a house and a mortgage. My wealth is net 0. One house owned. One house-value owed. Part of my future income is now someone else's current asset. They also net to 0 change (mirroring my balance sheet). Yet obviously, something somewhere has changed.
Lending and creating money are interlinked, as is inflation. Monetarists tend towards macroeconomic thinking, and default to regarding of inflation as a single thing. In reality, inflation is microeconomic. More real estate lending, higher real estate prices. Also, "inflation" as an actual phenomenon is not simply devaluation. It is all price and market size increases, including increases in "quality and quantity". More real estate lending, more/bigger houses. Another striking example is american universities. More student loans, more expensive tuition, fancier uni experiences, more students. All that is "inflation" in the "consequences of money supply^" sense.
Another aspect that I would be interested in seeing approached is "inflation by income level." I suspect that this is increasingly important, especially because of housing cost fluctuations and trends. If 40% of your income is spent on housing, a 25% increase in house prices represents 10% inflation assuming all other prices remain constant. Similar calculation for college and such. Your inflation could be 5% pa, while the average inflation is 0%. This is happening now where I live. People's spending habits are very dependant by social-wealth class, so I think it would be worth trying to generate class specific inflation rates. I expect income inequality growth would look faster this way.
^I'm alluding to Firedman's "Inflation is always and everywhere a monetary phenomenon" though I've defined inflation differently to the macroeconomic/monetarist standard which explicitly excluded increases in "quality and quantity." I think it still holds, as long as you swap "always" with "often" which might even be necessary for Milton's.
Need to consider temporal dimension: a house is owned because I'm already converting my future income into a house.
There's a difference between "net $0 now because I'm borrowing from my substantial cumulative future creation of wealth" vs "net $0 now because I'm not productive and won't be".
The temporal aspect is what makes it hard, but it's what I was trying to comment on. Wealth now and income later are effectively fungible, in todays world to a much greater extent than the past. This includes negative wealth (debt).
Even in a metal backed currency world, you still have money creation through lending. Money creation is a feature of lending, not just fiat currency printing. But in that world, currency value is fixed via metal redemption. So, the amount of money in an economy will still expand to 5-20 times the amount of metal, with the specific amount varying as lending expand and contracts. IMO, this makes "hard" currency more unstable than fiat currency in developed countries. Bank runs are less of a problem.
In terms of me and Milton… he’s the nobel prize winning economist and I’m a forum commenter. I just defined my own “inflation,” I’m calling it microeconomic inflation until someone who knows a different name for it says otherwise.
I'm basically saying is that money is not just money, it's not as fungible as it seems. Money supply is basically determined by lending. More loans, more money. In practice, lending is earmarked. So, we have multiple money types. Mortgage supply = housing money, student loans = college money. So, we end up with multiple types of money. Money supply can go up in certain markets, so inflation is uneven.
I wonder what factors caused that change. Wars and emigration maybe have something to do with it?
Data like these are interesting, but you still need the deep historical context to make sense of what it all means. Of course, for the overall big picture, you couldn't do better than Thomas Piketty's _Capital in the Twenty-First Century_.
There may also be a "hidden wealth" effect as people move it offshore; is someone domiciled in the Cayman Islands who lives in the UK for <6mo a year part of the "UK" graph?
In 1900 there were almost no taxes - A lot of taxation is not just for 'services' - it's distributional. So there's that.
Literacy, voting, emancipation - this to me is the biggest in the long run. People have skills, professions, they can create/read contracts, everyone can hire a lawyer, there is rule of law. There's much dynamism and much ado. In 1900 almost all of us lived on farms. The economy is way more diversified now.
Labour Unions - just started real power about then. Also maybe an awakening in business: Ford paid his staff a lot more so they could actually buy Model T's. There's some deep insight there.
Mass Media - radio, TV, internet. Information equalizers.
Gender Equality - female workforce participation exploded during the war and I think peaked about 20 years ago. This is a massive shift in economic outcomes.
Teddy Roosevelt - he broke up 40 (!!!) monopolies. Wow. Think about that. Basically, America was possibly taken over by corporate cabals who, in a less diversified economy could control everything. This was I think a huge thing. And though we can think of G, FB etc as monopolies, I don't think they have quite the relative strength. I'm still more worried about Wallmart and Amazon ...
The OP's section on "methodology" touches on "lack of transparency".
Averages are not particularly useful when confounded by the very shifting distributional patterns this is attempting to illuminate.
I'm the median Chinese worker. Per-adult national wealth has been exploding since 1987. The bottom 50% share of wealth and income has been plummeting, so inequality has been growing, too. But I'm a lot better off than my counterpart 30 years ago, aren't I?
As in the average of the lower 50% debt equals savings?
For something as dynamic as wealth is impossible to give any representation of its "distribution".
Neither it is useful to even speak if "inequality".
The idea of "distributing wealth" is the idea based on communism to steal property from those who have it and give it to those who do not have it.
It is partially implemented in income tax systems all over the world.
That fact does not justify its criminal origins.
And it is so often propagated to smart online boys to make them more "fit" for the society in which they are to yell on those who have it, in order to spread it to those who do not have it.
Instead of asking other people's property to become your property without giving them exchange (which is basic of crime) how about doing something helpful?
Maybe those people who belong to the group of not having it "equal" need better environment? Better education? Better chances for survival?
You cannot get better chance for survival by robbing other people's hard earned wealth. It is not fair. You have a car, I do not have a car, so let me rob you. That is criminal.
But you can get better chances for survival with education, knowledge and training to become better producer and service provider.
Each of us is both the producer and service provider. We are producing products and services for other people, so we help people, and we are creating wealth.
But those writing this kind of nonsense reports wish to sit behind their TV without creating anything for other people and get the money from "social funds" to support their parasitic lives.
That is what those people want who are yelling at you "look at the world, it is not equal".
Equality vs Equity.
I grew up in a town with a high per capita income, but fairly low inequality. There were a few tiny religious and Montessori schools, but pretty much everyone's kids went to the public schools. Home prices probably varied by a factor of 10 or 20; there were both crappy old duplexes and McMansions, but no genuine slums or palaces with car elevators. No one commuted by helicopter. The richest and poorest had shared interests.
My opportunity to succeed (which drives my potential income, which drives my potential wealth) is not equal to that of a guy whose parents are billionaires, went to private school and an Ivy League college, and has a contact list full of CEOs and high up politicians. My opportunity to succeed is also not equal to that of a guy whose parents are divorced and poor, lives in a gang-ridden neighborhood, and is stuck in the school-to-prison pipeline. The playing field is not level.
It can minimize the value of those things for the people that have them... at least within its borders. I'm not convinced that's in anyone's best interests, though.
It can do the second, and it can create opportunities for the third. And it can help (or hinder) the first. (As a purely hypothetical illustration of that, it could implement a systematically racially biased criminal justice system and engage in a pattern of racially-suitable violence against a specific segment of the adult population, decreasing the number of two-parent present families in that segment.)
You're right about it affecting the first, though. Also as a purely hypothetical illustration, it might create a multiple generation-spanning dependency on social programs, make single parent households more economically feasible and socially acceptable as a lifestyle, and foster class warfare that downplays the importance of one's own choices by blaming only others for one's own outcomes.
If not, we might say consider all 3 (excluding the one that doesn't exist) relative. We never have absolute equality of opportunity or outcome, but we can have more or less equality.
1 - compared to a rock, all humans are equal (note: this is not a political statement and has no relationship to theocracy)
2 - if a unit of food sits on the ground between two people, they are free to behave however they want, either can choose to pick up the food or not - this is liberty
3 - given that a unit of food when found will be split evenly (by some process out of an individual's control) their behavior no longer matters - this is not liberty
Shouldn't, for it to be true liberty, one of those people own that food by virtue of a piece of paper stating a government granted monopoly over it because his ancestors enslaved the ancestors of the other, and be allowed to call an army of police with guns to take it no matter how small and weak he is? And perhaps, if he sees fit and deems the other person worthy, the owner will rent a fraction of it to the other to plant as a seed and keep the yield for himself, divvying out exactly enough food for the other to barely survive and continue working?
This is exactly liberty, no?
I have a lot of time for liberal philosophy including even those like Milton Friedman and others from his (and our) era, where I tend to disagree with many of their conclusions. But, most liberal thought tends towards very hard definitions, of things that are (IMO) not that hard (objectively true in all cases) in reality.
It's an obvious problem in moral philosophy. You start from benign definitions of good and bad, like "greatest good for the greatest number." Then liberal philosophers push that to the extreme, usually weird moral dilemma scenarios. Killing fat men with mining carts to save skinny people. Infanticide. Involuntary euthanasia. Instead of admitting that your "moral maxim" or whatnot is really more of an approximation or a guideline really, they conclude that all this stuff which seems really bad and immoral is actually good.
The american liberalism (or conservatism, libertarianism and other bad, illogical names for it) is rife with this sort of thing, IMO. The concept of liberty is defined using simple, made up examples. Platonic ideals. Then it's applied to the real world. At some point, using the term "liberty" to describe it becomes defensible only by very academic, long winded philosophical argument. To the person who's liberty is supposedly at stake, it seems odd that these philosophers are calling it liberty.
I suspect this is why only very academic, extremist or philosophical types (or australians) call it liberalism or libertarianism (this one carries its own ironies). Everyone else just calls it conservatism.
And is there a point to prevent that rocket engineer from existing?
This is like asking what does wealth look like.
Inequality is just a bad metric. I'd rather be a poor in America than equal in Venezuela.
That is cumalative wealth up to 100%. The blue line is if everyone is equal (poorest 20% have 20% of the wealth). The red line is linear increase where the richest 20% have 5 times the wealth of the poorest 20%.
The yellow line is the actual wealth. These figures are just for the USA; the world one looks too much like a cliff.
It's probably somewhere in the industrial zones on the outskirts of cities, but it's not something many people do.
As a software developer I produce code. How would you exert democratic control over means of such production? Will it involve lots of tin foil?
Open source software is already a model that approximates such democratic production. If us developers didn't have to make a wage to survive, how would we develop software?
Oh wow, these people still exist.
We tried that in the last century and it ended up being the most horrific, mass-murdering, totalitarian, controlling era in all of history.
About half of my schoolmates growing up in Canada came from places like Cambodia, Vietnam, Ukraine, Russia, Czech, China, Serbia, Slovenia, Poland, Estonia, Hungary ... see the common thread there? :)
Buddy. I've got some news for you.
And FYI Cambodians were not fleeing bombs dropped near their homes by Americans, they were fleeing Communists who murdered 3 of 8 million, making it one of the worst genocides in history, easily comparable (on the same scale as) the '6 million' who died at the hands of the Nazis.
Everyone from there hates the Communists, much like almost everyone fleeing Cuba hates Fidel, it seems their only supporters are those who are not from there , and who have a very academic view of it all.
Fortunately, we have this Constitution that places limits on the amount of democracy we have, partly to keep it from running amuck in exactly that way...
For the downvoters, current global population is 7.6 billion, global GDP(GWP) is 78.28 trillion USD. 78.28 trillion / 7.6 billion = ten thousand three hundred USD.
The problem with income inequality is people abusing their capital (via compounding interest or political influence) to make more capital. I suspect that applies to the top .01%.
I happen to know China has more population so seeing it lighter says something to me, but having a better way to compare to the number of people would be helpful.
Has anyone of you seen similar stats for the middle- and ancient ages?