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The Pitchforks Are Coming For Us Plutocrats (2014) (politico.com)
108 points by yotamoron on June 4, 2020 | hide | past | favorite | 109 comments

This article is certainly an interesting read, but it seems like the only idea proposed is a higher minimum wage, the results of which seem to be mixed (https://grow.acorns.com/how-seattles-minimum-wage-has-change..., https://www.vox.com/the-highlight/2019/7/13/20690266/seattle..., https://publicpolicy.wharton.upenn.edu/live/news/2303-effect...). From what I've read, the academic study that paints the best possible picture says that for a 10% increase in the minimum wage, Seattle saw a 1% increase in wages (one would presumably expect a 10% increase in total wages, unless there was a decrease in total hours worked). There are partisan arguments for and against raising the minimum wage (which the author does a good job of summarizing), but from reading those studies it seems not obvious what raising the minimum wage will do at the macro level.

> Seattle saw a 1% increase in wages (one would presumably expect a 10% increase in total wages, unless there was a decrease in total hours worked).

How's that? Why would a minimum wage increase raise the wages of everyone already making more than the new minimum wage by the same amount?

The implication I’ve seen is that the bosses of minimum wage workers would need to see a pay increase if their pay is also only a little higher than minimum wage already. So pay would get crunched higher in those situations and mostly at the lower levels.

The data for increasing minimum wage is curious. While job losses don’t occur for the most part when increased there does appear to be suppression of new jobs, some churn in rural areas, and for small businesses starting up. However, the stats I saw don’t really show anything about the wage distribution of new jobs but currently most new jobs are temp and gig workers that are usually higher than MW anyway.

I’m generally in favor of market based approaches because they’re less susceptible to political issues but improving baseline wages at the bottom with a market would mean we need to drastically create more employers needing unskilled labor, remove a ton of unskilled labor from the pool, or increase unionization to increase bargaining. These are all a lot harder to accomplish and take a lot longer than just making MW higher by regulations but the political capital spent here to pass the increase in today’s America would be worse IMO than focusing more on affordable housing and healthcare that are easier with legislation and public funds.

I've read our production has more than doubled since the 90's; wages have not.

Just in case you were wondering how Bezos is a billionaire.. he now has MORE people making MORE profit, and that accelerates as the operations become more effective (until they plateau and then on the next technological leap they will jump again).

I am not targeting Bezos, I am merely using him as an example. Let's call it "scale", and "effectiveness".

That's because it took a decade to make the $15/hr minimum wage a thing, in which time inflation turned that $15/hr into the equivalent of $8/hr. That's not progress.

from an AMZN early investor. the company that pays the lowest wages and creates the greatest wage disparities ever seen.

great example of why the pitchforks are overdue. Even the rich who can see the writing on the wall are too greedy to do anything other than virtue signaling.

Amazon certainly does not pay the lowest wages.

And wage disparities are only bad where they don't make sense. But at AMZN, they do. AMZN has both some of the least skilled workers in the world, and also some of the most skilled workers in the world, which unsurprisingly demand vastly different rates.

The requirements to be a warehouse worker at AMZN are basically:

1. Know how to read

2. Be physically fit.

...which is a pretty low bar. You don't even need to be clever with your hands or anything, so sweatshops in Bangladesh require more skill. Meanwhile, the people building infra at AMZN are some of the most intelligent, highest skilled people on earth. And I'm sorry, but until we live in a post-scarcity economy, the former group is always going to get paid very little, and the latter group is going to get paid a lot. Nothing else is tenable. You can ignore supply/demand with Communism, but Communism clearly doesn't work in practice as long as there is scarcity.

Personally, I think UBI is a great solution to this problem. But the idea that AMZN is perpetrating an injustice by not paying unskilled, easily replaceable workers at anywhere close to the rate they pay highly-skilled, hard-to-replace workers is just silly.

The low skilled workers are going to get paid very little because we choose to pay them very little.

We as a society have decided that rather than increase the wealth of the very poor at the bottom of society, instead we want to increase the wealth of the ultra wealthy.

Why does a person need tens of billions of dollars? Because they worked very hard or had a great idea? Why isn't $500 million enough instead of $50 billion when we have kids in this country and around the world who don't know where their next meal is coming from?

Much of Western Europe decided on a much different route than the US took and they have much more egalitarian societies.

The problem is that in the US we decided that the ultra wealthy are our betters and deserve as much capital as they can accumulate and the parasites at the bottom are inferior and deserve to toil for Bezos' pocket lint.

Bezos has $100B because Amazon generated $900B of wealth for other people.

“Of all human emotions, none is trickier or more elusive than envy...as soon as we feel the pangs, we disguise it to ourselves—it is not envy we feel but unfairness of the distribution of goods or attention, resentment at this unfairness, even anger”

The Laws of Human Nature – Robert Greene

> Bezos has $100B because Amazon generated $900B of wealth for other people.

Even if this made sense - and it doesn't, because Jeff Bezos didn't convert dirt and manure into $900B worth of goods, so we don't know what the world's output would have been in his absence - there's no reason his share should be $100B.

It's a little saddening to see a quote about envy below a post which mentioned the children who don't know when their next meal will be coming.

Why? The wealth was not taken from those children.

There can be more than one truth valid at any given point:

* The wealth was not taken from those children. At the limit, those children can just fuck off and die in the street of starvation, it's not like they have too many useful skills to offer to society anyways.

* We have an ingrained tribal expectation that the tribe will take care of all its members to some degree, within the available resources. Driven by the game theoretical proposition that tribes that fail to do so will find their human resources and social cohesion depleted and be easily torn apart by rival tribes. By now integrated in our genetic heritage.

One only need look into the streets [or at Twitter] to see that we are incapable of having any nuanced conversation anymore. It's either 100% A or 100% B. If you dare explore a balance, both sides will rip you apart for lack of ideological purity.

It is, however, extracted from their parents. To post a quote about envy when the discussion is not based in envy but in concern for the welfare of the most vulnerable in society is the upsetting part.

extracted? As in not through voluntary agreement?

I think you're talking about taxes, and missing the point entirely.

>extracted? As in not through voluntary agreement?

This argument is so facile that I can't believe you are arguing in good faith. The power dynamic between an a low-wage employee (any almost any kind of employee) and an employer is incredibly biased in favor of the employer.

'Extraction' does not imply lack of voluntary agreement, neither does exploitation, in fact[0].

[0] https://www.boeckler.de/pdf/v_2011_10_27_yoshihara_veneziani...

We don't "choose" to pay them little. They get paid very little because on an individual basis they provide very little value. This is just reality, and it will continue to be true until we have a post-scarcity economy. If we are making any choice at all, it is choosing to pay the lowest-skilled workers in our society more than they are owed by value delivered, because we have empathy and don't want people to starve to death if avoidable. If you set the scales, with one end being the raw value delivered to the rest of society by a warehouse worker at AMZN, and the other side of the scale being the value being delivered to that same worker from society (in the form of food, clothes, cars, entertainment, housing, etc)... well, the scales would not be balanced at all. Some European countries are more egalitarian because they have deliberately chosen to put their hand down more heavily on the scale in favor of the worker, but this does not change the economic realities of the situation. Relative prosperity continues to increase for everyone, all the time. Amenities once considered to be ridiculous extravagances in times past are now considered pedestrian and in some cases, "deserved".

The other issue here is that practically nobody actually has tens of billions of dollars, Jeff Bezos included. He is worth $100B+ because he owns AMZN. If Jeff Bezos did not own such a large portion of AMZN, then arguably he would not have worked so hard to run it. If he had not worked so hard to run it (harder than you or I have ever worked, I'd bet, and I worked a 19H day yesterday), then it seems unlikely AMZN would be worth what it is today. And if it wasn't worth what it is today because Bezos hadn't been there, then we wouldn't even be having this discussion. There would be no "billions that no one man deserves!"

Europe has plenty of billionaires too. They have fewer because they have produced fewer stratospherically successful companies.

All smokescreen. We choose what to pay executives (egregious amounts) but not the rank-and-file? Nonsense.

Most of the money in the world is possessed by 100 people. Not a fiction, not sophistry about who has the money. It would be a terrible surprise to them and their bankers if they discovered they didn't actually have the money.

Crediting a manager for running a business, but not the people that did the work (and they work as hard as Mr Bezos you can be sure), is an American fiction.

If not Mr Bezos, then somebody else, or several others (those he put out of business simply by being earlier / bigger). Its very arguable that he has no special merit, other than being in the right place at the right time. Like the railroad magnates of the 1800's, who we now call 'robber barons'.

The smokescreen is you focusing purely on "how much wealth (in terms of imaginary currency units) some people have", as if that is somehow indicative of anything meaningful when it comes to the way we live our lives.

Bezos has 1,000,000x more wealth than I do, it's true. But his life is not 1,000,000x better than mine. I guarantee he is not 1,000,000x happier than me. The food he eats is not 1,000,000x better. The gym he goes to is not 1,000,000x better (by any metric, even if it's nicer than mine and in the comfort of his own home). His TV is not 1,000,000x better than mine. His car is not 1,000,000x better than mine. etc. etc. Not anywhere close. The numerical value we assign to some (very few) of those things do have large deltas when compared with what I have (e.g. property he owns), but it is still not even gonna approach that 1M multiplier. And even more certainly, the value he personally is deriving from those things is not anywhere close to 1,000,000x, even if what he paid for it is (which again, it's not).

The major difference is many things he has that I do not: for example, a private jet. But not everyone on earth can have a private jet, that is untenable. I am happy for the people with private jets to be the people who, by-and-large, have delivered the most economic prosperity to others.

Prosperity is not a zero-sum game. Yes, total value in currency is a zero-sum game (kinda, if we ignore inflation and such), but luckily this doesn't actually matter. What matters to humans is prosperity, and prosperity is not zero-sum. In fact, Bezos has increased the prosperity of humanity in ways that I very much doubt I ever will, while simultaneously creating a massive "wealth disparity" between himself and myself. Almost like just because a disparity exists doesn't mean the world is worse off. In this case, it actually means the opposite.

Meanwhile his employees don't even have adequate healthcare, and can't send afford to educate their children. Seems like a great system we've got here, but I'm glad you're worried about private jets.

How exactly is that a problem of wealth disparity?

Jeff Bezos has a few billion sitting around in cash, while people that work for him are struggling to get by, and you don't see how that's a problem of wealth disparity?

Why, oh why, does HN love to defend billionaires like this. I guess it makes sense since it attracts narcissists who love to hoard money. Let me guess, you're one of those temporarily embarrassed millionaires?

The answer is that we’re not defending billionaires. We’re defending the idea of ownership. In this case, ownership of a company he founded and nurtured from the ground up into one of the most valuable companies on earth.

Just like you might own a house, he owns a technology company (just like someone might own a restaurant, or a car wash, or a bank, or a toothbrush).

The difference between you and I is that I am not envious of his success, and I don’t think it’s morally justifiable (if you believe in private property) to entirely randomly make up some imaginary line which, if the value of the thing you own crosses it, it’s suddenly wrong for you to own that thing.

Because that is literally what you are saying: “oh, it’s fine for someone to own a website that sells books online, but when that same person grows that business into a company that employs thousands of people and improves the lives of hundreds of millions (and therefore increases in value), it’s no longer ok for him to own it. It’s even worse if the company provides jobs that require no skill at all, because that would be just heinous.”

Fixed pie fallacy.

There is not a finite amount of dollars to be held. Bezos holding more money does not make other people poorer. Economies are engines and Bezos is the one shoveling in coal.

Amazon can almost always find employees and it can do so because it pays a lot more than Macy's or 7-11. Workers choose to work at Amazon because it's better than most other no-skill jobs.

The retail giants went out of business because they were taking advantage of their customers and employees. My local department stores went under because they couldn't hire anyone.

A company's bottom line IS a fixed pie. The executives spend their meetings calculating how to get the largest fraction for themselves, and leave as little as possible on the table for the employees.

Have you actually participated in these meetings or where exactly does this knowledge come from?

Because that does not sound like any C-suite meeting I have ever been party to.

It's not at all. A bottom line is a flexible thing and by increasing costs you can increase profits, eg, opening more stores as part of your chain.

Executive meetings are mostly about forecasting how the business is doing accurately, and then communicating that to shareholders. It's.. not an exciting meeting in any way, shape or form.

Maybe in the 1950-60's. Now its a shark tank and no room for ideas like that. Not in industry anyway.

And maybe you're mistaking board meetings for the executive suite?

Reducing employee wages doesn't make each employee poorer and Bezos richer? Wow you'll have to show me how you did that math.

Bezos isn’t the worlds wealthiest man because his company is the most profitable. In fact it’s very easy to argue the opposite — AMZN is doing so well because for many years of the company’s existence, Bezos chose not to line anyone’s pockets at all, instead putting everything back in CapEx, I.e. hiring more people.

Nice job stepping around the question there. Do you take tango lessons?


I didn’t step around the question. Bezos is not making billions of dollars. If he took a salary of $0 he would still be the worlds wealthiest man, and the pay of a warehouse worker would not change appreciably even if 100% of his salary was allocated to increasing warehouse worker wages.

I don’t take tango lessons, no. But I do know basic economics and arithmetic, which you might want to brush up on.

They provide little value yet where deemed essential workers. F off with that bs man.

The lowest paid people are the people who deliver the last Mile of service, without Them, McDonald’s doesn’t serve a billion burgers. Amazon doesn’t ship its groceries. Safeway doesn’t have stocked shelves.

Police has existed to destroy unions and the country as a whole Also discourages unionizing. We’ve taken a tool these people had to fight for better wages away.

Edited Autocorrect typos

Without them in aggregate, yes.

Unfortunately, at an individual level, this is not true. This is an important point, because we are talking about individual income disparity here. AMZN spends a large bulk of their income on that last mile delivery, they're not really skimping. The issue is that delivery of this portion of the service is provided by lots and lots of unskilled people.

Without one burger flipper, McDs is not going to fall apart. In fact, it's doubtful a single restaurant would be hurt much at all by the loss of a single burger flipper. Without Jeff Bezos, AMZN very well could fall apart (or more accurately, probably wouldn't have made it this far in the first place).

Jeff Bezos is worth way, way, way, way more to AMZN than a single warehouse worker. Is he worth more than every warehouse put together? Maybe not. But you need to remember that AMZN has AWS and various other things which don't require warehouse workers at all, but are all still under Bezos. This makes the arithmetic a bit harder, but Jeff Bezos in many ways is arguably literally irreplaceable to AMZN, making his hypothetical value to the company infinite.

I think the entire world would be much better off without Bezos, we should pay him 0 and redistribute all of his wealth. By your arithmetic he may be "infinitely valuable," but from my stance he's infinitely worthless.

Yes, and we should probably do the same to you while we're at it, right?

Or is it more of a "rules for thee but not for me" kinda thing?

No, it's more a "when you spew baseless beliefs, I'll show you how ridiculous you're being by doing the same." If you're going to make a moral argument, at least try to back it up with something. It's interesting how you notice this fallacy when people are attacking billionaires, but not defending them. How's the taste of Bezos' dick in the morning?

How is “I believe in private property and ownership, including the ownership of businesses” a baseless belief? It seems pretty clear and internally consistent to me.

He could keep a billion or two.

> The low skilled workers are going to get paid very little because we choose to pay them very little.

I wish it were that simple. More reasons:

* Low skilled workers are paid very little because there don't have any higher paid options.

* Low skilled workers are paid very little because there are some many other low skilled workers willing to take their place, domestically, internationally, and through immigration.

* If there are 2 business using low skill labor, one paying low wages and another high wages, the latter goes bankrupt.

Cherry on top: the AWS project is to turn SWE cushy jobs into 'low skill' occupations. Bezos understands economics. He's building the ultimately efficient money making machine, which, by necessity, reduces the human expenses to the absolute minimum.

Yeah, I don't know where to start with comments like this. There certainly are people that think "stock runners" should make as much as engineers and business people (or close), but this isn't exactly a mainstream belief. The concern is more about making a living wage, healthcare, retirement, and employment rights. Communism isn't necessary to achieve these goals. The outrage has more to do with people hoarding obscene amounts of wealth, without paying their fair share of taxes.

Very few people are interested in going after the middle class. Now the middle class may or may not be collateral damage of their policies, but that's not the goal. Not too many people are worried about a software engineer making $90k-$200k (probably more in the valley, this is based on areas with modest COL)

Not so much hoarding, as the rules were changed so they could skim egregiously off of every transaction. When the man-in-the-middle makes more off of a money transaction than either of the parties involved, the systemic result is they end up with all the money. Model the flows, not rocket science.

Taxes are a patch. A direct fix is to severely limit fees for money handling, and to limit executive compensation. Like we used to do, before de-regulation turned it into a shark-infested bloodbath.

I don't know how much of it is something "we" decided versus how the ultra-rich have been able to take over our political system. It was happening for decades but after the Citizens United ruling it became fully legal to buy politicians with corporate money (if you think they weren't pocketing a lot of that PAC money you're insane).

As a result, the regular people lost our voice in the political process. Our political system -- yes, both parties -- exists to subjugate us and keep wages low for unskilled labor. The recent protests / riots have been about the police state that has developed in response to this.

I was in the middle of them in my city, and the rioters were primarily poor and white. Their grievances were both pro-Black and economic. They were trashing wealthy areas and stealing from the rich with no reservations. The common sentiment was "I've never lived anywhere nice, why should I care about keeping their [the rich] area nice?" You don't have to be Black to feel that way.

You're totally right on why wages are the way they are, and on Communism too.

I'm not so sure about UBI, though. You'd lose a lot of the workforce that don't make a lot of money, right off the bat.

That may not in itself be a bad thing. The scary thing about UBI is that we'd create an unhealthy dependence on the state. I could see it derailing. For all the talk about the US as the modern Roman empire, isn't that exactly what went wrong with it? Citizens dependent on UBI. And you can see similar things in the United Arab Emirates and Saudi Arabia. I used to preach UBI but now I'm sceptical. I think minimum wage is a less dangerous tool.

Agreed. My point was you lose a lot of the workforce that power the economy, so you end up losing a lot of what was funding the UBI in the first place (like, it's really expensive) so then how do you support it? And then, these people are dependent on the state and UBI... and then now we can't fund UBI? How well that's gonna go over! Plus, we probably won't get rid of the other social programs to fund UBI, so even the savings people are saying will happen most likely won't. No one will want to get rid of what we've already got.

Minimum wage is less dangerous, agreed, but it feels like just pulling out the bottom rungs of the ladder, since it limits what contracts can be made, not really raising the people on the bottom up. Sure the overall effect on unemployment won't be much because not a lot of people actually are on the minimum wage, but young people and low skilled workers will have a harder time.

He and his team at Civic Ventures have a podcast called Pitchfork Economics which is worth listening to:


> One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning.

Almost prophetic to today's events. It's gonna be a real rough ride once the masses that are currently focused on the murder of George Floyd and countless other PoC expand their view and take aim on the systemic issues that plague many Western societies.

> These idiotic trickle-down policies are destroying my customer base. And yours too.

Yup. I'm German, our car manufacturers have had the problem for years now that the only place they can grow and sell cars is China or some other export target. But well, that's the result of having:

- about the biggest low-wage sector in whole Europe

- 2/3rds of the population with either no meaningful savings at all or in debts (https://www.boeckler.de/de/boeckler-impuls-vermoegen-nur-jed...)

- and cars that cost tens of thousands of dollars in new

How is the German economy supposed to "pull itself out of the recession on the bootstraps" when the majority of the population does not have bootstraps?

The analogy isn't quite correct. The current movement started with BLM and is turning into a referendum on policing, it isn't directly related to economic inequality (although under the hood, it's exactly that).

The usual stopgap is a vast expansion of consumer credit. But I guess that phase has already passed in Germany as well.

That doesn't work too much here for two reasons:

1. German consumers are notoriously averse to debt ("Schwäbische Hausfrau"). Most transactions pre-covid were in hard cash or using debit cards, credit cards are rare and American-style revolving credit cards even rarer (the debt incurred on a standard German CC will be fully deducted on the third workday of the month, no partial payments or payment targets). Consumer debt is mostly real estate, cars and financing for big-ticket purchases such as furniture or expensive computers).

1a. Additionally, German consumers and companies are even more averse to risk. Going bankrupt with a company (or personally) is seen as deeply shameful and something that is only reserved for the lower classes of society (which also explains, next to a lack of venture capital, the lack of successful global scale start-ups from Europe), and many shy away from stock markets and capital investment... it wasn't widespread even before the dot-com burst, but that essentially killed everything involving stocks as an investment methods to this day, so rather than to invest in ETFs people prefer to "safely lose money" in zero-interest "saving plans". And as 2/3rds of Germans don't have anything left over to save after making rent and food and Germany being a "renter market" instead of an "owner market" in real estate, they also cannot build up equity over the decades and generations.

2. Credit requirements: the European "Basel 2" requirements on credit are enormously restrictive. It's extremely hard to get approved for loans and to make it worse, it doesn't make any difference if you have done business with the bank as a known customer even for decades, the decision to grant a loan or not must be purely statistic/math based. This royally screwed e.g. farmers who suddenly had to put up their farm / equipment as collateral for loans for seeds, but also prevents lower classes from using (consumer) credit to invest in either outright consumption or into furthering their position in society (e.g. by starting their own company).

Germany has traditionally had a political culture that was debt-averse, mainly because where in other countries the parliamentary left was Keynesian, the SPD favoured Ordoliberalism [1]. This resulted in the infamous constitutional amendment that governments had to balance every budget.

I think, though, that this is now beginning to be seen as a mistake and the attitude to debt is thawing. The requirement to balance public spending was suspended for the Covid measures: I think this would not have happened before the Eurozone crisis.

I'm talking about 'elite' opinion, where you are talking about public and business opinion, but I am guessing that the changes will spread if the Covid measures are seen as a success, which if the comparison is made to the US they are very likely to be.

[1]: https://en.wikipedia.org/wiki/Ordoliberalism

Thanks for very informative reply.

1. I hope that this stays this way, a needy public may be very susceptible to credit marketing.

2. I find it a bit odd that this doesn't seem to apply here in Sweden. Predatory loans are a plague on society atm. At the level where commercial breaks are almost exclusively gambling and payday loans.

Gambling regulation is individual for each country, it's a loophole used by e.g. Maltese web casinos advertising to German consumers.

Yeah, I know. Just added the gambling bit to emphasize how cynical it is.

Debt only delays the inevitable failure of get-a-job freestyle capitalism as we know it.

It's too bad that articles as good as these don't say on the front page for more than a day.

When my dad read this, he bought a pitchfork and mounted it on the front of the house.

There’s no problem with capitalism.

The problem is rich people aren’t willing to share the wealth with less fortunate.

Socialism is a dirty word in the USA but it’s really just about taking care of everyone. Rich people - to generalize - aren’t ok with people getting free or minimal cost health care education housing and a financial safety net. But in general terms the rich fight against this.

People get mad when you .... the rich... can have houses and cars and holidays and all the good things, but no one fights to ensure the less fortunate can own houses, that they aren’t bankrupted when they get sick, that they don’t have to work till they’re 78 even assuming they can get work.

That’s why the pitchforks will one day come. Because the rich want all for us, none for you.

503 anyone?


The lowest union participation rate out of those five countries is Norway with 51%. The other four have a union participation rate of over 2/3s of workers. Oh and they implement minimum wage at the provincial/city level.

Strengthen unions (not the police union, ofcourse) and local governments. Then you will see the streets paved in gold my friend.

The ford story is a myth. A fairy tale told by investors to their children whom they want to grow up to become successful venture capitalists. He raised wages to:

* Deal with worker turnover (Jeff Bezos did this too)

* Gain more social control over his workers (he had a thing for good/clean/christian/nuclear family living and he wanted a remuneration policy that would let him enforce that).

* To poke some of his shareholders in the eye (whom he'd had fallings out with).

* Pour cold water over incipient unionization (Jeff Bezos also did this one recently).

The oft repeated idea that our media likes to promulgate that it was a grand, magnanimous gesture done for selfless reasons (by a virulent antisemite no less) is not only untrue, it's the exact opposite of true - there had to be four really solid reasons to jack up wages before Henry Ford had his arm twisted into doing it.

> Pour cold water over incipient unionization

I'm generally pro-union, but I have absolutely no problem with an employer deterring its employees from unionising by paying them well and treating them right.

So... you don't disagree with the correction I made... but you'd just like to emphasize how much you agree with Henry Ford?


If that's what they'll pay with no union, think about what they'd pay with one.

Wegmans also famously pays more than union grocery stores and treats their employees better.

Deal with worker turnover

This was a real problem for early factory workers, the work was alienating in a way that wasn't the case for traditional craft work.

Sounds just like today

The entire articles point is that raising wages is not a grand magnanimous gesture done for selfless reasons, but instead a very selfish act that leads to increased wealth and dramatically reduced chance of pitchfork related complications for the 0.01%.

This is exactly the point of the article, and yet I ask myself... should I care? The existence of zillionaires does not per se harm anyone, and if they decide to improve the plight of the masses in order to save themselves from violent backlash, does it actually matter, so long as the masses are helped?

So, your interests align currently at this brief moment of history. What's to say this power dynamic will endure?

They use their power like this because they are afraid of the pitchforks currently. What happens when they no longer fear those? They are steadily working to make themselves pitchfork proof´.


the owner of Amazon can draft and pay for legislation, and has the power of millions of voters. How is that fair?

The problem is not zillionaires, the problem is that there are people working full time and can't afford rent. It's not an issue of billionaires being evil, or greedy. It's an issue of bad economic theories (trickle-down) dissuading government from adopting effective policy.

The housing affordability crisis is mostly a problem of land use and development restrictions, poorly related to billionaires or macroeconomic policy. Many of these housing policies were originally designed by the white middle classes with the goals of keeping black people out; today they occasionally still serve that purpose but are more about helping property owners prop up their net worth, comprised substantially of housing wealth.

> But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day.

As long as people keep getting this so badly wrong the problem, whatever it is, is never going to be fixed. Really I just call on people to stop using the wrong language and try to articulate detectable problems.

If you look out the window of your car (or house) and see homeless people (or mobs) - that isn't inequality. If all the homeless people had houses or all the mobers a comfortable life, the amount of inequality would be about the same as it is now. Inequality as measured is all but undetectable in the real world. I have no idea how unequal I am to the people who I see every day - and none of my readers on HN do either unless they've spent a few hours poring over some very dry statistical compendiums.

The problem is much more likely that the link between productive work and reward has been completely severed for more than 40 years [0]. If being productive reliably led to being rewarded there would be many less problems. The people being rewarded aren't the people who are producing results. Go look at the late 60s and early 70s to figure out what changed.

[0] https://www.epi.org/productivity-pay-gap/

I have no idea how unequal I am to the people who I see every day

When someone drives past me in a car that I know costs the equivalent of 30 years of my salary I do have some idea of how unequal we are. It's a pretty big clue.

Yes. I wish we would frame these conversations about value more in terms of time. It's even starker when you address it directly:

>When someone drives past me in a car that I know costs the equivalent of 30 years of my life...

Even as a comfortably paid software developer, someone with a billion dollars owns the equivalent of ten thousand years of my life.

Fair enough. So what if I gave you the same car and he doubled his wealth.

Now inequality has increased much more significantly. And you can't tell.

You haven't found a measure of inequality, you have identified that you can't afford an expensive car. Insofar as they are problems, the solutions to inequality and material lack are different from each other.

EDIT And furthermore, if inequality is the major problem, you're arguing you'd rather be in Scenario Now (no car) rather than Scenario Hypothetical (very expensive car). I don't like telling people their opinion, but I'd be shocked if inequality is going to be a factor in your decision making with that one.

You haven't found a measure of inequality, you have identified that you can't afford an expensive car.

It demonstrates that someone can afford an expensive car and someone else can't. That's not a measure of the extent of the inequality (the car owner could be a millionaire or a billionaire), but it's certainly a signal that inequality exists. I know that the inequality is at least someone having enough to spend 30 times what I earn on a car, and could possibly be thousands of times larger than that. That is a measure of inequality insofar as it clearly shows inequality exists. It's just not a very specific one that tells us the extent.

But you've still got no idea how much inequality is present - you've got a lower bound and 3 orders of magnitude error. They might have 30x or 30,000x times. You could take an action, halve inequality, and not be able to detect any changes. If you can halve the problem and not detect any change I don't believe you've identified the problem.

However if you doubled your living standard you'd know all about it.

You could take an action, halve inequality, and not be able to detect any changes.

This assumes that halving the wealth of rich people would have no impact on the world other than changing this immeasurable inequality. That seems unlikely.

Most that wealth was created in the last 20 years. Amazon, Google, etc, etc barely or didn't exist in 2000. If you are >20 years old, you have seen a world where there was substantially less wealth and inequality. It would be very easy to reduce the wealth of rich people by returning to how the business world was in 2000. Pretty sure Bezos of Amazon is the richest man in the world right now.

Destroying the wealth would be the fastest and easiest way to reduce wealth inequality that has built up in the last 20 years. It is a terrible idea. So the problem to solve is probably not wealth inequality.

To try and put it simply, halving the wealth of rich people is bound to have an effect - but that effect might be great or horrific for everyone else.

I feel like I should add an obligatory comment here: cars are a very poor indicator of true wealth precisely because luxury is explicitly designed to convey the opposite.

Now, private jets and yachts...different story.

That’s not how markets work. If you gave everyone a Lamborghini, the value of a Lamborghini would plummet, so the wealth measure doesn’t move. Also, resources have to come from somewhere, and that has a cost. The theoretical you’ve proposed doesn’t hold up to much scrutiny and doesn’t seem like a useful model.

> ... If you gave everyone a Lamborghini, the value of a Lamborghini would plummet ...

If your argument is that the person with a Lamborghini isn't materially better off in a real sense and that wealth inequality is therefore a social construction then I am profoundly confused if you are also aligned with the article's thesis that pitchforks are going to be involved due to wealth inequality.

The logical conclusion of that line of thought is to destroy the Lamborghini to promote wealth equality, which is stupid.

See also: Aston Martin

>> The problem is much more likely that the link between productive work and reward has been completely severed for more than 40 years [0]. If being productive reliably led to being rewarded there would be many less problems. The people being rewarded aren't the people who are producing results. Go look at the late 60s and early 70s to figure out what changed.

I think this is a very good point. I always felt that this was the case when I compared my own generation with my parents' and grandparents' generations.

That's not to say that things were always perfectly fair (especially during my grandparents' time). They never were completely fair, but at least the path to financial rewards was much more clear. The social contracts around wealth accumulation were always challenging to meet (especially for certain groups of people) but they were somewhat reliable in the sense that if you could meet certain skill requirements, or saved a certain portion of your income, your odds of being rewarded were high.

Today, the social contracts which relate to skill and productivity are totally unclear - The only real social contract which is clear is that if you have capital then you can get more capital. Saving-up for something doesn't work anymore because of insanely inflationary monetary policy, you can't buy a house anymore (prices are also inflated) and the investment options which deliver returns tend to be both speculative and unethical (monopolistic).

The number of intelligent, highly educated people who are poor and whose careers are uncertain today is unfathomable. The ratio of poor-productive people to rich-productive people is massive and growing. I don't think this was ever the case before.

The number of rich-unproductive people is constantly growing because they are being selected based on attributes that are not related to their productive abilities. They are parasites on the system. They are enriching themselves by shrinking down the economy through increasing wealth concentration for themselves and their friends. They're earning money not by adding value, but by making it harder for productive people to earn money - This makes them more desperate for money, more vulnerable and more exploitable.

The more rich-unproductive people there are, the less the social contracts make sense and the more people are going to want a reset. There is no limit to mediocrity. There is a point where people will accept an economic reset in whatever form is offered to them (dictatorship, communism, fascism...)

Effort to reward I think sometimes is measured as upward mobility. I agree that this is an important aspect, which needs to be measured. I think they call this equality of opportunity and education. So not everyone gets equal outcome, but all should have equal footing at making it up the ladder.

That said, I think some of the issues are just that we're not even meeting the fundamental human rights. If you read over the UN declaration of human rights here: https://www.un.org/en/universal-declaration-human-rights/ you can see we don't even meet them all.

> If you look out the window of your car (or house) and see homeless people (or mobs) - that isn't inequality.

I don't understand your reasoning. If some people are homeless while others have houses, how is that not inequality?

I've lived in São Paulo, where homeless people can be found on literally every street, while millionaires fly from skyscraper to skyscraper in their private helicopters to avoid the impassable traffic. No-one needs to pore over dry statistics to know that Brazil (to take just one example) has enormous levels of inequality.

If you go out and measure 'inequality', it isn't a measure of homeless vs middle class, it is a measure of homeless vs mega-wealthy. That is a stupid comparison IMO - the gap between the poor and mega-wealthy doesn't matter as much as the actual conditions of the poor.

The homeless vs middle class inequality could easily be much the same as it always has been. The middle class are getting increasingly tenuous in their wealth.

The rich are glad that you believe this, and they wish all of us were so foolish. Focusing all of our attention on the poor is what they want us to do. Meanwhile we'll be ignoring the people whose lobbyists have destroyed our society...

>> the gap between the poor and mega-wealthy doesn't matter as much as the actual conditions of the poor.

I expect that when most people talk about the gap they are referring specifically to the actual conditions of the poor, and not the range of the gap.

Then they don't mean inequality. That is talking about a living standards.

Inequality problems can be very effectively by taking stuff away from the wealthy. That doesn't work for a living standards problem because there isn't enough real stuff for it to work. Look at the real amount of resources consumed by the mega wealthy and divide it by the number of poor people - the results aren't very impressive. Not the paper wealth, but real consumption.

Jeff Bezos for example may make billions on paper, but his actual personal consumption isn't going to be anywhere near that amount in goods and services. Distribute his real consumption to the poor in New York and it won't make much of a difference, especially over the long term. But absolute inequality would noticeably drop. The poor would appreciate it, but it isn't going to solve systemic living standards problems.

I had the impression that the main reason wealthier people in São Paulo use helicopters is to keep their ears in place[1], avoiding traffic jams sure might be a nice plus.

[1] https://www.nytimes.com/2002/02/13/world/sao-paulo-becomes-t...

That too. And it illustrates another reason why extreme inequality is bad: even if you're a total psychopath with no concern for anyone except yourself, it's not in your interest to live in a society with extreme inequality - unless you like the idea of being surrounded by people who have so little compared to you that they're desperate for what you have, and are willing to use violence to get it.

> The problem is much more likely that the link between productive work and reward has been completely severed for more than 40 years [0]. If being productive reliably led to being rewarded there would be many less problems.

You spent paragraphs arguing against the existence of income inequality, then you finally get around to this statement, which is what people are actually talking about when they say "income inequality", and you agree with it. People are unequally rewarded for their productivity. The description of the first resource in your link even begins "Rising wage inequality..."

I live in LA in a house I rent. My morning walks take me by houses that cost up to $5 million, a short drive less than 5 miles I can see homes that are $20 million.

In addition to the houses and the cars discussed--I'm a pilot. I see private airplanes routinely that are capable of taking their owners to Paris non-stop and cost $12 to $60 million.

The trappings of wealth are merely a drop in the bucket.

Try hanging out in the non-rich areas of town and you will immediately understand how the wealthy have been attacking society.

if you look at the graph, it all begins after 1971. that was the year the gold standard was finally abandoned for real.

i am not an expert and don't know all the important puzzle pieces, or even understand them. but looking at our financial systems, i think a big part of the reasons for the problems of our current form of capitalism is the unlinking of fiat currency from any form of backing.

I'm just trying to get my head around this too. I think the basic mechanics of it are:

1) Abolish gold standard, enabling government to print money

2) Government prints money which is captured by large corporations

3) 90% of the population still owns the same amount of money but it's now worth far less because the rest of the pie is having cash pumped into it.

We're seeing a current example of 2/3 with the Coronavirus government stimulus, which went directly into plutocrat pockets while the masses were handwaved away with a token gesture.

>> We're seeing a current example of 2/3 with the Coronavirus government stimulus, which went directly into plutocrat pockets while the masses were handwaved away with a token gesture.

This helps to maintain an illusion of scarcity. It keeps the productive working class desperate for fiat money. The realist is that there is no scarcity of fiat at the top echelons; this is made clear by the high valuation of cryptocurrency projects.

The top 1% has so much free money coming in that they can toss it away some cryptocurrency projects with no effect at all on their lifestyles... And in doing so they also hedge their personal risk against the reality of an unsustainable fiat system of which they are currently beneficiaries.

Yeah in principle the money printing could have been used to devalue the assets of the wealthy and redistribute wealth, decreasing inequality. That didn't happen, presumably because corporations captured the wealth in the way that you describe.

Further, it is clear that some of those corporations (e.g. FAANG) are not the "original wealthy", which is often used as part of an argument suggesting that there is a lot of wealth mobility, but it seems incredibly limited to me, and the flow is hardening just as it did before.

that's pretty much my train of thought as well.

trickle down economics don't work like the theories would want it to, just look at quantitative easing and the ECB equivalent. all those cheap loans to banks never ended up in the real economy

This doesn't really stand up to the facts. Governments went off the gold standard far before 1971. By this logic the New Deal and WW2 government spending should've caused huge inequality through inflation.

It seems far more about the success of neoliberal policy allowing economic & political power to concentrate. The various ways that concentrated power then kept capturing more and more of the pie can't be reduced to a single simple narrative.

You have for example:

* Tax cuts

* Unregulated Monopolies

* IP law

* Owned Media

* Unlimited Campaign donations

And on and on.

I don't think what you're saying here disagrees with my theory. You're describing the mechanics of the second half of part 2 ('which is captured by large corporations').

As government policy is restructured to concentrate more and more wealth at the top, the rest of the economy slowly becomes illiquid and the government has to keep printing money to keep the axles greased. It's unsustainable and we're seeing the endgame now.

Your original post put the blame for inequality on government intervention via money printing.

Govt Inflation -> Inequality.

If only we still had the gold standard then they couldn't cause inequality!

This theory however is contradicted by a bunch of historical data.

There was massive inequality on the gold standard pre-WW1. The New Deal was a huge govt intervention which reduced inequality.

My explanation is that the problem is not government interference in 'free' markets but inequality in power. Economic power via monopolies & weak labour bargaining position AND political power via lobbying, strong parties, gerrymandering.

This power inequality is then leveraged by the powerful to create wealth inequality. The exact mechanisms by which they corrupt the systems to capture that wealth be it inflation or deflation or government handouts or M&A regulations or even slavery doesn't matter. If the systems are controlled by this massive inequality in power then it will find a way to corrupt the rules in powers favour.

So arguing for any particular economic policy is less important than reforming the voting systems, the tax system, the lobbying system and ownership of the media.

What do you back it with though? If the global economy was still linked to gold the the price of gold would be astronomical and cause similar problems to oil. Any country that happened to sit on a gold reserve is suddenly a potential world power.

Although if I remember the price of gold was actually regulated while it was linked to the dollar and after the gold standard was removed the price per ounce went up fast. That sort of control feels like a fiat currency anyway.

Changing the mechanics of the economy will not fix inequality, it is born from corruption in the ruling class. They more they are held to account the more equal society will be.

The real problem now is more and more power lies with entities that are detached from government, and the peoples vote (such as it is) has even less effect on those global entities.

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