There is a popular political perspective that rules on campus these days that treats wealth as something that just magically exists and is simply "redistributed" by one means or another like, say, a phase change in physics where no magnetism/charge/energy/etc. is ever created or consumed. I waited for a point in their model where people actually produced wealth and consumed it, made something or ate it, in addition to redistributing it. Not part of the model.<p>And the idea that things have a "true" value, the one put on them by enlightened campus philosophers, so a transaction not controlled by the wise and just will have a winner and a loser. I waited for the idea that I, shoeless but with ten loaves of bread, and you, hungry but with ten pairs of shoes, might reasonably value bread and shoes differently and BOTH win from the "redistribution" of bread and shoes, but it was not part of the model.<p>But their model (which they claim "reproduces inequality with unprecedented accuracy") could also (they claim) be fitted to a variety of different observed power law distributions when its parameters were adjusted, and the more parameters, the better the fit became. Yes, and they could probably get their model to describe the frequency distribution of English vocabulary (also a power law), with remarkable accuracy which probably does say something about economics but maybe not as much as they seem to think.
It should be self-evident that the accelerating inequality we’re witnessing is not the natural inequality of competition and the power law, easily explained by simple arithmetic.<p>An <i>accelerating</i> and <i>historically high</i> broad societal effect is naturally a product of broad and unique properties of the current regime, rather than fundamentally consistent properties, which would naturally be seen across all time.<p>What is more broad and far-reaching than manipulation of the money supply itself? “We have found that inflation (1) worsens income distribution; (2) increases the income share of the rich; (3) has a negative but insignificant effect on the income shares of the poor and the middle class; and (4) reduces the rate of economic growth”
<a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295.848&rep=rep1&type=pdf" rel="nofollow">http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.295...</a><p>It’s not difficult to see why - under an inflationary regime, those holding currency lose out relative to those holding assets, because the former’s wealth is not preserved; and low income wages are facing a constant headwind that their earners are less equipped to navigate.<p>We in the US have been engaging in an experiment since 1971, which has resulted in a marked discontinuity and a shift in to whom productivity growth accrued:
<a href="https://wtfhappenedin1971.com/" rel="nofollow">https://wtfhappenedin1971.com/</a><p>This is not necessarily the true or only explanation of our accelerating and historically high inequality, but it has the properties of a realistic explanation, in that it identifies a broad, historically distinct cause.
A lot of it misses the point.<p>Equality is unavoidable as long as people are allowed to compete for stuff.<p>If people are allowed to compete for property then those that are better at competing will have more property.<p>It might be possible to have property equality when people have access to same things but compete for different things, for example status, choice of partners, etc.<p>And the most important point people seem to forget:<p>Inequality does not mean we need to have people who can't satisfy their most basic things. It is possible for people to be allowed to compete for wealth and at the same time ensure those that don't want or can't compete have their basic needs like food, shelter and medical care satisfied.
I find the creation of physics-inspired sociological models distasteful. It's often a way of manufacturing certainty and authority through mathematical obsfucation.<p>It always runs the same way. First, you think of some political opinion you want to support. Then you come up with a mathematically trivial toy model that throws away 99% of the structure of the problem, whose few dynamical rules are artificially chosen so that they obviously will produce the result you want. (Though this part may look intimidating, it's not once you know how the game is played; I can easily cook up a toy model that "proves" any given political opinion upon request.) Then you put a lot of energy into solving the model in all kinds of cases, showing off your mathematical skills.<p>The end result of all such social models is a set of predictions that are only tenuously linked to reality. A common example of such a claim is "X follows a power law". But the models are usually too weak to actually calculate the <i>power</i> in the power law, and the data too tenuous to even show you have a power law at all. (Most of the time this is done by showing a fuzzy cloud of points on a log-log plot with a tiny range, drawing a line through it (ignoring the fact that literally anything can be fit with a line if you zoom in enough) and declaring victory.)<p>The point of mathematics is to make your postulates and predictions precise. If your postulates are obviously unrealistic, and your predictions are too vague to be meaningful, then the mathematics isn't serving any purpose -- except for giving your work a false authority.
This is a lot more satisfying than just r > g, which although seeming to be well supported in a rather large book somehow is dissatisfying. Specifically, I was looking for some kind of agent model like what this author is presenting here.<p>I've often thought about the "it's expensive to be poor" adage. What's interesting is he takes in this risk preference idea, in which you naturally expect the poor to have to be cede certain opportunities in order to secure further existence. I've played a lot of poker where you see this dynamic where the big stack guy can take chances and still win, and the cards (and skill) don't matter that much.
I come from Eastern/Asian culture. I'm surprised to see Western culture swings. When I first got to live in Western culture, everyone was talking about equality as truth. There was equality everywhere: gender, income, race, marriage, geography. Now we talk about inequality as, maybe, the accepted truth. People talk about tail, asymmetric risk taking.<p>I think Eastern philosophy has a balanced view on this. There're Yin & Yang. The system eventually needs to find a balance. Stop swinging, start living.
> "388 individuals possessed as much household wealth as the lower half of the world's population combined"<p>My goodness! This completely shocked me. I wonder if we are all complicit in allowing this to happen. I know wealth buys power and vice versa, so it likely would be hard to change but aren't we all indirectly allowing this to happen?
My perspective on this might be too naive; but it seems <i>wealth</i> inequality (which is the topic of this article) is inevitable since a significant proportion of the population will spend their entire income and therefore never save.<p>It seems like about 19% of all Americans have zero net worth, and something like 44% of single American retirees are dependent on Social Security for 90% or more of their income, implying they saved very little throughout their entire lifetimes.
It's inevitable and a direct consequence of the labor system that we live in. The internet makes it worse but its not the problem of the internet, its a problem of the system.<p>In our labor system, a small number of individuals are by definition going to be payed, as employees, a small amount of the value that they add in order to make their boss wealthier.<p>Over time, the employees get paid a constant amount of money that they need to spend for living expenses, but the employer wealth will compound and accumulate over generations.<p>It's a system that comes directly from medieval serventry, designed to concentrate the wealth in the hands of the noble.<p>Take for example a large surface supermarket, with 100 employees making minimal wage. If those same persons would each own their small family shops and serve the same amount of customers, you would have 100 families well off making way more than minimal wage.<p>Serve those same customers through a supermarket, and most of the wealth will be concentrated in the hands of the supermarket owner, while the employees make only scraps.
I don't get why lately the trend it to focus in inequality instead of focusing in poverty.<p>I mean, if the % of poverty decreases, then economy is moving in a good direction, in spite of inequality, right? Suppose you had one million, and somebody else has one thousand millions, there would be a large gap, but I wouldn't consider it as negative.<p>If there are arguments against what I wrote I would gladly read them and consider them.
Have there been any efforts to quantify what level of inequality is reasonable?<p>For instance, the GINI coefficient ranges between 0 and 1, where 0 means everyone has the same amount, and 1 means one person at the top has everything. Depending on how it's measured, the US is somewhere between 0.4 and 0.5.<p>You don't want to be at either extreme, so some level of inequality is desirable. Is there an appropriate amount of inequality that is generally accepted? Has anyone tried to identify the appropriate target level?
Without inequality we would not have airplanes, transatlantic cables, jet engines, electric cars, SpaceX, cloud computing, radar, internet phones, steel, automobiles, the textile industry, fuel, plentiful food, fresh fruit year round, etc.
Of course it is...it's a natural consequence of compound interest. One's ability to accumulate additional wealth scales exponentially with their level of existing wealth.
There's been hundreds of years of writing on this subject from political and economic theory, but the article doesn't touch on it at all; it's just a weird mathematical model.<p>Then there's this:<p><pre><code> You might, of course, wonder how this model, even if mathematically accurate,
has anything to do with reality. After all, it describes an entirely
unstable economy that inevitably degenerates to complete oligarchy,
and there are no complete oligarchies in the world. It is true that, by itself,
the yard sale model is unable to explain empirical wealth distributions.
To address this deficiency, my group has refined it in three ways to make it
more realistic.
</code></pre>
So, they started with a model that made no sense, and modified it to make it match "reality", and finished with this:<p><pre><code> Given how complicated real economies are, we find it gratifying that a simple analytical approach
developed by physicists and mathematicians describes the actual wealth distributions
of multiple nations with unprecedented precision and accuracy. Also rather curious is that
these distributions display subtle but key features of complex physical systems.
</code></pre>
Yeah... curious....
Peter Norvig did one of these.[1]<p>The authors can fit data better by adding parameters, which is no surprise. But these models omit an important feature of the real world: growth. "Yard sale" models are zero-sum.<p>[1] <a href="http://nbviewer.ipython.org/url/norvig.com/ipython/Economics.ipynb" rel="nofollow">http://nbviewer.ipython.org/url/norvig.com/ipython/Economics...</a>
Income inequality is a sign that an economy is functioning properly. For people vary greatly in their talents, ambition, tolerance for risk, vision. Some can lead, delegate and inspire, while others cannot.<p>Some are great at collaboration, others love confronting difficult challenges. Some are great at squeezing suppliers and others good at pushing people to adopt the next wave of technology. Some know exactly what people want and others are incredibly creative. Some never stop learning.<p>Some do none of the above and only want everything defined for them with no risks or growth required.<p>How could anyone analyze all of this incredible variability and decide whether people get too much money for their contributions?<p>Income inequality rewards the development of all of those qualities.
Let's assume for sake of argument that "inequality" is in fact "inevitable."<p>Then what policy conclusions are we supposed to draw?
Income inequality I'm totally in favor of as a reward for creating value. Outsized value, outsized reward. With that in mind, I have a few caveats. To function properly:<p>- Social mobility must exist: income inequality is available for everyone based on their merits, not coupled to things like circumstances at birth.<p>- Wealth inequality must only exist for the generation that earned it. Passing on your largesse to your children is just as bad as the plutocracies that the founding fathers tried to escape. They should be rewarded for the value they create, not the value I created.<p>- The bottom line is pulled up to the extent that you can live a comfortable life even if you fail.
tl;rd if you always bet x% on a fair coin you are going to lose in the long run, ex. 0.95*1.05 = 0.9974999999999999 < 1 (you will win and lose the same number of bets)<p>so if world is a casino, where everything is a bet for utility with someone else, since the best strategy is not betting (or betting the less %) the richer is always in an advantageous position, and on the long run will have anything: this is intuitively true, but it has to be said that this passive force is way inferior compared to the active skill of a good better, that can completely override this force (that on a single life span would be like 1% of the force coming from skills). Basically the system is too chaotic to even notice this little force.<p>Interesting idea, but this one from margrit kennedy <a href="https://vimeo.com/71074210" rel="nofollow">https://vimeo.com/71074210</a> is even better, here it's another passive force, but with way more impact than that, can be considered a real case of the general idea that "inequality" is a natural phenomena (that is a quite lazy concept cause it makes humans totally dumb and with no free will, like, sure, even war is natural, and murder, etc etc).
honestly these ideas are so basic that shouldn't have names on them, and surely they are not the first people to have notice that.
This question only worries me in the context of philosophy or in the context of the developed world.<p>My experience, being born on the African continent and with my (known) family having lived on the African continent for 10 generations, teaches me that this question is not a matter of philosophy but of pragmatism. The impression I have, whether illusory or not, is that the more fundamental human endeavor is towards Mazlo's pyramid of needs. One example that I can give is that often those that "defend" the position of the rich are not rich themselves, but rather believe in the value of personal property ownership.<p>And with regards to those in developing countries in general, I think the feeling is that you simply want to better your life up to a point of some kind of perception of equal access to opportunity (whether attainable or not). My point is thus that inequality in wealth is perhaps like inequality in everything else, including inequal distribution of personal preferences (in everything). It's easy to say this as a person with access to education and opportunity and pretend to say it on behalf of others, and could of course be misguided, but I don't know if relative spread of opportunity is important in the way that absolute spread of opportunity is.
Unfortunately I cannot read this article, because of the pay gate, but I can confidentily say that inequality is most certainly inevitable.<p>Inequality is the core concept which keeps everything in balance on this planet. Humans are destroying this planet by trying to achieve a utopian world of perfect equality. The only equality that we should strive for is equality of opportunity, but we can't aim for equality of distribution of resources as this would lead us into eating up our entire planet.<p>If everyone in this world would get the medical care to live until 100, if everyone would get fed with the same amounts of fish, meat, eggs, fruit, vegetables, etc. then we would pretty quickly end up in the tens of billions of human beings consuming everything around us until nothing will be left and we have killed ourselves.<p>Resources are limited and unless we can build more planet Earths at random will, then resources will always remain scarce and the only fair way to distribute these resources without looting everything to its extintion is to let all animals on this planet (including humans) compete for it. The strongest lion will catch the Zebra, the smartest human will afford a big mansion, etc.<p>Humans need to become comfortable with accepting the laws of nature which kept our planet flourishing for so many million years or we will put an end to it very quickly. No human has a right to anything. Whatever you are given is what you have either earned, stolen or you've been given out of mercy, but never because of entitlement. The sooner everyone can accept that fact the better things will turn out for us as a species.<p>Also it's important to understand that what's good for humans (today) is not necessarily good for humanity. It's good for humans to burn fossil fules like mad people to keep our homes warm in the coldest areas of the planet or to install energy wasting air cons in hot places which we want to inhabitate, but in the long run this is damaging our environment and bad for humanity. It's good for humans to fly everywhere and drive everywhere today, but it comes at a cost for humanity at some point in the future.<p>Humans are ego centric, self entitled and selfish animals which think that what's good for them today is good for us tomorrow, but it's often quite the opposite. The truth is, the more we live in animalistic conditions like survival of the strongest, the better it is for us as a species in the long run.
If a model shows that inequality is inevitable, then perhaps we can extend the model such that equality is achieved, e.g. by adding a certain amount of tax to the equation, where the tax is redistributed over the population. This could be called the "fairness tax", and of course would still allow inequality where wealth is created.
Inequality is a tricky word. At first I disliked it because, for me, it's a non-goal to have everyone equal.<p>I know there are some people who are willing to work harder than me, and I don't mind if they have more wealth. I also know there are people who don't want to work as hard. (This isn't meant as judgement, I'm just saying I'm somewhere in the middle.)<p>But let's not be black and white about it. I'm OK with some variation, but with some kind of limits. It wouldn't be reasonable for someone to receive a million times the reward for working twice as hard.<p>And although I'd prefer a better term, many people seem to use "inequality" as concise term for that. I don't love the choice of terminology (too prone to misinterpretation), but I can handle it.
Why is this surprising? Wealth provides the means to acquire more wealth, so of course any initial inequality will tend to intensify without some mechanism to redistribute wealth among those with less wealth.
I have to question the meaning of their result.<p>it's a known and inituitive result that a random walk on a lattice eventually reaches every point. This has no practical meaning whatsoever. it's not an interesting result because, just like the random walk on a lattice, after one person becomes an oligarchy, eventually a different person will also become an oligarch.<p>why did you choose to stop when the first became an oligarch? to make a click baity title?<p>people need to understand probabilities to read through bullshit like this article.
Inequality is inevitable.<p>We are not born equal. Some people are smarter, some people are better-looking, some people have more energy, are more motivated (or the opposite).<p>We can try and do everything we can so that everyone has the same opportunity to succeed, but if you want the same outcome you'd have to limit the smarter, better-looking, more energetic people so that their outcome is lowered to be the same as everyone else, and I don't think this would be positive for anyone.
According to Dave Ramsey, 79% of millionaires inherited $0.<p>Globally, poverty is on the decline.<p>What's the problem with wealth distribution, exactly? Besides jealousy.
Inequality will always be inevitable. Striving to better yourself by learning new skills and improving your abilities is to produce inequality because you're rising above the mediocre masses anytime you make an effort at anything. People should focus on equity, not equality. Equality of outcome is more fair than equality of opportunity.
That's an interesting model, especially with respect to how well it matches the reality. Since the transactions in the reality definitely do not look like the coin flip transactions in the model, it definitely warrants some more investigation as to why exactly it matches reality so well, despite not resembling reality as we see it.
Of course inequality is inevitable. Some people are bigger/stronger/faster than others. They will naturally out-compete the others for resources. And once they have those resources, they will then use them to accumulate even more wealth, buy off politicians and institutions to siphon even more off, etc...
My point in favor of the present income distribution being "natural" is that statistically, income is even somewhat more equally distributed than Tinder likes. Both are indicators of how good you are/how much people want to deal with you: give you cash or have sex with you. If there is no 'trick' in either distribution, they must be distributed equally. They are. Income slightly more equally because of the minimum wage/social pressure on businesses to hire useless workers/government providing some crappy employment to useless people.<p>Wealth is less equally distributed than income or Tinder likes, because it's an antiderivative of income distribution, also completely natural. And also because of the generational factor: you are very unlikely to get swiped right because of who your dad was, but your dad could have left you some cash or connections.<p>And yes, income is less equally distributed now than in 2008 exactly for the same reason as millenials having less sex on average than X-ers had in 2008: because we now have Tinder and it makes picking best partners a lot easier, resulting in top 1% best having sex with everyone with just scaps left for others. Money follows the same way due to the same factor of the smartphones and the Internet in general: success has become infinitely scalable.<p>It's extremely hard to do anything at all about it. Maybe we just need to know about this as a fact of life and build social constructs to contain the resulting pressures.<p>[1] <a href="https://medium.com/@worstonlinedater/tinder-experiments-ii-guys-unless-you-are-really-hot-you-are-probably-better-off-not-wasting-your-2ddf370a6e9a" rel="nofollow">https://medium.com/@worstonlinedater/tinder-experiments-ii-g...</a>
It's a simple side effect of <i>money creates money</i>. If you have X dollars, it <i>almost</i> automatically can create Y dollars in time T. Integrate over time and you have exponential growth. People starting with low initial number will have exponentially growing differential.
There's one glaring issue with this simulation, and it's that it keeps the amount of wealth static — it models a zero-sum world, which is not our reality.<p>I would like to see this simulation run where the agents are also creating wealth into the system.
What if there's a need for inequality? I.e. if everyone is about same as everyone else, how would the society organize any work that requires coordinated effort of many people? How would it maintain the required discipline?
A simple demo of the algorithm described in the article: <a href="http://dijkstra.cs.ttu.ee/~tammet/oligarch.html" rel="nofollow">http://dijkstra.cs.ttu.ee/~tammet/oligarch.html</a>
The question is not how to reduce or cope with inequality. Rather, the question is: why is there wealth in the first place? Why have billions of people risen out of poverty over the last few centuries?
it's really simple. the world is exponential, not linear. wealth grows (or decays) exponentially. that's it. too bad very few understand exponentiation.
This question isn't decided by market theories but by human nature. And human nature, sadly, makes inequality inevitable. Or, to put it another way, avoiding inequality will always be an ongoing struggle.
Finally found a cached version of the site without a paywall<p><a href="https://webcache.googleusercontent.com/search?q=cache:u4UoSfLPWBYJ:https://www.scientificamerican.com/article/is-inequality-inevitable/+&cd=3&hl=en&ct=clnk&gl=us&client=firefox-b-1-d" rel="nofollow">https://webcache.googleusercontent.com/search?q=cache:u4UoSf...</a>
Obviously there needs to be a balance. Too little inequality and we end up with communism, destruction of incentives for innovation, and a 10 year wait to drive a Trabant - if you're lucky! Too much inequality and there's too small a market to sustain the extraction of wealth by the elite.
This article has several fatal flaws. The first one is that there is a loser in every transaction. Generally speaking, economic actors will only voluntarily engage in a mutually beneficial transaction. A person generally does not enter into a transaction where they are injured. To do so on a consistent basis is self-destructive. A shoe maker makes a shoe and sells it to me for a value greater than it costs to produce. I buy the shoe because the value of having my feet warm and protected is greater than the price of the shoe. We both win. The shoe maker would not sell a shoe for less than it costs to produce and stay a shoe maker for very long. I would not pay for a shoe that did not give me enough value.<p>The authors claim people make a "mistake". In a very small amount of transactions, this may be true, but you cannot base a model on every transaction containing a mistake. But let's look at the math. The authors use an example where every transaction that costs $1 nets either $1.2 or $.83. Over ten transactions, the net is less than $10. But this assumes that the person puts their whole net worth on every transaction. This is false. Each transaction costs a $1. So, the first one costs $1, and the second costs $1, etc. You cannot accumulate the past values of the previous transactions into the current one. This is the coin toss fallacy. If you flip a coin and get 99 heads in a row, the coin toss fallacy says the odds are greater the next flip will be tails. But, each flip is independent of the previous flips, so the 100th flip has a 50/50 chance of being tails, regardless of the results of the previous 99 tosses. So there is no "loser" in every transaction as the authors posit. Both parties win, or the transaction would not occur.<p>Their next claim is that becoming a billionaire is just "luck" and could happen randomly to anyone at any moment. Bill Gates is a billionaire because he created Microsoft. Mark Zuckerberg is a billionaire because he created Facebook. John Smith a fast food worker in Hoboken, Nebraska doesn't just wake up a billionaire one day by luck.<p>And what is bad about being a billionaire. Gates and Musk are doing wonderful things with their money that disbursing it to a million people would not accomplish. The authors never give a reason why income equality is bad. In fact, inequality is the natural order. They never mention the Pareto Principle, popularly manifested as the Bell Curve, which is found everywhere in nature.<p>The authors claim income equality is destabilizing and must be corrected by redistributing all the wealth in equal amounts. However, as stated, income inequality is the stabilized form. It might be increasing slightly now due to faster movement of information, but class mobility is highly dynamic. Yesterday's billionaires are not today's, and today's billionaires might not be tomorrow's. Income inequality is the stable distribution of scarce assets in a free market economy.
Inequality is inevitable. It is baked into everything in nature, from the stars to ocean depths. When was the last time you looked up at the night sky and saw a uniformly spaced and evenly lit field of stars?<p>Evolution itself would not exist without inequality. Yes, some animals were better than others at certain tasks and evolutionary pressure did it's thing over time.<p>I suck as a dancer. I suck as a painter. I suck at a lot of things. And yet, I am a better than others at certain things and I am massively better than others in other areas. My life and that of everyone around me has inequality as a positive element rather than a negative. This is why I hire a plumber and an electrician and don't do everything myself.<p>EQUALITY OF OUTCOME IS A FANTASY.<p>Equality of opportunity is important and should be promoted far and wide. Trying to force equal outcomes is just silly, sorry.<p>Hence the Pareto distribution. It's real and it is a fact of nature everywhere you look. There is no such thing as equally distributed outcomes in but the most esoteric corner cases (having trouble thinking of one example).<p>As for the scale of inequality. That's another red herring.<p>The way I live today is beyond the equivalent of a rich person a hundred years ago. It is WAY beyond the super-rich before that. Kings did not live this way centuries ago. And yet I don't have Bill Gates level money. Not even close.<p>The average person today lives far better than the wealthy lived not too long ago. They certainly have greater access to amazing medical advances as well as technology. There are over FOUR AND A HALF BILLION people world-wide using the internet. When you consider that, in rough terms, about two and a half billion out of the 7.7 billion on the planet cannot use the internet (too young or too old) that means that approximately 87% of those able to use the internet use it. You start slicing that further and you might just discover the percentage is much higher than that. For example, my father certainly falls under the category of not too old to be counted as a potential internet user. However, he has less than zero interest and doesn't use it. My mother, on the other hand, is on the 'net every day.<p>Anyhow, the point is that this business of vilifying the "1%" is just silly. It has no bearing whatsoever on how people live. In other words, they are not taking oxygen out of the room, quite to the contrary.<p>We do need to raise even more people out of poverty, with some areas of the world notable for a desperate need for improvement. Nobody is saying we can't and should not do better, we always can. What isn't sensible is the constant finger-pointing to this mythical "1%" as the problem. Every year we raise millions of people out of poverty. Life, in general, has been getting better and better over time. Even in places where people have difficult lives you'll find they wear clothes and have things that are markedly better than what was available to them just a decade or two ago.<p>If we want to make things better for more people we just need to continue to focus on growing economies through free market capitalism. It's the only force in known history that has elevated so many people out of the dark ages. Everything else is a formula for disaster and misery, also a historical fact.<p>OK, I'll duck now. Let me have it.
Animals on both ends of the bell curve. Serial Killer avg. 10 deaths? Last billionaire I met killed 17 and poisoned 30,000. Silicon Valley is essential viewing at the moment on that subject.
Reading through the comments, I was hoping that someone actually pasted the article itself... because it's behind a paywall. But it seems that most comments can be TLDR'ed as the title of the post.