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Technology and wealth inequality

86 pointsby gatsbyover 11 years ago

23 comments

habermanover 11 years ago
The discourse around inequality in this article and elsewhere is frustrating to me, because it advances the idea that inequality is fundamentally unjust, using the lives of the poor as the example.<p>To me this misses the point. The problem is not inequality, the problem is poverty. If everyone had enough that their basic needs were met and they were not struggling to survive, the fact that some people can afford Lamborghinis and some cannot would not be unjust in my opinion.<p>Without inequality, there are no Elon Musks. Bootstrapping SpaceX and Tesla required more than 1&#x2F;6,000,000,000&#x27;th of the world&#x27;s resources. Big results require investment, and it&#x27;s not practical to crowdfund a multi-million dollar investment. So who should we entrust to make big bets? Doesn&#x27;t it only make sense that the people who have already been the most successful in creating wealth should have the freedom to take that wealth to try out new ideas?<p>Inequality is not the problem. Poverty is the problem. Lack of access to education is the problem. We should strive to see that everyone can focus on improving their life and doing interesting things without struggling to survive. And if the most successful people take their spoils and build a 150-foot yacht, or take a ride into space, or invest in the next big company, more power to them.
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pdonisover 11 years ago
One key point that is missed in this article: why do people making minimum wage have trouble making ends meet? Because all this advance of technology has <i>not</i> made the necessities of life cheaper in the same way it&#x27;s made, say, computers cheaper. For a few hundred dollars today, you can buy orders of magnitude more computing power than existed in the entire world when I was a child. Yet it&#x27;s still difficult for people working low wage jobs to afford food, housing (meaning housing in an area that&#x27;s reasonably safe to live in), and transportation (again, that&#x27;s reasonably safe to use).<p>Why is that? Why has all this enormous improvement in productivity not made the necessities of life so cheap that even someone making minimum wage can easily afford them? It seems to me that fixing that would go a long way towards fixing the problems Altman is talking about, yet nobody talks about it.
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natural219over 11 years ago
Another great post. I love this guy.<p>I think a lot of our discussion about this topic is limited because we&#x27;re still a capitalist society that largely views social trends through the lens of economics. At some point in time, things like &quot;GDP&quot; and income distribution where fairly good proxies for notions like &quot;overall well being&quot; and &quot;aspirational stability&quot; (more thought is required on this second term).<p>I think as technology progresses, we&#x27;re going to see the use of money as a proxy for social measurement drift further and further away from actual reality. Any new social paradigm is going to have to start with fundamentals of human nature -- human competitiveness, equal opportunity, etc.<p>In short, I think our failure to respond to these changes is mostly a failure of us to think clearly about what actually going on in the day-to-day lives of actors in this new technological world. I don&#x27;t know where we start, but existential philosophy seems like a good jumping board.<p>My thoughts are jumbled. I&#x27;d flush them out, but I need to get back to work.
joelrunyonover 11 years ago
Honest question: are people surprised at the wealth distribution?<p>It seems quite a few HNers are familiar with Pareto&#x27;s principle &amp; 80&#x2F;20 and the current wealth distribution reflects that almost perfectly (Top 20% = 84% of wealth).[1]<p>I&#x27;m not saying that being in that top 20% doesn&#x27;t bear certain responsibilities, but it shouldn&#x27;t necessarily be surprising.<p>[1] <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/this-viral-video-is-right-we-need-to-worry-about-wealth-inequality/" rel="nofollow">http:&#x2F;&#x2F;www.washingtonpost.com&#x2F;blogs&#x2F;wonkblog&#x2F;wp&#x2F;2013&#x2F;03&#x2F;06&#x2F;t...</a>
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baddoxover 11 years ago
The thesis of the article seems to be that wealth inequality, even if accompanied by a total wealth increase (and perhaps even if accompanied by a wealth increase for every single person, although that&#x27;s not made explicit), is still &quot;unfair&quot; and therefore worth combating.<p>But I&#x27;m confused when the article shifts between talking about what &quot;is really unfair&quot; and what &quot;feels really unfair&quot; (i.e. normative vs. descriptive fairness). I would have preferred a more consistent foundation for the thesis. Either argue why the normative view is valid, or demonstrate that a large portion of people <i>do</i> think wealth inequality is unfair. I think the latter is a more potent argument, especially paired with the claim that &quot;the traditional endings to extreme wealth inequality in a society are never good.&quot;
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seijiover 11 years ago
In the Types Of Economies That Work wars of the early 1900s, Marx kept pointing out the end result of capitalism will be the rich few controlling most of the wealth. It&#x27;s only natural after all, the profit flows to the owners, not the workers: <a href="http://en.wikipedia.org/wiki/Social_stratification#Karl_Marx" rel="nofollow">http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Social_stratification#Karl_Marx</a><p>We do the same thing today. Everybody knows you&#x27;re a rube if you&#x27;re just working—that&#x27;s why there&#x27;s Founder Mania around here. Get your fake 60% ownership, hire people to create value under you, capture most of the profit&#x2F;exit yourself.<p>Congrats on including actual charts (and some infographics too). Much nicer than just another &quot;X is happening. Oh noes!&quot; perspective.
iambatemanover 11 years ago
It&#x27;s easy to talk about inequality from a macro perspective, but imagine this...<p>Imagine Bill Gates is sitting next to a McDonalds employee. Bill is <i>millions</i> of times wealthier than this guy. He could afford to hire 100,000 minimum wage employees for <i>life</i>.<p>By all accounts Bill is lucky. He&#x27;s smart and works hard too, but he&#x27;s basically lucky.<p>And increasingly, society suggests that we deserve some slice of his luck, because we have less. But why? Our government guarantees your right to private property. Once you own something, it&#x27;s yours. When we choose to believe in a threshold at which the rules of private property cease, we erode Bill&#x27;s incentive to participate in the market. If that doesn&#x27;t feel like a big deal now, wait until the disincentive slides down to your level of income.<p>I&#x27;m not saying that civic society shouldn&#x27;t do anything for marginalized people. Education can have a meaningful effect on their wages and technology is going to shake the markets and people need help to smooth their individual outcomes, but to say that they deserve Bill&#x27;s money simply because he&#x27;s rich is a nasty nasty attitude.<p>We need to seek an environment that allows everyone to grow through profitable employment, not artificially rebalance the top-end.
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flyinglizardover 11 years ago
The problem of inequality is mostly a local thing where gentrification is taking progress, or on a wider scale, a media debate. No one seriously feels inadequate because of how the people on Forbes 500 live. They are so far out of the average person sphere that it has no significance on anyone.<p>Likewise, I doubt a person from Mississippi genuinely feels a disparty with his investment banking brethren in NYC.<p>In short, I don&#x27;t think inequality is something people <i>feel</i> unless there&#x27;s an ongoing public debate. People judge themselves by their immediate environment, which I believe follows a normal distribution nearly anywhere (there are always some more successful than others; business owners, entrepreneurs, paid workers and homeless. It&#x27;s like that nearly anywhere).<p>It&#x27;s should be also noted that while nationwide inequality among western world countries is rising (all across the board), it&#x27;s shrinking on a global level [1].<p>[1] <a href="http://i.imgur.com/B4vI8Y8.png" rel="nofollow">http:&#x2F;&#x2F;i.imgur.com&#x2F;B4vI8Y8.png</a>
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nostromoover 11 years ago
Here&#x27;s an idea a friend and I have been throwing around. It&#x27;s probably terrible to be honest, so I&#x27;d love to hear why it&#x27;s dumb.<p>Implement basic income, which HN is well aware of. But, instead of funding it entirely through income taxes, fund it primarily with what the Fed would call &quot;Quantitative Easing&quot; but what I will call &quot;printing money.&quot;<p>Right now, I believe the Fed has actually made inequality much worse by printing a metric ton of money and pumping it into government and the financial sector. The hope is that this will, to use a loaded term, &quot;trickle down&quot; to everyday Americans. Instead, it seems there isn&#x27;t much trickling.<p>So, why print money? Because it&#x27;s a wealth tax. It&#x27;s also the easiest tax to implement: you don&#x27;t have to collect anything! No IRS. A huge amount of the US government would be gone: no more means testing government expenditures (benefits), no more tax collecting for revenue.
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allthatglittersover 11 years ago
This article supports many of the common fallacies that accompany most discussions of &quot;wealth inequality&quot; - and as usual believes it should be rectified... (by whom?) For a refreshing point of view on this topic, read <a href="http://cafehayek.com/2014/01/wealth-is-not-a-glob-of-homogenous-dough.html" rel="nofollow">http:&#x2F;&#x2F;cafehayek.com&#x2F;2014&#x2F;01&#x2F;wealth-is-not-a-glob-of-homogen...</a> . It may not change your mind but it is certainly another way to think about the issue.
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ojbyrneover 11 years ago
This seems to be lacking some historical perspective (&quot;Those who forget history are condemned to repeat it&quot;). This happened before:<p><a href="https://en.wikipedia.org/wiki/Gilded_Age" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Gilded_Age</a>
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invalidOrTakenover 11 years ago
It&#x27;s important to note that over time, wealth <i>always</i> gathers itself into a few hands. Money will flow to the rich because they&#x27;re good at getting it to flow to them. That&#x27;s why they&#x27;re rich, duh. <i>As</i> they grow rich, any sensible person looking to sell something will try and sell it to the rich, because they have discretionary income. The problem is that the rich are good at making money flow to them (remember---that&#x27;s why they&#x27;re rich), and so most of what they buy are investments of some kind. Which means they make more money, etc.<p>In the past this has been mitigated by crazy amounts of philanthropy a la Carnegie or Rockefeller. I get the impression this is less so now, for two reasons. The first is that we&#x27;re a more global culture, so philanthropy efforts go toward the third world rather than the third precinct. The second is that I suspect some of the rich feel persecuted by all this talk about the rich, and aren&#x27;t kindly disposed towards donating their money to people who hate them. I&#x27;d love to hear recordings of Bill Gates&#x27;s phone calls gone bad.<p>As for solutions: I don&#x27;t know. One that I&#x27;ve been working on is better financial software for the common man (to run on a phone, rather than a PC); perhaps that will at least stop him from being suckered by predatory lending.
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strlenover 11 years ago
Basic income or negative income tax are great ideas: they&#x27;re cheaper to administer than the current welfare state, are more humane (people are treated as adults and allowed to spend the basic income on whatever they wish), and avoid perverse incentives. With the current system, getting a job easily has the same impact as a 100% tax -- all benefits go away, all income goes goes to deal with lost benefits (and free time goes to -- given this is an entry-level and menial&#x2F;service job -- an activity that&#x27;s not intrinsically rewarding).<p>Yet, people have (initially surprising to me) visceral reactions against these proposals -- despite these proposals coming from all over the political map -- as unfair.<p>Jonathan Haidt has an excellent article on morality of fairness:<p><a href="http://www.democracyjournal.org/28/of-freedom-and-fairness.php?page=all" rel="nofollow">http:&#x2F;&#x2F;www.democracyjournal.org&#x2F;28&#x2F;of-freedom-and-fairness.p...</a><p>In short, individuals see fairness on a scale -- from &quot;what people receive should be proportional to what they contribute&quot; to &quot;from each according to his ability, to each according their means&quot;.<p>It also makes sense to add a slightly more nuanced pole to this, namely &quot;just desserts&quot;: &quot;people should be able to keep everything that they earn, with the exception of fees for services they use and externalities they impose on others&quot;; in other words, fairness concerns should also be balanced against negative liberty.<p>This could explain why there&#x27;s such strong opposition to a basic income: significant chunk of the population people see it as less fair as opposed to more fair, another chunk views it as just another form of theft. It&#x27;s also why many aren&#x27;t easily bothered by supposed excesses of idleness of the rich, as long as the wealth was acquired legitimately. This isn&#x27;t to endorse these views, but to acknowledge that these positions are sincerely held by individuals of all races, genders, and incomes.<p>This is also why many of the wealthy vote for politicians that (on paper) promise to reduce wealth inequality and one of the reasons why many of the poor vote for candidates that don&#x27;t think inequality is a problem. In short, these are moral views as opposed to matters of rational self-interest.<p>Contrary to Marx not everyone is fighting for their class interests, contrary to popular view of economics (which is different from how economists actually see it) not everyone is trying to maximize their own net worth by any means possible. Economists say individuals try to maximize their utility, which to nearly all means -- to some extent -- wanting to see good in the world, but with their own definition of what is good.<p>So here&#x27;s a proposal: when speaking on inequality and social justice, let&#x27;s identify who the audience is, and justify policy proposals according to their values. If someone is a libertarian, address the negative effect concentration of wealth (which often begets political power) has on liberty (e.g., politicians buying their way into office to push Nanny state policies, wealthy funding campaigns that lead to criminalization of vice, etc...)<p>Likewise, if someone cares about proportionality, point out that labour theory of value is false: law of supply and demand means it&#x27;s inevitable that people will get rich as result of sheer luck or doing something that seems trivial. That&#x27;s not to mention that many of the wealthy are wealthy as result of rent-seeking -- and fight both rent-seeking and the inequality it leads to.<p>Otherwise, quite frankly, these ideas will remain dead in the water politically.<p>Edit: one thing that should be noted is that it&#x27;s unlikely that in a free market (which is generally a good thing) wealth distribution will be anything other than power law (which isn&#x27;t to say we can&#x27;t smooth it out, but we can&#x27;t turn it to a normal probability distribution). However, wealth isn&#x27;t everything: why not divorce wealth from status (to the extent, we already do this)? For example, Silicon Valley (it&#x27;s getting hard to use that term non-ironically, unfortunately) does tend to praise the value of individual contributors as well as that of entrepreneurs and managers, yet there&#x27;s disconnect in mainstream culture -- where remaining an individual contributor (or even a mid-tier manager) is _not_ considered a successful outcome. This change will have to happen organically, of course.
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tn13over 11 years ago
When it comes to debating ideas the supporters of big-government&#x2F;Communism&#x2F;Socialism has lost the battle long back.<p>In modern times I see that these people have changed skins and they are not talking about &quot;inequality&quot; and &quot;environment&quot; as tools to counter mostly free market enterprise and small government arguments.<p>Eventually it all boils down to which policy would fetch more votes. Number of unproductive freeloaders in American society is probably increasing, there is tendency to look down upon the legal temporary job seekers in USA as job thieves depriving Americans of their jobs and we are told to be compassionate about the illegal migrants.<p>The vote bank in favor of taxing the productive and paying the unproductive is increasing at a rapid pace. Yes, it will bring equality where everyone will be poorer and no hope for future. (Note: Big ships take longer to sink, I have no doubt USA will continue to be a leader over next 20 years or so but the decline after that will be catastrophic).
argumentumover 11 years ago
These ideas (negative income tax&#x2F;minimum income) have been proposed for decades by classical liberals &#x2F; libertarians <i>as a replacement</i> to the welfare state, and (less often) <i>as a supplement</i> by progressives.<p>This distinction is critical. <i>But</i>, I&#x27;d wager that many libertarians (like myself) would happily <i>match</i> the total welfare spend + proposed minimum income on a per person basis as long as we cut out the middle-class bureaucrats and administrators.<p>It will be hard to reach consensus for the reasons Sam mentioned, but <i>not impossible</i>, since some elements are supported by otherwise diametrically opposed politics. I <i>much</i> prefer the debate be between libertarians &amp; progressives (or even anarchists &amp; socialists) than the center-left and center-right.<p>&gt; <i>But this still doesn’t address the fundamental issue—I believe most people want to be productive.</i><p>I&#x27;m not <i>too</i> worried about that people will be lazy or feel alienated due to not being productive. Science and Technology are not the only outlets for human creativity: my prediction is that we will see a flowering of the Arts and Recreation: more music, more writing, more painting, more sculpture, more sports &amp; games etc. This will enhance all of our lives ..<p>As an aside, I think its a mistake to measure the delta in wealth distribution primarily in terms of assets. Technology, while increasing wealth disparity in measurable ways, often decreases it in immeasurable (and more important) ones: for example, wikipedia vs encyclopedia britannica.
pchristensenover 11 years ago
I generally agree with this, my only input would be to this:<p>&quot;Technology makes wealth inequality worse by giving people leverage and compounding differences in ability and amount of work.&quot;<p>to &quot;differences in ability, amount of work, and utilizing existing wealth and assets.&quot;<p>Technology helps the rich get richer, so it&#x27;s naive to chalk its benefits up to only hard work and ability.
calbear81over 11 years ago
I think the San Francisco average price of $5MM is quite a bit inflated. It&#x27;s closer to $850K (<a href="http://www.trulia.com/real_estate/San_Francisco-California/market-trends/" rel="nofollow">http:&#x2F;&#x2F;www.trulia.com&#x2F;real_estate&#x2F;San_Francisco-California&#x2F;m...</a>).
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firstOrderover 11 years ago
&gt; Technology makes wealth inequality worse by giving people leverage and compounding differences in ability and amount of work. It also often replaces human jobs with machines. A long time ago, differences in ability and work ethic had a linear effect on wealth; now its exponential.<p>This is a factor, but not much of one.<p>Let&#x27;s see who is wealthy. The top ten of the Forbes 400 wealthiest Americans.<p>#1 Gates - grandfather ran a bank, and had a million dollar trust fund for him. #2 Buffett - father a Congressman, grandparents owned a chain of stores #3 Ellison - grew up middle class, self-made #4 Koch - inherited oil company #5 Koch - inherited oil company #6 Walton - inherited Walmart #7 Walton - inherited Walmart #8 Walton - inherited Walmart #9 Walton - inherited Walmart #10 Bloomberg - grew up middle class, self-made<p>The incubi hovering over Silicon Valley are the limited partners whom VCs raise money from. Like the Forbes 400 list, or like the Federal Reserve Survey of Consumer Finances, most of the wealth is inherited.<p>I&#x27;ve sat next to too many Chinese and Indian guys, running the whole show for some Fortune 500 company in terms of their databases, storage, or some programming group, who were on H1-B visas and making a pittance and living in a small apartment in some crappy neighborhood to think that &quot;work ethic&quot; and &quot;ability&quot; is what is making all the money. These people not only have a work ethic (like many in society), they also have the technical ability. They have the ability and they&#x27;re using the ability. And making nothing.<p>Those who get wealthy expropriating the surplus labor time profits of we workers who work and create wealth - they are the ones who are benefiting, not the &quot;hard working&quot; or &quot;able&quot;. Watch the documentary &quot;Born Rich&quot; by one of their tribe. How many of the people interviewed their have the ability to know which data structure is proper for a certain project? Or how to set up BGP connections on a Cisco router? And so forth. They are benefiting due to the new technology, but it is they who benefit, the hard working able people building and implementing these things are getting scraps from the table.<p>While GDP per capita has risen over the past decades, inflation-adjusted wages per hour have fallen. Things have gotten better for those who do not work, and worse for those who do work and create wealth.<p>The only answer from those who parasitically expropriate profits from the surplus time of those of us who work and create wealth is this - &quot;spend more of your time studying math. Go into debt to pay for college and spend four years paying for your own job training. Then you might live as well as your parents did, who did not have to do these things (or who would live better than you ever will by doing these things.&quot;<p>Ultimately an economic system built on this has too many self-contradictions. Once you drain all the spare money from the average worker, no one has any money to buy the things these companies make. They can go into debt, but that just kicks the can down the road and makes the ultimate crash work.<p>In fact Sam Altman&#x27;s business, Green Dot, is predicated on this new reality. Poor people don&#x27;t have the credit to get credit cards, so they go to Green Dot and get charged exorbinant amounts of money. His business is one of the heaviest into the transfer of wealth from the poor to the rich.
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johnrobover 11 years ago
I think health care and education should absorb the misplaced workers. The demand for those services is infinite and there should (in theory) always be incremental value created by additional workers (assume their salaries were 0; they would be paid for by the government instead of the employing institution).
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jamiequintover 11 years ago
Most implementations of basic income actually taper off as your income increases so the cost doesn&#x27;t have to be adults_in_us*basic_income, but actually significantly less.<p>It would probably be possible to support a basic income system just by getting rid of existing entitlements (although that is a big &#x27;just&#x27;)
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natmasterover 11 years ago
Your ideal wealth distribution is that everyone has the exact same amount of wealth? Next you&#x27;re going to be telling me some animals are more equal than others...
benchedover 11 years ago
Meta, but I cannot believe this excellently written post has already dropped from the front page, while some bullshit about &quot;suhvuhbtle&quot; and medium is still sitting in the top spots for hours. Like ever more <i>hip</i> ways for echo-chamber attention-seekers to share their amazing epiphanies about productivity with each other, is so much more interesting than poverty.
callmeedover 11 years ago
Random thoughts ...<p><i>&gt; We are becoming a nation of haves and have-nots—of prosperous San Francisco vs. bankrupt Detroit.</i><p>Based on the people protesting&#x2F;blocking the shuttles, San Francisco has plenty of have-nots.<p><i>&gt; and we’d presumably cut a ton of government bureaucracy.</i><p>LOL. A $3.5T govt program is going to <i>cut</i> bureaucracy? Even if it swallowed up other existing entitlement spending, I don&#x27;t see this happening.