The article mentions globalization but doesn't view inequality through a global lens. If you look only within rich nations, yes inequality has increased, because the poor and blue collar middle class have lost a lot of jobs to poorer countries. But that phenomenon is actually reducing inequality as measured from a global view.
The biggest issue I have with the article is that it ignores the geopolitical trends that were actual checks on inequality historically. Inequality typically only decreases in the face of an existential threat to the wealthy; when the US passed 90% marginal tax rates, it was to fund a war where the ability of the wealthy to remain in power at all was in question. Getting pensions and many other social democratic policies which benefit the poor and middle class, in many countries in the world, often required blood instead of the free market.
>The article mentions globalization but doesn't view inequality through a global lens. If you look only within rich nations, yes inequality has increased, because the poor and blue collar middle class have lost a lot of jobs to poorer countries. But that phenomenon is actually reducing inequality as measured from a global view.
Actually inequality (of percentage of the world's resources amassed) between poor and rich countries has increased as well. The get richer compared to their own past, but less than the world is getting richer overall.
But that's a red-herring. Even if inequality among countries was lessening, that could just be part of poor countries getting richer, building infrastructure and so on.
That wouldn't mean the richer countries having rising inequality and poverty is is not a problem, nor we should view it like "inequality in the west is being balanced as less inequality in other countries".
> But that's a red-herring. Even if inequality among countries was lessening, that could just be part of poor countries getting richer, building infrastructure and so on.
Simpson Paradox. Inequality inside of countries can increase while the average inequality across all countries goes down.
Also: The change in world inequality is all about China.
> Actually inequality (of percentage of the world's resources amassed) between poor and rich countries has increased as well. The get richer compared to their own past, but less than the world is getting richer overall.
That's an interesting claim to make. China, India, Eastern europe... Africa is having a boom too. Ask any westerner who used to go on dirt cheap super long vacations. The today's gap is miniscule compared to the glorious days.
It seems to be comparing personal incomes rather than country-to-country difference. Isn't it? And it goes up to 1990 only. China and India boomed after that. Eastern europe was in the process of shrugging off their chains. Africa boom started more than a decade later.
I'm talking about GDP PPP grouped by country. Coming from eastern european perspective, the difference is much smaller than it was in 90s or 70s. Both in how close we're to western europe and us and how China or India or Africa got closer to us.
Even if the Third World now had their own wealthy elite, such that the wealth of the Third World was closer to the richest countries, you could still have rising inequality in BOTH the richest and poorest countries.
Which, also, is what really matters most. Democracy and the rule of law both start to break down when a few people have orders of magnitude more money than the median for that country; they can use their wealth to influence their own government in a way that the masses of that country cannot. That the gap between countries might have narrowed, is no help, if the inequality of both rich and poor countries goes up.
Very true, in terms of poverty the world was never as equal as today. My guess is that Free Software had the consequence of providing a lot of value to people for free, taking part of the cost of the supply chain.
This is the real equaliser, it is not tax and it's not the market. In all honesty even in their example, the 1% in the US is not stable .. it's more like a game of chair, if you blink you can loose your seat.
Free Software is a miniscule part of that process, if it even is a part at all. The main reason is reduced transport and communication costs making it feasible to outsource work across continents.
>If you look only within rich nations, yes inequality has increased, because the poor and blue collar middle class have lost a lot of jobs to poorer countries. But that phenomenon is actually reducing inequality as measured from a global view.
How is that reducing inequality worldwide situation? Those foreign workers may be closer to the middle classes in rich nations, but the rich are getting further ahead
It's reducing inequality by volume, as in the bottom 20-50th%iles are seeing their incomes rise closer to the 50-90%ile incomes. But yes the super rich are getting richer than ever before
"If you look only within rich nations, yes inequality has increased, because the poor and blue collar middle class have lost a lot of jobs to poorer countries. But that phenomenon is actually reducing inequality as measured from a global view."
Not the OP but I’d mention the 1871 Paris Commune deaths [1]. Bismarck saw the writing on the wall (i.e. take care of the masses or they’ll end up taking all your stuff away and worse) and that’s how the modern welfare State was born. The US Social Security system is in a way just a continuation of Bismarck’s policy applied to an industrialized Western country with a considerable middle class.
Nobody but people did have to get killed for earlier employer-pensions to be passed. And cynically you can view a lot of the pro-labor progress in the US from the great depression through the 50s to be a response to the popularity of communism and socialism abroad
> the popularity of communism and socialism abroad
Which took hold because workers were being abused. Various communist revolutions in history, and all the related violence, can be considered in part blood shed towards improving the conditions for the working class.
So it's OK to fuck over a large portion of your own population because it's trickling down to a poor country?
The issue is that nations have a duty to their own citizens, good luck telling an entire generation that they need to make sacrifices for others while the rich keep getting richer.
I'm not sure the rising inequality in the US is really a result of the poor countries getting richer. Lots of other developed countries have traded with the world with much less of that eg. Germany, Scandinavia. It's more a result of the kind of politics Fox News pushes.
Globalism was literally a concerted effort to off-shore blue collar work with the expectation that the population of richer countries would become more educated and work in information intensive jobs (also siphoning off value from said off-shored industries). Where it went somewhat awry is that computers and automation have meant that less jobs are actually required in those sectors that we envisioned people having, leaving a large portion of the population under-employed in low paying service jobs. Globalism was literally a concerted effort undertaken after WWII, this isn't some sort of Fox News level conspiracy theory. It's history, literally stuff in economics textbooks and easily verifiable.
As for why Scandinavia and Germany have managed to keep inequality at bay, they've got very robust welfare states and strong labour unions.
All European welfare states have been in the process of dismantling & privatising post Reagan/Tatcher (e.g. in Berlin the city sold most public housing estates to private investors decades ago).
They haven't deteriorated as fast as the US and UK but the trend is clear.
Well they're seeing a rise in immigration (which economically speaking has the same effect as offshoring) which is large enough to offset the equalising effects of the welfare state, and while I'm not super up to date on their politics, I'd guess the welfare state might also be weakening because of the need to support the influx of new immigrants.
Also, crime rises/falls depending on economic outcomes for the lower segment of the population. If there's too many immigrants unable to find jobs or integrate, crime rises which can cause discontent.
Decreasing the cost of labour through immigration is the same. Most immigrants also send money back home. So yes it's the same effect even if the it's not quite the same amount.
But discounting the labour cost is not the only dimension. These immigrants are spending money domestically, increasing the domestic output, creating new market demands, paying rents, etc.
I do understand your logic, but my argument is while offshore money is spent outside the borders, immigrants spend most of their income domestically and pay their taxes, which is a too big difference to put it into the same category.
Because their income is discounted, they are more likely to receive social assistance and they send money abroad, in the short-medium term their economic effect is similar to offshoring.
Long term, they bring their family over, raise families in the host country, get better jobs and integrate (culturally and economically) so the offshoring effect disappears.
The main problem is, especially concerning the rise of populism, when the short term effects become too severe, the long term outcomes don't matter to those who have been affected by lowering wages during their working years. And it's not every industry, perhaps not even a majority who are affected, but for those who are, they feel as though their social contract has been broken, and they vote for whoever promises to fix it.
This forum is mostly IT workers. For awhile, wages in this sector in the US were suppressed by things like cartels and H1B visas, and subsequently action was taken to enforce proper employment laws and increase the wage requirements for H1Bs. That was 1 sector, not even that much immigration, and wages showed a noticeable dip. People here were outraged too, but it was before the Trump years so the whole conversation had a different tone.
Anyhow, I don't think immigration is bad, but there are pros and cons, different effects on the economy and people, and these definitely need to be accounted for.
I read OP's comment more as a neutral statement of a fact than as a justification for the globalization processes. I'd be willing to wager that none of the actors pushing these processes are minding either of these two inequality facts (inequality in developed countries rising, inequality is developing countries falling). These actors are driven by their incentives and the current system makes it good for them to further globalization - very much in the same way that it's good for them not need to be careful to be environmentally friendly.
At least to me, "f*g over someone" would imply malicious intent - these economic agents are neither benevolent nor malicious - they simply don't care. In a slightly wider context, this is exactly why an AGI is considered dangerous.
That's the Big Lie of economics - that this is just how it is, and people don't/shouldn't care.
In fact mainstream neoliberal economic theory has always been about rationalising political actions that operate against the interests of most of the population.
The origination and promotion of these economic myths is calculated, deliberate, and absolutely malicious in intent. The Chicago School didn't just happen - it was created, promoted, funded and nurtured as a dogmatic political movement opposed to Keynesianism.
Individual actors may not care, but that's exactly the problem -they've been incentivised not to.
Under a more humane system, they could just as easily be incentivised towards other actions.
I watched an interesting interview with a billionaire a while ago, who said that after you reach a given net worth it actually becomes very hard (unless you're unlucky) to significantly diminish your wealth through consumption, and that in fact consuming more goods often just increases your net worth: Luxury cars, apartments, mansions, real estate, parks, yachts or resources like gold often appreciate in value with time (at least they did for the last 60 years), so the more of your money you spend on these goods, the richer you'll become. The words that the interviewee used were "if you're rich you can't destroy money by consumption", which is of course not 100 % true, but explains really well why the rich are getting richer.
In addition, many countries have much lower taxes on capital gains compared to other types of income, which is another factor that favors further concentration of money with those people that already have a lot of money.
I don't know if someone else also said it, but Bill Gates did too. He also said something to the effect that past $5m or so[0] wealth doesn't really affect your material quality of life & it starts becoming about what you can do with that money other than consumption (with e.g. business investment or philanthropy).
[0] this may have been a couple decades ago, apply inflation but it was more or less in that order of magnitude.
Very few things in life are priced for billionaires. Millionaires, sure, but a lot of people forget that a billionaire is literally 1000 millionaires, or the equivalent wealth of 80,000 people at the poverty line. It's pretty hard for anyone to fathom that egregious level of personal wealth.
Implementation may be politically difficult, but the solution isn't rocket science: substantially raise the inheritance tax and abolish all trust loopholes.
The relatively high income of the most wealthy isn't the problem unless your primary motivation is spiteful envy of the wealthy.
The real problems are that it's harder than it was in the past to maintain a middle class lifestyle. The necessities of such a lifestyle have only gone up in price: health insurance, college education, real estate/rent, and maintaining a vehicle. This causes debt to pile up and drives people into depression or serious stress.
In turn, fewer people in this class are investing in the future or hold stock, which means they feel little investment in the world. Instead of feeling like part-owners of the country, they feel like wage slaves with little power to escape the bondage of debt.
On top of this, it feels like just barely getting by with these things requires more time and effort than it used to. People are working more part-time jobs and both parents of a family need to work.
Taxing rich people does little to make these very real problems go away.
I mean... it absolutely does. You put the money taxed from the rich into social programs to ease the stress and risk of the lower classes - or just give it directly to them as lower taxes. That could make a huge difference.
If you argue that insurance/college/rent etc would scale to accommodate the larger budgets the lower classes would suddenly have, then obviously some other legislation is needed there though.
I believe lower taxes stimulate productive investment of both human and financial capital so I'd prefer to lower income and investment taxes. But this only seems fair and sustainable if you raise the inheritance tax to a very high level. The problem isn't wealth so much as dynastic wealth. Land value tax I support 100%.
Don't some investments benefit society? For example: Invest in real estate that turns into housing or businesses that weren't there before, or investing into businesses so they have the money to grow to a larger building or hire more people to meet demand.
Well, sure. It's easy to say some investments benefit society, but most of the time they are solely for the benefit of the wealthy.
One just needs to look at the land stratification California has been going through to understand why. Most of the issues they face are a result of the wealthy doing everything in their power to prevent land from being upzoned or rebuilt because that devalues their property or ruins their view.
In this case there's no growth happening despite a desperate need for growth because the wealthy don't want it.
A land value tax would fix this - the more land appreciates in value, the more property tax the owner would pay to the public coffers. California would also have to repeal proposition 13 which limits property tax increases. Proposition 13 is one of the biggest giveaways to the wealthy in the history of US tax policy.
Taxes on income and taxes on investment gains should be the same. In the UK, a 20 year old contributing to society by doing £45k worth of work every year keeps 69% (£30,737)
Meanwhile a 70 year old seeing their BTL property appreciate by £45k a year due to crossrail (paid for out of income tax the 20 year old is paying) keeps 87% (£39,060)
The problem with trickle down economics is that it involved decreasing the taxes of the wealthy so that in theory that money would trickle down to improve the lot of the poorer.
This doesn't work because the rich can opt to do a lot of different things with their money including hide or invest it overseas.
Taking the money of the rich and using it to directly improve the lot of the less fortunate has been tried and actually works as one would expect.
My understanding of trickle down economics is that you get more economic activity by putting a dollar in the hands of the bottom 10% than the top 10%, which makes sense since the propensity to consumer is higher at the bottom. By investing, the top % supports invention and innovation. By consuming, the bottom % validates those inventions and innovations that are worthwhile, versus those that are worthless. Both functions are required in order to keep the economy humming along producing and consuming new goods and services at a rapid pace. There would seem to be some function which maximizes the utility of each group in their respective roles. That's what I would want tax policy to reinforce.
I like the idea of progressive property tax rates.
Figure out the median property value, make the first 50% of that tax free. Then the next 50% is taxed at the previous rates. Then tax values above that enough to make up for it.
Could apply the same idea to land value taxes too.
That "figure out the median property value" is the hard bit.
The value is determined in a voluntary exchange, such as a sale, and results of sales of similar property serve only as approximations.
Same problem is with the land value tax. It's like trying to buy / sell your property every time you do taxes.
There is a known mechanism to limit attempts do show an excessively low value. Back in the day, the British Empire's customs reserved the right to immediately buy the entire freight of a merchant ship for the value declared at customs. That could work with land and even realty, too, but would be much more disruptive.
Unless you’re taxing something at the time of exchange on a free-market, there’s always approximations.
Plenty of jurisdictions do market-value property taxes by using market data and creating models to approximate the rest.
It’s never perfect, but the line in the sand must be drawn.
Other taxes have the same approximation issues. Income taxes don’t really tax all the value I provide. Any social person barters plenty of value that goes untaxed, but technically should be.
>>> Back in the day, the British Empire's customs reserved the right to immediately buy the entire freight of a merchant ship for the value declared at customs
Can you elaborate on this/help me out with what to google for? I've never thought of this but it's actually a brilliant idea - would love to read more about it!
To have a progressive property tax schedule, don't you need the progressive scale to apply to the whole portfolio of holdings? It doesn't make sense to me for it to be applied per-property as this just creates a loophole to sub-divide property titles. Why should one person be taxed less to own many small properties than someone owning a single large property of the same total value?
And if so, how does this get applied to corporations and REITs? Do they get taxed out of existence, or do their holdings get apportioned to individual shareholders and included in their personal portfolio, so that individual progressive schedules are applied to each portion?
It seems unlikely to me that you can construct a sound set of rules for this that are workable (no glaring loopholes) and appreciably different from a progressive wealth tax, which might be much easier to formulate...
The problem with property taxes as they are usually implemented is that they put a very high burden on farmers and are often passed on directly to renters by their landlords.
A farm is industrial property. If it’s highly valuable land, it’s either producing a high value crop, and can pay the tax, or better used for some other function.
If the farmer is struggling because of property taxes driven by their own increased property value... sounds like a good position to be in.
As for passing them on, that argument could be made for all taxes. If true, at least this structure would lower rents for low-value dwelling occupants and increase for those in more luxurious situations.
Raise inheritance tax... So people can inherit their family home then immediately have to sell it because they can't afford the tax bill just because their parents purchased in a cheap part of London that boomed 30 years later? No thanks.
100% tax on inheritance and other hereditary wealth-transfer schemes, eliminate loopholes, use the (substantial, I assume) takings to supplement existing funds and implement a universal basic income. Also do something about education and healthcare. You can work and compete as hard as you like during your life, and get as rich as you possibly can in that time, but you can't take it with you and your wealth is used to give everybody in future generations the same chances you had yourself.
I don't believe it will ever happen. There's too much inertia and rot in what we have now, and nowhere to go to build something new.
A 100% inheritance tax is destructive and the government doesn't know what to do with objects that are very valuable for their previous owner and their children but worthless on the general market. How do you liquidate a family business without shutting it down because you're removing the family that is working for it?
The way inheritance should be solved is by not allowing a single person to inherit more than 50% of the total net worth.
What we have now is destructive, and what I'm talking about is science fiction. It would require significant legal and economic changes. Coincidentally, it appears now that the long-term survival of industrialized human society will require significant legal and economic changes. So, that's why I would say such a crazy thing.
With the wealth distribution curve we have today, I don't think your proposed solution goes anywhere near far enough to stop the consolidation of wealth in the hands of a very few who hoard it and use it to buy governments. But maybe your definition of "solved" in this context is not the same as mine.
The primary metric in OP is income inequality, which is historically high. You're primarily addressing wealth, which is connected, but not the same. Taxing inheritance will do very little towards income inequality.
As Kuznets determined, it was after the American Civil War that the gap between the rich and the poor began to widen.
I wonder how much of that was counting blacks in the South as people (after slavery was ended). During the post Civil War era, they typically made half as much as whites for the same work.
I read a history book years ago which, unfortunately, I can't determine the name of. The current narrative is that minimum wage laws are oppressive racist nastiness, but this book asserted that the Federal minimum wage was intended to put a stop to the practice of paying blacks half as much as whites in the Deep South so as to bring the South more in line with the rest of the nation generally.
This is almost exactly opposes the history of union support of minimum wage legislation. It was pushed and supported by predominantly white unions to protect their workers from lower skill and cheaper minority workers. The minimum wage doesn't just say you can't hire a worker for less than an amount. The other side is that you are not allowed to sell your labor for less than the floor. White union workers were being out competed on price by workers who were either trying to gain experience of lived in cheaper neighborhoods.
While some higher skilled and higher priced workers are needed, not all of them need that level of expertise and it prices out people trying to enter into a field where the on the job experience would be invaluable. If you can produce 2/3rs of the value on lower skill tasks but at half the price, it is better to hire two of you than one higher skilled individual. Plus it allowed you to build skills for the next job. These minority workers were seen as a social (racism) and economic threat. There were literally white-only unions that supported these policies.
The infamous Cabrini Green chicago housing project was a more recent example of this. It was mostly poor black families, and many thought it would be a boon for local black employment. In reality, white union workers were bused it at huge expense to fill the roles.
I stated up front that it's the opposite of our current narrative, so telling me this doesn't actually add anything at all to the conversation.
The book was very well documented. At the time, I had no idea it said the opposite of the usual framing or might have made more effort to remember the title and author.
The book suggested the Federal policy initially failed in its goal because racist whites in the South simply fired blacks rather than "pay them a white man's wage." The start of WW2 helped it eventually succeed, but there was also a fairly widespread exodus of blacks from the rural South to urban centers elsewhere in the US as a personal means to solve such problems on an individual basis.
I was homeless for several years. During that time, I did piece work. Initially, it was common for my hourly earnings to be well below minimum wage, like as little as $1.25 an hour. Over time, this changed.
So I am actually a proponent of the idea that we need to make it possible for people to work for less than minimum wage so they have the ability to better than themselves. I don't think it's a good idea to allow wage work per se to be that low because it easily becomes an inescapable personal hell. But we do need to design work opportunities that can pay less than minimum wage if it takes you a long time to complete it, but also has the ability to become a more middle class income if you get good at and thus get faster or otherwise qualify for similar work that nonetheless pays better.
As a mind experiment, imagine money randomly appeared in your bank account.
$500 - Bank error in your favour and you move on with your life.
$5,000 - Maybe buy you some breathing space to look for a job you prefer. Pay off a debt?
$50,000 - Maybe you might quit and retrain in a new career.
$500,000 - Maybe you'd start looking to see whether you could jack it all in and live off investments.
$5,000,000 - Start that business you'd always fancied, without fear of failure. Or just invest and kick back.
$50,000,000 - Makes more sense to invest it, and do whatever you want with the interest.
Yes, I've just made up those sums and outcomes - but I think it's interesting how we look at "sizes of money" and would all do wildly different things depending on the size.
e.g.
If you got 10x$50,000 you're not going to retrain ten times. But give $50,000 to ten people and ten people might.
Or 10x$5,000,000 and you might get 10 new businesses - but $50,000,000 is unlikely to create any viable ones.
As much as in theory inheritance tax is a solution for the problem, I don't think in practice it works well. The ultra rich will always have avenues to escape tax. The middle class instead, trying to secure a better future for the family, will get hit the hardest.
I am conflicted about this way of trying to solve the problem.
Also, this is assuming the tax money gets used efficiently and not to the advantage of the top earners.
A half-way solution could be progressive inheritance tax, with a rather high bend point.
When a father who back in the day bought a house in Silicon Valley for $100k passes it to his child, the child does not pay a ton (or likely anything at all) from the few million of current value of the house.
When a parent passes a $10B enterprie to children, the children have to split and sell a part of the business to pay the inheritance tax. The children still retain a successful multi-billion business, but its market share becomes smaller, increasing the competition on the market.
> As much as in theory inheritance tax is a solution for the problem, I don't think in practice it works well. The ultra rich will always have avenues to escape tax. The middle class instead, trying to secure a better future for the family, will get hit the hardest.
The middle class is not subject to Federal Estate taxes. The exemptions are $11MM and $22MM if the estate first passed to a spouse. Neither of those are middle class amounts of wealth.
Those seem pretty high ceilings for middle class, but would someone who has 10B in assets really pay out? I am skeptical in practice it would happen. But you never know, in Canada taxes seem to work.
An inheritance tax is a solution for wealth inequality in the same way that picking at a scab gets rid of the scab.
Sure, it might be satisfying to get rid of, but it only causes the wound to bleed more, a new scab will form, and getting rid of it isn't what you actually need, you need the wound to heal. If the wound heals, the scab will fall off, but picking at it only makes the healing time longer.
> The United States was the world’s most egalitarian society.
Is this a joke? And slavery is mentioned indirectly, in passing, only once? You cannot discuss equality in America without discussing slavery. Not to mention the dispossession of native Americans.
I see people throwing ideas and most of these ideas rely on politicians and/or govt doing something.
Is there a non govt or non politician dependent way of solving inequality? facebook connected the world not govt or politicians. Google made knowledge and information available to the whole world not a politician or a govt. (I understand there are down sides to these companies products but so is there to govts/politicians)
Even as a thought experiment I would like to see some ideas here to solve inequality in way that just keeps the politician and govt out of it (cos all they do is make the common people foolishly quarrel against each other while they retain power and do what they think is right)
> Is there a non govt or non politician dependent way of solving inequality?
The guillotine?
No, I mean seriously, if you rule out the political process, you just leave violence as a way to change things. It is to prevent that that government and then democracy were invented. If you consider this process broken, you are screwed and need to revolt.
Concentration of wealth is a well-known and well-accepted side effect of market economies. This is supposed to be offset by income taxes and wealth taxes.
The economics does not have incentive laid out to smoothen inequalities. If you rule out the political process, what do you have left?
A political solution that doesn’t involve politicians or the government will just create its own politicians and government to sustain it. Look what happened during the American and French revolutions, or the Russian revolution. It always starts out as “we don’t need that” and in the end you simply recreate that.
Recreate stuff with similar features, but some differences -- At least they're new and easier to change than the old ones. Maybe these institutions have a finite useful lifespan and need to be put out of our misey when they outlive it
I’m referring to the way the Bitcoin world has had a crash course in why the modern financial system has the moving parts it does. Like centralized exchanges.
Of all things there’s even a Family Guy episode about just that. They abolish the town government in a tea party/libertarian bid and just end up re-implementing everything to attain some modicum of order, agreement, and convenience for everyone.
I know that what you're going for is to solve inequality by working within the means of the established political system, and that you're wondering if there could be something like a startup or company that somehow makes a profit by reducing inequality. After all, when starting a company the first problem anyone should solve is "What is the need" and economic inequality is a pretty big need.
Unfortunately, I just don't think every problem can be solved through that lens. Companies can earn money by creating something of value, or by making something cheaper. Facebook connecting the world together was creating new value, and Google making information easily/freely available was a drastic reduction in the cost of discovering information. Both of those services created value. The problem of economic inequality is not a problem of needing more value, it's a problem of poor distribution of value. That's a problem companies are not good at solving. Companies are usually terrible at solving those problems.
The other side I see you going for is that the government seems unreliable, so you'd rather there was a solution -- ideally one that's scalable -- that didn't rely on forces outside of your control. My best guess would be volunteer work and activism, which doesn't have to go through the government. Supporting local businesses and encouraging your neighbors to do so helps your local economy. Food banks and homeless shelters are great, and so are public libraries. Big brother/sister programs, little league sports coaching, volunteering at after school programs -- all good ways to help.
Solving inequality with a profit generating business would change drastically change our society.
The closest example I can think of is Kiva. They provide micro loans for new businesses that cannot access traditional banking services. For us the lender, it is temporary charity as we get no interest, but Kiva field agents collect interest.
Convince smart and capable people to avoid creating value. A really good entertainment technology or recreational drug could help. Propagate cultural norms against trying too hard/selling out. There are probably some ed-tech startup ideas that would gain adoption by playing well to cultural biases while making children less likely to succeed. You could also try to make capital markets skittish and reduce investment in productive enterprises by engineering a crash or perpetrating many large scale, hard-to-detect frauds.
Inequality is produced by engines of value creation whose fruits accrue more to some than others. The simplest way to reduce it is to break them.
Making a Facebook post or a YouTube video on the topic of inequality inherently does nothing no matter how many likes you get. This is actually a trap in fact because it saps your energy without accomplishing anything. It's like a banquette of delicious food laid out which provides no nutrition so that fools gorge themselves while starving to death. Their bodies stinking and rotting on the periphery of the feast.
If you think the existing politicians are worthless then your Facebook post should be about replacing them with ones that are worth something. Our political process is the only way we set the ground rules for this game and if someone else sets the rules you can't win if they don't want to let you.
You have already given up the only actual power you have. Take it back.
Most large organizations, governmental or not, start gaining many of the same issues of governments. I really feel a lot of the issues people have with government is really the issues people have with large organizations and misaligned incentives playing out.
Is there a non govt or non politician dependent way of solving inequality?
My background is as a homeschooling mom of twice exceptional kids. I'm also twice exceptional.
I think the rise in inequality is partly due to higher survival rates of people with, for example, incurable genetic disorders and other serious problems. We also have a lot of people surviving serious health crises that would have simply killed them in a previous era, but it means they are now permanently impaired and less productive.
Personal handicaps are a significant risk factor for homelessness. Being homeless typically means you are among the poorest of the poor, so it works well as a proxy for factors impacting extreme inequality.
I run a number of websites trying to address such issues. I'm also involved to done degree with local non profits.
I think it can be done, but, like anything, "ideas are cheap, implementation is hard." (Or whatever that saying is on HN about how ideas alone don't make for successful startups.)
The problem with inheritance taxes, property taxes, etc. is that they erode the meaning of ownership and permanence.
For example, if I as a parent want to save up and give up my immediate gratification from spending that money so my children have a head start or even a luxurious cushion, what’s wrong with that? That’s me spending my utility the way I want.
With property taxes, ownership turns into renting - you never really own anything and even things you already bought can have their ownership eroded into nothing by subsequent policy.
You're treating ownership as if it's some natural right. It's not. The idea of property and ownership is a social construct, so it makes sense that society gets to determine the rules of this construct.
And society has generally determined that your "ownership" comes with a fee to cover the societal costs that make it all possible. E.g., car and house property taxes to cover police depts, fire depts, etc. Without which see how long your precious possessions last.
Ownership is a human invention. You can't take it with you, you're only ever really leasing it, and to the degree that you distribute it, what you're actually exercising is power to get other people do what you want (or delegating that power).
Ownership will exist for as long as there's support in governance and law for it. If ownership doesn't deliver enough benefit for the majority in society, then expect society to alter the terms of the bargain.
Seems like a problem humanity has been struggling with for millennia the way we’ve taken to burying people with their prized objects and riches.
What’s more, in many cases—like Egyptian pharaohs—the wealth was only inherited and not earned by way of creating anything except through maybe war and conquest.
The difference in perspective seems fundamental. Wonder if there’s been more vigorous research on the subject.
The argument against that would be that you can give your kid a luxurious cushion, you just don't get to give him 1000x what the average person would need.
Keeping your kid safe from pretty much anything you went through doesn't require 80 billion dollars.
At the extremely wealthy end, you almost certainly didn't.
There's hard work, and there's luck. Your genes, your environment and the randomness of the universe add to make up 100% of both of those things.
I don't think it's fair to say that the children (and their children, and their children) of someone who won the randomness / genetic / environmental lottery should be thousands of times better off than the children of someone who didn't.
In a fair and just nation/world we would try to reduce wherever possible the instances where your opportunities are dependent upon where, or to whom you are born.
That's missing the point. People don't get angry about someone else being a thousand times better off. They get angry about being left behind while certain special interests take all the gains.
That's something that can't be solved by an inheritance tax or sending children to boarding schools from the day they are born to let them grow up in a homogeneous environment.
All of those children will then feel left behind while their parents party away their last savings because the state is going to take it away anyway, right?
I don't really understand why the commentors are just contradicting your statement with philosophical notions of ownership.
I think your comment is more about the right to self-determination and touches on the topic of what wealth itself means (i.e., having a good education is of value; whether it cost a lot of money or not).
I guess one should not take HN comments too personally or seriously...
If people were less focused on acquiring wealth (such as property), or their estate needed to sell much of it when someone passed, it would probably bring the prices down as a whole - demand would be less and there would be much more liquidity. For things like housing, that would be good for everybody. All those houses wouldn't magically disappear, they would just be cheaper, because a lot of the investment/speculation demand would fall.
While this is a commonly believed myth, it is a myth. The vast majority of millionaires and other "wealthy" people are self made, not made from inheritance.
it's not the case that all your savings are only the outcome of your own hard work. Your income depends on the labour of countless others that make your modern life possible. Why should your wealth stay with you instead of going to workers that make your shoes or your clothes or your laptop or your phone?
You don't even need to use such a dire example as cancer to see how wealth would get transferred involuntarily.
Say your neighbour falls on hard times, and instead of just helping him, you offer to buy some of his land, or his watch, or whatever at a disadvantageous price. Or you lend him money at unfavourable terms.
There are real life businesses that operate today, pawn shops, cheque cashing places, that grow wealthy on the poor.
The way to avoid giving what little wealth we have to the man, means to rely on one's community, but in North America that is being eroded more and more.
In South Africa there is the added complication that these taxes don't normalise income inequality—they exarcerbate it. One of the biggest problems is that regulation raises the barrier to entry and creats a situation where the "efficient" become more efficient.
EDIT: I don't agree with the other opinions that reply to your comment: I think the arguments about autonomy and and self-determination hold just as much in personal finance.
Is the Hacker News community open to alternative viewpoints on this subject? It would be informative to read a wide spectrum of opinions, like we get for things like microprocessor design and code libraries.
Generally you get downvoted for doing so, but people still try to argue. I have a lot to say on the subject, but one thing I still need an argument for is why inequality is bad intrinsically. I'd love to hear a cogent argument that addresses that fundamental point, but what I end up seeing in the wild is camps of people who think inequality is some intrinsic evil, and those that don't think it's relevant to anything.
(1) A political system is a distributed decision making process that a community uses to, well, make decision that affect large sections of the community. One characteristic of a good political system is one where everyone gets roughly equal say.
(2) Most current politico-economic systems across the world have the feature that any given rich person has much more say in the political process than a poor person.
(3) It doesn't take much of a study of history to ascertain that, at least in the last century, rich people have used the additional power they have over the political process to make decisions that make them yet richer. Which then increases their political power even more. And the cycle repeats.
(4) There are at least two obvious solutions to (2) and (3), and which a lot of people subscribe to:
* Either, pass laws and pursue policies within the current system that make it very hard for anyone to become too rich or too poor relative to the average. This is what you will usually see a lot of regular people espousing.
* Or, redesign the politico-economic system so that rich people don't have a disproportionate influence on the political process. This is, perhaps, the motivation of some people working on crypto-currencies, even if they are misguided in their efforts.
The reason you find people who think "inequality is some intrinsic evil" is because many people believe that the second solution is not possible, i.e. it is human nature to exploit others and they will exploit in any unequal system and, hence, inequality is always an undesirable state.
No one would be talking about it if everyone was still earning a good wage, able to live a decent middle class life, have a family, had no issues visiting a doctor, etc. etc. But they aren't. People in the bottom 90% (or whatever) are feeling very much like they're falling behind, while they watch the top 10% (or whatever) get richer and richer.
If the system were working for most people and they felt they had good lives, I don't even think people would be particularly concerned about the concentration of power that comes with the concentration of wealth because they would see the system working for them.
Certainly we should talk in terms of ensuring there is an adequate floor, rather than in terms of bringing down the ceiling. What's the point of lowering that ceiling if the people at the bottom still can't see a doctor? And raising the floor is indeed what a lot of progressive proposals do aim for (Medicare for All, or Living Wage, or UBI, etc.). But providing that floor requires funding. Funding anything is always redistribution of some kind with the wealthier paying more because that's where the money is.
Isn’t the problem with inequality that it makes the society less stable? More envy and less feeling of being part of a group? It is good that poverty in the world is much less and there are more people in the middle class but it is also a problem that wages in the US are stagnant for large swath of the population that feels like it isn’t part of the group anymore and makes trouble because of it.
When you convince people they're being robbed because of inequality, it's a problem. Envy is the problem. It's a cognitive defect. There's a reason it's a considered a sin. You are not entitled to what other people have, and justifying that feeling is how you destroy prosperity for all.
> Isn’t the problem with inequality that it makes the society less stable?
Yes. However, too much equality also makes society too static, because no one is incentivized to innovate anymore. The problem, as always, is maintaining the right balance.
> Sorry if this is a naive question, but is that really true? What's the evidence for believing that, much less treating it as fact?
The economic collapse of the Soviet Union, Warsaw Pact counties, Venezuela, North Korea.
By allowing a free market invasion in their Communist utopia, the Chinese Communist Party long ago abandoned their core ideology in favor of “pragmatic authoritarianism.” They get to stay in power, while reaping economic benefits impossible in a truly communist economy.
Yes. There was essentially zero upward economic mobility in those societies, except for the party elite. When only 0.001% of your society has any possibility of bettering their circumstances, innovation stagnates.
It is still true that most anybody can get rich in a capitalist economy if they’re some combination of smart, hard-working, or lucky. This causes lots of people to try.
I'm with you. Inequality seems to be baked into the natural world. Look at power law distributions and the preferential attachment model as one of the ways they arise. There is mathematics to suggest the notion of inequality is a fundamental part of life.
The Polya process is another thing that comes to mind. In that model, if you were picked in the past then you are more likely to be picked in the future. That's the classic competitive exclusion "rich get richer" at work.
But here's the equalizer:
Every distribution of possible outcomes under the Polya process has an equal probability of happening.
That strikes me as very interesting. Basically, if you were to run history forwards from the same starting point again and again, in some of those iterations your life would turn out significanty better than others. So, there is equality for everyone in that sense, but on a case-by-case basis it's more of a better luck next time.
One argument: influence of big money on the shaping of politics.
Economic stratification is effectively a stratification of people's degrees of influence over the natural world, so unchecked economic stratification necessarily means that there's a breaking point where a system which was previously democratic stops being so.
My observation is that the patterns around downvoting and dead comments suggests that HN is not as open to alternative views as it used to be in the early days. It is slowly regressing to something more like Reddit or Twitter, although it is not nearly as bad yet, where Bay Area far-left progressive viewpoints are the most welcome.
Local inequality may have gone up lately, largely due to loose monetary policy driving up prices for assets which most workers do not (and choose not to) own. Such paper wealth can disappear rapidly during an asset repricing (market crash), as we can see in this graph[1]. Also, this is the result of Keynesianist monetary policy, a far cry away from the persuasions of Milton Friedman.
However, global inequality - especially comparing the economic classes across countries - is way down. For instance, Chinese standard of living is far higher today than in the past, as is the cost of their labor - relative to an American worker. In due time, many a Chinese worker will find themselves uncompetitive due to increased costs - much like the American worker before them.
What would put things back into balance is a massive global re-pricing of labor. This is politically unfavorable and those countries that maintain a reserve currency can put it off for a long time.
That is optimistic. The rich could also just get rid of all the poor people they don’t need. Armed drones even reduce the need for human soldiers to get that done.
Anyways, let’s hope for much more peaceful solutions.
Poor is fractal from this perspective. Like stack ranking, rich people would have to invent poor people in order to save their own hides when their turn comes around.
Exactly, as long as we keep deriving most productivity gains from capital rather than labor, then rising inequality is inevitable without some kind of intervention.
I wonder what happens to society in a theoretical scenario where the foundation of why we build societies change. I understand this is way over simplifying it, but one of the basic premises of building a society is to control a finite resource. [We are going to control this water, this farmable land, oil field, etc.] I wonder what would happen to society if we were able to make more and more of the universe useable, if 3d printing became so efficient we were able to make our own goods, or other scenarios that would make it so we no longer needed to rely on a society in a classic sense to accumulate a "limited" resource. Would it fundamentally change how we govern ourselves or would we just change what metrics we use to define the rich/not rich?
Why is inequality a problem if everyone else’s quality of life is improving? Poverty is lower than ever and most adults in developed countries have a smartphone, an unimaginable luxury that not even the richest could have twenty years ago. Things are good.
Some very important things have become hugely expensive, while other things have become incredibly cheap.
Housing near work opportunities, education, health care, and childcare are many times more expensive today than in the past, adjusted for inflation and purchasing power parity [1].
Smartphones are not a luxury today by the very definition of what a luxury is (something scarce and hence expensive). Likewise, entertainment and other diversion options have become very cheap.
Globally quality of life is improving, locally the US is regressing to third world status among larger and larger areas. Financial measures somewhat cover up the increase in instability in people’s lives.
This is a bit dark but at a certain point I do think we’ll see assassination attempts on billionaires (not politicians) for simply being billionaires. It does feel like we’re at a point where the social fabric of rich nations is ripping due to rising wealth inequality and at a certain point the bottom will have had enough.
You can "print" unlimited amount of money but Earth resources are limited, moreover its usage is overshot (Earth Overshoot Day is 29 July 2019). So the problem is how the money is spent. We should tax money that spent to decrease Overshoot Day.
Earth's resources are limited over a given timespan, but most of these resources are not exhaustible, particularly not hydrocarbons.
Given that all human populations that have reached a certain standard of living so far have ceased to grow beyond replacement levels, overpopulation is likely not going to be a long-term concern either.
It is therefore not a problem to overshoot for a while, assuming that we eventually reach a level of technology that lets us maintain our standard of living in a sustainable fashion.
Earth's resources are decreasing over a given timespan because we both spent exhaustible resources and produce wastes for future generations. It can’t be sustainable system.
There is no evidence that overpopulation is not long-term concern. Look at Africa, India, China
New technologies are not guaranteed. You can’t simultaneously give less and less time and resources to your children and ask them to be better than you. They will choose to continue your tactic until civilization collapse as future generations can't vote
> Earth's resources are decreasing over a given timespan because we both spent exhaustible resources and produce wastes for future generations.
To my awareness, there is no critical resource that is both exhaustible and non-substitutable. Waste is not a fundamental issue, it can be stockpiled and possibly recycled with future technology. Most of it can also simply be burned with relatively low environmental impact, at least in modern incinerators [1].
> There is no evidence that overpopulation is not long-term concern. Look at Africa, India, China.
Yes, do look at these countries:
Chinese fertility today is well below replacement, despite giving up the disastrous "one child policy".
Indian fertility rates are at 2.2, very near replacement levels.
African fertility rates vary wildly with countries, but here as well you can see that fertility is inversely correlated with standard of living. Moreover, a low standard of living also implies relatively low resource usage.
> New technologies are not guaranteed.
New technology isn't strictly required, it just implies a lower standard of living.
> You can’t simultaneously give less and less time and resources to your children and ask them to be better than you.
Of course you can. The more pressure there is, the more likely it is that new solutions are developed.
Imagine if there wasn't any petrol left, we'd put a lot more effort into renewables. They wouldn't even need subsidies.
> They will choose to continue your tactic until civilization collapse as future generations can't vote
Well, sometimes civilizations do collapse. We may well enter an age of decline again. We also may launch a global thermonuclear war. I'm not saying a rosy future is guaranteed, I'm saying resource exhaustion and overpopulation are not as big a concern as people believe.
Hydrocarbons didn't form themselves. An energy source is required to remove the oxygen from CO2. If it is possible to tap that energy source directly, then depending on energy from hydrocarbons is incredibly irresponsible because high concentrations of CO2 make the planet less habitable for most life including humans.
The biggest issue I have with the article is that it ignores the geopolitical trends that were actual checks on inequality historically. Inequality typically only decreases in the face of an existential threat to the wealthy; when the US passed 90% marginal tax rates, it was to fund a war where the ability of the wealthy to remain in power at all was in question. Getting pensions and many other social democratic policies which benefit the poor and middle class, in many countries in the world, often required blood instead of the free market.