What's the best solution to this - if wealthy and high-income individuals get more power via political lobbying, they can then gain more wealth and higher incomes, gaining even more lobbying power. They can also flood the media with advertising money and propagandist messaging to convince voters to care more about less impactful issues. It feels like an endless cycle to me.
Other than war or complete societal upheaval, what can actually be done to solve the problem?
Of course you still want the government to do some regulating. For instance government will be necessary to solve collective action and public good problems. So once we've entered that realm, the solution isn't to just back off and let collective action and public good problems run rampant, it's to restrict lobbying and corruption while continuing to regulate.
Capitalism is working quite as intended right now. The goal is to move more and more money to the capitalists, and that goal is increasingly faster being reached.
Are you saying that data is the means of production?
I would disgree. Advertising is more important because stuff is less valuable. Therefore the data (which enables effective advertising/selling) is more valuable than the means of production.
They certainly aren't the same thing. You can produce tons of stuff without data. You would just have no idea what to produce or how to sell it.
> Are you saying that data is the means of production?
No, I was thinking about the infrastructure (servers). I am saying that Facebook has the infrastructure (rackspace) to produce (or subsidize the production) content and the money actually goes to Facebook. I don't know if the reasoning is sound though: would a newspaper own the means of production if they owned the printing machines ?
Servers are capital, I agree, but I don't think that's what makes FB valuable. The data is what's valuable, and I think it's a mistake to think of data as capital.
In places like the West, the poor have air conditioning, refrigerators, plumbing, and large high-def screen TVs. While the people on the top have a lot of money, they can't spend it. The people on the bottom are living better then the richest African (who is the richest man in absolute dollars) ever. When we toss in promiscuity of both sexes, better than the king.
People down vote, but where am I wrong? The West's biggest problem right now is having TOO MUCH FOOD! Think about that. We are so fat that we're dying. Not starving. FAT!
A resource allocation system that didn't have this problem should out-compete one that suffers these information masking flaws. So we just need fully automated space communism* to arise once, and it will overwhelm the less effective resource allocation systems.
* I'm not expressing an opinion on what this future more effective organization method would look like, just I'm pretty sure it wouldn't create incentives to keep masses of people less effective than they'd otherwise be.
>just I'm pretty sure it wouldn't create incentives to keep masses of people less effective than they'd otherwise be.
Self-interested authoritarians always have incentive to keep the population controlled, ignorant, and subdued, to preserve their status. The trouble is that in order to establish something like communism, the populace must cede all powers to an extremely authoritatian government, in which case it becomes inevitable that bad actors will co-opt the system for personal gain, which the "proletariat" will be powerless to legally resist, because of the restriction of rights necessary for centrally planned collectivist society.
See USSR, DPRK, China, Venuezuala, etc.
In becoming absolute arbiters of resource distribution, communism, and extreme socialism, can only exist by removing most of the freedoms that allow citizens to keep governments from being overly tyrannical. This is a sort of emergent progression, and it is a consequence of collective human nature.
Just a disclaimer, I'm not arguing that democratic capitalism is perfect either, especially because similar bad, selfish actors can take advantage of this system as well, especially with regulatory capture. However, at least under this system we theoretically have the ability to vote both by ballot and by wallet.
I am not worried about rich people propaganda, all the rich companies in the silicon valley supported Clinton, all the rich in Hollywood supported her and in general most people in the upper class supported her but she still lost, there are always other companies who will support the other side and people in general will decide who to believe anyways, today even 4chan basement dwellers can spread propaganda if they want.
I'm still amazed at how effectively we have collectively shunned thought along these lines by turning the founding father of the relevant branch of economical philosophy into a real life he-who-shall-not-be-named. Anyone who wants to talk about these problems either has to either re-invent the wheel or mention the unmentionable name and doom themselves to immediate dismissal as a kook.
e: Oh shit I just realized who I'm replying to. Serious answer time. Socialism will be a disruptive new paradigm for start-ups and other businesses where (following the idea of a meritocracy) workers, and not stuffy old capitalists, each own an equal number of shares at their place of work. And even more innovative in structure than Zappos and Valve, it allows for capital investment decisions to be voted on by individual contributors, throwing away traditional management structures you see at crufty old firms. Pretty cool stuff! According to some dusty old theories it's the "Exit Strategy" for our largest firms.
Who's dang and why are you self-censoring? Are you afraid of getting banned from HN? I don't think the site can remove your comments. If you are banned, I'd take it as a badge of honor.
Karl Marx. And I see the point the parent is making, although that's probably more of an issue in the USA than in Europe for instance. And I do agree that it's a shame because the writings of Marx are extremely interesting and deserve to be studied and discussed even if you don't believe in socialism and communism, it's really about economy in general first and foremost. Dismissing this important ground-breaking work because of what people did in its name decades after Marx's death is pretty strange. You could argue that he was wrong in his "praxis" but the diagnostic is very thorough, methodical and unfortunately a lot of it is very much relevant.
And let's not even talk about whatever rebranding of Marx is used as a strawman these days, like this "cultural marxism" dog whistle I hear 10 times a day and I can't be bothered to figure out what that's even supposed to mean anymore. Actually I just tried to search the term and the first result was an entry on "urban dictionary" which goes like:
>An umbrella term for identity politics, affirmative action, feminism, radical LGBT activism, Islam apologetics, white privilege, political correctness... Basically the SJW ideology.
In a past life I went to film school at a very very left-leaning university and distinctly remember learning about Lukács, Gramsci and Althusser as a "Cultural Marxist" wave that was all about correcting the excessive emphasis on economics of previous orthodox marxism.
So there -- not only the phrase makes perfect sense if you do read Gramsci like I have, it's been uttered by Marxist professors somewhere in the world sometime this century.
The Frankfurt School, which coined the term "cultural Marxism", were German Marxists who survived WWI, saw the revolution fail in Germany and turn to Leninist/Stalinist horror in Russia, and tried to understand what went wrong. They were seeking a route to revolution that was not wracked with violence and dictatorship. Fascinating stuff, actually.
It doesn't seem helpful to say that the Frankfurt school coined the term when their academic use is so vastly different from the bullshit we see today.
Thanks, his works are on my reading list. Curiously enough, I reckon that the sole reason I've pushed his works down the list is because he's so talked about by the sort of people that like to obfuscate everything in an esoteric language - which I despise.
But neither Lukács (Hungarian iirc), nor Gramsci (Italian, wrote in prison) nor Althusser (at one point the "French Freud" before Lacan rose to prominence) were from the Frankfurt school.
They think you can take Capital and search/replace 'money' for 'privilege points' and it's what the left believes now. I'm paraphrasing but I see this point made over and over again. James Damore did it in his Google Memo...
But Karl Marx was wrong, really wrong. About almost everything he modeled. Labor theory value did not stand academic or practical scrutiny. The reserve army idea is frankly, plain off the mark.
He contributed a great challenge to economics with his ideas, having to work towards rebuttal and debunking of his simple, yet appealing models.
>Labor theory value did not stand academic or practical scrutiny.
It seems to be standing academic scrutiny today, at least, it is debated to be. Kliman's[0] Temporal Single System Interpretation of Marx, upheld by Alan Freeman, David Laibman and Guglielmo Carchedi is one example which also attempts to solve for the transformation problem. On the other hand, Paul Cockshott has written on the empirical validity from the opposite pole[4] (note, one which Kliman rejects). Anwar Shaikh takes up what (I believe to be, my memory is rusty) a neo-Ricardian approach to the empirical strength of Marx's theory of value[8]. With regard to Marx's falling rate of profit, Okishio's Fundamental Marxian Theorem is currently upheld by Dong-Min Rieu (in several interpretations)[10]. Recent work has also been done on the empirical validity of the TRPF using actual econometric data[9]. Marx's theory of exploitation is currently upheld by John Roemer, Roberto Veneziani and Naoki Yoshihara[1]. Marx's "third thing" proof is currently upheld by James Furner[2]. The interpretation of the labour theory of value in the causal-explanatory mode is discussed since Steven Fleetwood[3]. The Sraffian criticism of Marx is also very much discussed[5][6][7]. There is also, of course, the Neue Marx-Lektur school which takes the sociological and cultural approach to the theory of value, the relatively new idea of the "value theory of labour", and the philosophical reading of capital such that price and value are different levels of abstraction and thus irreconcilable.
My point is that to say Marx was "wrong, really wrong" does not do justice to the fact that he was wrong on some counts and right on other counts, and your dismissal is much too heavy handed to dismiss much of the work and debate done in political economy.
[0] "Two Concepts of Value, Two Rates of Profit, Two Laws of Motion," Research in Political Economy 18, 243–67
[7] Bowles, S., and Gintis, H. (1981): “Structure and ractice in the Labor Theory of Value,” Review of Radical Political Economics 12,pp.1-26.
[8] "The Empirical Strength of the Labor Theory of Value" in Conference Proceedings of Marxian Economics: A Centenary Appraisal, Riccardo Bellofiore (ed.), Macmillan, London.
[9] Basu, Deepankar and Manolakos, Panayiotis T., "Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy, 1948-2007" (2010). Economics Department Working Paper Series. 99.
[10] Rieu, D.-M. (2009). Interpretations of Marxian Value Theory in Terms of the Fundamental Marxian Theorem. Review of Radical Political Economics, 41(2), 216–226.
I've saved the references and plan to take a solid look at them. I stand by my criticism at the moment, even as an avid and interested reader in Das Kapital.
^ this. Furthermore, one can really make progressive, social-democratic policy within the confines of fairly traditional economics, certainly without much reference to Marx.
Cultural Marxism applies modes of analysis developed within the Marxist community with different presumed central conflicts than the economic class one addressed in Marxism (and a number of the early practitioners were former Marxists.) So there originally was an understandable genesis of the term.
Nowadays, it's sort of a generic derogatory epithet by the right for anything that they disagree with that can't be ascribed directly (even in a very loose view) to actual economic Marxism, because everything bad must have “Marxism” stamped on it somewhere.
That's the point. You have a problem with people misappropriating Marxism, so why not start with the people who claim to be Marxists? If you ask cultural Marxists to explain socialism then they'll tell you to go read Capital, but I think you should be able to answer questions about it if you have and you have understood it. If you don't understand it then you have no good reason to recommend it.
Marx isn't responsible for cultural Marxists, Nietzsche isn't responsible for Nazis and Darwin isn't responsible for social Darwinists.
Fortunately, though, it seems as though the movement-that-shall-not-be-named is gaining some traction through groups like DSA and Momentum, even if it is reformist. I think there's still some hope - he-who-shall-not-be-named is only as such in public discourse, and in the academic discourse (in particular political economy, sociology, critical theory, philosophy, literature and with a good dose in psychoanalysis) he is named by his true name.
I think we ignore him and his work (in favor of sound bites from supporters and detractors) at our peril. There is enough to be critical of in what he said, we don't need to rub out his name over what Badiou called the 20th c. experiments.
Probably because the implementations tried have failed so badly. If people distanced themselves from the hammer and sickle, communism could possibly be given another chance but in the meantime it looks like people showing that icon either don't know about history or they have explained it away quite callously.
> Probably because the implementations tried have failed so badly
Implementations of Leninism did, sure, but (deliberate mislabeling aside), I'm not sure what that has to do with Marc, since Leninism rejected the preconditions Marx laid out and altered the approach to address the changed preconditions.
Leninism is farther from Marxism than the near-universal abandonment of the system Marx named “capitalism” for modern mixed economies (which, to be sure, is still pretty far from Marxism), so if you are going to blame Marx at all for the failure of the former, you have to credit him at least as much for the success of the latter.
In fairness, attempts have been made to translate the revolution part of his ideas into functional policy at least twice now and both events have included massive violence (and one has followed up that massive violence with a general mismanagement of public resources to the detriment of the "unconnected," not unlike the pain inflicted upon them by the previous ruling class).
At this point, the burden of proof is on the theory to show merit. It's a bit like Extreme Programming in that regard---looks great on paper, but how many times does it get to fall short of its promises before people stop blaming the implementers for "holding it wrong" and start talking seriously about the flaws in the originating theory?
Perhaps also like XP, however, pieces of it do seem worthwhile and are bearing fruit in the nations that have adopted them.
Those familiar with contemporary ideas of communism, socialism, communalism, left-anarchism, etc. will know there's been a lot of work done since the 50s (and a little earlier) on criticism of Marx, of the Soviet system and of the Chinese system. Modern Marxology actually takes up these issues with regard to their historical context, the USSR in particular. Unfortunately very few people actually get round to reading this wealth of work, especially after the year 1970 or so, in which most departments Marxism was declared dead and refuted.
The question of Marx's meaning and intentions, what does or does not flow from his critique, the idea of revolution, the issue of Rosa Luxemburg, Lenin and Mao are all very much actively discussed today. At the same time, there is a distinct, perhaps irreconcilable, difference of opinion between the liberals who treat property as part of an individual, or an extension of him, and the tradition since Marx which does not take this for granted at all.
As for the two attempts to implement Marxism (assuming you're speaking of Russia and China here)... in Russia, you can't separate it from Leninism and Stalinism. Is Marxism the problem, or the authoritarian government?
China is more interesting. China is still ostensibly a Marxist nation, right? Per World Bank data I just looked up, China's per capita GDP (in constant US dollars) was lowest in 1962, at $71.91. That's per year. In 2017, it's $8826.99. Constant dollars, mind you. That's 123 times more.
I have a hard time calling that a failure of any sort.
There hasn't been large-scale political violence in China since the end of the Cultural Revolution in 1976. That ten-year period killed 5-10 million on the high end. Which is, of course, quite bad, but in comparison to the 50-80M that died in ostensibly capitalist Europe during WWII, it doesn't seem that outsized.
So for burden of proof, I think you need to argue that an alternative model would have resulted in less political violence and more economic prosperity than that for China. Good luck.
> There hasn't been large-scale political violence in China since the end of the Cultural Revolution in 1976. That ten-year period killed 5-10 million on the high end. Which is, of course, quite bad, but in comparison to the 50-80M that died in ostensibly capitalist Europe during WWII, it doesn't seem that outsized.
> So for burden of proof, I think you need to argue that an alternative model would have resulted in less political violence and more economic prosperity than that for China. Good luck.
The Communist China's Great Famine[0] is said to have caused the deaths of tens of millions of people, as much as 30-40M, depending on who is guesstimating.
I am not sure I would call that a triumph of economic prosperity for China.
Famines were not exactly unusual in backwards agrarian nations recovering from 50 years of nonstop civil war and foreign occupation. European nations, before modernization, had famine problems, even without war. As Hans Rosling pointed out, famine killed much of the Swedish population in the late 19th century. From 1845-1850, Ireland lost a quarter of its population to famine and emigration to escape famine - 10-15% of the country starved to death under ostensible capitalist rule. And there are plenty more examples where that came from.
So blaming it on communism seems a little off to me. Matter of fact, one could easily argue that communist revolution is a consequence of capitalist failure, not a cause of failure on its own.
I certainly didn't mean to imply that Communism was the cause of the famine.
I meant to instead do what you seem to be doing - pointing out a bit of economic turmoil that lead to great loss of life. Mine just happened to be accounting for on the side of the ledger labeled "Communism".
Does it make the Great Famine any less an economic blow to Communist China that there are also historical examples of large famines in capitalist societies?
The economy boomed under Mao, too, if you think about it. China went from decades of war - Boxer Rebellion, civil war, Japanese occupation, civil war - to a famine that was entirely unsurprising considering the scope of what had happened in the previous 50 years. Mao ended that and put the country on the path to what they are today.
And those "translations" were criticized from their inception onward by non-authoritarian socialists/Marxists.
For example, Bertrand Russell only 3 years after the revolution (thus 1920):
In a capitalist state, the Government and the capitalists on the whole hang
together, and form one class; in Soviet Russia, the Government has
absorbed the capitalist mentality together with the governmental, and
the fusion has given increased strength to the upper class. But I see
no reason whatever to expect equality or freedom to result from such a
system, except reasons derived from a false psychology and a mistaken
analysis of the sources of political power.
I am compelled to reject Bolshevism for two reasons: First, because
the price mankind must pay to achieve Communism by Bolshevik methods
is too terrible; and secondly because, even after paying the price, I
do not believe the result would be what the Bolsheviks profess to
desire.
The problem with Marxism is that there's always a way to game a system. The people who are opportunistic CEOs right now would find a way to be opportunistic as an official in a socialist government, except now they wouldn't be producing as much economic surplus. Marxists tend to hand wave this problem by claiming that a strong democracy would keep this in check. However, the world is too complicated, and people have neither the intelligence nor patience to make sure everyone is a good actor.
I'd prefer a tax on increase in wealth. Which is to say a tax on income with a deduction for consumption.
So you're taxing the act of becoming richer, rather than just owning stuff. I suppose you could still have a wealth tax, if you set the threshold high enough that it only affects the top 10%.
What a lot of discussions on economics miss out on is that for every order of magnitude less people you are talking about out of the whole (10%, 1%, .1%, .01%) you are talking about people who then also have orders of magnitude more wealth than the previous categorization.
Your .001% is billionaires, your .01% is hundred millionaires, the .1% is tens millionaires, the 1% millionaires, the 10% is hundred thousandaires (of readily accessible capital, at least - a lot of people in the 10% push themselves into the millions on their consumable assets like their house). Beyond .01% it exponentiates up to Bezos levels of wealth.
When talking about wealth taxes we shouldn't even be thinking about anyone but the 300,000 who have as much wealth as the bottom 292,000,000 - the .1% - at most.
I find the denial of a healthy existence to those impoverished to be much more an interference in individual liberty than the denial of people's ability to hand over money for a particular service.
I also think this example may be valid for some discussions but in the modern world where the acquisition of wealth is denied from a large portion of the population this example fails to provide value.
Many things can be done. Be careful though as ALL have unintended side effects. What we have is an unintended side effect of our system of government, in different systems of governments people find other ways to make themselves more powerful.
I think on balance I'll take our current system. It isn't perfect, but all systems have downsides (if you think otherwise you don't know much about your preferred system): so far nobody has suggested something better.
Well, I bet most commenters on here are, like myself, part of a pretty privileged class.
What we can do is spread our own ideas about what privileged people can do to actively counteract the work of selfish privileged people who want more for themselves.
Personally I really dislike that my day job only serves to grow the income divide, and I’m working hard on finding a new job where my work will be open source. In that way, my work will not just be for a select few, but for anyone with the means to take advantage of it.
That is still a select group, but I also advocate for selfless giving of our labor to others. I want to do more than just commit my work to open source, but also to seek out those with less privilege, learn more about what they need, and direct my efforts towards work that is more clearly beneficial to these broader groups.
In short, those of us with privilege can practice selflessness, and use our privilege to help the disadvantaged even if that does not pay as much. I believe I will be happier in the future if I am helping others than if I had a big bank account but only worked to grow the divide.
Oh and a big part is education - I work in robotics and am passionate about mitigating inequality and so I see that building high quality cheap and free robotics educational resources can help avoid a privileged class taking advantage of those who would otherwise not be able to participate in growth due to automation.
War and societal upheaval never solve the problem of the common man's inequality with the élites.
"Why, of course, the people don’t want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece etc etc etc"
Or something like that anyway. That was Goering, or Goebels. Don't really remember which, but the point is war and societal upheaval are not tools to solve problems that the common man has with élites. War and societal upheaval are tools to solve the problems that one group of élites has with some other group of élites. The only thing a common guy would get out of it is to "come back to his farm in one piece", so to speak. (And a lot of us might not even get that.)
I mean, frankly, we can live on our farms in one piece without going to war at all. Sure, there are some rare exceptions, usually involving being a minority, where you truly are fighting for your life. In those instances the enemy's stated purpose is not to allow you to live on your farm. But even then, you don't gain equality with the élites if you win, you just get to stay alive.
This mad-max painting of economics is not really true. Since the 80's, global wealth exploded like nothing else. Extreme poverty face an erradication unlike any other period. Recently it was published that for the first time, the majority of the world is middle class. Ever.
Globally, not locally. I've read Factfulness and felt profoundly inspired by Hans Rosling's insights, but he's talking about the nations who are catching up, not the nations at the top.
I suspect what happens is that nations climb out of the steady-state of poverty, and into the steady-state of fully modern economies, and the growth rate ceases. At that point, the powers in control of the flow of money become ever more sophisticated at directing any growth to themselves, until we see roughly 100% of all post-inflation growth going to a tiny minority at the top.
I don't know how to fix this, but I think it's a reasonable observation of the source of the problem.
It's one way to look at it, and you will find multiple macro-models that will sustain some ideas, for example the increasing weight of government or how captured economies become. But globalization has definitely been a huge cause of stagnant wages in developed countries and sky-rocketing poverty reduction in the rest of the world.
I'm seeing this sentiment often. Some people seem to think that the storming of the Bastille would never have happened if the people would just have known how much better France's trading partners had progressed over the last decade or so.
I understand the interests as a nation and as a globe are different and sometimes antagonistic, but it pokes a massive hole in the idea that the rich are stealing and from the poor: if the rich are richer, and the poorer richer, the ones complaining are the ones in the middle. It would change the rhetoric from "poor vs rich" to "middle vs rich and poor".
Why aren't they? They're not doing it from altruistic reasons, they've just found people willing to work for less pay. Surely a king upon conquering even worse off subjects, which enables him to maintain and expand his wealthy lifestyle cheaper, can still be charged as an exploiter?
> Why aren't they? They're not doing it from altruistic reasons, they've just found people willing to work for less pay.
The middle class is not asking for progressive taxation of the rich for altruistic reasons either: they want the benefit of that taxation: access to housing, health, government jobs, college education, etc.
Its a much more morally and factually confusing narrative to say that the middle 50% wants to take fro mthe top 25% and bottom 25%, than the top 50% is taking from the bottom 50%. Particularly because in the utilitarian view, taking from the middle and giving to the bottom is still redistribution of wealth the 'right direction'.
The case in the united states is a lot simpler than people think tho. I believe the single most important reversal of real wages stagnation is to fix healthcare. If insurance cost half of what it costs today (or even less), then real wages would get a massive bump, specially at the lower echelons, where insurance costs disproportionately more than at the top.
> The middle class is not asking for progressive taxation of the rich for altruistic reasons either: they want the benefit of that taxation: access to housing, health, government jobs, college education, etc.
This needs a change of perspective. The workers are the ones that needs to sell their labour to the rich. It's their work that's the base of the rich's gains. The rich are unable to get rich without them. The benefits funded by taxes are capitalist societies fundamental palliative to prevent a Bastille day - especially when livable wages are seemingly also up for discussion. It's interesting to see how they're undermining themselves.
Societally we need to fix politics. There are some really easy things we can go after first in fact. To start with removing monied interests from politics by passing laws to counteract citizen's united would help, supporting proportional representation to invalidate any efforts to gerrymander maps and allow the expression of minority opinions would also help and, the big bad one, by adopting proportional representation (either via STV or some sort of mixed member balance) we could destroy America's two party system, this would discourage negative campaigning and ideally let in collation governance which is much more resistant to corruption.
After all that we could regroup and discuss how to ensure people in need get an appropriate amount of vital services.
So looks like the 80s is when things start going south (increased income inequality) so I looked up who was president during that time, then looked at their wiki page to see their economic policy and found this gem of a quote:
"Soon after taking office, Reagan began implementing sweeping new political and economic initiatives. His supply-side economic policies, dubbed "Reaganomics", advocated tax rate reduction to spur economic growth, economic deregulation, and reduction in government spending."
From what I have read a lot of those trends were already on the way in the 70s and before. Reagan certainly helped but the banks were looking for more money already before that.
It was sold to the middle class as "Trickle down economics". Basically, if you make the rich richer, your pie gets bigger too. Sadly, people bought that line.
Trickle down economics is a pejorative term from the 30's. As a proposition it is as naive as trickle-up, which is what the other spectrum usually sells. ('if you give poor people more resources, its good for everyone')
Economics, as the expression of human beings exchanging with each other, accepts neither.
> Economics, as the expression of human beings exchanging with each other, accepts neither.
I will never understand how adults can believe that things like economics, journalism, central banking, and (especially) the US constitution can be non-political.
Because that idea (about economics) has been heavily, and successfully, pushed by interested parties:
'The economy' and 'the market' are sacred things that are disconnected from the dirty world, and work perfectly in their own if you don't bother them. No need for 'political economy' anymore, only 'economics'.
Gotta answer that last sentence. Free market advocates are the exact opposite of disconnected with the dirty world: they advocate for allowing the dirtyness of reality sort itself out, without a neat central order. The most significant advocate for free markets, Milton Friedman, literally wrote the book on the application of Positive Economics: seeing things how they really are, use empiric data, make falsifiable predictions, etc.
They don't exist in "the void". Property rights are fundamental to the free market ideology, as well as courts, police and military. It's the foundations of liberalism, with Locke, Adam Smith, etc.
I reiterate that free market ideology is positive, while government intervention ideology is more normative: it says how things should be and tries to make it so. The best case of this has been obviously Communism and Fascism: they said this is best, and organized top to bottom how things should be, and ignored any evidence of the contrary.
> It's not 'poor people' vs. 'rich people' but the majority vs. a minority.
As silly a proposition as any other.
> Economics? what do you mean? There are theories that, in a less simplistic way, come to propose one and the other.
Mostly politicians and pundits. Economics, neither the mathematically inclined microeconomics nor the formulaic and macroeconomics have such thought or principles behind them.
>>As a proposition it is as naive as trickle-up, which is what the other spectrum usually sells. ('if you give poor people more resources, its good for everyone')
Incorrect. It has been well-documented that when people have more disposable income, their spending increases. This increase in economic activity grows the economy.
> Incorrect. It has been well-documented that when people have more disposable income, their spending increases. This increase in economic activity grows the economy.
It has been well documented that when you give people who have proven themselves capable of efficiently allocating capital (i.e. the rich) more capital, they continue to allocate it to its best and most productive use for society.
Everyone's got a narrative, and they're both right. To an extent.
>>when you give people who have proven themselves capable of efficiently allocating capital (i.e. the rich) more capital, they continue to allocate it to its best and most productive use for society.
You are making some wild assumptions that require evidence. Specifically, you need to prove that the reason rich people are rich is because they "have proven themselves capable of efficiently allocating capital", as opposed to (or at least independent of) other factors, such as luck, inheritance, etc. You also need to prove that the way the rich allocate resources, even when "efficient" (i.e. provides the most return) is actually good for society as a whole, and not just the rich.
> You are making some wild assumptions that require evidence. Specifically, you need to prove that the reason rich people are rich is because they "have proven themselves capable of efficiently allocating capital", as opposed to (or at least independent of) other factors, such as luck, inheritance, etc.
I'm not making any assumptions. In aggregate, by definition, wealthy people are better at allocating capital than non-wealthy people. Yes, not all wealthy people are good at it. But in general, they are. That's why they're wealthy. The fact that exceptions exist is irrelevant to my point.
> You also need to prove that the way the rich allocate resources, even when "efficient" (i.e. provides the most return) is actually good for society as a whole, and not just the rich.
Do you have evidence that the way the poor allocate additional capital is more socially useful?
What will these rich capital allocators do when nobody has money to buy their stuff? We need people to produce things and we need people who buy things. Both of these roles are equally important. Considering how housing and other asset prices are going up and companies like Apple are sitting on billions of dollars it seems there are a lot of rich people who don't know how to invest their money productively.
> What will these rich capital allocators do when nobody has money to buy their stuff? We need people to produce things and we need people who buy things. Both of these roles are equally important. Considering how housing and other asset prices are going up and companies like Apple are sitting on billions of dollars it seems there are a lot of rich people who don't know how to invest their money productively.
Totally agree. To be clear, i'm not advocating either narrative, just pointing out that both sides have one. I think they're both important. You need efficient allocators productively allocating capital...and you need them to have the capital to do it with. You also need consumers, with the buying power to make the capital allocators allocations work. The debate ends up being around what the right mix is, and I don't know the answer to that, simply pointing out that it's not a one-sided narrative of "give poor people money!" or "give rich people money!".
How about "Give working people more money"? Maybe if they had some capital they could allocate it for something useful too. When I look at the money that's being thrown around in SV I have my doubts that the professional allocators are doing a good job.
Its a generally well documented trend that once rich it becomes difficult to actually fall out of wealth. I'd definitely love some unbiased research in how much better these purported rich people are better at allocating capital.
Because I can easily start naming microeconomically selfish ways of managing capital that the wealthy practice on the regular that it is no way economically beneficial to the parent economy - offshore tax havens, tax loopholes, real estate bubbles, buying politicians and policy to harm liberty, investing in companies that themselves offshore, launder, and hide their capital outside of the economy.
Businesses in the US are magnitudes wealthier today than they were forty years ago but the standard of living has at best remained stagnant for the last 20 (depending on locality, there are substantial regional swings). Money is flush in the upper echelons of society but it has provably and demonstrably not resulted in economic prosperity for the whole nation.
> Its a generally well documented trend that once rich it becomes difficult to actually fall out of wealth. I'd definitely love some unbiased research in how much better these purported rich people are better at allocating capital.
Huh? The fact that they're rich is proof.
> Because I can easily start naming microeconomically selfish ways of managing capital that the wealthy practice on the regular that it is no way economically beneficial to the parent economy - offshore tax havens, tax loopholes, real estate bubbles, buying politicians and policy to harm liberty, investing in companies that themselves offshore, launder, and hide their capital outside of the economy.
Sure, but they had to get rich in the first place.
> Businesses in the US are magnitudes wealthier today than they were forty years ago but the standard of living has at best remained stagnant for the last 20 (depending on locality, there are substantial regional swings). Money is flush in the upper echelons of society but it has provably and demonstrably not resulted in economic prosperity for the whole nation.
Yes, its been very unevenly distributed. How do you think that relates to the question at hand?
Do you not understand the issue? I'm not trolling. You become wealthy by allocating capital efficiently. This is econ 101. How hard is this to understand?
I already responded. There are many ways to become wealthy. "Allocating capital efficiently" is just one of them. You keep claiming it is the most common way, and the rest, such as inheriting money, are "exceptions". I asked you to provide a citation. You refused, and provided a shallow response instead, saying it is "self-evident". Hence, you have no interest in actual discourse.
It is irrelevant what the percentage is. If you are good at allocating capital efficiently, you will become wealthy. Therefore, the wealthy has positive skew to their capital allocating ability.
Again...the fact that some people are born that way does not preclude the fact that the aggregate group has better capital allocation capabilities than the average person.
If they have more disposable income, their spending decreases. If you have no disposable income, your spending 100% of your income.
Moreover even if that proposition were somehow true, spending is not a measure of progress of any kind, not nominally and not in real terms. Inflation is a good exercise on this topic.
It's a funny thing that trickle-up is never ridiculed in the public eye.
> It was sold to the middle class as "Trickle down economics".
No, it was sold as “supply-side economics”, “Trickle-down economics” was a hostile characterization (as was Geore H. W. Bush’s “Voodoo economics” characterization.)
David Harvey has a fantastic book on this, "A Brief History of Neoliberalism", it's quite a read but it's very well structured and I'd recommend it to anyone looking to investigate the recent (by this I mean second half of the 20th c.) trends in global capitalism and society.
I think more pertinent are Economism by James Kwak (on the naive use of Econ 101), Global Inequality by Branko Milanovic (a better, or at least much more legible, analysis of inequality within and among countries than Piketty's tome), and maybe Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer (about campaign financing in the last two decades in the US).
It looks as if it began mid-70s. You can see the red and blue start diverging then, though the line stroke width causes some overlap. The heavy divergence begins in the 80's, as you pointed out.
I think confirming your theory would be as simple as comparing the policies of "Reaganomics" with the policies that emerged in the 70's that caused the initial bump shown on the chart.
There's a fellow that's discovered a piece of legislation in 1970 that was the turning point for all this lobbying taking over congress so heavily. The lynch pin of his argument is that we have to remove lobbyists from the actual physical galleries in congress and preserve the anonymous nature of how each congressman votes so they can vote their conscious and not how their lobbyist handlers choose. It's a counter-intuitive idea because everyone is already sold on wanting to know how their congressmen voted.
As ideas go this is a bit of a non-starter. If you can't tell what your congressperson is voting for, how do you know if they are representing you? When you vote, how would it be even theoretically possible to make an informed decision of who you want as a representative?
The only axis of discrimination between politicians would be charisma - which is no predictor at all of what someone will actually do.
EDIT It might be even easier for handlers to corrupt the system, because they could make it known that if a bill gets through, they'll be generous with their largess to everyone - and there will be know way to verify which politicians are the ones who are being bought off.
Charisma is only a problem when your representative is a figure on a screen you never see or interact with. Its definitely fallen by the wayside in recent times with the explosive population and suffrage growth not corresponding to a larger legislature, but there is ample historic record of the aristocratic voters in the decades following the founding of the US also having close relations to their representatives. The voters (the <10% of the population eligible) often had regular, direct access to converse and interact with those they elected.
In more modern terms it would be if you weren't electing a representative for every several hundred thousand people, but had one for every few hundred. Something constrained by Dunbars Number. You wouldn't be electing a caricature but someone you can actually interact with, especially in an era of total digital interconnection.
Fixing representative democracy in the US and abroad is probably the most fundamental issue facing America and most of the world today. Getting back to actual representation by peers has to happen eventually or the widening divide between the political aristocracy and the commoner will revert most of western society back into a model more reminiscent of 16th century Britain.
TL;DR: Titans of industry felt persecuted, rolled back The New Deal.
"Lobbying America tells the story of the political mobilization of American business in the 1970s and 1980s. Benjamin Waterhouse traces the rise and ultimate fragmentation of a broad-based effort to unify the business community and promote a fiscally conservative, antiregulatory, and market-oriented policy agenda to Congress and the country at large. Arguing that business's political involvement was historically distinctive during this period, Waterhouse illustrates the changing power and goals of America's top corporate leaders.
Examining the rise of the Business Roundtable and the revitalization of older business associations such as the National Association of Manufacturers and the U.S. Chamber of Commerce, Waterhouse takes readers inside the mind-set of the powerful CEOs who responded to the crises of inflation, recession, and declining industrial productivity by organizing an effective and disciplined lobbying force. By the mid-1970s, that coalition transformed the economic power of the capitalist class into a broad-reaching political movement with real policy consequences. Ironically, the cohesion that characterized organized business failed to survive the ascent of conservative politics during the 1980s, and many of the coalition's top goals on regulatory and fiscal policies remained unfulfilled. The industrial CEOs who fancied themselves the "voice of business" found themselves one voice among many vying for influence in an increasingly turbulent and unsettled economic landscape.
Complicating assumptions that wealthy business leaders naturally get their way in Washington, Lobbying America shows how economic and political powers interact in the American democratic system."
This is something that economists have debated over for decades since. Stiglitz specifically attacks Reagan on that front. Milton Friedman defends it.
Reagan was the last president to make a deep impact change in how economics and politics relate. He was unique in the way he self-deprecated government, something that is truly rare for presidents. He would actively advocate the government was the problem not the solution, a famous line by Milton Friedman on his economic ideas.
To this day, I am awed at the air-traffic controller firing. I am from a country with a pervasive strike culture, to the point that even cops strike, and it has been unfathomable for any president , of any ideology, from dictatorships to democratic socialists, to fire a swath of strikers.
> It is absolutely legitimate to characterize the president denigrating government as self-deprecating
No, it's generally not (there may be specific cases where it is), especially when the President in question is selling himself as an ally of the people against government.
> Reagan was more unique in his ability to actually do it
Actually do what? If you mean literally denigrating the Government, no, Trump's done much more of that.
If you meant reducing it's role..
Reagan didn't even do that; he shifted the burden of paying for it, sure. But it was much bigger, more intrusive, and more expensive when he left office than when he entered.
I’m an 80’s kid, and don’t remember the specific rhetoric, but my question has always been: if you dont believe in an organization, why join it and try to ruin it for everyone? Why be president if you think government is bad?
I mean, I think the KKK is bad and should go away, but I’m not going to go try to be it’s leader.
The irony is the right holds Reagan as a shining example of fiscal conservatism.
However, Reagan ultimately tripled the debt while in office. The right loved saying Obama spent more than all other presidents before him combined (which he did, which Bush did...but Reagan the model of fiscal conservatism spent 2x as all presidents who served before him).
Seems Trump is on the way to top that. That's one thing I never get about modern Republicans. When in opposition they throw a fit about deficits but as soon as they have power they forget these concerns but drive deficits up a lot. Reagan did it, Bush did it and now Trump is doing it too.
Its almost as if forcing (rational) people to select D or R via a number of single issue pivot points creates a situation where everyone is guilty of some level of hypocrisy.
> When in opposition they throw a fit about deficits but as soon as they have power they forget these concerns but drive deficits up a lot.
They don't care about deficits, they care about spending priorities. Deficits is just the argument they turn to when they don't have an argument against particular spending priorities.
Reagan's deficit increase comes mostly due to military spending, something that was regarded as extremely strategically important in an era of potential nuclear holocaust.
As an engineer and computational scientist, drawing conclusions from correlations like this is absurd. Maybe Reagan was good for income inequality or maybe he was bad for it. Did you control for the other variables before drawing your conclusions? What about:
* The governments' legislation and economic policies in countries like the USSR, China, etc. in the 80s
* Changing technology especially communication technology
* Changing levels of education in the world.
* Lingering/diminishing trends/effects from wars like: Cold War, Korean War, Vietnam War, etc.
* Changing age distribution of humans in western countries,
And on and on. The world economy is extremely complex with heavy nonlinear feedback effects. How can you possibly state things like Reagan caused X w.r.t. the world wealth distribution with such confidence?
Oh, and while throwing all sorts of alternative world scenarios in the wild hope one might make a reasonable argument that Neoliberal policies aren’t the driver of inequality...
I didn't throw out any "alternative world scenarios". I was just pointing out that a lot of things were going on in the world that could easily have had a very significant impact on things such as income inequality. There are also many examples in economics where a simple/obvious solution actually has the opposite of the intended effect. Rent price control would be an obvious example (https://en.wikipedia.org/wiki/Rent_regulation#Economists'_vi...).
If you want to dig in to the gory details of reaganomics, economists have researched and debated about its effects for decades. There are many economists who make cases both for and against it having appreciably affected income inequality in various ways.
>As an engineer and computational scientist, drawing conclusions from correlations like this is absurd. Maybe Reagan was good for income inequality or maybe he was bad for it. Did you control for the other variables before drawing your conclusions?
Drawing absolute conclusions in this area is nearly impossible, and we can't say with any certainty that Reaganomics caused this problem. The evidence does seem to suggest that the policies are not fixing the problem, which is a far easier claim to make. They might not be the cause, but it seems very likely they aren't the solution.
Given that you don’t know what would occur without reagonimics, even that much isn’t safe to say. It’s quite possible that reagonimics is in fact helpful, just not enough to overcome other negatives in the environment (so in sum, a loss). Removal may very well increase the rate of inequality.
In other words, with just the evidence provided, you can’t safely say much of anything beyond “it started getting worse in the 80’s”
>Given that you don’t know what would occur without reagonimics, even that much isn’t safe to say.
Yes, I can. The current situation seems undesirable. While it's possible that the situation would be worse without Reaganomics, the actual situation is still undesirable. Looking towards the future, it seems unwise to continue a plan that led to undesirable results.
Your argument proves too much. Consider the following example:
> You are diagnosed with Type II Diabetes. Your doctor tells you to monitor your blood sugar and take insulin. This situation seems undesirable. While it is possible that the situation would be worse without monitoring your blood sugar and taking insulin, the actual situation is still undesirable. Looking towards the future, it seems unwise to continue a plan that led to undesirable results.
If Reaganomics came from a trained professional who were basing their recommendations on the best theory science had developed through experimentation, I would not advocate changing the policy. That is not the case though, as we both agree that reliable evidence is scant.
Going forward, there isn't a great theory showing that Reaganomics is worth continuing, and the hypothesis that different policies would provide a better outcome seems worthy of testing.
:P Ouch, going right for the partisans. Presidents are important people, but they are a lot more reactive than is generally accepted - what about the theory that Reagan was reforming economics in response to some deeper underlying problem [0]?
So the implication is that Reagan instituted broad and substantial tax reduction for the rich in combination with the institution of enormous federal deficit spending in order to offset rising oil consumption following two oil crisis the previous decade?
We saw how oil turned out in the long run. Reagans policies, if anything, only gave dictatorships another two decades of unmitigated dominance in an industry we have seen the US itself rapidly commercialize internally. Most US consumed oil is now domestic, and most of the growth happened in the rebound from the 08 recession. I'd be really interested in comparing the economic policies of how Reaganomics protracted foreign dependence while the late Bush / Obama era bailouts and recovery stimulus somehow exploded the domestic market.
Or that neither of those had anything to do with oil, and that the development of the market and industry as a whole was detached enough from federal law of the US that neither president is responsible for anything in that regard.
The theme I'm replying to is 'Regan's stated policy objectives were implemented in the 70s and were probable causes of rising income inequality'. Maybe policy settings were twiddled, but the sudden stoppage of growth is probably linked to resource growth tapering off. In a counterfactual scenario where some other set of economic policies were in place, you'd probably have seen income growth trail off regardless.
The 'fix' could well be rich people being worse off, not poor or middle income people being better off. Not much of a solution, that.
A fun thought experiment, there are some good answers to this: at the end of the day, a different policy would be redistributing something real away from the rich. That wouldn't be food (rich people eat as much as everyone else), so what would it be? That is to day, what exactly are the rich securing that is unfair? (money isn't a valid answer, the answer is what the money is then used to buy)
But go deeper than even that and determine what is the crux of the unfairness. How are the rich securing a larger percentage of the growth unfairly? If everyone is getting richer, but the rich are doing it faster, what are they doing to capture that excess? Isn't the answer "investing in the economy?"
The answer is that if everything were the same but the rich had less money, is that the rich would be less in a position to capture the regulatory framework and tilt the playing field in their favor. Eg maybe without trickle-down, the factors that compounded into the Citizen's United decision would have fallen the other way, etc.
Another side of this to consider, is that low-skill many jobs today are literally not worth as much as they used to be.
In labor economic there is a very well established understanding that jobs requiring high levels of skill are typically harder to fill hence corporations must pay more to get those individuals.
But the reverse is true, low skill jobs are easy to fill so we don't have to pay as much.
But here's the kicker, many branches of economics focus on technology as a eliminator of work. Basically, two guys becomes one guy and a machine. Eventually a machine might replace both of the guys.
There is an intermediary between a job being automated entirely away though, where a physical human's work loses value. McDonalds for example has been rolling out automated ordering systems so that they don't have to employ as much "front-office" staff. If they keep those on payroll, there job brings much less value to the company than it did prior.
Technology creates skilled jobs (aka maintain the robot) and eliminated unskilled jobs. But technology can also reduce the value-add of another unskilled employee.
What I am getting at is the sad truth that it's totally possible unskilled labor is not worth as much as it used to be.
If we continue to base our salaries entirely capitalistically, maybe these gaps will widen as low skill employees become less and less valuable while high skill employees gain value but less of them are required.
Moral of this story: become high skilled. If you are high skilled not only do you make more money in absolute dollars, but also the things you want to buy are cheaper in absolute dollars.
There are plenty of things to automate for the foreseeable future. I don't know what the correct answer for kids 100 years from now will be: they have the figure out their own answers.
> Is there an inherent problem with income inequality?
Yes, because once you get past the truly abject absolute poverty (which isn't an issue for most of the developed world), there's a lot of indication that experienced utility or disutility is driven more by relative material position than absolute position. So, yes, outside of very poor economies (where absolute gains that increase inequality may still improve utility across the board), increases in inequality are very often utilitarian ills that are not compensated by absolute gains at the lower end.
Well, I think what he's saying (which I don't necessarily disagree with) is that if I have everything I need, what difference does it make to me - besides jealousy - if the guy down the street has more than he needs?
It's a common a priori moral argument about how many people think people should derive utility from material circumstances, sure, but “stop feeling pain from relative deprivation” is about as effective as “stop feeling pain from me twisting your arm”, even if you think it is morally obligatory for people to disregard having their arm twisted.
Yeah, parent post expressed it well. Probably better than me. I purposefully didn't say anyone should feel anything (and got flamed for being an absolutist for it). While it's how I personally feel, I think others should decide how they feel about it. Funny enough, framing the problem in a slightly different moral perspective leads to vast differences in how people feel about the situation.
1. We are social creatures, not homines oeconomici whose utility function only includes our own consumption. (In fact, I feel that the argument you (and others) make comes from this mistaken Econ 101 idea that the simplifying economics assumption of a utility function only including own consumption is has normative character (ie we should only look at that). But it has neither positive (descriptive) nor normative character for actual humans.)
2. Extreme inequality jeopardises the democratic project, and corrodes the political process.
3. In the real world, higher inequality is linked to more crime. (Too lazy to find the reference now, but there's a recent book out on it.)
4. The jostling for status arguably leads to enormously wasteful spending (ie conspicuous consumption, ostentatious waste, etc.)
5. Life expectancy, health, happiness seem higher in more equal societies.
You can't just dismiss these facts (some empirical, some philosophical) by "why should you care about what someone else has?".
(Note: none of the above objections are dependent on a false "zero-sum" or "fixed-pie" argument.)
In addition to Nozick, I recommend reading Rawls (or even better, somebody writing about Rawls - his "Theory of Justice" is very heavy reading, taking way too long to get to the points).
I don't really understand why this scenario is worded this way, it seems like World 2 where everybody has .5x is just worse due to World 2 getting the shaft. Here's a setup:
* World 1, where everybody has x except one person has 100x
* World 2, where everybody has 1.2x
I think World 2 pretty clearly wins but this is a bit of a strawman to begin with. I'd personally rather live in a world where the poor have x and the rich may benefit by having 6x in extreme cases.
I agree with the general concept that incentives can increase productivity and different people are adding different amounts to society, I disagree with the idea that some people are equal in skill to 100,000 other people and need to be rewarded accordingly.
Well you actually do end up with 0.5x instead of 1.2x because in World 2 you have eliminated the profit motive that drives progress forward. Basically you forego all progress that would have happened with the opportunity to profit by creating and inventing things and then making those things faster, cheaper and better.
The question is how much profit should go to a few. I don't think many people would object to a world where most people get 1.5x and some get 10x. The 10x people should have enough profit motive in that world. I don't think today's CEOs are better than the ones in the 50s when they made it 20 times morw than their workers compared to them making several hundred times more today.
Sorry, so part of your scenario to divine why wealth inequality isn't so bad is an assumption (without grounding or explanation) that a lack of wealth inequality necessarily leads to high levels of economic inefficiency?
I feel like your initial question is just coming from a very disingenuous place, the discussion of the relative economic efficiency of unequal vs. perfectly equally distributed wealth is a bit aside from the question of how extreme wealth inequality is. So I suppose, I agree that wealth inequality does provide value, but it does so in very small doses which we have greatly exceeded at this point.
The view that "wealth = money" is myopic. Wealth is access to goods and services. At any point in time, money is just the means to get more goods and services, but over long periods of time, goods and services becoming cheaper and more accessible is a form of wealth.
The problem with people who focus on inequality is that they completely ignore ∂t. If you're trying to improve the lives of 7.6 billion people, time is of utmost importance.
I agree entirely with you in theory. I agree that increased compensation drives innovation and that innovation is the primary driven of our standard of living. In ~1700 france if the extreme wealth of the monarchy and clergy had been redistributed to the common folk their standard of living would almost certainly be below that of people living in slums in the modern day. I think that over the last three hundred years we've all gotten to a place where we're much better off, but the relative standard of living people experience has slid downward in the first world in recent decades and I think that is an issue that's worth solving, or at least finding the source of so we can mitigate it in the future.
Is it really proven that profits are what drives progress?
Would Einstein have stilled discovered relativity regardless if he had been paid large amounts of monney for doing research or not?
Sure, there are examples like Ford - where without profit motive, they would not have gotten the advances that happened. But those examples tend to have less impact than the non-profit driven motives.
malandrew explained my thought process pretty well. I elaborated a bit in my other comments on this thread as well. The point was more about illustrating the irony of people arguing about inequality instead of thinking about what they have.
A man is perfectly happy with his Corvette until he sees his neighbor pull up in a Ferrari.
These are artificial choices that don't help. I think the last decades had most people in rich countries staying the same or going slightly negative while a few got much more. To me that's not desirable.
Keep in mind the alternative may have been even more people sliding into poverty. I think inequality is more misleading than my artificial choice. Why anchor on what the richest have, as opposed to what they poorest SHOULD have? The rich will always get richer. It's basically a law akin to gravity. You can shovel shit uphill fighting it, or you can accept it and use that force to make the whole world better.
The point does not stand because the proportions you gave are very far from reality. The world 1 you describe is a communist utopia compared to what we currently have.
It is interesting, though, that your idea of what's grokable is so far from reality
Instead of dealing in black and white absolutes, how about World 3, where 99% of everyone has .9x and 1% have 9x.
Plenty of economical arguments exist to supply a profit motive as a means to spur economic development and advancement. At the same time, I highly doubt Bob the CEO of Big Bucks would staunchly refuse the job and that no other qualified candidate would consider doing it if the mean CEO salary was only $600,000 a year instead of 7 million. Hell, thats what they did make until Clinton era tax incentives.
Its the same argument as to why lifetime of the creator + 70 years copyright is ridiculous and absurd. Maybe Jules Verne would have written ten sequels to 20000 Leagues if only he could guarantee a distribution monopoly for 70 years after he died?
The orders of magnitude of wealth difference are colossal, and something with plenty of documented study showing your average citizen has no clue how large the disparity is between the average and the extreme prosperity at the top.
Others have answered why its a problem, I just want to point out its not a black an white either you go full communism or laissez faire.
I agree it's not black and white. The reason I presented a theoretical extreme was not to straw man. It's because I think it illustrates an interesting philosophical paradox. It seems that people would rather that others (the CEO) make much less, even though it may not mean the "proceeds" are distributed broadly, and in fact, everyone may individually be worse off due to economic fallout.
This is a very US - centric view. With globalization I think a different picture emerges. Increasing global trade has hurt US (and Other Western) working classes with de-industrialization, where many more people foreign countries have been lifted out of poverty.
The US has, on a global scale, long had higher standards of living than a large remainder of the world so balancing US workers with foreign workers to elevate the standard of living in third world countries isn't a bad thing. The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason.
> long had higher standards of living than a large remainder of the world
Not really 200 years ago most Americans were scratching a living in a new world fighting off the natives and importing slaves.
>The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason.
Reganomics, the end of Breton Woods, the end of the "Gold Standard", "Stagflation", "Peak Oil", population growth, immigration, greying population, healthcare, welfare, tax cuts, globalization, capitalism, communism.
Oh don't mind me, just pulling excuses out of my ass. I love posts like these and I especially love their graphs. Less so for the (little) content they contain. More so for people's reactions to the content. Its confirmation bias bait all the way down!
I don't mean to be so negative and critical. I'm just tired of people trying to explain the state of the world from a single graph!
Income inequality could be increasing for different reasons at different times. It might not be increasing at all (depending on how you define income)!
---
Let's stop drooling over graphs and have an actual conversation about the "problem". Who am I richer than and why? Who is richer than me and why? Maybe if we answer these questions we can solve income inequality (assuming we still want to solve it all).
their primary metric for increasing interest rates is wage inflation. so they play wack a mole when people start seeing income growth, a recession comes, and employers have all the bargaining rights again.
yet despite the fed's goal of smacking down wage growth ahem, inflation,, nobody points a finger at them.
I posted my take on this recently on Facebook. (And I recently gave a TedX talk on the same concept entitled "Money: The Greatest Story Ever Told" [1])
Here is an image of the entire world's Money supply [2].
In my eyes, the majority shift occurred due to two things:
1) Ending the gold standard peg
2) Creation of the derivative market
1 --- Ending the Gold Standard Peg
In 1971, Nixon severed the connection between Gold and the US-Dollar. The USD now became purely fiat --- no actual resource backed the USD anymore.
This allowed the dollar to change. Banks could create money -- really. Credit could be expanded and offered to customers. Debt could become an asset, and banks could trade.
But the most interesting part is that it led to #2 --- the Derivate market
2 -- Creation of the Derivative Market
By removing the gold standard tether, money became anything that people believe in
In 1973, the first derivative began to trade.
And banks utilized this to create futures, contracts, warrants, swaps --- bets against bets against bets against bets. The money isn't really there. It's just a financial instrument traded to hedge against fluctuations.
It's a betting system. And it's turtles the whole way down.
Here's the crazy part. The global derivatives market is 1.4 QUADRILLION dollars. That is, 20 times larger than the GDP of the entire WORLD.
In the picture attached --- see that giganticly long section at the bottom? That is derivates. It outweighs the rest of the world's money by FAR.
1.4 Quadrillion USD are in derivatives. Guess how much money world-wide is in coins and banknotes? $5 trillion.
That is --- derivatives are 280x the amount of coins and bank notes in THE ENTIRE WORLD.
Glad to see someone mention the "temporary" cessation of the dollar's convertibility to gold. From my perspective that would mark the most important event for this topic but it is hardly discussed.
I never understand why people see these actions all happening simultaneously -- a invention of infinite money will of course go to the top, and create inequality between the rich and poor -- because that's how compound interest works.
But for some reason, that doesn't seem to even register on people's radar.
195 comments
[ 4.4 ms ] story [ 250 ms ] threadOther than war or complete societal upheaval, what can actually be done to solve the problem?
The issue is it has to be in place before money command structures have a chance to develop, so it's not something you can really implement now.
Realistically, it may not be fixable without fixing capitalism, which no one has figured out how to do.
Mark Zuckerburg has very little of what I'd call "capital" that actually produces stuff, yet he makes tons of money.
I would disgree. Advertising is more important because stuff is less valuable. Therefore the data (which enables effective advertising/selling) is more valuable than the means of production.
They certainly aren't the same thing. You can produce tons of stuff without data. You would just have no idea what to produce or how to sell it.
No, I was thinking about the infrastructure (servers). I am saying that Facebook has the infrastructure (rackspace) to produce (or subsidize the production) content and the money actually goes to Facebook. I don't know if the reasoning is sound though: would a newspaper own the means of production if they owned the printing machines ?
People down vote, but where am I wrong? The West's biggest problem right now is having TOO MUCH FOOD! Think about that. We are so fat that we're dying. Not starving. FAT!
But is it also working as advertised ?
* I'm not expressing an opinion on what this future more effective organization method would look like, just I'm pretty sure it wouldn't create incentives to keep masses of people less effective than they'd otherwise be.
Self-interested authoritarians always have incentive to keep the population controlled, ignorant, and subdued, to preserve their status. The trouble is that in order to establish something like communism, the populace must cede all powers to an extremely authoritatian government, in which case it becomes inevitable that bad actors will co-opt the system for personal gain, which the "proletariat" will be powerless to legally resist, because of the restriction of rights necessary for centrally planned collectivist society.
See USSR, DPRK, China, Venuezuala, etc.
In becoming absolute arbiters of resource distribution, communism, and extreme socialism, can only exist by removing most of the freedoms that allow citizens to keep governments from being overly tyrannical. This is a sort of emergent progression, and it is a consequence of collective human nature.
Just a disclaimer, I'm not arguing that democratic capitalism is perfect either, especially because similar bad, selfish actors can take advantage of this system as well, especially with regulatory capture. However, at least under this system we theoretically have the ability to vote both by ballot and by wallet.
e: Oh shit I just realized who I'm replying to. Serious answer time. Socialism will be a disruptive new paradigm for start-ups and other businesses where (following the idea of a meritocracy) workers, and not stuffy old capitalists, each own an equal number of shares at their place of work. And even more innovative in structure than Zappos and Valve, it allows for capital investment decisions to be voted on by individual contributors, throwing away traditional management structures you see at crufty old firms. Pretty cool stuff! According to some dusty old theories it's the "Exit Strategy" for our largest firms.
https://www.fastcompany.com/90223130/how-elizabeth-warrens-a...
dang is the HN admin, lead moderator, or whatever the official title is.
> If you are banned, I'd take it as a badge of honor.
Some people would rather continue to participate then accumulate honor badges.
#OrangeManBad
And let's not even talk about whatever rebranding of Marx is used as a strawman these days, like this "cultural marxism" dog whistle I hear 10 times a day and I can't be bothered to figure out what that's even supposed to mean anymore. Actually I just tried to search the term and the first result was an entry on "urban dictionary" which goes like:
>An umbrella term for identity politics, affirmative action, feminism, radical LGBT activism, Islam apologetics, white privilege, political correctness... Basically the SJW ideology.
I think I missed that part in Das Kapital...
So there -- not only the phrase makes perfect sense if you do read Gramsci like I have, it's been uttered by Marxist professors somewhere in the world sometime this century.
He contributed a great challenge to economics with his ideas, having to work towards rebuttal and debunking of his simple, yet appealing models.
It seems to be standing academic scrutiny today, at least, it is debated to be. Kliman's[0] Temporal Single System Interpretation of Marx, upheld by Alan Freeman, David Laibman and Guglielmo Carchedi is one example which also attempts to solve for the transformation problem. On the other hand, Paul Cockshott has written on the empirical validity from the opposite pole[4] (note, one which Kliman rejects). Anwar Shaikh takes up what (I believe to be, my memory is rusty) a neo-Ricardian approach to the empirical strength of Marx's theory of value[8]. With regard to Marx's falling rate of profit, Okishio's Fundamental Marxian Theorem is currently upheld by Dong-Min Rieu (in several interpretations)[10]. Recent work has also been done on the empirical validity of the TRPF using actual econometric data[9]. Marx's theory of exploitation is currently upheld by John Roemer, Roberto Veneziani and Naoki Yoshihara[1]. Marx's "third thing" proof is currently upheld by James Furner[2]. The interpretation of the labour theory of value in the causal-explanatory mode is discussed since Steven Fleetwood[3]. The Sraffian criticism of Marx is also very much discussed[5][6][7]. There is also, of course, the Neue Marx-Lektur school which takes the sociological and cultural approach to the theory of value, the relatively new idea of the "value theory of labour", and the philosophical reading of capital such that price and value are different levels of abstraction and thus irreconcilable.
My point is that to say Marx was "wrong, really wrong" does not do justice to the fact that he was wrong on some counts and right on other counts, and your dismissal is much too heavy handed to dismiss much of the work and debate done in political economy.
[0] "Two Concepts of Value, Two Rates of Profit, Two Laws of Motion," Research in Political Economy 18, 243–67
[1] http://www.ier.hit-u.ac.jp/~yosihara/Reexamination_of_the_Ma...
[2] Furner, James (2004) 'Marx's critique of Samuel Bailey', Historical Materialism 12(2)
[3] Fleetwood, S. (2001) 'What kind of theory is Marx's labour theory of value? A critical realist inquiry', Capital & Class 73
[4] http://users.wfu.edu/cottrell/eea97.pdf
[5] Freeman, Alan, (2002), Marx After Marx After Sraffa, MPRA Paper, University Library of Munich, Germany.
[6] http://ricardo.ecn.wfu.edu/~cottrell/ecn265/value.pdf
[7] Bowles, S., and Gintis, H. (1981): “Structure and ractice in the Labor Theory of Value,” Review of Radical Political Economics 12,pp.1-26.
[8] "The Empirical Strength of the Labor Theory of Value" in Conference Proceedings of Marxian Economics: A Centenary Appraisal, Riccardo Bellofiore (ed.), Macmillan, London.
[9] Basu, Deepankar and Manolakos, Panayiotis T., "Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy, 1948-2007" (2010). Economics Department Working Paper Series. 99.
[10] Rieu, D.-M. (2009). Interpretations of Marxian Value Theory in Terms of the Fundamental Marxian Theorem. Review of Radical Political Economics, 41(2), 216–226.
Nowadays, it's sort of a generic derogatory epithet by the right for anything that they disagree with that can't be ascribed directly (even in a very loose view) to actual economic Marxism, because everything bad must have “Marxism” stamped on it somewhere.
Marx isn't responsible for cultural Marxists, Nietzsche isn't responsible for Nazis and Darwin isn't responsible for social Darwinists.
I think we ignore him and his work (in favor of sound bites from supporters and detractors) at our peril. There is enough to be critical of in what he said, we don't need to rub out his name over what Badiou called the 20th c. experiments.
Implementations of Leninism did, sure, but (deliberate mislabeling aside), I'm not sure what that has to do with Marc, since Leninism rejected the preconditions Marx laid out and altered the approach to address the changed preconditions.
Leninism is farther from Marxism than the near-universal abandonment of the system Marx named “capitalism” for modern mixed economies (which, to be sure, is still pretty far from Marxism), so if you are going to blame Marx at all for the failure of the former, you have to credit him at least as much for the success of the latter.
At this point, the burden of proof is on the theory to show merit. It's a bit like Extreme Programming in that regard---looks great on paper, but how many times does it get to fall short of its promises before people stop blaming the implementers for "holding it wrong" and start talking seriously about the flaws in the originating theory?
Perhaps also like XP, however, pieces of it do seem worthwhile and are bearing fruit in the nations that have adopted them.
The question of Marx's meaning and intentions, what does or does not flow from his critique, the idea of revolution, the issue of Rosa Luxemburg, Lenin and Mao are all very much actively discussed today. At the same time, there is a distinct, perhaps irreconcilable, difference of opinion between the liberals who treat property as part of an individual, or an extension of him, and the tradition since Marx which does not take this for granted at all.
As for the two attempts to implement Marxism (assuming you're speaking of Russia and China here)... in Russia, you can't separate it from Leninism and Stalinism. Is Marxism the problem, or the authoritarian government?
China is more interesting. China is still ostensibly a Marxist nation, right? Per World Bank data I just looked up, China's per capita GDP (in constant US dollars) was lowest in 1962, at $71.91. That's per year. In 2017, it's $8826.99. Constant dollars, mind you. That's 123 times more.
I have a hard time calling that a failure of any sort.
There hasn't been large-scale political violence in China since the end of the Cultural Revolution in 1976. That ten-year period killed 5-10 million on the high end. Which is, of course, quite bad, but in comparison to the 50-80M that died in ostensibly capitalist Europe during WWII, it doesn't seem that outsized.
So for burden of proof, I think you need to argue that an alternative model would have resulted in less political violence and more economic prosperity than that for China. Good luck.
> So for burden of proof, I think you need to argue that an alternative model would have resulted in less political violence and more economic prosperity than that for China. Good luck.
The Communist China's Great Famine[0] is said to have caused the deaths of tens of millions of people, as much as 30-40M, depending on who is guesstimating.
I am not sure I would call that a triumph of economic prosperity for China.
[0] https://www.npr.org/2012/11/10/164732497/a-grim-chronicle-of...
So blaming it on communism seems a little off to me. Matter of fact, one could easily argue that communist revolution is a consequence of capitalist failure, not a cause of failure on its own.
I meant to instead do what you seem to be doing - pointing out a bit of economic turmoil that lead to great loss of life. Mine just happened to be accounting for on the side of the ledger labeled "Communism".
Does it make the Great Famine any less an economic blow to Communist China that there are also historical examples of large famines in capitalist societies?
I'm not sure it does.
For example, Bertrand Russell only 3 years after the revolution (thus 1920):
In a capitalist state, the Government and the capitalists on the whole hang together, and form one class; in Soviet Russia, the Government has absorbed the capitalist mentality together with the governmental, and the fusion has given increased strength to the upper class. But I see no reason whatever to expect equality or freedom to result from such a system, except reasons derived from a false psychology and a mistaken analysis of the sources of political power.
I am compelled to reject Bolshevism for two reasons: First, because the price mankind must pay to achieve Communism by Bolshevik methods is too terrible; and secondly because, even after paying the price, I do not believe the result would be what the Bolsheviks profess to desire.
https://www.history.ac.uk/reviews/review/1675
Taxing rents generally would be beneficial.
A wealth (not income) tax.
So you're taxing the act of becoming richer, rather than just owning stuff. I suppose you could still have a wealth tax, if you set the threshold high enough that it only affects the top 10%.
What a lot of discussions on economics miss out on is that for every order of magnitude less people you are talking about out of the whole (10%, 1%, .1%, .01%) you are talking about people who then also have orders of magnitude more wealth than the previous categorization.
Your .001% is billionaires, your .01% is hundred millionaires, the .1% is tens millionaires, the 1% millionaires, the 10% is hundred thousandaires (of readily accessible capital, at least - a lot of people in the 10% push themselves into the millions on their consumable assets like their house). Beyond .01% it exponentiates up to Bezos levels of wealth.
When talking about wealth taxes we shouldn't even be thinking about anyone but the 300,000 who have as much wealth as the bottom 292,000,000 - the .1% - at most.
The font is terrible, but this is the shortest explanation of it that I could find easily:
http://faculty.seattlecentral.edu/jhubert/wiltchamberlainarg...
I also think this example may be valid for some discussions but in the modern world where the acquisition of wealth is denied from a large portion of the population this example fails to provide value.
I think on balance I'll take our current system. It isn't perfect, but all systems have downsides (if you think otherwise you don't know much about your preferred system): so far nobody has suggested something better.
What we can do is spread our own ideas about what privileged people can do to actively counteract the work of selfish privileged people who want more for themselves.
Personally I really dislike that my day job only serves to grow the income divide, and I’m working hard on finding a new job where my work will be open source. In that way, my work will not just be for a select few, but for anyone with the means to take advantage of it.
That is still a select group, but I also advocate for selfless giving of our labor to others. I want to do more than just commit my work to open source, but also to seek out those with less privilege, learn more about what they need, and direct my efforts towards work that is more clearly beneficial to these broader groups.
In short, those of us with privilege can practice selflessness, and use our privilege to help the disadvantaged even if that does not pay as much. I believe I will be happier in the future if I am helping others than if I had a big bank account but only worked to grow the divide.
Oh and a big part is education - I work in robotics and am passionate about mitigating inequality and so I see that building high quality cheap and free robotics educational resources can help avoid a privileged class taking advantage of those who would otherwise not be able to participate in growth due to automation.
What do you think of this?
"Why, of course, the people don’t want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece etc etc etc"
Or something like that anyway. That was Goering, or Goebels. Don't really remember which, but the point is war and societal upheaval are not tools to solve problems that the common man has with élites. War and societal upheaval are tools to solve the problems that one group of élites has with some other group of élites. The only thing a common guy would get out of it is to "come back to his farm in one piece", so to speak. (And a lot of us might not even get that.)
I mean, frankly, we can live on our farms in one piece without going to war at all. Sure, there are some rare exceptions, usually involving being a minority, where you truly are fighting for your life. In those instances the enemy's stated purpose is not to allow you to live on your farm. But even then, you don't gain equality with the élites if you win, you just get to stay alive.
I suspect what happens is that nations climb out of the steady-state of poverty, and into the steady-state of fully modern economies, and the growth rate ceases. At that point, the powers in control of the flow of money become ever more sophisticated at directing any growth to themselves, until we see roughly 100% of all post-inflation growth going to a tiny minority at the top.
I don't know how to fix this, but I think it's a reasonable observation of the source of the problem.
The middle class is not asking for progressive taxation of the rich for altruistic reasons either: they want the benefit of that taxation: access to housing, health, government jobs, college education, etc.
Its a much more morally and factually confusing narrative to say that the middle 50% wants to take fro mthe top 25% and bottom 25%, than the top 50% is taking from the bottom 50%. Particularly because in the utilitarian view, taking from the middle and giving to the bottom is still redistribution of wealth the 'right direction'.
The case in the united states is a lot simpler than people think tho. I believe the single most important reversal of real wages stagnation is to fix healthcare. If insurance cost half of what it costs today (or even less), then real wages would get a massive bump, specially at the lower echelons, where insurance costs disproportionately more than at the top.
This needs a change of perspective. The workers are the ones that needs to sell their labour to the rich. It's their work that's the base of the rich's gains. The rich are unable to get rich without them. The benefits funded by taxes are capitalist societies fundamental palliative to prevent a Bastille day - especially when livable wages are seemingly also up for discussion. It's interesting to see how they're undermining themselves.
Furthermore it's in general a terrible argument since it can be more or less claimed by every despotic regime in history.
After all that we could regroup and discuss how to ensure people in need get an appropriate amount of vital services.
"Soon after taking office, Reagan began implementing sweeping new political and economic initiatives. His supply-side economic policies, dubbed "Reaganomics", advocated tax rate reduction to spur economic growth, economic deregulation, and reduction in government spending."
The economics and finance professors I took classes with had a good laugh at that idea.
Economics, as the expression of human beings exchanging with each other, accepts neither.
I will never understand how adults can believe that things like economics, journalism, central banking, and (especially) the US constitution can be non-political.
'The economy' and 'the market' are sacred things that are disconnected from the dirty world, and work perfectly in their own if you don't bother them. No need for 'political economy' anymore, only 'economics'.
Free markets are pro-reality, pro-dirty world.
For instance: assuming that property rights exist outside a political framework or power structures.
I reiterate that free market ideology is positive, while government intervention ideology is more normative: it says how things should be and tries to make it so. The best case of this has been obviously Communism and Fascism: they said this is best, and organized top to bottom how things should be, and ignored any evidence of the contrary.
It's not 'poor people' vs. 'rich people' but the majority vs. a minority.
>>"Economics, as the expression of human beings exchanging with each other, accepts neither."
Economics? what do you mean? There are theories that, in a less simplistic way, come to propose one and the other.
As silly a proposition as any other.
> Economics? what do you mean? There are theories that, in a less simplistic way, come to propose one and the other.
Mostly politicians and pundits. Economics, neither the mathematically inclined microeconomics nor the formulaic and macroeconomics have such thought or principles behind them.
Incorrect. It has been well-documented that when people have more disposable income, their spending increases. This increase in economic activity grows the economy.
It has been well documented that when you give people who have proven themselves capable of efficiently allocating capital (i.e. the rich) more capital, they continue to allocate it to its best and most productive use for society.
Everyone's got a narrative, and they're both right. To an extent.
You are making some wild assumptions that require evidence. Specifically, you need to prove that the reason rich people are rich is because they "have proven themselves capable of efficiently allocating capital", as opposed to (or at least independent of) other factors, such as luck, inheritance, etc. You also need to prove that the way the rich allocate resources, even when "efficient" (i.e. provides the most return) is actually good for society as a whole, and not just the rich.
I'm not making any assumptions. In aggregate, by definition, wealthy people are better at allocating capital than non-wealthy people. Yes, not all wealthy people are good at it. But in general, they are. That's why they're wealthy. The fact that exceptions exist is irrelevant to my point.
> You also need to prove that the way the rich allocate resources, even when "efficient" (i.e. provides the most return) is actually good for society as a whole, and not just the rich.
Do you have evidence that the way the poor allocate additional capital is more socially useful?
Totally agree. To be clear, i'm not advocating either narrative, just pointing out that both sides have one. I think they're both important. You need efficient allocators productively allocating capital...and you need them to have the capital to do it with. You also need consumers, with the buying power to make the capital allocators allocations work. The debate ends up being around what the right mix is, and I don't know the answer to that, simply pointing out that it's not a one-sided narrative of "give poor people money!" or "give rich people money!".
Because I can easily start naming microeconomically selfish ways of managing capital that the wealthy practice on the regular that it is no way economically beneficial to the parent economy - offshore tax havens, tax loopholes, real estate bubbles, buying politicians and policy to harm liberty, investing in companies that themselves offshore, launder, and hide their capital outside of the economy.
Businesses in the US are magnitudes wealthier today than they were forty years ago but the standard of living has at best remained stagnant for the last 20 (depending on locality, there are substantial regional swings). Money is flush in the upper echelons of society but it has provably and demonstrably not resulted in economic prosperity for the whole nation.
Huh? The fact that they're rich is proof.
> Because I can easily start naming microeconomically selfish ways of managing capital that the wealthy practice on the regular that it is no way economically beneficial to the parent economy - offshore tax havens, tax loopholes, real estate bubbles, buying politicians and policy to harm liberty, investing in companies that themselves offshore, launder, and hide their capital outside of the economy.
Sure, but they had to get rich in the first place.
> Businesses in the US are magnitudes wealthier today than they were forty years ago but the standard of living has at best remained stagnant for the last 20 (depending on locality, there are substantial regional swings). Money is flush in the upper echelons of society but it has provably and demonstrably not resulted in economic prosperity for the whole nation.
Yes, its been very unevenly distributed. How do you think that relates to the question at hand?
That can be achieved by being born with the right parents, not necessarily by doing intelligent things.
Again, exceptions are irrelevant. We're talking about the aggregate here.
A certain popular politician/business owner has filed bankruptcy 6 times.
> Sure, but they had to get rich in the first place.
That's easy, just be born that way.
Moreover even if that proposition were somehow true, spending is not a measure of progress of any kind, not nominally and not in real terms. Inflation is a good exercise on this topic.
It's a funny thing that trickle-up is never ridiculed in the public eye.
No, it was sold as “supply-side economics”, “Trickle-down economics” was a hostile characterization (as was Geore H. W. Bush’s “Voodoo economics” characterization.)
I think confirming your theory would be as simple as comparing the policies of "Reaganomics" with the policies that emerged in the 70's that caused the initial bump shown on the chart.
https://www.youtube.com/results?search_query=cardboard+box+r...
The only axis of discrimination between politicians would be charisma - which is no predictor at all of what someone will actually do.
EDIT It might be even easier for handlers to corrupt the system, because they could make it known that if a bill gets through, they'll be generous with their largess to everyone - and there will be know way to verify which politicians are the ones who are being bought off.
In more modern terms it would be if you weren't electing a representative for every several hundred thousand people, but had one for every few hundred. Something constrained by Dunbars Number. You wouldn't be electing a caricature but someone you can actually interact with, especially in an era of total digital interconnection.
Fixing representative democracy in the US and abroad is probably the most fundamental issue facing America and most of the world today. Getting back to actual representation by peers has to happen eventually or the widening divide between the political aristocracy and the commoner will revert most of western society back into a model more reminiscent of 16th century Britain.
And in general, I don't like attributing these things to a single cause of "corruption". It's too neat, too easy.
As for why things took a right-wing turn in the mid-70s, I prefer this thesis:
Lobbying America: The Politics of Business from Nixon to NAFTA
https://www.amazon.com/Lobbying-America-Politics-Business-So...
TL;DR: Titans of industry felt persecuted, rolled back The New Deal.
"Lobbying America tells the story of the political mobilization of American business in the 1970s and 1980s. Benjamin Waterhouse traces the rise and ultimate fragmentation of a broad-based effort to unify the business community and promote a fiscally conservative, antiregulatory, and market-oriented policy agenda to Congress and the country at large. Arguing that business's political involvement was historically distinctive during this period, Waterhouse illustrates the changing power and goals of America's top corporate leaders.
Examining the rise of the Business Roundtable and the revitalization of older business associations such as the National Association of Manufacturers and the U.S. Chamber of Commerce, Waterhouse takes readers inside the mind-set of the powerful CEOs who responded to the crises of inflation, recession, and declining industrial productivity by organizing an effective and disciplined lobbying force. By the mid-1970s, that coalition transformed the economic power of the capitalist class into a broad-reaching political movement with real policy consequences. Ironically, the cohesion that characterized organized business failed to survive the ascent of conservative politics during the 1980s, and many of the coalition's top goals on regulatory and fiscal policies remained unfulfilled. The industrial CEOs who fancied themselves the "voice of business" found themselves one voice among many vying for influence in an increasingly turbulent and unsettled economic landscape.
Complicating assumptions that wealthy business leaders naturally get their way in Washington, Lobbying America shows how economic and political powers interact in the American democratic system."
Reagan was the last president to make a deep impact change in how economics and politics relate. He was unique in the way he self-deprecated government, something that is truly rare for presidents. He would actively advocate the government was the problem not the solution, a famous line by Milton Friedman on his economic ideas.
To this day, I am awed at the air-traffic controller firing. I am from a country with a pervasive strike culture, to the point that even cops strike, and it has been unfathomable for any president , of any ideology, from dictatorships to democratic socialists, to fire a swath of strikers.
This is false on two levels:
First, Reagan was not a monarch who shared personality with the State, so any deprecation of government he did was not self-deprecation
Second, he is not at all unique in that. Bush (43 more than 41) and Trump have done much the same, and even Clinton did it off and on.
It is absolutely legitimate to characterize the president denigrating government as self-deprecating, splitting hairs about this is silly.
> Second, he is not at all unique in that. Bush (43 more than 41) and Trump have done much the same, and even Clinton did it off and on.
Reagan was more unique in his ability to actually do it, though. The others had much less impact.
No, it's generally not (there may be specific cases where it is), especially when the President in question is selling himself as an ally of the people against government.
> Reagan was more unique in his ability to actually do it
Actually do what? If you mean literally denigrating the Government, no, Trump's done much more of that.
If you meant reducing it's role.. Reagan didn't even do that; he shifted the burden of paying for it, sure. But it was much bigger, more intrusive, and more expensive when he left office than when he entered.
That is, George W. Bush (the 43rd President) more than George H. W. Bush (the 41st).
I mean, I think the KKK is bad and should go away, but I’m not going to go try to be it’s leader.
He has some magnificent quotes: contrary to the president "with the best words" he was actually a great public orator.
http://www.ontheissues.org/Celeb/Ronald_Reagan_Government_Re...
However, Reagan ultimately tripled the debt while in office. The right loved saying Obama spent more than all other presidents before him combined (which he did, which Bush did...but Reagan the model of fiscal conservatism spent 2x as all presidents who served before him).
They don't care about deficits, they care about spending priorities. Deficits is just the argument they turn to when they don't have an argument against particular spending priorities.
* The governments' legislation and economic policies in countries like the USSR, China, etc. in the 80s
* Changing technology especially communication technology
* Changing levels of education in the world.
* Lingering/diminishing trends/effects from wars like: Cold War, Korean War, Vietnam War, etc.
* Changing age distribution of humans in western countries,
And on and on. The world economy is extremely complex with heavy nonlinear feedback effects. How can you possibly state things like Reagan caused X w.r.t. the world wealth distribution with such confidence?
Tell that to Ruby developers... duck typing (if it quacks like a duck and walks like one, it’s definitely a duck)
you forgot Occam’s Razor.
If you want to dig in to the gory details of reaganomics, economists have researched and debated about its effects for decades. There are many economists who make cases both for and against it having appreciably affected income inequality in various ways.
Drawing absolute conclusions in this area is nearly impossible, and we can't say with any certainty that Reaganomics caused this problem. The evidence does seem to suggest that the policies are not fixing the problem, which is a far easier claim to make. They might not be the cause, but it seems very likely they aren't the solution.
In other words, with just the evidence provided, you can’t safely say much of anything beyond “it started getting worse in the 80’s”
Yes, I can. The current situation seems undesirable. While it's possible that the situation would be worse without Reaganomics, the actual situation is still undesirable. Looking towards the future, it seems unwise to continue a plan that led to undesirable results.
> You are diagnosed with Type II Diabetes. Your doctor tells you to monitor your blood sugar and take insulin. This situation seems undesirable. While it is possible that the situation would be worse without monitoring your blood sugar and taking insulin, the actual situation is still undesirable. Looking towards the future, it seems unwise to continue a plan that led to undesirable results.
Going forward, there isn't a great theory showing that Reaganomics is worth continuing, and the hypothesis that different policies would provide a better outcome seems worthy of testing.
[0] https://assets.weforum.org/wp-content/uploads/2015/07/150710...
We saw how oil turned out in the long run. Reagans policies, if anything, only gave dictatorships another two decades of unmitigated dominance in an industry we have seen the US itself rapidly commercialize internally. Most US consumed oil is now domestic, and most of the growth happened in the rebound from the 08 recession. I'd be really interested in comparing the economic policies of how Reaganomics protracted foreign dependence while the late Bush / Obama era bailouts and recovery stimulus somehow exploded the domestic market.
Or that neither of those had anything to do with oil, and that the development of the market and industry as a whole was detached enough from federal law of the US that neither president is responsible for anything in that regard.
The 'fix' could well be rich people being worse off, not poor or middle income people being better off. Not much of a solution, that.
A fun thought experiment, there are some good answers to this: at the end of the day, a different policy would be redistributing something real away from the rich. That wouldn't be food (rich people eat as much as everyone else), so what would it be? That is to day, what exactly are the rich securing that is unfair? (money isn't a valid answer, the answer is what the money is then used to buy)
Or rent seeking through concrete asset accumulation during the bust phase of boom-bust cycles.
In labor economic there is a very well established understanding that jobs requiring high levels of skill are typically harder to fill hence corporations must pay more to get those individuals.
But the reverse is true, low skill jobs are easy to fill so we don't have to pay as much.
But here's the kicker, many branches of economics focus on technology as a eliminator of work. Basically, two guys becomes one guy and a machine. Eventually a machine might replace both of the guys.
There is an intermediary between a job being automated entirely away though, where a physical human's work loses value. McDonalds for example has been rolling out automated ordering systems so that they don't have to employ as much "front-office" staff. If they keep those on payroll, there job brings much less value to the company than it did prior.
Technology creates skilled jobs (aka maintain the robot) and eliminated unskilled jobs. But technology can also reduce the value-add of another unskilled employee.
What I am getting at is the sad truth that it's totally possible unskilled labor is not worth as much as it used to be.
If we continue to base our salaries entirely capitalistically, maybe these gaps will widen as low skill employees become less and less valuable while high skill employees gain value but less of them are required.
There are plenty of things to automate for the foreseeable future. I don't know what the correct answer for kids 100 years from now will be: they have the figure out their own answers.
* World 1, where everybody has x, except one person has 100x * World 2, where everybody has .5x and is thus totally equal
(I realize assets and income are not equal, but I think the point stands)
Yes, because once you get past the truly abject absolute poverty (which isn't an issue for most of the developed world), there's a lot of indication that experienced utility or disutility is driven more by relative material position than absolute position. So, yes, outside of very poor economies (where absolute gains that increase inequality may still improve utility across the board), increases in inequality are very often utilitarian ills that are not compensated by absolute gains at the lower end.
1. We are social creatures, not homines oeconomici whose utility function only includes our own consumption. (In fact, I feel that the argument you (and others) make comes from this mistaken Econ 101 idea that the simplifying economics assumption of a utility function only including own consumption is has normative character (ie we should only look at that). But it has neither positive (descriptive) nor normative character for actual humans.)
2. Extreme inequality jeopardises the democratic project, and corrodes the political process.
3. In the real world, higher inequality is linked to more crime. (Too lazy to find the reference now, but there's a recent book out on it.)
4. The jostling for status arguably leads to enormously wasteful spending (ie conspicuous consumption, ostentatious waste, etc.)
5. Life expectancy, health, happiness seem higher in more equal societies.
You can't just dismiss these facts (some empirical, some philosophical) by "why should you care about what someone else has?".
(Note: none of the above objections are dependent on a false "zero-sum" or "fixed-pie" argument.)
In addition to Nozick, I recommend reading Rawls (or even better, somebody writing about Rawls - his "Theory of Justice" is very heavy reading, taking way too long to get to the points).
* World 1, where everybody has x except one person has 100x
* World 2, where everybody has 1.2x
I think World 2 pretty clearly wins but this is a bit of a strawman to begin with. I'd personally rather live in a world where the poor have x and the rich may benefit by having 6x in extreme cases.
I agree with the general concept that incentives can increase productivity and different people are adding different amounts to society, I disagree with the idea that some people are equal in skill to 100,000 other people and need to be rewarded accordingly.
I feel like your initial question is just coming from a very disingenuous place, the discussion of the relative economic efficiency of unequal vs. perfectly equally distributed wealth is a bit aside from the question of how extreme wealth inequality is. So I suppose, I agree that wealth inequality does provide value, but it does so in very small doses which we have greatly exceeded at this point.
https://fee.org/articles/you-are-richer-than-john-d-rockefel...
The problem with people who focus on inequality is that they completely ignore ∂t. If you're trying to improve the lives of 7.6 billion people, time is of utmost importance.
Would Einstein have stilled discovered relativity regardless if he had been paid large amounts of monney for doing research or not?
Sure, there are examples like Ford - where without profit motive, they would not have gotten the advances that happened. But those examples tend to have less impact than the non-profit driven motives.
A man is perfectly happy with his Corvette until he sees his neighbor pull up in a Ferrari.
It is interesting, though, that your idea of what's grokable is so far from reality
Plenty of economical arguments exist to supply a profit motive as a means to spur economic development and advancement. At the same time, I highly doubt Bob the CEO of Big Bucks would staunchly refuse the job and that no other qualified candidate would consider doing it if the mean CEO salary was only $600,000 a year instead of 7 million. Hell, thats what they did make until Clinton era tax incentives.
Its the same argument as to why lifetime of the creator + 70 years copyright is ridiculous and absurd. Maybe Jules Verne would have written ten sequels to 20000 Leagues if only he could guarantee a distribution monopoly for 70 years after he died?
The orders of magnitude of wealth difference are colossal, and something with plenty of documented study showing your average citizen has no clue how large the disparity is between the average and the extreme prosperity at the top.
Others have answered why its a problem, I just want to point out its not a black an white either you go full communism or laissez faire.
Not really 200 years ago most Americans were scratching a living in a new world fighting off the natives and importing slaves.
>The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason.
Agreed its a big change from the 60s and 70s.
Oh don't mind me, just pulling excuses out of my ass. I love posts like these and I especially love their graphs. Less so for the (little) content they contain. More so for people's reactions to the content. Its confirmation bias bait all the way down!
I don't mean to be so negative and critical. I'm just tired of people trying to explain the state of the world from a single graph!
Income inequality could be increasing for different reasons at different times. It might not be increasing at all (depending on how you define income)!
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Let's stop drooling over graphs and have an actual conversation about the "problem". Who am I richer than and why? Who is richer than me and why? Maybe if we answer these questions we can solve income inequality (assuming we still want to solve it all).
their primary metric for increasing interest rates is wage inflation. so they play wack a mole when people start seeing income growth, a recession comes, and employers have all the bargaining rights again.
yet despite the fed's goal of smacking down wage growth ahem, inflation,, nobody points a finger at them.
Here is an image of the entire world's Money supply [2].
In my eyes, the majority shift occurred due to two things:
1) Ending the gold standard peg
2) Creation of the derivative market
1 --- Ending the Gold Standard Peg
In 1971, Nixon severed the connection between Gold and the US-Dollar. The USD now became purely fiat --- no actual resource backed the USD anymore.
This allowed the dollar to change. Banks could create money -- really. Credit could be expanded and offered to customers. Debt could become an asset, and banks could trade.
But the most interesting part is that it led to #2 --- the Derivate market
2 -- Creation of the Derivative Market
By removing the gold standard tether, money became anything that people believe in
In 1973, the first derivative began to trade.
And banks utilized this to create futures, contracts, warrants, swaps --- bets against bets against bets against bets. The money isn't really there. It's just a financial instrument traded to hedge against fluctuations.
It's a betting system. And it's turtles the whole way down.
Here's the crazy part. The global derivatives market is 1.4 QUADRILLION dollars. That is, 20 times larger than the GDP of the entire WORLD.
In the picture attached --- see that giganticly long section at the bottom? That is derivates. It outweighs the rest of the world's money by FAR.
1.4 Quadrillion USD are in derivatives. Guess how much money world-wide is in coins and banknotes? $5 trillion.
That is --- derivatives are 280x the amount of coins and bank notes in THE ENTIRE WORLD.
[1] https://www.youtube.com/watch?v=9G0F-VUPTa4 [2] http://money.visualcapitalist.com/worlds-money-markets-one-v...
But for some reason, that doesn't seem to even register on people's radar.