Economist Tyler Cowen has some advice for what to do about America's income inequality: Get used to it. ...
In the interview, the economist basically says "give up" because that's the way things are going. The economist attributes (mostly) this to computers.
"Computers will play a larger role and people who can work with computers can make a lot."
But those who aren't in the "top 15%" will be okay, since:
"... But I think people who are not rich can be extremely happy. And I think the chances to be happy in this new world, with many more opportunities to be creative, to be online, to educate yourself — there'll be a lot more chances to be happy. It's not to say everyone will take them or be equipped to take them, but there will be a lot of new paths to opportunity."
I think it's lacking in scope of what's possible in the future. If you stick to the status quo of how things are, then yeah, the future will be shit for most people. The status quo will be different in the future though.
Maybe. It could always get worse though. The poor maintain their current standard of living in part thanks to laws and structures that protect this: minimum wage, food stamps, welfare, unions, Medicaid
These tend to be in decline or under attack, sometimes with good reason. But there's no impetus to replace them with anything.
Brazil may be our future. The low end goes very low there.
Modern urban poverty as in Brazil is really rarely a matter of lack of resources. The poor in Brazil suffer from a poor organization rather than material poverty; people in favelas suffer the daily violence and rampant drug trade, but they don't really go hungry often.
But very little data exists about the happiness levels of people in a country where despite income inequality the poor have a higher living standard than they did at any other time in history, as it is in the US. If the poor are doing better than ever, and the rich are doing better than ever, what's the problem, really?
There is, for instance, the problem that some "goods" cannot be produced although people care very much about them, namely partners to start a family with.
Unfortunately, women tend to be attracted to relatively rich men, which can result in a lower "supply" for relatively poor men if a rich man can attract several women (for instance, by using serial monogamy). It's been suggested that this leads to a larger amount of violence in poor neighborhoods (due to increased competition among men).
Which leads to another problem: Being relatively poor may not be a problem, provided the level of wealth is secure. Due to the lack and inefficiency of social safety nets in the US, however, being relatively poor can always turn into being poorer still.
Since being relatively poor often means living in a relatively poor neighborhood with a higher prevalence of violence, there's a good reason for feeling insecure all the time. Your son may get killed in a drive-by shooting, while your daughter may get raped. Meanwhile, you may get robbed.
Even if one's situation is not as critical, it's always possible to become critical. For instance, one may simply loose one's job, and thus the means to provide for a family. Or one becomes ill. The number one reason for declaring personal bankruptcy in the US are medical bills. A large percentage of these people were health insured, by the way.
These are just a few examples on the top of my head.
This isn't wishful thinking. It's simply recognition of the fact that feeling materially superior to others is only one of many routes to happiness.
If income doubles for the poor and quadruples for the rich (Cowen's postulated mechanism of increasing inequality), the poor have many new sources of happiness. For example, currently only 38% of the poor have a Playstation or XBox [1]. If the income of the poor doubles, probably every poor person could gain some happiness from video games.
The problem lies elsewhere. The problem is that the system is so sick that the poor have to pay taxes for rich banksters bonuses. Hence, destoying all the credibility of the system. Rich paying to the poor is socialism. Poor paying to the rich is feudalism. Poor could care less about the toys they can get when they can afford less and less food, energy free time. Plus pay feud to the corrupt banksters on top of that. That's not capitalism, that's feudalism. Cowen is proposing neo-feudalism.
Empirically, however, societies with higher income inequality have lower happiness (and this is fairly robust to confounding factors and different kinds of society, and even shows up internally when comparing different time periods of the same society, e.g. when you look at different U.S. decades). Perhaps in principle it's possible to have a happy and highly unequal society (in sci-fi this is commonly imagined as involving happiness drugs or VR), but we haven't seen one yet.
Empirically, however, societies with higher income inequality have lower happiness...
Could you link to some data on this? Ideally something other than "The Spirit Level", which basically just observes that many negative traits are correlated and then puts inequality on the x-axis.
A fairly arbitrary sampling of studies (there are many on more specific subjects, if you're interested in researching more specific aspects of the question):
These are more of the same - vague correlations without any causal analysis.
The ones based on happiness surveys are even worse, since there is no way to know whether a score of 7 happiness points (on a scale of 1 to 10, or whatever the scale of the survey is) for someone in Denmark in 1976 is comparable to a score of 7 happiness points for someone in Japan in 1996.
Today people without money are not happy because life itself requires resources, that many people do not have, to be happy and healthy.
Tomorrow people without money could be happy and healthy because many of the things that make them so will require less resources to access. One example given in the interview I heard is that eventually you'll be able to get a good education for free from the Internet. Once people accept that premise, then spending big money on a college education isn't as necessary.
But then, it's the future so who knows what will happen since the future doesn't exist yet.
You can't have the Brooklyn Bohemian life without Brooklyn city planning. The modern suburban sprawl demands two-car households, and two-car households demand full-time middle-class employment.
Unless this Bohemian class anticipates living with roommates through old age, living in Brooklyn is considerably more expensive than living in suburbia.[1] Perhaps the economist meant Detroit.
These issues are the outcomes and culmination of corrupt and pernicious actions taken a long time ago in the USA. If you look at Europe and other places around the world, there are sufficient models to emulate to solve these problems; but the corrupt master class has no interest in solving the "problems" that serve their interests and they have no interest in letting us, as a people, realize that we are not exceptional and therefore could learn by looking outside of our own culture and borders.
What America doesn't realize, even the supposed most intelligent and informed, is that we are no different than any other people living under a controlling regime, we just have more resources to burn that allow the margins for error to be humongous compared to other places. The controlled media, corrupt politics, the rationalized abuse of laws you are destroyed for not abiding by, the propaganda, the war mongering, the racist subjugation of certain groups. It's all there, we just don't see it, as a people, because as with the same form of national socialism that destroyed Germany in the early 20th century, the American version of national socialism has brain-washed people into doing, thinking, and saying things to and about others that they would never want happen to themselves.
I think they meant Brooklyn-like environments, not literally Brooklyn, NYC. There are plenty of them in semi-gentrified urban cores around the USA and Canada, but not enough to house the predicted boom of semi-employed bohemian upper-lower-middle-class.
Maybe this wouldn't be such a problem if those with the money wouldn't use it to pay Congress to help them make even more money to the detriment of others. I think that's really what bothers most Americans, and not necessarily the fact they can make more money on their own.
Who is worse, the one begging for the money, or the one supplying it? You're portraying Congress as some kind of passive conduit when in fact they're quite active in their own schemes.
I don't see him portraying Congress as anything like that at all. Those people use their money like that because Congress allows it. Congress allows it because voters aren't organized enough to vote them all out. Voters aren't organized for that because the media keep playing the tribal Reps vs Dems game. And I guess the media keep playing that game because there's profit in it for them. It's a vicious cycle that needs to be broken.
That's not capitalism, that's feudalism:
A 0.1% - Aristocrats, Barons, Kings, etc.
A 10% - service professionals: shoemakers, weapon makers, creditors (bankers), accountants and whoever else the 0.1% might need to run their empires
A 90% - Peasants - born in debt, will die in debt. Wage slaves - get enough money to perform the work and nothing else.
That's called neo-feudalism. At the top are private creditors of nations - central bankers. The rest owes feud to them from the moment they are born (i.e. the US newborn already has to pay off few hundred thousand in debt through their live-time)
Please don't call it capitalism.
And one more thing -- what really destroyed neo-feudal society was the French Revolution. We need Robespierre's and Danton's guillotining banksters and their whore neo-feudal political class.
That's the only way to revert back to capitalism and liberalism.
I guarantee the Wall Street shenanigans would be sorted out, post haste, with the careful application of separating certain greedy, conniving, overly-large heads from their bodies.
Coffee without coffeine. Beer without alcohol. Sex, but in condom. War but without casaulties. The very core of the post-modern folk is that they want the thing but without the most crucial element of that thing.
Revolution without a Revolution?
That's why nowadays nothing changes. Because all that's left are empty words.
"Terror without virtue is fatal; virtue without terror is impotent"
Nope, let's call it for what it is. The current situation is capitalism and liberal doctrines's consequences. Some economists and thinkers have said all along that this is the only outcome possible for such ideologies.
Banksters is a term that was widely used and is regaining ground in far-right populist parties in Europe (and America if I recall correctly).
But I like the idea of neo-feudalisme, it fits the picture and describes the situation quite well.
The current environment evolved only due to specific circumstances involving industrialization and globalization, and the fact the people at large completely missed the concentration of power by bankers and wealthy dyanasties.
I think the problem emerges whenever you have an economic system built round game theory (which really capitalism is) where most people don't rationalize their participation such that the few recognizing the game they are playing can exploit the passive participants and siphon their productivity they add to said game.
We are all playing, but a huge number of people I know don't rationalize that participation. They don't look beyond buying a car, house, nice clothes, paying rent on a dozen different things they don't recieve tangable long term goods from (ie, $300 a month phone service). They don't ever ask why their tax bill is huge or why they even have income tax at all, because their parents told them it is inevitable and they were ground through an educational process with a peripheral task of grooming them to be assembly workers.
Just my line of thought. If capitalism, regulated or not, leads to neo-feudalism, maybe that society is actually the target for which capitalism is just a catalyst.
I think in this case the OP is rather in love with the idea of capitalism and thinks it is a pure and perfect goal to strive for except for the nasty little practical implementations that keep getting in the way.
So given what we have now doesn't work we have to rename because otherwise we would be tarnishing capitalism's great reputation.
No! That what you describe is that what I would fight against the most. Because it gives a bad name to capitalism. My philosophy is rather that capitalism without democracy is as great utopia as communism is.
I think that the problem is that the political elites in many Western countries, especially in the USA, watch China and falsely conclude that capitalism is much more effective in conjunction with authoritarian type of government. Like in China. Or Singapore. Or many other South-East Asian emerging economies. The strength of capitalism derives from democracy and freedom. Because capitalism thrives on innovation and "dangerous" ideas. Slaves or scared people aren't innovative. Yep, you can produce stuff in China, but the innovation part needs to happen in place where people haven't been afraid to think freely and express themselves.
I hope that I made myself more clear. If people vote for social-democracy, let it be.
Also, I'll give you a few example of why I don't think that the current system is capitalistic. First of all, the zombie banks in capitalism would be allowed to fail. Go bankrupt. The moment we decided to take from the regular folk via taxes to support zombie banks is the very moment in which I'd say we're not capitalists any more.
Or we could just build a colony of smart people on the moon. Or Mars. Or my favorite, a floating city in the climate stable upper atmosphere of Venus. A lot easier to generate renewable power there.
I think that is what is really missing in the world, a frontier to go to when your oppressors get out of hand.
Feudalism and capitalism are both defined by the mechanism of interaction between people, not by what percentage of society different sorts of people occupy.
Feudalism - each person (besides the highest king) is bound by oath to serve his master.
Capitalism - each person owns some property and has the right to trade property/labor with other willing parties.
Feudal serfs were bound to the 'land' in a sort of debtor-lendor scenario, and could be sold along with the land beneath their feet. They just couldnt' be sold as individuals.
However, knights, squires, barons, etc. were bound to serve their superiors by oath. Its the oath that kept the political and military structure together.
From wiki:
"Knight-service was a form of Feudal land tenure under which a knight held a fief or estate of land termed a knight's fee (fee being synonymous with fief) from an overlord conditional on him as tenant performing military service for his overlord."
There still was debt to be paid even by knights. Every year the debt obligation had to be met via service or hard ca$h.
EDIT: changing "lords" by knights in the Middle Ages was common. I.e. for few years a knight served a French king just to serve German Prince for a few years after that. So, it looks like they couldn't have taken their oaths too seriously or there had to be an easy way to have the whole thing cancelled.
"In medieval Europe, an oath of fealty (German: Lehnseid) was a fundamental element of the feudal system in the Holy Roman Empire. It was sworn between two people, the obliged person (vassal) and a person of rank (liege lord)."
Agreed. However, in my personal opinion, debt enforced by the law is more important in that case than oath.
Don't remember the exact date or edict name, but when in the Roman Empire a law was introduced banning debtors from moving too far from their creditors - that's when according to many historians Middle Ages have started.
It does vary by region. Russian serfdom was closer to a form of slavery, with serfs owned by the estates, while in Western Europe, serfs were usually formally free to leave but in practice unable to.
The usual explanation for the emergence of feudalism in Western Europe involves market forces as well. As people fled the starving cities at the collapse of the Roman Empire, they had little choice but to agree to whatever terms rural estate landowners offered, which were generally not favorable terms.
I think one reason a sort of libertarianism was popular in the early U.S. is that there was always an alternative option: go to the frontier and homestead. So people really felt that they had individual freedom, and could escape any onerous sharecropping arrangement by just heading west. But in Europe all land was already spoken for, so there was nowhere to go homestead.
> what really destroyed neo-feudal society was the French Revolution
It was really messy though. I am sure the 0.1% will understand this fact. It is in their best interest to make the rest of us think we have something, something to lose. Therefore, our buying more "stuff" helps them two-fold. They have sold us more stuff, therefore soaking away liquidity which increases the value of their money. Furthermore, it gives an impression that we have "stuff" to lose as well in case of conflict.
Wait, why are central bankers "necessary"? We invented bitcoin 4 years ago, and it didn't take that long for the rise and fall of pagers to go through.
I didn't say they were, though I much prefer a system with them included.
I said "banksters" are necessary. You know, in the same sense garbage collectors and lawyers and doctors and teachers are necessary. I mean, I guess you could argue that none are really necessary. But again, as a bank customer and user of credit (which I'm sure you and 95% of everyone else here is), I will call them necessary for my desired society.
What you don't understand is that there are more important things in the world than repaying banksters. Greece has been forced to repay to the banksters. The cost: neo-nazi at 22% in the national polls. In opposition to this what the media claim there is more to live than bankster bonus.
>"What you don't understand is that there are more important things in the world than repaying banksters."
"Banksters" didn't force loans on Greece, or tell them to cook their books and spend frivolously. The politicians and citizens did that.
But guess what? They are free to default and not pay back any "banksters"! The repercussions for that will be the inability to get credit in the future. But, who cares, right? Because no one needs that credit that the "banksters" provide, according to you.
It still might happen. Then the complaint will be, at some point in the future, "Why are the banksters charging Greece extortionate rates to borrow money?!?"
> But guess what? They are free to default and not pay back any "banksters"!
Oh yeah?! Says who? EU? So the Euro lands in the trash bin and then there is a whole line of countries that want to leave the Titanic as well? You're so naive.
Let me explain it to you how it works:
If I'm an investor. Private investor. I buy a stock, equity or a bond, or commodity. I understand that there is risk and reward. That the asset may go up in price but it also may go down. So, if I buy Greek bonds - and note, I do it after analyzing the market, etc, etc - I know they may go up, or they may go down in price. Actually, they may go to zero. And that's a healthy, normal capitalism. That's my attitude when I invest my money. But when you are bankster? Do you accept the capitalistic risk&reward model? Do you accept that the Greek bonds that you bought back in 2000-2007 may go to zero. Oh nein! Then you call Die Frau Merkel and ask her for a favor. Because you gave her money for the campaign, didn't you? So now it's payback time! Die Frau together with the whole EU then forces little Greece to repay as if the bonds were not at zero. As if they were great investment.
Fantastic!
The banksters are the folks I described above. And for the mentality itself - like we should be paid even if it's our error here and even if it means neo-nazis governing Greece - is the reason for which I would behead them with pleasure my friend. And don't confuse these clown with true bankers who believe in capitalism, believe in risk&reward and would just take the hit like they believe in the system (capitalism). Not some aristocrats who think that socialism should be only for them and rest of the populace should live in capitalism.
Greeks vote neo-nazi because they know that the Golden Down would have balls enough to cancel the whole so-called debt to these crooks with a stroke of a pen.
bankster - someone who took risks on the markets. Lost. Expects others to pay for his mistakes. Preferably tax-payers. So he can continue his lavish life-style. Embraces socialism for himself, and capitalism for everybody else.
banker - someone who took risks on the markets. Lost. Took the hit. Takes responsibility for his actions. Doesn't believe that there will be the end of the world if he goes bankrupt. Understand and embraces free market capitalism with both sides of it: risk and reward.
Capitalism is private ownership of the means of productions. There is nothing in capitalism that implies less inequality. If the balance between capital and work switches to favor capital more, there will be inequality.
Why not call it capitalism. They call it capitalism, everyone else does. How much do you want to bet going around asking what economic system US has and less then 0.1% will say neo-feudalism.
Using alternate monikers used to justify still believing in this magic religion (oops I mean magic economic system) is a bit silly. This is the typical
Why not just assume that capitalism is an idealized system that never works, it is just too unstable.
If this pattern seems familiar, it is not surprising they used to say the same thing about communism. Oh what they have in country X is not communism. "True communism is not like that, this is Y (replace with ugly sounding term)".
> That's the only way to revert back to capitalism and liberalism.
Revert to what? Guillotining people in the streets? Or rather are there good examples of capitalist paradises on earth here to inspire us?
And seriously, saying something is feudalism doesn't make it so. There is so much wrong with your post I don't even know where to start. Just wow. Feudalism is a military system with lords and vassals. Vassals provided military services to the lord in trade for land. Calling SF neofeudalist in hystrionic nonsense. No such thing exists in SF. Nothing even close to that exists.
You might want to google feudalism and capitalism. Here's some links:
That type of feudalism isn't sustainable in a world with increasing automation. A better model would be slavery in Rome immiserating both the slaves (obviously) and the people who used to work the land, but on a far larger scale. Speaking of the implications of service robots, Hans Moravec once said, "Perhaps governments will decide they no longer need citizens." Which is unlikely. But the truth in that statement is more and more people's survival will depend on the sympathy (rather than self-interest) of the rich and the politicians whose bridles they hold.
I didn't call it capitalism. I said that the 0.1% were capitalists. I.e. owners of capital. They're not the bankers, almost all of whom are in the professional class. These are the people who own not just the banks, but the F500 companies, etc.
Now that the Walton family's wealth equals the bottom 40% of America's population, I wouldn't look down upon people stealing food from Wal-mart to keep alive.
But keep in mind that it's all completely voluntary. As someone who was a foreigner in the US, I got to the top 3-5% salary wise.
I'm astonished how much opportunities US has for education, jobs and business, yet people pass them en masse. There's a huge subset of the population that considers education and knowledge as something lame.
The second big problem is that young people are fed "you can be anything you want" mantra, so they end up studying (while spending tons of money and years) impractical things like art or history or women studies or international relations.
Don't get me wrong, I LOVE art, but you shouldn't base your future on a possibility that you will become famous enough to support yourself making art.
What we need to do is educate our young people to choose their majors wisely. So next time you hear somebody wanting to study history, slap them in the face and tell them to read history porn during their free time.
As someone who grew up in the low income bracket of America I totally agree with your first point, it is amazing how easy it is to simply work hard and get somewhere like I have, yet people throw that chance away all the time. Your second point, however, I think is not so much about students thinking they can be whatever they want and more about not succeeding in their first choices. Most of the people I went to college with tried to be engineers or physics majors or something similar but didn't put enough effort in and instead of simply dropping out decided to change their majors to something easier because "you have to get a degree" is such a strong idea by our parents generation that most kids will accept the debt knowing they will never find a good job simply to not look like a failure. I'm not saying this is any better, but this in my experience seems to be the more common reason for so many people getting those degrees.
I'm not even sure how the 10% lives unless you combine two professionals in a household. Even in a place like San Diego, which supposedly doesn't have much of an economy, you have to spend $500k to get a decent enough home to raise a family in. Close to $4,000 a month for mortgage + taxes + insurance. So you need to make over $11k a month to do this responsibly.
I understand that we're in a 2-income household world now, but I don't believe your fixed expenses (housing) should be tied to this expectation. One of you could easily lose your job, or one of you could decide to stay home with the children. Imagine one of your kids has special needs, is disabled, etc -- you will probably end up not being able to have both of you handle full-time professional careers.
This isn't just the case in America, housing is even more expensive in other western countries. I just don't understand it. There's too much credit (30 year mortgages shouldn't exist!) and not enough income out there. People are all too willing to saddle themselves with this stressful existence and it punishes those who wish to avoid these dangerous and stressful obligations.
You're basically getting to what separates the professional class from the capitalist class, and why a couple in Manhattan making $500k/year HHI is part of the former and not the latter.
Thanks to exploding housing prices, skyrocketing tuition, dysfunctional urban schools, etc, having a 2BR + a couple of kids in New York City involves a $1 million house, $30k x 2 per year in school expenses, $50k per year in nanny expenses, $25k/year in health insurance, etc. On top of that, you've got $50k/year in paying off your student loans, because after all you didn't get to a $500k HHI without an expensive bachelors or graduate degree, and you'd better be putting some of that in a college fund to help your kid repeat the whole cycle, lest she fall into that 90%.
IMO, there is some kind of correlation between efficiency in the economy and the inequality in the society. I believe that it is part of the government job to reduce the inequality... but the devil is on the details on how to do it.
Wouldn't inequality make efficiency worse? On an individual level, it would seem that poverty makes your life less efficient -- you end up treating your own time as less valuable, and so you do less productive things, such washing out your paper towels to reuse them, using more energy and water in the process than was used to manufacture them in the first place. When if you had more income, you could, hypothetically, do more productive things? Or would you just around watching Netflix more?
Poverty != inequality, provided poverty refers to a fixed material standard of living (which is how you seem to be using it, since you are referring to specific material goods).
To illustrate the point, consider India and the US. India has little inequality but lots of poverty (if we take the 5'th percentile of the US as the poverty line, then 95% of India is poor). The US has lots of inequality but little poverty.
Poverty is inefficient, sure. But inequality is also inefficient. Paying someone to work private security for example. There are better uses for human labor.
Wouldn't inequality make efficiency worse? On an individual level, it would seem that poverty makes your life less efficient -- you end up treating your own time as less valuable, and so you do less productive things, such washing out your paper towels to reuse them, using more energy and water in the process than was used to manufacture them in the first place. When if you had more income, you could, hypothetically, do more productive things? Or would you just around watching Netflix more?
On the topic, there was a thought provoking article in the NY Times recently entitled "Can the Government Actually Do Anything About Inequality." The answer is unclear:
It would take a tectonic shift in how policy is crafted and implemented but if the US government decided to turn on a dime tomorrow and redistribute wealth who could stop them?
So "There will be a certain fragility to this existence." but "They may have lives that are quite happy and rewarding" - how? If you are constantly one minor incident away from doom, you are not happy, you are stressed. Welcome to the precariate.
"I think for a lot of people, upward mobility will be much easier." This does not follow. In a more unequal society, upwards mobility falters as the wealthy form an exclusive layer of society. The best you can hope for in this scenario is to be useful enough that you will be kept compensated. But without the right connections, you will not be permitted to tryly rise. And this theoretical upwards mobility will be dangled in front of you to prevent you from feeling solidarity with everyone who isn't so "useful".
Upward mobility might be easier though, even as poverty and precarity increases. Elites would have to shutdown Internet wealth generation somehow to prevent upward mobility.
Right now it's never been easier to start a business and generate income for yourself. We're seeing easier upward mobility for those equipped to take advantage of this, even as others see their opportunities shrink.
I think Zarkonnen was trying to say that as the inequality increases then it becomes more and more difficult to rise above a certain threshold. As the inequality increases then that threshold becomes more difficult due to standard economic situations and due to interference from the elite that likely would eventually want to control access.
Today it may be easy to raise your economic standing, but that doesn't mean that will continue into tomorrow.
No, I'm tired of moaning about income inequality. If every person in the US had their income doubled we would have even greater income inequality than we do now, but everyone would be better off. Everyone benefits from technological advances. The poor can buy better goods for a cheaper price and the rich can maximize their profits.
But this is exactly the problem that perpetuates growing economic inequality. You have 99% of people that are interested in things, and 1% that are interested in profits. We are all playing the capitalist game from birth, and to opt out is to isolate oneself from the market. But very few people acknowledge they are in a gambit with those seeking profits over who gets better value in a transaction, so they end up siphoning their wealth into means of production owners pockets but that money will never come back because the wealthy only need a very limited subset of goods and services, and after that they will invest that revenue to make more money by robbing others of their productive gains.
And when the wealthy make more money does it sit in big Scrooge McDuck style money bins, or is it reinvested into the markets or spent? If you don't want to "siphon wealth into the means of production owners pockets" then get your own means of production. Start a company and spread the stock out to your employees as evenly as you see fit. It is easier now than it ever has been to start and grow a company.
They don't evenly reintroduce their money into the market across the board (a consumer does much better at that) and they are not reintroducing money for the purposes of goods exchange but they are exchanging money now for money future. And they actively try to avoid risk (such as bank bailouts, golden parachutes, guaranteed dividends, etc) so you either make a little or a lot, and rarely lose your shirt.
That means inevitably you have more money than you started with, just siphoning more and more off of the populace. Even if you keep cycling the money back in and people get to use it in a theoretically good way, you still concentrate ownership of resources, businesses, and workers as your reinvestments give you ownership of all these things that make you more money to own more things in perpetuity.
>The low paying jobs today are in the service industry - largely retail and fast food chains. These jobs are dead end without paying anyone enough to live on.
Friend of mine went to work at McDonalds during high school. By 22 he was a manager and making over 80k a year. It may be dead end, but that is more than enough to live on.
I knew a guy too, therefore many studies showing growing inequality and inability to find work are flawed.
Yes I have heard this argument before when it comes to inner city youth and helping single mothers. It is always a sample of N, someone's friend of a friend. "Well so and so went to college and was able to not get into trouble, and raised 2 kids, and owns a house now, so I don't know why these other ones need help".
One way to deal with income inequality is to shrug your shoulders and pretend it's okay - "let them drink latte" - which is what this guy is recommending.
Another way is to claw back some of the financial regulation that once protected America's middle class from the full force of market instability. Take a look at this chart comparing income inequality and bank failures over the previous century:
There's not some magic force of technology driving growing inequality. In fact, even in this writer's argument, technological aptitude provides one of the only routes out of the lower classes. Inequality is growing because of financial deregulation since the 1980s.
In the future, there won't be enough work for everybody to do.
Technology won't just produce cars. Technology won't just produce our food and our clothing. Technology will do everything. Technology will make the allocation of resources very, very efficient, including the allocation of wealth. Technology will take electrical energy and convert it into wealth. In the middle-distant future, the wealth that technology produces will be enough for a whole society of humans to subsist on without doing much work. However, in the beginning this wealth will be concentrated with the people who write the software, make the robots, and otherwise are technologically proficient.
The inescapable conclusion that I'm coming to is that this technology has the possibility of transforming society economically. It has the capacity to lift everyone out of poverty. But we need to adjust our fiscal policy so that the wealth doesn't become so concentrated with so few people. In the future we will be able to afford a safety net for everyone, where everyone is guaranteed a minimum quality of life, without much effort.
We need to go about setting up a Rawlsian framework where inequality is accepted, just as long as the least well off person is still reasonably well off. We can do this by paying for people's health care, paying for their food, paying for their housing. Self-interest and capitalism will still be the paradigm, but it won't be so brutal.
If you go back in time to 1913, and told someone about all the machines we have in 2013, he would say "surely there are no jobs for even 5% of your society". Even not counting that in 2013 bigger percentage of women work than in 1913.
But then, how could he predict that there will be these billion-dollar industries that do things not even invented in 1913. Huge majority of what people do in 2013 just didn't needed to be done in 1913.
I don't doubt people will invent something to waste our time on ever greater scale.
I'm not sure I agree. The technological revolution hadn't happened yet in 1913. We saw an increase in new types of jobs over the course of the 20th century because any innovation that occurred still required a significant amount of human labor. I believe we will see a slow acceptance that we are not going to see a high level of full time, high paying, high skill jobs. After the recession, employment has slowly creeped up again but you can see that the types of jobs that people are working now are different than they were in the early 2000s. More jobs might have been created, but they are of a lower quality in terms of hours, pay, benefits, and the amount of skill they require.
We are at a point with technology where any conceivable manual task that we do will almost certainly be automated away at some point, and many tasks requiring high degrees of skill - including intelligence tasks - will also be automated away. It will be increasingly hard for us to find pockets of value in areas that we can offer the marketplace that it hasn't already seen. I do believe the decline won't be rapid - our expectation for full employment will slowly but steadily fade away - but over the course of decades I think we will come to the idea that we are all entitled to a minimum quality of life, regardless of our ability to hold a job, and that we will have to be guaranteed such in order to maintain a stable society.
It's worth remembering that while inequality in first world countries has been going up and will continue to do so, global inequality has been going down. China is growing especially fast, but India and Africa and pretty much the whole third world has been growing quickly this last decade.
In other words, much of the U.S. is going to start looking more like a 3rd world country like the Philippines, though probably a richer version (less grinding poverty.)
You don't travel much.Your possessions are likely your smart phone, maybe a family computer and clothes. Because there isn't as much money to go around, families tend to stick together more rather than every generation scattering at age 18. This trend expands into the community. So, perhaps you are closer to your neighbors and certainly to your family.
I wonder how much longer the car culture is going to last. It seems that you have to be rich to justify buying a car these days. Maybe we will be driving scooters like people in Asia instead of cars?
I would hope that would finally trigger the acceptance of working from home, or even satellite offices, instead of large groups of people converging in the same set of buildings on a daily basis in a specific area of the city for little benefit.
It would probably even save the city itself large amounts of moneys not having to maintain such an inefficient infrastructure.
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[ 3.0 ms ] story [ 45.5 ms ] threadIn the interview, the economist basically says "give up" because that's the way things are going. The economist attributes (mostly) this to computers.
"Computers will play a larger role and people who can work with computers can make a lot."
But those who aren't in the "top 15%" will be okay, since:
"... But I think people who are not rich can be extremely happy. And I think the chances to be happy in this new world, with many more opportunities to be creative, to be online, to educate yourself — there'll be a lot more chances to be happy. It's not to say everyone will take them or be equipped to take them, but there will be a lot of new paths to opportunity."
I do not subscribe to this wishful thinking...
These tend to be in decline or under attack, sometimes with good reason. But there's no impetus to replace them with anything.
Brazil may be our future. The low end goes very low there.
http://en.wikipedia.org/wiki/Economic_inequality#Effects_of_...
Unfortunately, women tend to be attracted to relatively rich men, which can result in a lower "supply" for relatively poor men if a rich man can attract several women (for instance, by using serial monogamy). It's been suggested that this leads to a larger amount of violence in poor neighborhoods (due to increased competition among men).
Which leads to another problem: Being relatively poor may not be a problem, provided the level of wealth is secure. Due to the lack and inefficiency of social safety nets in the US, however, being relatively poor can always turn into being poorer still.
Since being relatively poor often means living in a relatively poor neighborhood with a higher prevalence of violence, there's a good reason for feeling insecure all the time. Your son may get killed in a drive-by shooting, while your daughter may get raped. Meanwhile, you may get robbed.
Even if one's situation is not as critical, it's always possible to become critical. For instance, one may simply loose one's job, and thus the means to provide for a family. Or one becomes ill. The number one reason for declaring personal bankruptcy in the US are medical bills. A large percentage of these people were health insured, by the way.
These are just a few examples on the top of my head.
This isn't wishful thinking. It's simply recognition of the fact that feeling materially superior to others is only one of many routes to happiness.
If income doubles for the poor and quadruples for the rich (Cowen's postulated mechanism of increasing inequality), the poor have many new sources of happiness. For example, currently only 38% of the poor have a Playstation or XBox [1]. If the income of the poor doubles, probably every poor person could gain some happiness from video games.
[1] https://explore.data.gov/Energy-and-Utilities/Residential-En...
Could you link to some data on this? Ideally something other than "The Spirit Level", which basically just observes that many negative traits are correlated and then puts inequality on the x-axis.
* A general literature survey as of 1995, of the evidence on whether increasing the incomes of everyone (with no change in relative incomes) improves overall happiness: http://ibe.eller.arizona.edu/docs/2010/Martinsson/easterlin9...
* Income inequality and happiness 1972-2008 in the U.S. and causal hypotheses: http://inside.bard.edu/~luka/documents/Oishi-Kesebir-Diener-...
* Relationship between regional inequality, happiness, and confounding factors in Japan: http://www.sciencedirect.com/science/article/pii/S0277953610...
* Empirical alignment of utilitarian happiness-maximization and other desiderata often seen as opposed: http://repub.eur.nl/res/pub/22129/JHS_11_2010_605.pdf
The ones based on happiness surveys are even worse, since there is no way to know whether a score of 7 happiness points (on a scale of 1 to 10, or whatever the scale of the survey is) for someone in Denmark in 1976 is comparable to a score of 7 happiness points for someone in Japan in 1996.
Today people without money are not happy because life itself requires resources, that many people do not have, to be happy and healthy.
Tomorrow people without money could be happy and healthy because many of the things that make them so will require less resources to access. One example given in the interview I heard is that eventually you'll be able to get a good education for free from the Internet. Once people accept that premise, then spending big money on a college education isn't as necessary.
But then, it's the future so who knows what will happen since the future doesn't exist yet.
[1] The Council for Community and Economic Research: http://finance.yahoo.com/news/10-most-expensive-places-to-li...
What America doesn't realize, even the supposed most intelligent and informed, is that we are no different than any other people living under a controlling regime, we just have more resources to burn that allow the margins for error to be humongous compared to other places. The controlled media, corrupt politics, the rationalized abuse of laws you are destroyed for not abiding by, the propaganda, the war mongering, the racist subjugation of certain groups. It's all there, we just don't see it, as a people, because as with the same form of national socialism that destroyed Germany in the early 20th century, the American version of national socialism has brain-washed people into doing, thinking, and saying things to and about others that they would never want happen to themselves.
A 0.1% - Capitalists: LP clients of VC firms, very successful founders and VCs
A 10% - Service professionals: rank-and-file VCs, engineers, managers, lawyers, accountants, consultants
A 90% - Unskilled service workers: baristas and waiters at trendy SF hotspots
That's called neo-feudalism. At the top are private creditors of nations - central bankers. The rest owes feud to them from the moment they are born (i.e. the US newborn already has to pay off few hundred thousand in debt through their live-time)
Please don't call it capitalism.
And one more thing -- what really destroyed neo-feudal society was the French Revolution. We need Robespierre's and Danton's guillotining banksters and their whore neo-feudal political class.
That's the only way to revert back to capitalism and liberalism.
But then maybe I'm just jaded.
Coffee without coffeine. Beer without alcohol. Sex, but in condom. War but without casaulties. The very core of the post-modern folk is that they want the thing but without the most crucial element of that thing.
Revolution without a Revolution?
That's why nowadays nothing changes. Because all that's left are empty words.
"Terror without virtue is fatal; virtue without terror is impotent"
You propose impotent solution. That won't work.
Banksters is a term that was widely used and is regaining ground in far-right populist parties in Europe (and America if I recall correctly).
But I like the idea of neo-feudalisme, it fits the picture and describes the situation quite well.
I think the problem emerges whenever you have an economic system built round game theory (which really capitalism is) where most people don't rationalize their participation such that the few recognizing the game they are playing can exploit the passive participants and siphon their productivity they add to said game.
We are all playing, but a huge number of people I know don't rationalize that participation. They don't look beyond buying a car, house, nice clothes, paying rent on a dozen different things they don't recieve tangable long term goods from (ie, $300 a month phone service). They don't ever ask why their tax bill is huge or why they even have income tax at all, because their parents told them it is inevitable and they were ground through an educational process with a peripheral task of grooming them to be assembly workers.
What if they're the same thing?
So given what we have now doesn't work we have to rename because otherwise we would be tarnishing capitalism's great reputation.
I think that the problem is that the political elites in many Western countries, especially in the USA, watch China and falsely conclude that capitalism is much more effective in conjunction with authoritarian type of government. Like in China. Or Singapore. Or many other South-East Asian emerging economies. The strength of capitalism derives from democracy and freedom. Because capitalism thrives on innovation and "dangerous" ideas. Slaves or scared people aren't innovative. Yep, you can produce stuff in China, but the innovation part needs to happen in place where people haven't been afraid to think freely and express themselves.
I hope that I made myself more clear. If people vote for social-democracy, let it be.
Also, I'll give you a few example of why I don't think that the current system is capitalistic. First of all, the zombie banks in capitalism would be allowed to fail. Go bankrupt. The moment we decided to take from the regular folk via taxes to support zombie banks is the very moment in which I'd say we're not capitalists any more.
I think that is what is really missing in the world, a frontier to go to when your oppressors get out of hand.
Feudalism - each person (besides the highest king) is bound by oath to serve his master.
Capitalism - each person owns some property and has the right to trade property/labor with other willing parties.
Nope. Not by an "oath". By debt. Check your history books.
Feudal serfs were bound to the 'land' in a sort of debtor-lendor scenario, and could be sold along with the land beneath their feet. They just couldnt' be sold as individuals.
However, knights, squires, barons, etc. were bound to serve their superiors by oath. Its the oath that kept the political and military structure together.
There still was debt to be paid even by knights. Every year the debt obligation had to be met via service or hard ca$h.
EDIT: changing "lords" by knights in the Middle Ages was common. I.e. for few years a knight served a French king just to serve German Prince for a few years after that. So, it looks like they couldn't have taken their oaths too seriously or there had to be an easy way to have the whole thing cancelled.
http://en.wikipedia.org/wiki/Fealty
Don't remember the exact date or edict name, but when in the Roman Empire a law was introduced banning debtors from moving too far from their creditors - that's when according to many historians Middle Ages have started.
The usual explanation for the emergence of feudalism in Western Europe involves market forces as well. As people fled the starving cities at the collapse of the Roman Empire, they had little choice but to agree to whatever terms rural estate landowners offered, which were generally not favorable terms.
I think one reason a sort of libertarianism was popular in the early U.S. is that there was always an alternative option: go to the frontier and homestead. So people really felt that they had individual freedom, and could escape any onerous sharecropping arrangement by just heading west. But in Europe all land was already spoken for, so there was nowhere to go homestead.
It was really messy though. I am sure the 0.1% will understand this fact. It is in their best interest to make the rest of us think we have something, something to lose. Therefore, our buying more "stuff" helps them two-fold. They have sold us more stuff, therefore soaking away liquidity which increases the value of their money. Furthermore, it gives an impression that we have "stuff" to lose as well in case of conflict.
Only took a few comments before someone blamed things on the Fed. Nice.
>i.e. the US newborn already has to pay off few hundred thousand in debt through their live-time). Please don't call it capitalism.
You understand that "paying back" public debt means reducing private financial assets right? Of course you don't.
>We need Robespierre's and Danton's guillotining banksters and their whore neo-feudal political class.
Yeah, let's kill people who undertake a specific, necessary occupation in society!
Take your ignorant, conspiratorial hatred elsewhere.
I didn't say they were, though I much prefer a system with them included.
I said "banksters" are necessary. You know, in the same sense garbage collectors and lawyers and doctors and teachers are necessary. I mean, I guess you could argue that none are really necessary. But again, as a bank customer and user of credit (which I'm sure you and 95% of everyone else here is), I will call them necessary for my desired society.
So you don't believe in the markets setting price of credit more efficiently than a burocrat?
You understand that burocrats setting prices doesn't work, right? Or 70 years of communistic "experiment" isn't enough for you to get it?
"Banksters" didn't force loans on Greece, or tell them to cook their books and spend frivolously. The politicians and citizens did that.
But guess what? They are free to default and not pay back any "banksters"! The repercussions for that will be the inability to get credit in the future. But, who cares, right? Because no one needs that credit that the "banksters" provide, according to you.
It still might happen. Then the complaint will be, at some point in the future, "Why are the banksters charging Greece extortionate rates to borrow money?!?"
Some people don't get it.
Oh yeah?! Says who? EU? So the Euro lands in the trash bin and then there is a whole line of countries that want to leave the Titanic as well? You're so naive.
Let me explain it to you how it works: If I'm an investor. Private investor. I buy a stock, equity or a bond, or commodity. I understand that there is risk and reward. That the asset may go up in price but it also may go down. So, if I buy Greek bonds - and note, I do it after analyzing the market, etc, etc - I know they may go up, or they may go down in price. Actually, they may go to zero. And that's a healthy, normal capitalism. That's my attitude when I invest my money. But when you are bankster? Do you accept the capitalistic risk&reward model? Do you accept that the Greek bonds that you bought back in 2000-2007 may go to zero. Oh nein! Then you call Die Frau Merkel and ask her for a favor. Because you gave her money for the campaign, didn't you? So now it's payback time! Die Frau together with the whole EU then forces little Greece to repay as if the bonds were not at zero. As if they were great investment.
Fantastic!
The banksters are the folks I described above. And for the mentality itself - like we should be paid even if it's our error here and even if it means neo-nazis governing Greece - is the reason for which I would behead them with pleasure my friend. And don't confuse these clown with true bankers who believe in capitalism, believe in risk&reward and would just take the hit like they believe in the system (capitalism). Not some aristocrats who think that socialism should be only for them and rest of the populace should live in capitalism.
Greeks vote neo-nazi because they know that the Golden Down would have balls enough to cancel the whole so-called debt to these crooks with a stroke of a pen.
banker - someone who took risks on the markets. Lost. Took the hit. Takes responsibility for his actions. Doesn't believe that there will be the end of the world if he goes bankrupt. Understand and embraces free market capitalism with both sides of it: risk and reward.
Capitalism is private ownership of the means of productions. There is nothing in capitalism that implies less inequality. If the balance between capital and work switches to favor capital more, there will be inequality.
Why not call it capitalism. They call it capitalism, everyone else does. How much do you want to bet going around asking what economic system US has and less then 0.1% will say neo-feudalism.
Using alternate monikers used to justify still believing in this magic religion (oops I mean magic economic system) is a bit silly. This is the typical
http://en.wikipedia.org/wiki/No_true_Scotsman
Why not just assume that capitalism is an idealized system that never works, it is just too unstable.
If this pattern seems familiar, it is not surprising they used to say the same thing about communism. Oh what they have in country X is not communism. "True communism is not like that, this is Y (replace with ugly sounding term)".
> That's the only way to revert back to capitalism and liberalism.
Revert to what? Guillotining people in the streets? Or rather are there good examples of capitalist paradises on earth here to inspire us?
And seriously, saying something is feudalism doesn't make it so. There is so much wrong with your post I don't even know where to start. Just wow. Feudalism is a military system with lords and vassals. Vassals provided military services to the lord in trade for land. Calling SF neofeudalist in hystrionic nonsense. No such thing exists in SF. Nothing even close to that exists.
You might want to google feudalism and capitalism. Here's some links:
http://en.wikipedia.org/wiki/Feudalism
http://www.differencebetween.net/miscellaneous/difference-be...
http://thenewinquiry.com/essays/steal-this-article/
I'm astonished how much opportunities US has for education, jobs and business, yet people pass them en masse. There's a huge subset of the population that considers education and knowledge as something lame.
The second big problem is that young people are fed "you can be anything you want" mantra, so they end up studying (while spending tons of money and years) impractical things like art or history or women studies or international relations.
Don't get me wrong, I LOVE art, but you shouldn't base your future on a possibility that you will become famous enough to support yourself making art.
What we need to do is educate our young people to choose their majors wisely. So next time you hear somebody wanting to study history, slap them in the face and tell them to read history porn during their free time.
I understand that we're in a 2-income household world now, but I don't believe your fixed expenses (housing) should be tied to this expectation. One of you could easily lose your job, or one of you could decide to stay home with the children. Imagine one of your kids has special needs, is disabled, etc -- you will probably end up not being able to have both of you handle full-time professional careers.
This isn't just the case in America, housing is even more expensive in other western countries. I just don't understand it. There's too much credit (30 year mortgages shouldn't exist!) and not enough income out there. People are all too willing to saddle themselves with this stressful existence and it punishes those who wish to avoid these dangerous and stressful obligations.
Thanks to exploding housing prices, skyrocketing tuition, dysfunctional urban schools, etc, having a 2BR + a couple of kids in New York City involves a $1 million house, $30k x 2 per year in school expenses, $50k per year in nanny expenses, $25k/year in health insurance, etc. On top of that, you've got $50k/year in paying off your student loans, because after all you didn't get to a $500k HHI without an expensive bachelors or graduate degree, and you'd better be putting some of that in a college fund to help your kid repeat the whole cycle, lest she fall into that 90%.
To illustrate the point, consider India and the US. India has little inequality but lots of poverty (if we take the 5'th percentile of the US as the poverty line, then 95% of India is poor). The US has lots of inequality but little poverty.
http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...
http://opinionator.blogs.nytimes.com/2013/09/10/can-the-gove...
Possessing things is as fragile as a human life.
It would take a tectonic shift in how policy is crafted and implemented but if the US government decided to turn on a dime tomorrow and redistribute wealth who could stop them?
"I think for a lot of people, upward mobility will be much easier." This does not follow. In a more unequal society, upwards mobility falters as the wealthy form an exclusive layer of society. The best you can hope for in this scenario is to be useful enough that you will be kept compensated. But without the right connections, you will not be permitted to tryly rise. And this theoretical upwards mobility will be dangled in front of you to prevent you from feeling solidarity with everyone who isn't so "useful".
Sound familiar?
Upward mobility might be easier though, even as poverty and precarity increases. Elites would have to shutdown Internet wealth generation somehow to prevent upward mobility.
Right now it's never been easier to start a business and generate income for yourself. We're seeing easier upward mobility for those equipped to take advantage of this, even as others see their opportunities shrink.
Today it may be easy to raise your economic standing, but that doesn't mean that will continue into tomorrow.
That means inevitably you have more money than you started with, just siphoning more and more off of the populace. Even if you keep cycling the money back in and people get to use it in a theoretically good way, you still concentrate ownership of resources, businesses, and workers as your reinvestments give you ownership of all these things that make you more money to own more things in perpetuity.
Friend of mine went to work at McDonalds during high school. By 22 he was a manager and making over 80k a year. It may be dead end, but that is more than enough to live on.
Yes I have heard this argument before when it comes to inner city youth and helping single mothers. It is always a sample of N, someone's friend of a friend. "Well so and so went to college and was able to not get into trouble, and raised 2 kids, and owns a house now, so I don't know why these other ones need help".
Another way is to claw back some of the financial regulation that once protected America's middle class from the full force of market instability. Take a look at this chart comparing income inequality and bank failures over the previous century:
http://www.tobinproject.org/sites/tobinproject.org/files/ass...
There's not some magic force of technology driving growing inequality. In fact, even in this writer's argument, technological aptitude provides one of the only routes out of the lower classes. Inequality is growing because of financial deregulation since the 1980s.
Technology won't just produce cars. Technology won't just produce our food and our clothing. Technology will do everything. Technology will make the allocation of resources very, very efficient, including the allocation of wealth. Technology will take electrical energy and convert it into wealth. In the middle-distant future, the wealth that technology produces will be enough for a whole society of humans to subsist on without doing much work. However, in the beginning this wealth will be concentrated with the people who write the software, make the robots, and otherwise are technologically proficient.
The inescapable conclusion that I'm coming to is that this technology has the possibility of transforming society economically. It has the capacity to lift everyone out of poverty. But we need to adjust our fiscal policy so that the wealth doesn't become so concentrated with so few people. In the future we will be able to afford a safety net for everyone, where everyone is guaranteed a minimum quality of life, without much effort.
We need to go about setting up a Rawlsian framework where inequality is accepted, just as long as the least well off person is still reasonably well off. We can do this by paying for people's health care, paying for their food, paying for their housing. Self-interest and capitalism will still be the paradigm, but it won't be so brutal.
If we do it right.
But then, how could he predict that there will be these billion-dollar industries that do things not even invented in 1913. Huge majority of what people do in 2013 just didn't needed to be done in 1913.
I don't doubt people will invent something to waste our time on ever greater scale.
We are at a point with technology where any conceivable manual task that we do will almost certainly be automated away at some point, and many tasks requiring high degrees of skill - including intelligence tasks - will also be automated away. It will be increasingly hard for us to find pockets of value in areas that we can offer the marketplace that it hasn't already seen. I do believe the decline won't be rapid - our expectation for full employment will slowly but steadily fade away - but over the course of decades I think we will come to the idea that we are all entitled to a minimum quality of life, regardless of our ability to hold a job, and that we will have to be guaranteed such in order to maintain a stable society.
You don't travel much.Your possessions are likely your smart phone, maybe a family computer and clothes. Because there isn't as much money to go around, families tend to stick together more rather than every generation scattering at age 18. This trend expands into the community. So, perhaps you are closer to your neighbors and certainly to your family.
I wonder how much longer the car culture is going to last. It seems that you have to be rich to justify buying a car these days. Maybe we will be driving scooters like people in Asia instead of cars?
It would probably even save the city itself large amounts of moneys not having to maintain such an inefficient infrastructure.