The Death of the Middle-Class Musician

> [...] a larger problem, namely that overall economic inequality is way too high.

What economic inequality would you deem small enough?

And why do you care about inequality, and not eg the absolute livings standards of the least well off? We can 'solve' inequality by just destroying everything the rich have, but that won't make anyone better off.

Btw, the absolute living standards of all members of society, including the least well off, have never been better. And that's true for almost any society you care to look at on our globe. (Removing eg those currently at war, that weren't at war earlier.)

> What economic inequality would you deem small enough?

Economic inequality small enough to not be the root cause of the particular problem you are interested in.

There is so much research on the problems of inequality. "The Spirit Level" is one book. (e.g. https://equalitytrust.org.uk/the-spirit-level/)

The problems of inequality go well beyond living standards. E.g. political control in a very unequal society gets concentrated in a few people.

> What economic inequality would you deem small enough?

I'd like the one small enough that I won't die from my (treatable) first major medical event due to being unable to fund 100% of treatment costs.

I'd also like one small enough that me and the kids didn't spend most of the 2010s in hunger-level poverty.

That'd be a start.

Nothing of what you said has anything to do with equality at all. It's about the absolute level of prosperity of yourself (and presumably everyone else).

So if everyone got 10x richer overnight, but the top 1% got 1000x richer, that would increase inequality by any reasonable metric, but it would help with the benchmarks you mentioned.

Well, that definition only makes sense to someone who thinks that economic inequality is a root cause of any problems.

the healthcare situation sucks. provide universal healthcare and you might have a point

See https://en.wikipedia.org/wiki/The_Spirit_Level_(Wilkinson_an...

Especially the failures to replicate.

I don't live in the US. We have a very different helthcare system where I live, and it's working well.

But again: providing universal healthcare is all about giving (poor) people more prosperity. It has nothing to do with inequality by itself.

If tomorrow Mr Zuckerberg got 100x better healthcare, but everyone else only got 10x better healthcare, that would fix the problem you mentioned, but would technically make inequality worse.

Good points, he seems to be in to something in the health field, but the analysis was incomplete and flawed. Given the importance of the health results, perhaps someone could build on top of that and build an improved study?

If absolute prosperity is what matters, how is the US the richest country in the world, while being pretty much the only one where medical bankruptcy is a thing?

> And why do you care about inequality, and not eg the absolute livings standards of the least well off?

The two are connected. You can either transfer more wealth to the poorer people without taxing the rich (lets say by helicopter money), or transfer it from the rich to the poor. In both cases the rich become less rich in relative terms. It should also make intuitive sense - if the rich (lets say top 5%) hold 95% of wealth it means there is less for everyone else - less wealth that is because the resources like land, apartments and good education are finite and not abundant.

See also 'The Spirit Level Delusion' by Christopher Snowdon. https://marginalrevolution.com/marginalrevolution/2019/03/th...

1. Any research of any note will get criticism. (E.g. see responses to Picketty.)

2. From Wikipedia it appears they responded to all the substantial criticism. It also mentions an independent study largely agreeing with the results.

3. This is one book amongst a mountain of research, and there are problems with inequality that go beyond those the book mentions.

No it wouldn't. Inflation would skyrocket and baseline prices would be at least 10x higher. And that's not how UBI works, no one is some multiplier richer because it exists.

The top 1% getting 1000x richer is a problem, because trickle down economics is bullshit. Money that exists as part of a pile of gold in a dragon's den does not move the economy.

You can of course create wealth in such a way that inequality stays the same. Not all types of wealth are finite for practical purposes.

But, if empirically our current system for net wealth creation tends to also produce wealth concentration, it makes sense to consider ways of modifying the system to mitigate some of the wealth concentration while maintaining as much of the wealth creation as possible.

> If tomorrow Mr Zuckerberg got 100x better healthcare, but everyone else only got 10x better healthcare, that would fix the problem you mentioned, but would technically make inequality worse.

No, because we outnumber Mark Zuckerberg by more than 10 fold

Anyway, I would argue that having guaranteed healthcare is 10293762397697x better than not having guaranteed healthcare

I agree that Wikipedia wasn't the best source to go for criticism: Wikipedia is very sympathetic to the claims like in the book, so the criticism section is very weak sauce.

It is indeed noble that the authors responded to the criticism, but unlike what Wikipedia seems to imply, they didn't manage to rescue their argument.

See https://marginalrevolution.com/marginalrevolution/2019/03/th... from another comment.

The US isn't the richest country in the world (per capita). What makes you think so? However, Americans are on _average_ pretty rich per capita.

And in any case, I'm saying absolute prosperity of individual people matters. Not the average per capita absolute prosperity of a country.

So people who go into medical bankruptcy in the US are obviously not individually rich. And I hope you and me agree, that if you could find a way to make them better off, that would be a good thing?

Whereas if you found a way to make them worse off by 20%, but make Mr Zuckerberg worse off by 50%, that would not be advisable, even if it technically decreases inequality.

I was not making a statement about UBI. I was purely talking about inequality.

The price level is driven by what the central bank does with the money printer. UBI wouldn't raise prices, if the central bank does their job even halfway competently. (Even the mediocre real world performance of the Fed or ECB would suffice to _not_ have prices raise by 10x in eg a year of UBI.)

> And that's not how UBI works, no one is some multiplier richer because it exists.

I was not meaning to imply that UBI would make people richer on average. My comment was purely about inequality being a bad measure.

UBI plus the taxes that finance it are a redistribution scheme. It doesn't make people richer on average. At best you can hope that the tax is very efficient and has low or no deadweight losses (like land value taxes), so that on average UBI doesn't make your society worse off.

> The top 1% getting 1000x richer is a problem, because trickle down economics is bullshit. Money that exists as part of a pile of gold in a dragon's den does not move the economy.

Huh? If what you said were true, the top 1% getting 1000x richer would merely not do anything, but it wouldn't be a problem per se.

Btw, it's not a problem if someone just hoard some money: the central bank will notice that inflation is below target, and print more. (Later, when you spend from your hoard, the central bank will notice that, and correspondingly shrink the money supply.) Sticking money in a hoard is equivalent to giving an interest free loan to the central bank, because they can temporarily emit more money, while yours is out of circulation.

However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.

> Anyway, I would argue that having guaranteed healthcare is 10293762397697x better than not having guaranteed healthcare

Sure, healthcare is nice. I see no disagreement.

> > If tomorrow Mr Zuckerberg got 100x better healthcare, but everyone else only got 10x better healthcare, that would fix the problem you mentioned, but would technically make inequality worse.

> No, because we outnumber Mark Zuckerberg by more than 10 fold

Well, fix the numbers any way you feel like. Eg say Mr Zuckerberg gets better off by whatever amount the rest of us together get better (eg in terms of healthcare) plus 10% extra.

> You can either transfer more wealth to the poorer people without taxing the rich (lets say by helicopter money), [...]

Helicopter money transfers real wealth from the people who previously held cash.

It creates nominal wealth, but not real wealth.

> It should also make intuitive sense - if the rich (lets say top 5%) hold 95% of wealth it means there is less for everyone else - less wealth that is because the resources like land, apartments and good education are finite and not abundant.

Let's invert that: if I make everyone's lives 10% more miserable, but the lives of the richest 1% a whopping 20% more miserable, that will have decreased inequality. But it's not a good idea.

That's basically just the idea from https://news.ycombinator.com/item?id=44411538 inverted. Many people have a hard time seeing that wealth can increase, but it's pretty easy to see that total wealth can decrease: I can set fire to my piano, and no one else gets any better because of it.

The target you should look for is how much wealth gets created for the least well-off (or for some low percentile representative person). Just don't worry about what the rich people doing at all. No need to punish them.

Mark Zuckerberg would in fact need to have 8 billion times better healthcare than me for your argument to matter

I don't know anyone who really thinks that absolute inequality is the problem. people need a high floor - there is no inherent reason to want to lower the ceiling of wealth/benefits. but since there's no such thing as free lunch, we need to calculate by how much each % of ceiling that is lowered raises the floor. If we can reduce the ceiling by 10% and raise the floor by 100%, then that's worthwhile.

The hard part is calculating the benefits. There are non-linear effects when you try to predict the benefits of having a healthy and educated population, although the benefit should be enormous.

On the other hand it is very easy to calculate the downside of people not being wage-slaves: not needing to accept bottom wages, having time to understand what's actually going on in the world, organizing for or against particular causes, etc..

The reason inequality is a problem is very simple.

As inequality increases at scale it means that an increasingly concentrated group has more and more capital. What do they do with that capital? They buy assets, they are basically forced to do so by design.

What happens when they buy assets? They capitalize those assets. An apartment unit now becomes a home others can rent but not purchase.

Rinse and repeat until eventually wealth is so concentrated that the ability for any other individuals to access assets is basically zero. This means those individuals cannot build capital or ultimately wealth and it also means that, even if more resource become readily available, more people cannot afford them. They have to do 2x today what they did yesterday to an achieve the same amount of stability even if their "standard of living" has increased because of a wider swath of goods and services.

Honestly at this point I think that anyone who doesn't see inequality as a major driver of contemporary problems is simply not paying attention to the USA or must not live there. Countries in which it is less of a problem basically only mitigate it by having a state that can provide essentials to effectively prevent the capitaled class from taking them away from people (eg healthcare, as you mention).

Economics is all about the balance of who has access to what resources. We cannot just generate resources and capital out of thin air. One person getting more necessarily means another gets less. Period.

> Let's invert that: if I make everyone's lives 10% more miserable, but the lives of the richest 1% a whopping 20% more miserable, that will have decreased inequality. But it's not a good idea.

You are conflating two different things, wealth and misery.

Wealth is about material resources not misery or happiness. This is about giving more people access to more material resources by taking away some of the exclusive access to those resource by the rich. Will preventing the uber rich families from buying their seventeenth fleet of housing complexes and their twentieth estate make them "more miserable" sure, probably, but it also secures the independence of the people you make that house available to (rather than make them permanent wage slaves to the landed class that just scoops up homes that they don't materially need need to extract rents etc).

It's the richest country in absolute terms, and the richest per-capita if you exclude small countries.

As a side note, it really shouldn't be possible to edit comments two hours after they've been posted and after they've had replies. Particularly without showing any indication of that.

No one is suggesting to "make Mr Zuckerberg worse off".

The inequality problem is about access to material resources. Money is just an abstraction. No one is seriously suggesting to refuse zuckerberg access to good things on principle or to just diminish and not redistribute his wealth, that's preposterous.

The point is that access to capital is access to resources. The people that hoard capital necessarily end up hoarding important resources and they use this imbalance to then extract further capital from others and further their position, thus in turn gives them power. The problem is all about bringing more balance to this situation so that we avoid a return to feudalism in which a handful of people have control over all the resources and power and everyone is is basically just beholden to their whims.

Where is the "wealth created for the least well off" going to come from?

Necessarily, that must be wealth that did' go to the rich instead (it could have!). So, necessarily, you are "punishing" them by doing so.

You mainly seem to be against some kind of hypothetical robinhoodesque style redistribution because you worry it's unfair to the rich. Any solution, though, will have to take this shape, whether it targets the existing wealth or wealth generated going forward. It's all about redistribution of access no matter how you slice

You don't need to be so protective of the rich. They are doing just fine and they have plenty of resource and mechanisms in place to protect themselves. If the world's wealthiest people were made even just a tiny bit less wealth by redistribution of assets they would still be living like absolute kings.

How does taking some ones second mansion away to help feed struggling family decrease happiness? If there is a net decrease, the rich person needs to examine their priorities.

> This is about giving more people access to more material resources by taking away some of the exclusive access to those resource by the rich.

You realize most of this wealth is tied up in stocks and other assets that anyone can purchase, right?

> Will preventing the uber rich families from buying their seventeenth fleet of housing complexes

But ARE the likes of Bezos and Musk actually buying housing complexes in the first place, nevermind ones that anyone who isn’t already rich are able to afford?

> and their twentieth estate

And who but the extremely rich would be able to buy these estates in the first place?

> However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.

exactly. Which is the problem. You seem to actually have all the ingredients to be able to understand why this is a problem, but some kind of sympathy for the rich (lol) seems to prevent you from actually using logic to see the problem.

To be clear, confiscating everything Musk, Theil, Zuckerberg and Bezos have absolutely would make my life better off. Think about the amount of political meddling by Musk in the past year alone, things he could never do if he weren't so rich.

Certain forms of stock are effectively liquid. This means that you can turn around and leverage them to buy material resources quite easily.

It doesn't matter that "anyone can purchase them". If you have N dollars and I have Nx1000I can buy more stock than you. I can also diversify better than you, I simply have more options, more power, etc. Unless I am a total idiot or you get absurdly lucky and effectively win the lotto, my greater amount of initial capital will go further than your small amount.

> But ARE the likes of Bezos and Musk actually buying housing complexes in the first place, nevermind ones that anyone who isn’t already rich are able to afford?

I didn't mention either of these people. There are plenty of people not in the limelight that do precisely the things I'm talking about, often through banks and companies that they run—I can have my investment firm buy property and increase my salary off the extracted rents and it achieves the same thing.

> And who but the extremely rich would be able to buy these estates in the first place?

Exactly. You just restated the problem with inequality. It gives a small class of people exclusive access to important material resources. Further they can they use this exclusivity to further entrench their positions.

> But ARE the likes of Bezos and Musk actually buying housing complexes in the first place, nevermind ones that anyone who isn’t already rich are able to afford?...

One of the bigger ways this plays out as opposed to your example is: Tons of property is locked up as short term vacation rentals that are only used a tiny percent of the time and only by the rich. There's a spectrum of how rich but we know the bottom 50% almost never use them for example

Similarly the amount of resources locked up in industries that 99% of the time only cater to the very rich is quite a lot and more importantly the trajectory is going more and more that direction.

You could have a world where the work is done mostly by robots and a few million rich people use the world as their playground and then what happens to everyone else?

A blog post referencing another blog post doesn’t seem to rise to the level of total disregard for the original study. But maybe we can try Wikipedia again.

> What economic inequality would you deem small enough?

> And why do you care about inequality, and not eg the absolute livings standards of the least well off?

Answer to both those questions, simplifying massively: the most prosperous period of capitalism in the past 200 years was also that where there was the smallest levels of inequality.

The point of view that you must only look at the overall floor is terribly short-sighted (and even then, the lower and middle classes have become WORSE off in the past 40 years!). The massive increases in wealth have been going overwhelmingly to the pockets of the very rich; this is bad in itself, irrespective of the overall GDP growth or whatever.

Read Pikkety's books and you will understand.

> Answer to both those questions, simplifying massively: the most prosperous period of capitalism in the past 200 years was also that where there was the smallest levels of inequality.

You mean today? Today is the most prosperous period of all of world history. Or what period are you talking about?

Global inequality is also near all-time lows, thanks to China, India and the rest of Asia mostly catching up to the rich western countries. Alas, Africa is still quite poor, but they are working on it.

> The point of view that you must only look at the overall floor is terribly short-sighted (and even then, the lower and middle classes have become WORSE off in the past 40 years!).

In what sense?

> The massive increases in wealth have been going overwhelmingly to the pockets of the very rich; this is bad in itself, irrespective of the overall GDP growth or whatever.

Why?

> Read Pikkety's books and you will understand.

See eg https://marginalrevolution.com/marginalrevolution/2019/03/th...

See https://en.wikipedia.org/wiki/Deadweight_loss

> Similarly the amount of resources locked up in industries that 99% of the time only cater to the very rich is quite a lot and more importantly the trajectory is going more and more that direction.

Sources?

In any case, what you say seems to suggest that consumption taxes would be the way to go.

> Where is the "wealth created for the least well off" going to come from?

Well, mostly where everyone's wealth is coming from: from the fruits of their own labour.

> You mainly seem to be against some kind of hypothetical robinhoodesque style redistribution because you worry it's unfair to the rich.

No, I haven't started worrying about fairness, yet. No, I'm afraid that a tax system designed by what sounds good instead of what works will leave the poor even worse off.

Check out https://en.wikipedia.org/wiki/Tax_incidence for an example: who you officially levy the taxes on isn't necessarily the person shouldering the economic burden.

How does 'hoarding' capital look like? What do you mean by that?

Sorry, I don't understand what problem you are seeing from people owning shares in eg publicly traded companies.

Trump isn't rich (or at least wasn't rich before he became president for the first time), and managed to do lots of meddling just fine.

If anything, I'd like rich people (in general) to play more of a role. I'd take Bloomberg or Romney over the popular candidates any day.

Compare and contrast https://slatestarcodex.com/2014/05/26/compound-interest-is-t...

I'm saying that we need to be careful that our obsession to obstruct the rich doesn't leave the masses worse off.

> If we can reduce the ceiling by 10% and raise the floor by 100%, then that's worthwhile.

I'm afraid that lowering the ceiling by 10% might lower the floor by 10%, too.

The economy is not a static thing in which the same goods and services are offered independent of the wealth distribution. The same work is not done.

When wealth is concentrated, prices cease to aggregate information and preferences from across the whole society. Instead they represent whatever stupid whim some clique of investors has developed. As a result you get massive malinvestments in speculative bullshit while basic things decay. It's the Politburo but dumber.

This determines the physical environment you live in, the services offered on your street, and the stuff you do at your job.

> Tons of property is locked up as short term vacation rentals

You might not want to dig too closely into who exactly owns all these short term vacation rentals. There's a non-trivial number of people who aren't conventionally what we picture as being "wealthy" who own a lot of them. It was a very popular Covid-era life hack to buy a house at an absurdly low interest rate and rent it out. And that's not getting into people who just managed to buy a house at the right time. For example, I'm just a software engineer in a MCOL area but I bought my first house in the early 2000s and paid it off a little under 20 years later. I sold to fund the next house, but I could've easily bought something more modest and rented the old one out. This is not an uncommon occurrence.

> that are only used a tiny percent of the time and only by the rich. There's a spectrum of how rich but we know the bottom 50% almost never use them for example

Are you under the impression that you have to be fabulously wealthy to rent an AirBNB for the weekend?

> If you have N dollars and I have Nx1000I can buy more stock than you. I can also diversify better than you, I simply have more options, more power, etc. Unless I am a total idiot or you get absurdly lucky and effectively win the lotto, my greater amount of initial capital will go further than your small amount.

And, so what? This just sounds like whining that people in this world who have more money than you exist. I'm sure there's a lot of people in this world who would hold this exactly same argument against you ("you have N dollars, but I have N/1000"). You're not denied the opportunity to build wealth with what money you DO have just because Bezos and Musk et al exist.

> Certain forms of stock are effectively liquid. This means that you can turn around and leverage them to buy material resources quite easily.

Sure, but this isn't the infinite money glitch people seem to think it is. The loan and its interest have to get repaid with... money! That's first taxed! And anything purchased is... subject to taxation!

> It gives a small class of people exclusive access to important material resources.

Look, no matter how little income inequality is, you're gonna have to be rich to say, buy a building in Manhattan or a house in some similarly coveted area.

You clearly believe you're very objective and applying very "rational" thinking to the problem. It's about the dollar value of the income of the least well-off, so what are these stupid people even talking about inequality? Don't they realise making a poor person 10% worse off and Bezos 11% worse off reduces inequality but lowers the floor (the pedestrian argument you've made several times in this thread)?

But please consider that the problem is slightly (i.e. a lot) more complicated than you think. Economics is a very very hard discipline and perhaps more closely related to philosophy than the natural sciences. There have been countless books written on the topic of inequality by people smarter than you or me, so it's highly it's all so simple as your dismissive "just do X" line imagines it to be.

A simple, almost trivial observation: very high inequality of wealth also means very high inequality of power, meaning the rich elite can and will influence the political process to enrich themselves further at the expense of the "low percentile" less well-off, which will be denied political power. This is one example of why you should care about inequality.

absolute living standards are very unequal

a book is not a study a either.

In poorer countries, instead of medical bankruptcy, there just isn't medicine available. The poor in sub-saharan africa are not receiving first class government funded medical care.

The top 1% aren't sitting on a pile of gold in a dragon's den, their wealth is mostly invested. The amount of money Jeff Bezos owns in houses and boats is small in comparison to the amount of his wealth that is represented by stock in amazon; that money in amazon's hands is absolutely cycling through the economy.

Only tiny fraction of a billionaire's wealth tends to be the fruit of their personal labor. It's the labor of their employees and machines that create the wealth. To my understanding, this is broadly accepted.

Now, billionaires do supply a different key ingredient to the wealth creation - risk. Without investment and risk, wealth cannot be created. In terms of $ investment, billionaires take on the vast majority of the risk and deserve the bulk of the rewards, the argument goes. Workers take on far less risk with their guaranteed* paycheck .

But which is the bigger risk? A billionaire's $100,000,000? Or your home, your health, and your retirement savings were you to lose your job in a bad market?

I'm interested in company structures that incentivize distributing risk, profit, and power across a larger group than we tend to see in modern companies.

Your analysis is spot on. UBI funded by taxes is redistribution.

Is that a bad thing? It would obviously have some negative effects. We'd immediately see damage to luxury brands and yacht sales. The art markets would crash. Stock markets would feel some pain.

The upside though? My hunch is that making most people feel secure enough to risk starting/joining businesses is fuel for a strong and innovative economy. The fact that so few of us are able to take those risks is a constraint on growth.

> small in comparison to the amount of his wealth that is represented by stock in amazon

That wealth should also be taxed.

What makes stock ownership somehow holy that should be protected from taxation?

We should stop conflating what a company generates as a consequence of their activity with the glorified gambling of the stock market.

> UBI plus the taxes that finance it are a redistribution scheme.

Yes. That is desirable.

> However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.

And those too should be taxed. If it is wealth, it should be taxed.

Not a problem. But above a certain threshold it should be considered taxable wealth too.

I broadly agree with everything you say.

> Sure, but this isn't the infinite money glitch people seem to think it is. The loan and its interest have to get repaid with... money! That's first taxed! And anything purchased is... subject to taxation!

Interestingly, my broker lets me just pile up the interest and doesn't expect me to pay anything back, but only as long as my overall portfolio is worth comfortably more than my debt.

Of course, if I ever want to actually get at all my money, I'll need to pay the debt off.

Btw, leveraging your stock portfolio isn't all that different from a mortgage on your house. But people seem to be much more confused about the effects of the former than the latter. It seems to be easier for people to understand that a mortgage ain't an infinite money machine.

> I'm interested in company structures that incentivize distributing risk, profit, and power across a larger group than we tend to see in modern companies.

Please feel free to start your own company or cooperative.

> But please consider that the problem is slightly (i.e. a lot) more complicated than you think. Economics is a very very hard discipline [...]

Yes, and that's why I am saying that it's far from an obvious conclusion that making rich people worse off is a good thing for poor people.

And once you admit that this ain't trivial, you can look at topics like deadweight losses or tax incidence.

Different tax and redistribution system have different effects. It's not just 'more tax = more revenue to redistribute'.

For example, I actually think you can drive overall tax rates (eg as percentage of GDP) a lot higher than they are today in most countries without harming the economy, _if_ you switch to something as efficient as land value taxes for the vast majority of your government revenue (and lower other taxes). Property taxes are a second best approximation.

In contrast, capital gains taxes and income taxes are less efficient. Tariffs are even worse (by a large margin!), even if they could theoretically raise some revenue. Stamp duties or other taxes on transactions are also pretty bad. And silly things like price controls just hurt the economy without raising any revenue at all.

But that's all vastly simplified. As you suggest, there's lots of theory and practice you can investigate for the actual effects. They might also differ in different times and places.

> There have been countless books written on the topic of inequality by people smarter than you or me, so it's highly it's all so simple as your dismissive "just do X" line imagines it to be.

That's why I'm saying exactly the opposite: I'm arguing against the naive 'just tax the rich'.

Stock ownership isn't protected from taxation: there's capital gains tax to be paid (in many countries).

> We should stop conflating what a company generates as a consequence of their activity with the glorified gambling of the stock market.

Well, that might be a valid point for some people, but it's pointless for Zuckerberg or Bezos or Bill Gates or even Musk: those guys have been mostly holding their companies' stocks for ages. They don't buy and sell all the time. No 'glorified gambling the stock market' there.

In any case, I brought up stock ownership as a concrete example of wealth that doesn't just site 'idle' in a vault somewhere. It's a claim on a productive enterprise that is only worth something because it serves customers and employs people etc.

> We'd immediately see damage to luxury brands and yacht sales. The art markets would crash. Stock markets would feel some pain.

How do you make these confident predictions?

I think it would depend a lot on how the UBI is, and exactly how you design the taxes to finance it (and how high those taxes are going to be).

I keep significant fraction of my wealth in eg my kidneys and healthy organs. Should they be taxed?

How about taxing Brad Pitt for his good looks?

Has Bill Gates bought up all avocados on the market so far? Or anything ridiculous like what you seem to imply would happen with concentrated wealth?

This is a total red herring. We're not talking about sub-Saharan Africa. As Americans who want to fix your country, you should be looking at countries with similar standards of living, such as every single European country. You can even pick the rich ones, like the Scandinavian countries, Netherlands, or Germany.

The alternative to the current situation in the US is not abject poverty.

> But which is the bigger risk? A billionaire's $100,000,000? Or your home, your health, and your retirement savings were you to lose your job in a bad market?

This parallels the diminishing marginal utility of wealth, which states that with extreme wealth, you can't buy any more to get more utility or happiness.

In a way, the risk phenomenon picks up where that phenomenon leaves off, where the need for normal "utility" gives way to the desire for amassing power over society at large.

The mistake they make is not realizing how much of their wealth and welfare relies on the welfare of the masses.

> I'm interested in company structures that incentivize distributing risk, profit, and power across a larger group than we tend to see in modern companies.

Ironically this is a tiny bit of what we saw with employee stock options in the early days of the internet industry, reflected in the historically outsized power and voice of workers. Arguably, that is a part of the rationale behind the big tech layoffs - to put labor back in its place.

> Tons of property is locked up as short term vacation rentals that are only used a tiny percent of the time and only by the rich.

Im guessing you don’t know how much property this is. It’s probably under 5% and so has very little effect on the market.

I'm guessing neither knows. So 5% is just another WAG.

Here in my college town, the new townhouses in prestigious locations are dominated by football-game-day occupation by the rich. So there's that.

Have you seen how much money we are shoveling into 'AI'

> We can 'solve' inequality by just destroying everything the rich have

This is "all or nothing" fallacy thinking.

> However, Americans are on _average_ pretty rich per capita.

Better to use the median, because the average is heavily skewed by the ultra-rich.

> And, so what? This just sounds like whining that people in this world who have more money than you exist. I'm sure there's a lot of people in this world who would hold this exactly same argument against you ("you have N dollars, but I have N/1000"). You're not denied the opportunity to build wealth with what money you DO have just because Bezos and Musk et al exist.

I don't have a problem with differences in wealth. My problem is with (a) differences so extreme that they border on the inhumane (we arguably have enough resources amassed to end world hunger, yet people still starve. Why?) (b) People are fed the lie that this system is purely meritocratic. That is plainly untrue. That was my point about the relative "distance" your money can go. If you are born into a wealthy family, you can basically live a zero-labor life and continue to reap rewards, generate more income, gather more resources for yourself, concentrate capital. When your origin is the greatest determining factor in wealth, it's a gross lie to suggest to day laborers that if they just "work hard" they too can strike it rich.

Sure, I would agree that under the current system manhattan remains unaffordable. But this is not an essential property of manhattan, as you seem to think. It is a side effect of the current economic structure we have. Alternative structures would lead to significantly more affordable living in the city. In fact the NYC dems just voted for a mayoral candidate who wants to establish such an alternative. People who think like you are increasingly becoming the minority, and it's because it's glaringly and exceedingly obvious that there are massive problems of wealth distribution in the current system. You can honestly identify that there are issues and ask for solutions without being anti capitalist.

People get so caught up in morality when it comes to wealth, which is absurd. As if somehow wanting some of Bezos money to be redistributed so that it can feed people instead of paying for 500mil dollar yatchs is a moral affront. How about we instead focus on the moral affront of underpaying workers, having them the piss in bottles in warehouses, gaming the system by incorporating offshore, the list is endless. It's hilarious that anyone would defend the rights of these robber barons. You've got to be either seriously brainwashed or an extreme ideologue to think that there are no issues with inequality today. Even staunch capitalists are starting to admit there are problems. Its simple systems dynamics. Any system that maximizes singular variables is necessarily unstable and heading toward collapse.

lol. Like many of Scott Alexander's essays, this is bad argumentation in nice window dressing, as well as a slight apologia for racism.

There are so many problems with this essay that it's hard to know where to begin, but two major ones are that (1) his reading comprehension sucks, (2) the major flaw in his line of argument is merely hand waved away—it relies on a fundamental premise that mobility of people in the south was zero after the civil war and that the civil war destroying an entire industry would have had zero effect (this is the part he hand waves away at the end of the article after making his idiotic apology for continued racism based on one solitary citation) As usual, it's an article making people unschooled in the actual practice of rigorous academic research to buy into bad ideas .

Anyway, that's all beside the point. A specific article countering a single claim against reparations has basically very little to do with the topic at hand unless you can prove the very specific set of dynamics that is analyzed in that case (a) applies globally, and (b) still applies today.

This style of argument is equivalent to saying "look i found one rock that was purple so all rocks must be purple". It has basically no relevance as far as I'm concerned.

Don't be silly. Smoking one cigarette is generally not problematic. Smoking thousands will tend to give you lung cancer.

Nobody is arguing that people shouldn't own stocks. People are arguing that asset concentration taken to extremes is like smoking too many cigs: so enough and you force bad outcomes on society and the economic system.

It seems pretty straightforward to me.

Wealth redistribution has this positive effect: If you take $1000 from a billionaire and give it to a very poor person, total happiness increases.

It also has a negative effect, high level of redistribution can inhibit production.

The optimal level of redistribution depends on what you're optimizing, it's usually a mix of societal happiness and some notion of fairness. (I personally would want to optimize happiness and prosperity.)

My assumption is that UBI is a significant transfer of wealth from the richest to the rest. Isn't that the whole point? Exactly how to structure the taxes that pay for it is naturally a key question.

Given that, it's pretty safe to assume markets that cater exclusively to the ultra-wealthy will be harmed by reduced demand as their customer base shrinks. Higher tax rates will also exert downward pressure ob stock values as companies make less profit and investors tighten their belts. (Especially if there's a wealth tax.)

Working on it ;)

Jeff Bezos can spend 50 million dollars on his wedding. Since that's a small amount of money compared to the amount of his stock in amazon, I think Jeff can actually afford to have his taxes raised on whatever he has on hand.

You might need a refresher in history. Trump has ALWAYS been wealthy.

https://www.theatlantic.com/politics/archive/2011/04/weve-be...

> the absolute living standards of all members of society, including the least well off, have never been better

that is completely wrong. purchasing power is at an all time low in real dollar terms

https://fred.stlouisfed.org/series/CUUR0000SA0R

> we need to be careful that our obsession to obstruct the rich doesn't leave the masses worse off

we need to be careful that the obsession with being mega rich doesn't leave the masses worse off

you're not proposing anything. you don't even seem to think there's a problem. let me guess, the best thing to do is just keep things the way they are? what are you talking about?

The bigger relative risk is precisely why the billionaire is so rich - their surplus wealth may be wagered against longer odds when it would be suicidally reckless to yolo your life's savings into a start-up. Those sorts of bets are the Venture Capital strategy.

The relative value of money being lower is what enables riskier investments and essentially what 'justifies' inequality in a bloodless utilitarian sort of way. You know how in economics trades may be net positives due to different valuations between individuals? The same applies in current certain money vs future risky unbound returns. That taking such bets is consistently a successful strategy breeds inequity even without any winner-takes-all effects or high barriers to entry.

Hypothetically if the VCs kept on 'gambling' on failed start-ups and always losing without any offsetting huge wins, not quitting because they think a win is just around the corner, it would be a trend that reduces inequity. As it puts money into the pockets of employees and smaller suppliers of neccessary capital production goods.

I am afraid you would find it harder to get larger groups of people to agree to the high growth potential, high risk enterprises because they tend to lack the spare capital to be able to afford to risk it. I think ironically the most probable tolerable risk profile for larger groups (who are presumably more precarious) is something big and secure being sold out of by larger players. (Small traders panic buying and selling and doing worse is its own separate problem.)

One form of company structure that technically does paying labor well better are partnetships typically used by law firms. It works for them because they have no real capital requirements and have high per hour productivity and labor expenses as the lion’s share of profits go to the lawyers whose names are in the company name.

> This parallels the diminishing marginal utility of wealth, which states that with extreme wealth, you can't buy any more to get more utility or happiness.

You can buy more. The utility just diminishes, but doesn't go to zero.

> Ironically this is a tiny bit of what we saw with employee stock options in the early days of the internet industry, reflected in the historically outsized power and voice of workers. Arguably, that is a part of the rationale behind the big tech layoffs - to put labor back in its place.

Compare and contrast https://slatestarcodex.com/2014/09/14/does-class-warfare-hav...

Look, its pretty simple. Here's a microcosm example: There is a German ship-builder that exclusively builds luxury yachts. They have ~2,000 highly skilled craftsmen, engineers, etc.

This company only exists because wealth is concentrated enough to support a market for it.

That company consumes about 4 million skilled-labor-hours a year to provide this service.

This means that skilled-labor-hours are more scarce/expensive for _everyone_, because the on any given year, there are only so many skilled-labor hours that exist. These labor hours require about three decades of investment from society to produce (public education/childcare/etc).

Bezos may not buy a super-yacht every year, but as a class, the super rich consume an insane labor hours.

> So if everyone got 10x richer overnight, but the top 1% got 1000x richer, that would increase inequality by any reasonable metric, but it would help with the benchmarks you mentioned.

The metrics are a problem when the result was my kids and I regularly having no food for most of a decade. During this time we contributed to society, performed civic duties and cared for others.

And we were just one hungry family of way too many to count. An ethical distribution model wouldn't be okay with that.

> However, Americans are on _average_ pretty rich per capita.

Because it is very expensive to live in America.

"Consume" labor hours? What does that even mean? Those laborers get paid, and then they spend the money they get. That money is circulating through the economy.

> "Consume" labor hours? What does that even mean? Those laborers get paid, and then they spend the money they get. That money is circulating through the economy.

Money isn't stuff. Yes, those craftsmen get paid, but when one of them has something he needs done, some service provided, or some physical resource, he ends up paying more for the labor, because he is competing in the same labor market as everyone else.

Don't you think spending the working time of 4 million labor hours a year, building megayachts, is perhaps not the most productive/ROI generating activity for society at large? You could for example, with ~4 million skilled labor hours a year, build a lot of housing. You could build factories that provide for the needs the people. Hell, you could just give people time-off to, y'know, live and enjoy life (and perhaps, uh, have _children_, which the current system seems to be very efficient at disincentivizing).

> he ends up paying more for the labor, because he is competing in the same labor market as everyone else

You'll have to explain that more. Ship builders aren't competing with plumbers.

>Don't you think spending the working time of 4 million labor hours a year, building megayachts, is perhaps not the most productive/ROI generating activity for society at large

Well, that's a drop in the bucket. But you could apply this reasoning to any form of luxury goods. Where do you draw the line? Nice clothes? Fancy watches? Sports cars? Five-star restaurants? Are any of these "the most productive/ROI generating activity for society at large?" Who decides what goods and services are worthy?

> and perhaps, uh, have _children_

You think people are having fewer children because luxury yachts are being built?

Medical bankruptcies are vastly overstated.[1] And while the US may be unique in our exposure to medical debt, we're doing much better than other developed countries in terms of overall household debt, which would seem be a more useful metric if you're concerned about the impact of debt on prosperity.[0]

[0] https://www.oecd.org/en/data/indicators/household-debt.html [1] https://news.ycombinator.com/item?id=30793926

> You'll have to explain that more. Ship builders aren't competing with plumbers.

Sure, on any given year. But the current economic organization of society wasn't born yesterday. On a longer timescale? Absolutely are.

> Well, that's a drop in the bucket. But you could apply this reasoning to any form of luxury goods.

Yes.

> Where do you draw the line? Nice clothes? Fancy watches? Sports cars? Five-star restaurants? Are any of these "the most productive/ROI generating activity for society at large?" Who decides what goods and services are worthy?

The neat thing about market economies is that you don't actually have to draw a line anywhere. You can just reduce income & wealth inequality via taxes and markets will sort it out. If you had taxed capital gains such that Bezos would have had to liquidate 10x - 100x in Amazon stock to buy his yacht, he likely would have settled for a smaller, but still perfectly acceptable yacht, and so on down the wealth ladder.

> You think people are having fewer children because luxury yachts are being built?

Yes I think income/wealth inequality + the amount of labor hours demanded from people to just stay in place is why people are having fewer children.