According to Wikipedia, 87% of the wealth belongs to the wealthiest 20%. However over 80% of that wealth belongs to the top half of that group. The figures I am looking at do not break it down farther, but my understanding is that this same relative relationship holds for the top 5%, 2%, 1%, and so on.
Everyone agrees that some wealth disparity is a good and necessary part of a healthy economy. But there is a lot more going on here than the straightforward "some people are older, some people save".
The charts and tables at http://en.wikipedia.org/wiki/Wealth_in_the_United_States#Dis... are very interesting. Of interest to many in the HN crowd I direct you to "Current work status of head". Note the immense disparity between "self-employed" and all other categories.
Everyone agrees that some wealth disparity is a good and necessary part of a healthy economy. But there is a lot more going on here than the straightforward "some people are older, some people save".
Of course. And if you read to the bottom of my post, you'll see that I agree that there's too much inequality in the world.
The point of this post isn't to argue that the existing level of wealth inequality is appropriate -- rather, it's to point out that the appropriate level of wealth inequality is surprisingly high.
Absolutely not for me. Arguably, if all citizens had basic needs met (including "luxury" items that enable participating in society as equals – cell phones and internet connections, for example) and had equal opportunity to advance, that would be acceptable. Not what I consider to be a fair society, but acceptable.
Oh I agree, but for that you need everyone to be similarly educated, which I'd argue requires participation on the part of the citizen. Which might be impossible.
I think it's enough to provide all the basic needs so no one needs to spend extra money on survival. Given that, I get philosophical about work: I think people would contribute more to society if they had the choice of how to do so. My theory is people flourish pursuing goals when the pursuit defines their identity.
It's hard to make office work meaningful when you don't care about the business you're in. Most will settle there for needs met. The parallel is the poor farmer who loves her job but doesn't make enough money to survive.
I'd love to study how identity effects job satisfaction.
While I agree with you and disagree with the original poster, indeed, not everyone agrees that some wealth disparity is a good and necessary part of a healthy economy, I think the discussion merits more than a dismissive "Nope". Perhaps, if you are one of those that disagrees, you could lay out your position and argument.
It is difficult to see how to avoid wealth disparity. We can argue all day about whether that is good or evil, but it is a dangerous and destructive proxy for the complex question that, I believe, most of us actually want to answer: How do we get the most good to the most people while simultaneously preserving most or all of the autonomy, freedom, and privacy that Western cultures traditionally also value?
The original article said: Is there too much inequality in the world? Sure. And cperciva reiterated that opinion above.
That's what drunkpotato is disagreeing with. It is clearly an opinion that isn't purely a matter of facts and figures. (One with which, as I happen, I agree.)
I was acknowledging that not everyone agrees that wealth disparity is necessary. I did not state my opinion on the matter, merely that it is difficult to see how it could be avoided should we want to. I was trying to point out that a glib "Nope" doesn't bring anything new to the table.
Moving on to my personal opinion, I think it's more productive to think in terms of how much wealth disparity is part of a reasonably robust and functioning economy. We've all seen the numbers that show a steady trend upwards over the last 3 decades. That does not seem to be a good thing.
Whoops, yes, I got that backwards. Anyway, the point is that what he's agreeing and disagreeing with are opinions that aren't just a matter of unambiguous facts and figures.
I don't think that opinion of cperciva is relevant to the point btilly made, which is the subject of this subdiscussion. As such, there are no opinions to disagree with. I may be imagining things, but I've seen too many cases of people discarding facts because of some not directly relevant opinion the author/collector/presentor of the facts also happens to have.
That reductio ad absurdum, and most likely not what the OP meant. The idea that a fair society is one where inequalities are rather low is not exclusive to extreme left ideologies. How you articulate inequality and justice is one of the most pertinent way to describe right vs left ideologies, and economics do not preclude either view (up to a certain degree).
If you read serious works about how fairness and inequality relate in modern democracy (for example John Rawls), you will realize that the concept is certainly worth of consideration. Being of a normative nature, it is obviously a matter of personal judgement and opinion, but the idea that inequalities are mostly bad by nature cannot be dismissed as naive, stupid or both.
Finally, I have never seen any serious economic work which claim that inequality was necessary for an health economy. There is a lot of studies about policies which tried to decrease inequalities with disastrous consequences, of course, but that's different.
Low inequalities and no inequalities are very different.
Suppose that we start with equal wealth. And then I buy and consume a chocolate bar. Odds are that I'm now happier and poorer than you. Who would seriously argue that this wealth inequality is a bad thing?
I'm right there with people who complain about the amount of inequality that we have today. I don't think that it is healthy or productive. But if you believe in having private property and money, you have accepted that some level of inequality is acceptable.
Well, sure, it is impossible to have 0 inequality if you consider pure equality, but that's a trivial remark. The notion of equality almost always makes sense only in a statistical sense (are two values statistically different), unless you have a discrete observation.
Maybe that high school dropout is wasting his life away because he sees no means of being successful.
I think you'll find that most people who prefer to stay at home and mooch off the system do so because to make their life just slightly better would require them to seriously bust their asses. That means their effective compensation would be very low (maybe zero or even negative in some cases).
We have and have had societies in the past where everyone got equal compensation. Do you think those societies allowed loafers to goof off all day and contribute nothing?
We have and have had societies in the past where everyone got equal compensation. Do you think those societies allowed loafers to goof off all day and contribute nothing?
That's not better. If someone wants to be lazy, put in the minimum effort, and spend the rest of their time playing games that's their choice and they shouldn't be punished for it by forcing them to contribute to society to "earn" what they've been forced to receive. That cure is far, far worse than the disease.
I'm just saying loafers isn't a deal breaker. Past societies dealt with it by not allowing it. If we ever realize a future utopia we could probably live with a small percentage of the population spending their whole life doing nothing but gaming. But it is my strong (completely unprovable without actually trying it) suspicion that many people who game their lives away actually would rather be doing something else (e.g. working in a space station), they just don't feel they have the option.
Why? Do you think that success should also be uniformly distributed amongst the entire population?
I'd say reward people who are successful. The fact is the majority of people aren't successful or really very useful to society.
The top 1% of society do most of the work, so they get most of the reward. That's pretty fair IMHO.
Human motivation requires that success be rewarded. If there is no success, or "success equality" amongst everyone, then there's no motivation to do anything.
Good lord, how did a post like that get an upvote? It's ignorant well beyond the point of normally being considered a troll post.
>The fact is the majority of people aren't successful or really very useful to society.
That's an insanely arrogant thing to say, not to mention complete garbage. The only reason we even have a society at all is because of that majority you dismiss. They are the ones who spend the money, do the mundane jobs that the top 1% can't be bothered to and so on.
>The top 1% of society do most of the work, so they get most of the reward. That's pretty fair IMHO.
Wtf? Citations? Actually I'm not sure what kind of citation could possibly be provided to demonstrate such a statement was anything but full retard. How do you define "work"? Obviously not manual labor. I will venture a guess that you must be talking about CEO's, but there is no metric you could name that you can't find people lower on the food chain who outwork any CEO on.
>Human motivation requires that success be rewarded.
More Rush Limbaugh-esque nonsense. Rewards take many different forms. A college professor might take reward in the results of his research, even though he'll never be compensated like e.g. Larry Ellison who some would qualify as a blot on the IT industry.
Consumption isn't useful to society. Society is useful in that it makes consumption possible, but that's not the same thing.
How do you define "work"? Obviously not manual labor.
I imagine he meant production, rather than work. A developer (potentially earning $200k/year) who builds an application can be hundreds or thousands of times more productive than a secretary (potentially earning $20k/year). The same applies to a manager who streamlines a production process, a consultant who outsources labor to where it is cheaper, or any number of other similar jobs.
That seems absurd on it's face. If there is no one to consumer what exactly are the producers selling?
>A developer (potentially earning $200k/year) who builds an application can be hundreds or thousands of times more productive than a secretary (potentially earning $20k/year).
Exactly. Surely you're not under the impression that programmers are in the top 1%? Maybe one or two of them but the post I commented on contended that the most productive people are the most wealthy. Nothing could be further from the truth.
>The same applies to a manager who streamlines a production process
If you find a CEO who actually does this (has to be CEO to break the top 1% who are apparently so much more productive than anyone else). I've seen many CEOs ruin things in my career and I've seen many be nearly irrelevant but I can only think of a couple of CEOs who actually made a huge and obvious difference to their company (e.g. Steve Jobs).
That seems absurd on it's face. If there is no one to consumer what exactly are the producers selling?
So a loaf of bread is eaten just so that it can be produced?
Also, the developer I mentioned is in the top 3%, not the top 1%. Does that substantively change the nature of my assertion?
Lastly, when discussing CEOs who fail to turn a company around, you are comparing CEOs to other CEOs. Similarly, while most programmers are more productive than most secretaries, most programmers are not that much more productive than other programmers. (A few are, however, just as in the case of CEOs.)
Unless you believe that a company would be better off making the secretary into the CEO, it is ridiculous to assert that the CEO is less productive than the secretary. Less productive than the competition at his level != less productive than the janitor.
>So a loaf of bread is eaten just so that it can be produced?
Are you arguing in good faith here? Do you seriously believe that if we got rid of the "useless majority" in the US that the GDP would remain the same or even grow? Where would this extra wealth be coming from when the majority of the actors in the economy would be gone?
It's not that society exists to support people consuming, it's that the US' wealth is almost exclusively based on consumption. If you get rid of the consumers you get rid of... (fill in the blank).
>Also, the developer I mentioned is in the top 3%, not the top 1%. Does that substantively change the nature of my assertion?
Well, the conversation was about the top 1 or 2%, but even so. You mention a developer in the top 3%. Most developers, even most very good ones are not there. Is pg in the top 3%?
>Lastly, when discussing CEOs who fail to turn a company around, you are comparing CEOs to other CEOs.
No, I'm comparing what they accomplish to what they're paid. In my mind it would be pretty hard to do something worth a yearly compensation of e.g. 20+ million/yr.
For a founder it's pretty clear. He/she made something and received that level of compensation with a very small team so obviously what he/she did was worth that much to the market. But CEO's are generally shielded from market forces on salaries. Your "you are comparing CEOs to other CEOs" even seems to acknowledge this. If you aren't comparing them, how exactly are we arriving at the value they are providing?
>Unless you believe that a company would be better off making the secretary into the CEO, it is ridiculous to assert that the CEO is less productive than the secretary.
I never asserted that [1]. I concede that a CEO is very valuable and concede that he should be the highest paid person in the company. What I don't concede is that he should get hundreds or even thousands of times more compensation than any non-executive.
[1] I did assert that for a given task that a given CEO does I bet I could find someone paid a normal salary who works harder on that specific task but that's not the same thing and it was to address the patently ridiculous claim that the most wealthy people are also the hardest workers. Some are hard workers.
It looks like the OP doesn't like CEOs. Fair enough, what with CEOs raking in the moolah while the stock underperforms / short-sighted decisions that pander to the 'analysts' are taken etc.
But, the OP also seems to be making the mistake of implying CEOs == the rich. This is patently absurd. There are plenty of rich people who are not CEOs. How about Larry Page, Sergei Brin, Michael Jordan, Barack Obama, Senators of the United States?
Not at all, it's a needed and valuable position to be sure. And I have no problem with them being the highest paid person in the company, even by several times. I just think the vast majority are ridiculously over paid.
>But, the OP also seems to be making the mistake of implying CEOs == the rich.
No, I was singling this group out as a big source of inequality. Larry and Sergei are founders. Their wealth (initially) didn't negatively impact anyone else. Michael Jordan made his money directly from advertising which means he was paid what companies thought was fair [1]. Politicians get rich from corruption and gaming the system. The difference between them and overpaid CEO's is that what they do is obviously illegal or at least immoral. Lots of people herald overpaid CEO's as something to aspire to.
[1] This is different from a typical mid to large size company CEO who's pay is decided by a board (i.e. often totally shielded from any market forces). The board will mostly be composed of people who are themselves CEO's of companies for which this CEO is a board member...
Capitalism, and the income inequality it causes, has proven itself time and again as the most efficient organizing principle to create wealth. You may not like that but I don't think there is any way around that fact.
If you want to go to a less efficient organizing principle you will have to accept that there will be less wealth. If history is any guide the people who will suffer the most from there being less wealth will be the ones at the bottom, not those at the top. Be careful what you wish for.
I think a large amount of our monetary inequality is down to the way we've allowed our markets to become warped.
The numerous examples of CEOs who kill their company but still make out like a bandit. The traders who're supposedly part of price discovery mechanisms but who actually just seem to keep blowing bubbles. The musicians who're granted a government monopoly to sell something we already have too much of (pop music). These are alot of the top 10% and mostly they're doing so well because our capitalist systems are broken.
Even when you get to what you might think of as 'real' work. Advertising is generally not informative but emotive - thus these jobs mostly exist to distort markets. Lobbyists are in the same line of work but using government edict to achieve the same distortions.
Yes the EMH demonstrates that markets are efficient at distributing resources, but it assumes products are fungible, actors are rational and have perfect information.
Vast swaths of our economy are about stopping products being fungible (branding, copyright, patents, lobbying) and limiting how rational actors are (marketing, branding).
I agree. My position is not that capitalism is infallible, far from it, and the distortions of incentives you mention can and should be addressed. But you will find even worse excesses in nations organized around communism.
>Capitalism, and the income inequality it causes, has proven itself time and again as the most efficient organizing principle to create wealth.
Bizarre statement. Compared to what? Primitive cultures that didn't have money? At what do you mean by "wealth"? Fiat currency (in which case Mugabe has been the most successful)? Accumulated toys and gadgets?
Because if you're talking about anything else you're talking about capitalist countries. Sweden is capitalist, as in Denmark (despite both having over 50% tax rates). Hell, so is "communist" China.
The question is just how much regulation they use and where, but make no mistake: they are all capitalist systems.
I'm talking about capitalism as organizing principle: where people create wealth for society as a whole by pursuing their own interests. Wealth does not have to be money, I was talking about the economic definition of wealth. For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism. But it does cause income inequality as a necessary side effect.
Nations label themselves in various confusing ways, as you point out. China may label itself communist but it is quite far removed from using communism as an organizing principle to create wealth.
>For groups of more than a few hundred people (some say 50) this turns out to work better than any of the alternatives such as communism.
Citation please? Where has communism seriously been tried? Russia was trying a lot of things at the same time while simultaneously engaging in wars and dealing with their own in fighting. Communism didn't flourish in this environment, but what would? Capitalism itself depends on rule of law which was spotty at best.
>But it does cause income inequality as a necessary side effect.
Again, if you're talking about US levels of inequality I'm going to need another citation. I can't think of any developed country that isn't capitalist but I can think of a lot that don't have US levels of inequality.
>China may label itself communist but it is quite far removed from using communism as an organizing principle to create wealth.
Exactly. Granted, China does interfere in their markets a great deal (e.g. pinning their currency to the dollar artificially) but market interference isn't communism. It's a capitalist market their interfering with not a communist one.
> Citation please? Where has communism seriously been tried?
Actually communism works well on a small scale and even in the US it is practiced widely: the family. No one presents their kids with a bill at breakfast. There have been attempts of various success to scale this up in communities / kibuts / etc especially in the sixties. But everywhere it was tried on a nation wide level it failed, which was my point exactly.
> Again, if you're talking about US levels of inequality I'm going to need another citation.
I'm not claiming the US has the "right" level of inequality. They do have one of the highest inequalities and also one of the highest per capita incomes (discounting a countries with natural wealth like Norway). The OECD.org web site has all the numbers you are looking for. I'm not claiming that this is fair, I'm claiming the US has more wealth, albeit not equally divided. If you make things more equal there is a good chance you destroy wealth, and there is also a good chance less wealth hurts those at the bottom, although it can take a few years for the effects to show.
>But everywhere it was tried on a nation wide level it failed, which was my point exactly.
But I don't think it's been conclusively demonstrated to fail on it's own "merit" (so to speak) but rather due to "too many cooks in the kitchen" and/or outside interference. I don't know if this idea could every seriously work or not (I currently lean against), but I do know that people enjoying lots of power and wealth today don't even want to know due to the off chance that it might work.
>discounting a countries with natural wealth like Norway
Why are you discounting natural wealth? The US has natural wealth and a lot of size. We're either comparing it to other countries/regions or we're not.
>I'm claiming the US has more wealth, albeit not equally divided.
I would also question this. It's more or less true as a country but the US has 300 million people and 50 states, many of which being as large as European countries. So a better comparison might be US vs. the Euro zone in which case Europe has more wealth and it is more equally divided.
>there is a good chance you destroy wealth
There is some chance, but I think we're starting to see that it might not be the case and the opposite may even be true.
There's a difference between equality of wealth and equality of opportunity.
Genuine equality of opportunity is unequivocally something to be desired and should be the ultimate goal of any society.
Equality of wealth cannot and should not happen, because people are different. Enforcing equal wealth means limiting opportunity for those who want to take advantage of it. I would argue that this is a fundamental fact of human nature: even in a ideal communist or utopian system where there is no money, wealth would just take the form of respect and influence.
Everyone agrees that some wealth disparity is a good and necessary part of a healthy economy. But there is a lot more going on here than the straightforward "some people are older, some people save".
The charts and tables at http://en.wikipedia.org/wiki/Wealth_in_the_United_States#Dis... are very interesting. Of interest to many in the HN crowd I direct you to "Current work status of head". Note the immense disparity between "self-employed" and all other categories.