from Hacker News

Economic Inequality Is Worse Than We Think (2015)

by kimar on 6/7/17, 9:33 AM with 98 comments

• by Super_Jambo on 6/7/17, 11:04 AM

  Looking at the charts from Capital in the 21st Century [1] it's obvious that previous relative equality of wealth was largely due to the incredibly destruction of the two world wars. Factories blown up, colonial lands lost and war debts inflated away wiped out many fortunes.[2]

  So the reduced power of post war rich, combined with fear of communism resulted in the Democratic Socialist consensus that gave us high taxes and a big middle class. (And Vietnam but I digress).

  Since fear of Communism has eased and the rich have again massed giant fortunes there's little to stop them weakening the rules that prevent our Democracies from being bought.

  To me this is a compelling explanation for how you end up with Trump running against Clinton two historically disliked candidates. Almost everything in the news is just noise to the slow grinding power of wealth accumulation. Occasionally you get a glimpse as WaPo is bought by Bezos, Trump gets elected and Zuck clearly starts to form some presidential ambitions. But largely everything is a distraction to pull your eyeballs, after all that's what our media is paid to do.

  [1] http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014Fig...

  [2] Capital in Britain 1700-2010: http://piketty.pse.ens.fr/files/capital21c/en/pdf/F3.1.pdf

• by bjourne on 6/7/17, 11:09 AM

  I think everyone should read Nickel and Dimed (https://en.wikipedia.org/wiki/Nickel_and_Dimed) by Barbara Ehrenreich. She goes undercover and tries to survive working minimum wage jobs. I don't think I'm spoiling the book by revealing that she wasn't able to. After three months she were so deep in debt that she had to abort the experiment.

• by averagewall on 6/7/17, 11:36 AM

  I can tell this article is preaching to the choir because it doesn't bother to explain why inequality is bad. It just assumes that we agree it is. So why is it bad? Especially since most Americans don't even know about it, how can it be hurting them? Two possibilities I can think of: A) Jealousy B) Risk of revolution

• by throw2016 on 6/7/17, 11:49 AM

  These threads are always depressing on HN. They reveal a worrying sociopathy that one can only hope is not reflective of a wider pattern and limited to a small subset of readers here.

  This is why more power in the hands of SV companies like Google, Facebook and other VC funded startups become worrying as with power they will build a desolate soulless uncaring world.

  Devaluing other human beings is like cutting the branch you sit on, you only devalue yourself. You can't build a healthy country or society without a collective and empathy. What happens during harder times?

  One wonders if this is because of religious ideologies like calvinism and others in their ilk or some taking sociopathic ideologies by people like rand designed purely to appeal to egoistic individualism and the rich seriously.

• by autokad on 6/7/17, 11:53 AM

  Its really important to take a step back and see what they really mean. They are talking about NET WORTH. Its an almost guarantee that a fresh college student has a negative net worth, but does that mean they are poorer or worse off than an begger who just received a dollar? To use their logic, the day I broke 0$ net worth, I owned more than 50% of the nation's wealth.

  hardly. The only thing that video shows me is people dont really think very hard about their expectations between the very top and the very bottom.

• by trentnix on 6/7/17, 10:59 AM

  I've never understood using income inequality as a measure of the health of a society. As Milton Friedman said, the only place where people are equal is in a prison and in the grave.

  Milton Friedman on greed and income inequality: https://youtu.be/RWsx1X8PV_A

• by JCzynski on 6/8/17, 3:08 PM

  >The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%. The Walton family, for example, has more wealth than 42% of American families combined.

  >We don’t want to live like this. In our ideal distribution, the top quintile owns 32% and the bottom two quintiles own 25%. As the journalist Chrystia Freeland put it, “Americans actually live in Russia, although they think they live in Sweden. And they would like to live on a kibbutz.” Norton and Ariely found a surprising level of consensus: everyone — even Republicans and the wealthy—wants a more equal distribution of wealth than the status quo.

  You'd think they'd sanity check their poetic description against professed beliefs. If your metric says that most Americans "would like to live on a kibbutz", then your metric is wrong.

  What this actually shows is that most Americans have no idea what wealth inequality looks like. Ask the same group of people their predicted and ideal income inequality measurements. I predict you'll get the same numbers, plus a little noise.

  A closely related question: is asking in terms of percentages biasing? And the answer is: Very Yes. http://journal.sjdm.org/12/121027/jdm121027.html

  >Norton and Ariely (2011) set out to answer a remarkably important set of questions: How much inequality do ordinary Americans believe exists in the U.S.? And how much inequality do they desire? These questions have a range of important policy implications. However, the initial answers to these questions need to be reconsidered. Our findings indicate that the remarkably low estimates of wealth inequality given by Norton and Ariely’s respondents depended on the particular measure (quintile percentages) that was used. When asked to state quintile percentages for either household wealth, teacher salaries, or web page clicks, our respondents seemed to use an anchoring-and-adjustment heuristic leading to very similar responses across very different domains.

  >When respondents were relieved of aggregating their intuitions about inequality into quintile percentages, another picture emerged. According to this new picture, Americans do not tend to have extremely biased perceptions of current levels of inequality. Nor do they entertain an ideal of near-perfect egalitarianism. Rather they seem to prefer a world where the poor are not as poor as they are today. Further investigation into this more tractable ideal might provide a basis for workable policy prescriptions.

• by wolfgke on 6/7/17, 10:54 AM

  To me the worse problem is: While I can understand that it is an inconvenient situation to be poor (and I have some kind of compassion for them), I really cannot understand how one could even come to the idea to give rise to children if one is not in a high quantile of earning. If people applied this reproduction strategy consequently, poverty would simply die out.