A society with no technology has hardly any wealth gap.
People who can leverage multiple technologies can multiply their efforts. Mass communication, mass distribution and automation of all sorts.
But Wall Street bonuses are subsidized by the fact the government socializes their biggest failures. Bailouts just encourage them to take greater risks, leveraging debt in dangerous ways that will blow up the system again.
What's "no technology", because ancient rome was full of giant wealth gaps. Maybe if you mean hunter-gatherer societies, but i don't really know enough about them to comment.
Andrew Carnegie noted that the richest men in 1850's America were barely rich by the standards of the 1890, because of the technological changes and industries created, which minted huge fortunes.
Similar huge fortunes are made any time more technology breaks out and scales better. That's what he means.
Being able to force other people to do things is a way of multiplying your efforts. And we still HIRE people and delegate tasks to them.
And, as Melting_Harps pointed out, weapons are a technology. And so is communication and methods of organizing a larger society.
Storing grain is a technology too. Even agriculture is a technology.
But now we have many more ways to do this. If I write an app and millions install and use it, I am multiplying the amount of work I can get done for people and what they are willing to pay for it.
Much better for them than threatening them with my army.
Especially since I have been unable to find it. :-)
A poor, non-existing fanciful hypothetical argument that cannot stand on it's own, but is made to illustrate an ill-convinced point: because since the advent of anatomical Humans (~200k-300k) we see evidence of Man was using clubs or spears fashioned from wood, or arrowheads with the art in caves to go with it.
All of which fall under technology of some sort.
In short, its a poorly reasoned hypothetical to support one's own biases and perhaps disdain for tech and the inherent inequality that follows from those who benefit from it.
This is correct. More generally, there is absolutely no evidence that wealthier people do, on average, "leverage" technologies better. Ancient Rome is one example because while advanced technology existed, the wealthiest people were land owners taking in the profits of slave labor, not the architects and inventors who built temples and refined concrete.
Of course, the same is true for modern society. Even so-called "tech entrepreneurs" like Elon Musk do much better at seeking profits than "leveraging technologies" -- as paying people to develop technologies isn't the same thing as leveraging them for increasing the productivity of oneself, at all.
However, of course, the argument is hardly surprising. After all, much of the ideology of modern capitalism rests on the ideal of the Iron Man, the genius inventor who, by his smartness (and benevolent white masculinity) embodies the excuse for the exploitation of the Earth's natural resources, for the creeping destruction of our democracy and the huge disparities in wealth and power that go along with it. You just have to believe this is real, otherwise all you ever learned from Coca Cola advertising would be wrong, at that is too painful to admit.
> The wealthiest [Romans] were land owners taking in the profits of slave labor
Not exactly.
Crassus amassed his fortune first through conquest, and then through real estate speculation. Caesar and Pompey's fortunes were a mixture of family wealth and the spoils of war.
There was certainly a class of wealthy Romans that derived their wealth -- and Rome's food supply! -- from land worked by slaves (mostly captured in war and brought in from all over Europe). But the wealthiest were, by far, the political-military ruling class, who accrued their wealth through bribes and conquest.
I mean, you are right, but this is nitpicking and doesn't really relate to my argument. Exploiting slaves and robbing Gallia aren't that far apart, as far as technological sophistication goes.
> What kind of technology enabled wealth gap in feudal society?
In short: Weapons.
On the pre-gunpowder battlefield, the mounted, armored knight was roughly equivalent to the modern light tank.
It is incredibly hard to take out an armored knight with the kind of weapons or tools which would have been available to peasants or serfs, so it doesn't take that many knights to keep enough peasants in-line to build a very wealthy kingdom.
Religion during this era functioned much more like the modern civil service than what you or I would recognize as a church, and this also included both education and state security functions.
When firearms became commonplace, this game totally changed. Previously, weapons, even the longbow, took years to master well enough to be combat effective. With muskets, you can turn a group of ignorant peasants into a fighting force capable of taking on armored cavalry in a few months, possibly even weeks.
The Enlightenment, as well as our ideas about "equal treatment under the law", were the direct result of this force parity.
Following this reasoning, why didn't the enlightenment occur in asia, which had earlier access to gunpowder? Iirc the ottoman empire had portable guns before the west. And china had fire lances way before that.
“Gun” isn’t one single tech; you start with a canon that’s hard to move, dangerous to the user, and with a smooth barrel and ball that doesn’t have good accuracy.
Industry to make gunpowder cheaply and reliably rather than as one-offs for anti-castle siege weapons, and metallurgy and tooling to make the weapons hand-held and not prone to exploding in the operator’s hand, are what I have to assume old Asia lacked.
> What kind of technology enabled wealth gap in feudal society? It seems it was more about religion being used to subdue people.
I'd argue the advent of centralized currencies did more harm than any and all standing armies combined.
When you think about what a parasitical entity does in biology, you realize that simply killing a host is not evolutionary advantageous--their are 3 types of parasitism, not to be confused with the 3 types of symbiosis of which parasitism lies in.
So instead the parasite seeks to keep the host alive as long as possible in order to extract resources/life from it in order to propagate and spread itself and its DNA/RNA into Nature in order to infect other hosts and rinse and repeat.
Simply by demanding that peasants/serfs pay taxes and conduct all commerce in the coin that bares the issuers legacy has brought about so much of Human misery and perpetual serfdom that it baffles me what immense gravity their is in just the last 10,000 years since the supposed advent of Agriculture and therefore modern Society.
I've spent the last ~15 years of my life focused on this very topic, and while I have gained a great deal of insight and probably did a PhD's worth of research, it would take my entire Lifetime to really dissect all of this.
What do you consider centralized currency? I mean, Rome had coin, I'm not sure about egypt and ancient sumeria, but I know they had gold and plenty of slaves.
People have been warring and exploiting others since civilization... I can't say 10k years back before the move towards grouping in clans and cities...
But technological currency also could "right the wrongs"...
Imagine if each person could only have 1 bank account on a blockchain, verified by identity which is somewhat centralized but governed by a DAO.
This bank account is auto-taxed (tx fees), it has a max limit, say 999 million. So essentially, there could not be billionaires. Sitting coin is taxed as well after awhile, and estate transfers would be limited say max 50 million can be transferred to posterity. The rest is paid out to all users as a dividend.
The bank account would also pay out UBI to people based on the size of their wallet and their utilization. The more purchases, the more utilization the more your payouts from UBI. A large portion would also go towards a central "trust" for crowdfunding of businesses, mutual aid for emergencies, and for healthcare.
The DAO would invest in worker/consumer owned grocery stores and try to peg the value of the dollar to prices by owning some of the pricing. Basically start w/ competing with Amazon on some consumer goods via the internet, and brick/mortar stores.
DAO would work w/ devs to develop an algorithm that ensures not too much deflation/inflation, max limits, good taxation, good ubi, good burning/minting via staking protocol, etc... all while being open and transparent.
What's to prevent the people that deploy and maintain that software from modifying it slightly to exclude themselves from the cap, and diverting those sitting coins to their own accounts?
> Imagine if each person could only have 1 bank account on a blockchain, verified by identity which is somewhat centralized but governed by a DAO.
Are you seriously pitching me the DAO, like I don't know it was one of the biggest exit scams in all of Cryptocurrency History?
Listen, you ETH guys worship Vitalik and walk around pounding that koolaid that you give us all that work in the space a bad name, give it a rest... I mean it, money is something ETH just isn't good at. In fact, I still cannot see any value or a usecase in ETH to this day besides a bunch of pump and dump schemes that tarnish what BTC and other alts have done.
I was forced to use solidity and hyperledger at an enterprise level for a megacorp, tied what the ripple and stellar idiots that were brought on without my consent to a project I had been brought no I had no choice but to leave the project and the Industry for some time. We had to loss weeks/months of work to make something that had worked in BTC (multi-sig escrow) for years just because it sounded better if it had a functionality in those 3 useless alts.
To this day I still cannot believe Vitalik, a former Unsystem developer, didn't just make this all up and his hiding all of exit scam money to contribute to the BTC network in some way; none of it adds up at all, how do you from squatting and working on FOSS in Spain to being best buddies with Putin? Chances are had he just held onto a fraction of his BTC from back then they'd all be millionaires since 2017.
But to answer you question:
Centralized currency: The means to issue and control the medium of exchange in any system (eg: civilization, country) and impose arbitrary and even malicious actions to detriment of those who reject or oppose your currency. Often a role held by Nation States and by extension Central Banks that preclude said entities.
> Simply by demanding that peasants/serfs pay taxes and conduct all commerce in the coin
Just tell the peasants you're the hand of the god, and the god wants you to give their cows and grain to you. I think that worked pretty well for a looong time.
> Just tell the peasants you're the hand of the god, and the god wants you to give their cows and grain to you. I think that worked pretty well for a looong time.
It did, until it didn't and you can read all about peasant revolts in a book all you want, which led to things like the Magna Carta.
But I lived in Italy and worked on a farm that sprawled for many KMs in what was a feudal lord's manor and it was baffling just how much absurd complexity from a supply chain and logistics view tending that much land entailed since it was so fractured and disrupted by hills and valleys, and the amount of bureaucratic BS that had to be created and subsequently put up with in order to survive as a serf: it wasn't just cows, wine or grain that had to be rendered, but actual members of your family were taken into the homes as slaves, physical or sexual.
I did the mistake of watching Passolini's Salo when I was there, and the level of somberness still stays with me to this day [0] when I think what horrid forms of cruelty Humans are capable of when they amass so much power and wealth. And this was just a modern take on things, just pondering the things they did openly during the dark ages and even in the height of Rome can send me to some dark places.
The lack of technology. With not much surplus in terms of food and resources children of serfs and peasants have to work and never do much else meanwhile nobles learn to read and educate themselves. And even with reading, without the printing press, all copying was mostly done by the Church, which means no Voltaire, no reading of the Bible to find that indulgences are BS and just a lack of awareness that things could be better.
> Bailouts just encourage them to take greater risks, leveraging debt in dangerous ways that will blow up the system again.
In practice, this hasn't happened. As a whole, financial institutions are more risk-adverse than ever. Keep in mind, that they don't want another Dodd-Frank.
> As a whole, financial institutions are more risk-adverse than ever.
And this includes Hedgefunds, like Melvin Capital, Citadel and the like? Doesn't the Robinhood and GME thing DIRECTLY contradict what you're saying?
Furthermore, they are over leveraged on real estate in teh US and BlackRock accounts for every greater RE holdings than post 2008 housing crisis.
I'm not sure what you are talking about, Dodd-Frank is like Glass-Steagall, they'll just make up rules when the bailouts are required (Goldman Sachs 2008), just like airliners laid off a large majority of their staff despite the bailouts in the first Trump bailout being issued to ENSURE they wouldn't and they took the money either way.
> And this includes Hedgefunds, like Melvin Capital, Citadel and the like? Doesn't the Robinhood and GME thing DIRECTLY contradict what you're saying?
Meme stocks are a thing born out of social media just very recently and will most likely not happen that much given that now edge funds are aware of it and have probably already deployed the appropriate counter-measures.
> Meme stocks are a thing born out of social media just very recently and will most likely not happen that much given that now edge funds are aware of it and have probably already deployed the appropriate counter-measures.
Tesla was called a meme stock, and it turned Elon into the World richest man (depending on the day or week) and he went on to invest in BTC and then pump DOGE in defiance of the SEC who stand on the sidelines with the credit agencies who arbitrarily enforce the 'law' and 'regulate' when it see's fit.
How exactly are you arriving at your conclusion with any reason or logic behind it?
Meme stocks, an overly used and frankly absurd notion as it is all can be seen that way since it's all just smoke and mirrors hiding a very pernicious casino business model at the end of the day, but lets say they are; what stops any of them from stopping them from what was once called 'vigilante investors' in the early 2000s?
Hell they couldn't even stop ponzi schemes like Bernie Maddof, or outright fraud like credit default swaps that allowed the World economy in 2008 to blow.
If anything it shows just how entrenched the politicla class and the financial class collude to extract wealth from Society with little to no punishment, think MF Global.
Being called a meme stock doesn't mean being a meme stock and popular figures influencing stocks is nothing new. Tesla was never really a thing on WSB and it being overly shorted never really was a motivation to invest in it to "screw over the edge funds".
> How exactly are you arriving at your conclusion with any reason or logic behind it?
I explained my logic. Now that using social media to find and use over shorted stocks to make money has made its way to mainstream culture, fund managers will take this into account.
The alternative now is to disconnect the systems from the possibility of contagion, but the nature of crisis is essentially an acknowledgment of a failure to achieve in those efforts.
The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot of suffering.
But on the other hand, the rich will lose more, and during the rebuilding a different set of people will gain the upper hand and end up on top.
It's hard to get the political will to actually allow what needs to happen to fix wealth inequality.
> Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich).
Nope, it's a wealth transfer from those who refuse to invest to those who invest and if you fail to invest you deserve it because you are not creating jobs and therefore make the lives of the poor and middle class worse.
>Deflation is the same thing in reverse.
No, since you are not investing your savings you are not creating jobs, you are directly responsible for causing unemployment. Please tell me, if you put cash under your mattress how is that cash supposed to employ anyone?
>Makes it pretty clear why the government is fighting deflation so hard.
The government is fighting deflation because it doesn't want unemployment because it doesn't want the economy to shrink because that requires the population to shrink. Do we just "cull" those useless people by killing them or sending them to Australia?
Now, lets talk about the real damaging wealth transfer. Low interest rates are a wealth transfer from people who invest into safe investments (bank accounts) to people who invest into risky investments (stocks and housing).
Interest rates are a function of inflation. Low inflation means low interest rates and therefore a higher wealth transfer from the poor to the rich.
Don't forget that the government on purpose disconnected the currency from precious metals (gold, etc.) in order to facilitate usurious lending, which allows the government to print money at will to pay off its debts, inflating the currency at the cost of the hard work of the citizens.
Currency collapses, bank defaults, asset freeze-ups, international trade stoppage because of debt/credit changes, strikes and work stoppages, demand collapses.
Sometimes do nothing is fine, like the video game crash of 1983. But when it's systemic and big, that strategy has collapsed entire countries
Going by absolute value, perhaps, but that's nowhere near the whole story. Yes, if owners of a megacorp lose $100M, they've lost more than all their employees combined - but they still have a $1B between them in other assets, offshore bank accounts, whatnot, so they stay rich, while their employees suddenly find themselves in a life-threatening emergency.
I can't think of a single market crisis that kicked down the richest people to the level of the poor. Wars and revolutions, yes, but not a market crisis. The more money you have, the easier it is to protect it - and marginal value of money grows sublinearly, so losing even 50% of your wealth hurts less the bigger that amount is. On top of that, connections and networks don't go away in a crisis. Which brings me to:
> during the rebuilding a different set of people will gain the upper hand and end up on top
One way for a competing upstart to get ahead of the other upstarts would be... to hire some of the "old guard" in advisory roles. After all, the crisis doesn't suddenly invalidate the ex-top people's knowledge experience. On the contrary, not only they still have relevant experience that an upstart doesn't, they also have benefit of hindsight and connections. So while the names of the companies and their CEOs may change, I'm pretty sure many of the old players - ones that didn't choose to retire and enjoy their riches - will quickly find their way back into the game.
As for their employees, maybe they'll find their way back to their original positions too. Some day. After they dig themselves up of debt. That is, if the experience of having to give their kids heated ketchup packets for dinner didn't completely break them.
--
EDIT: To be clear: revolutions and wars aren't the answer either. A big enough wave of death and destruction will be enough to grind down the richest too, but that's only a way to re-roll the dice on who's the rich and who's the poor in the next round. And the poor, again, suffer disproportionately here.
For some reason this is seen as controversial these days, but I honestly believe that stability is something that works in favor the poor, not against them. It limits what they can do (the dreaded "status quo"), but it also puts a limit on losses. As long as the society is stable, we can try to make steady adjustments, even if it's a grind. If it starts to collapse, everyone enters survival mode, and everyone is much worse off. Even those who survive the chaos and chance their way into the top will have to live in the smoldering remains of their previous civilization, which is almost surely worse than what they had before.
(Worth remembering we all have more to lose now. 1000 years ago, life before and after war wasn't much different. 70 years ago, the difference was stark. Today, it would be greater still. All the quality of life we enjoy today is very far from "ground state" of humanity, very quick to undo, and very hard to restore.)
If you are going to make the argument that the rich losing large sums of money doesn’t matter much, couldn’t you use the same line of reasoning to argue that the rich gaining large sums of money doesn’t matter much either?
My argument is that if you take a billionaire and take away 90% of their wealth, they're still filthy rich. If the way you do this is by taking away 90% of everyone's wealth, you'll make everyone except the rich suffer badly, and when the dust settles, the rich will still be ahead. Allowing for large-scale failures like these only creates lots of unnecessary suffering and burns a lot of money.
As for whether "the rich gaining large sums of money doesn’t matter much either" - if you're asking if it doesn't matter much either to them then yes, this is the flip side of the marginal value of money point. A person with $1000 in the bank will be much happier about getting extra $100 than a person with $1M. It's one of the core (if not the core) argument towards reducing income inequality - moving some money from the rich to the poor is a net increase in happiness and value in society.
One strong caveat being, building things that require big capital expenses, like factories or specialized machinery or infrastructure. These things require being able to front up a lot of money, and at the same time, they don't mesh well with democratic decision-making. So you want to have some way in a society for an individual, or a small group of individuals, to be able to take control over large amounts of money - otherwise factories and bridges and utilities just won't happen. This doesn't necessarily mean you have to allow that small group of people to capture the entire wealth they generated, though.
That's assuming the system can fix itself, which generally isn't true :). If a boiler in your bathroom maneuvers itself into a runaway positive feedback loop, it won't fix itself. It will explode, sending superheated water and shards of steel and plastic across your house. The smoldering remains of the PID controller that drove the failure won't recollect themselves and reweld the shredded tank.
A system that fails can be fixed by the system in which the failing one is contained. That same outer system can also work to prevent the inner system from failing in the first place.
(And sure, in the analogy, the "outer system" is the homeowner that can buy a new boiler. But wouldn't it be better to make sure the original boiler can't move out of its control envelope? Then the homeowner wouldn't have a bathroom to renovate and a pet to bury, after it caught a flying pressure valve in the eye.)
When has such a policy actually worked? Do you have any clean historical examples at a large scale?
Panic of 1873 is the closest I know of and it didn't go very well
I'm not taking a stand. It's just that macroeconomics is hard and counterintuitive, especially when we're dealing with something large enough to have currency implications
My counter example is slavery, which would lead to a very big wealth gap.
I think that large slavery state or system would need metal working, but will guess it has existed without.
While what you point out is definitely true, a very important cause of the wealth gap in todays world that barely anyone talks about is the accepted engagement in lending money with interest (i.e. usury). It's heavily built in to the society today. It's not for no reason that this practices (along with derivative practices) is prohibited in the major 3 religions.
A lot of companies (and the jobs those companies created) were built on top of that usury and the workers who lent out their money were even compensated for that!
That doesn't justify the immorality of engaging in usury, it's like saying whaling is banned, but there are people who need to feed their families - we already know that.
A superior and not immoral model is investing in said companies, so if they succeed both the investors and company owners profit, otherwise they both lose. It's proper risk sharing.
Taxpayers not only recovered everything from the 2008 bailouts, they actually earned a $15.3 billion profit. How is that “socializing their biggest failures”?
From [1]:
Early estimates for the total cost of the bailout to the government were as much as $700 billion, however TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6%...
Well, they shouldn’t be angry at all, because they got a $15 billion profit. People are a bit too tough to please if that makes them angry, especially in light of the fact that we will be paying for the most recent stimulus packages for generations, and they seem to have public support.
“Perhaps” isn’t a data point - it’s speculation, and is thus irrelevant. The money was recovered at a $15.3 billion profit. If they had included a number and a reference to the data backing up their guess that “perhaps” it might have been a tiny inflation-adjusted loss, I would have included it.
I’m not sure what your point in bringing it up is either. The point is that the bailouts were fully recovered, and that is undisputed. HN loves its pedantry, but there is little value to this particular incarnation of it.
There's no such thing as infinite money. Cash just symbolizes value its not actually "value", and you can't make infinite value by just printing infinite cash.
The banks don't have to manufacture the product. They just sell it. The easy money is the profit margin on the lending activity because the profit margin is usually constant, regardless of the state of the economy.
I'm not saying banks are evil but they do have it easy because they are core infrastructure that people don't want to live without.
No I think that it's easy for people that got the bailout to make a profit while being flush with cash in a crisis which they themselves caused, with no repercussions. Printing that money devalues everyone else's money, so it's basically a transfer of wealth from everyone to wall street.
>>Taxpayers not only recouped everything from the 2008 bailouts, they actually earned a $15.3 billion profit. How is that “socializing their biggest failures”?
Taxpayers should have behaved like hedge funds behave with one another...merciless. Want cash cause no one else loans to you? Sure, hand 95% of the business. The difference between what I said and $15.3 Billion is the gift.
The government is not a hedge fund. It has no expertise in running businesses. Had they done what your are suggesting, the markets wouldn’t have reacted the way they did, the companies would have gone bankrupt under government mismanagement, the economy would have continued to crater, and not $1 of the money would have been recovered.
It turns out that the architects of this bailout were very smart about the way they did it. Also, relative to the recent stimulus packages that have no hope of ever being recovered, the numbers from 2008 are quaint and the conditions under which it was given were extremely fiscally responsible.
>>Had they done what your are suggesting, the markets wouldn’t have reacted the way they did, the companies would have gone bankrupt under government mismanagement, the economy would have continued to crater, and not $1 of the money would have been recovered.
Nah. Keep the management, they run the business not owners. In fact give them raises and bonuses. It's not like managers had other employment options.
But either way, they did get a lifesaving bailout, regardless of the merits or whether US got their money back
they did get a lifesaving bailout, regardless of the merits or whether US got their money back
They did, and given the systemic importance of the companies that received this money, that was a gift not only to the companies, but to the entire economy. We wouldn’t have an economy today had they not done this. Today we are capable of giving away trillions with no hope of recovery in part because of what was done in 2008 - and it was done at no cost to taxpayers.
The government isn't supposed to run the company. It's supposed to get an ownership stake to compensate for the risk it takes on. The bank would just issue additional non voting shares and sell those to the government as a punishment for the share holders of the banks and teach them a lesson to not put their money into mismanaged companies.
They wouldn’t have taken non-voting shares if this were the stance they were taking. When the government owns a controlling interest in a private company, investors will shy away from it. Even if the government doesn’t run the day-to-day operations, they can replace management at-will with people who will obey commands based upon political interests of the ruling party. That is an unacceptable risk to many investors. Ultimately, if they own it, they run it.
The point is that the outcome would not have been the same, because investors would not have treated the companies the same.
So what? I am fully in support of increasing minimum wage but I've been seeing articles like this for weeks and it is frankly garbage ragebait that I hesitate to call journalism.
I agree that concentrating on living standards is a good idea, but I also think massive wealth and income inequality is a barrier to truly free society. I hope it continues to stay in focus alongside other issues.
billionaires are criminal by definition, and their existence proves the absence of a (econ 101 style) market in whatever industry they came from. we can only fix this problem through efficient regulation of monopolies.
Sadly, billionaires aren’t criminal by definition (no such laws), but the existence of billionaires sure does cut against the idea of a perfect market (in a “perfect” market there cannot be profits).
I've had this exact discussion with friends who study economics. The idea is that in a market with perfect flow of information (i.e. fairy land) then the profits tend to zero, I don't think this is a model for much of the real world if any.
That makes as much sense as people working for nothing. I don't see any explanation for profits tending to zero, either.
I wonder why "perfect" markets are even a thing. It has no applicability to actual markets. It offers no insight on actual markets, and offers no useful predictions about markets. It's about as useful a model as the Monopoly game is - i.e. none.
I've seen many people claim that a "perfect" market is a requirement for free markets to work well. This isn't remotely true. "Perfect" markets and free markets have nothing in common.
"Perfect" markets just seem to be a strawman put forth by people who argue that since "perfect" markets are unachievable, therefore free markets are no good.
That assumes infinite number of competent, driven and well funded market participants that jump on every opportunity or inefficiency .
The real world is anything but that. There is very small number of competent driven people and vast ocean of opportunity and value waiting to be created. If you deliver the value people will be more than happy to pay. Maybe someone competes with you if the field is ripe enough or maybe not if they choose another one. There is a lot of fruit out there and we are far far away from the point where people need to compete for the same one.
Have you seen the realstate market? Competition is all there is. The food market, probably the oldest market, is full of startups and more enter the space each year.
There is no shortage of untapped competition in any industry.
Unfortunately it's not possible to get major cities to work, at least not the Californian ones. The second best answer is to build more major cities. The irony of course is that the next major city won't be in California either.
in a functional market, competition for profit exists. because billionaires exist, we know they control their market, squeezing out competitors through artificial and illegal means.
To be fair, this would encourage super rich people to have more children. Not a bad outcome but it's still not the silver bullet that everyone thinks it is.
>their existence proves the absence of a (econ 101 style) market in whatever industry they came from.
Actually, it proves that a single company can serve an entire market and by that extension a single CEO can serve an entire market. It's not that the CEO is super productive, it's just that there is no need for a second CEO.
You're right about monopolies though. One single company serving an entire market will just cause inefficiency over the long term.
Most, if not all monopolies are government granted in one way or another.
As far as criminality goes, billionaires are the least criminals of us all because they've been able to use and sometimes change the law to make them not fall into the definition of criminality.
In short, what's needed is less "regulation" as it is the main defense mechanism monopolies employ to stay monopolies.
No it doesn't. I'm not pro socialism, communism, nor capitalism (as defined today). However, we can have proper societies with great standards of living, while having extremely rich people (i.e. billionaires). It's been done in the past, and no reason why it can't be replicated other than people not wanting to address the true underlying causes of the messed up financial system we live in today.
It's not just that Joe is rich while Bob is poor. Joe is rich because Bob is poor. And vice versa. It can't be any other way. Grasp that and you've got the whole thing. Sure, focus on living standards and opportunity, but those are just two more metrics that illustrate the same inequality.
I honestly don't see it that way. The current wealth inequality factors don't have anything to do with it. The economy is merely broken, not inherently unfair. However, the way it is broken is unfair and fixing the economy (get inflation back on track) will make it fair again.
Say n = 3. You've got 3 people, all of whom are equally wealthy. Now make one of them richer. The other two are now poor. They weren't before, but now they are, by comparison if nothing else. It's a wealth distribution. You can't have an upper end without a lower end. Notice I'm not even insisting that the rich guy gets his wealth from the other two, but if he did, then the two are literally poorer as well.
Good point, I agree with the basic principle. But in your example you made 33% of the population richer. If you made richer a single person out of 1 million, would the other 999999 be equally poor as in your previous example? I'd say they wouldn't, because the overwhelming majority of those they interacted with would still be as wealthy as themselves. They might even never cross paths with the richer one. So yes, slightly poorer but almost imperceptibly so.
Anyway, the clickbait title seems to imply some (inverse) connection between the two figures- minimum wage and Wall Street bonuses. Yes the bonuses have grown dramatically, and yes there can be something wrong in the fact that minimum wages are so low; but trying to create a connection between the two is moral blackmail.
I agree with you, but I think your comment could be improved by pointing out the specific issues with the article, e.g. wall street bonuses bring a cherry picked metric that is easy to manipulate.
They article picked 1985 as the start date. The 80's and 90's saw a hedge fund boom, so it's not surprising that pay followed, and there was a shortage of people able to do that specialized work.
Minimum wage is a price floor that mostly applies to unskilled labor.
It does point out disparities, but minimum wage not tracking CPI and whether minimum wage is and appropriate and effective policy tool are more interesting discussions. Or on the Wall Street side, does the incentive structure serve shareholders' best interests and the best interest of the financial system. The comparison makes for good rhetoric, but they actual causes are very different, so it just makes intelligent debate harder.
There is a psychological component to minimum wages though. A small increase every year would cause companies to renegotiate salaries frequently. A sudden increase will definitively cause underemployment.
Wall Street compensation has become more and more bonus heavy over time (i.e., the salary to bonus ratio has shifted even keeping total comp fixed), so the methodology here really just does not make sense on top of the other flaws folks are pointing out.
> I’m being flippant, but there really could be constructive share ownership amongst the general population.
If only everyone could work in adtech and digital surveillance, we'd have endless growth and high profits throughout the world! But that's obviously not the case, so how would somebody working for trucking company arrive at the same compensation that somebody in adtech would?
Stories like this are clearly intended to support the politics behind raising the min wage...and Business Insider is a known propaganda machine for the left.
What the story intentionally doesn't point out is that a hike in minimum wage wouldn't impact Wall Street bonuses whatsoever (or business exec salary/bonuses). The cost would be shifted to non-unionized middle class workers, such as software devs via wage stagnation and reduced benefit quality while at the same time inflation would soar causing reduced purchasing power of that salary.
You think people at the top care if there's one big lower class?
I don't think anyone will deny the presence of inequality, but cherry picking the highest possible number to compare against doesn't really help anything.
Because the math is so easy, I calculated a couple other minimum wages (1985 vs 2020):
- $21, if it kept up with software engineers.
- $17.40 an hour, if it kept up with teachers. (Interestingly, only $16 if it kept up with superintendents).
- Doctors are the real losers. Minimum wage would only have gone up to $9.72.
Actually, picking the highest possible number helps show the massive disparity. I’m curious as to why you say it doesn’t help anything, or why it’s cherry picking.
First, the last 50 years have seen a series of "one off" increases to global labor supply. Between Asia and former communist countries, American workers have been forced to compete in an environment dominated by the largest globalization of labor ever. That competition pushes wages down for anything that can be done outside our borders.
Second, as the issuer of the world's reserve currency during this period of massive globalization (while all this increased trade is creating a demand for dollars overseas), America's financial sector is involved in exporting dollars the way Norway exports oil. So Wall Street is sitting at the center of an incredible boom driven by international forces + the increased financialization that has come from having an artificially strong dollar (kind of a Dutch Disease for us, where the "sector" thats growing is the dollar-printing sector). Most dollars are printed using private debt, so Wall Street is basically the Saudi Arabia for dollars.
Given these two forces, of course Wall Street compensation was going radically outpace the minimum wage. (Not that I would/could have predicted that in 1970 if I had been alive then.)
When it comes to public policy I think it's better to focus on how things turn out in reality rather than how they were intended or designed to turn out.
Somebody earning pennies more than minimum wage would be excluded from this analysis, despite the fact that they’re earning poverty wages and would benefit from an increase to the minimum wage.
> the Congressional Budget Office released its analysis of the Raise the Wage Act of 2021, reporting that increasing the federal minimum wage to $15 per hour would affect 17 million workers who are currently making below that. Another 10 million additional workers earning slightly above $15 per hour would be affected.
>, despite the fact that they’re earning poverty wages and would benefit from an increase to the minimum wage.
It could lose them their job, or not. You don't know that. Nobody knows that. That's why if you must raise the minimum wage, you do it slowly, step by step.
While it's true that very few people earn exactly the federal minimum wage, which is what your source is discussing, it's probably worth mentioning that "Currently, 29 states and D.C. have minimum wages above the federal minimum wage of $7.25 per hour." [1] Saying that "very few people earn minimum wage" while referring to federal minimum wage statistics is not particularly informative - and even the statistics you cite are somewhat misleading, as they refer to people earning the federal minimum wage or less, although it's implied that those earning less are mostly tipped workers.
It turns out to be somewhat difficult to find statistics for which fraction of workers earn their state's minimum wage or less; focusing just on California [2], it seems that at least 4%, or ~630,000, CA workers were earning at or below the CA minimum wage in 2017. In other words, the 1.3 million figure given as "the number of minimum wage workers" is almost certainly off by a large factor, once you take into account different minimum wages.
[2] https://www.labormarketinfo.edd.ca.gov/data/oes-employment-a... the 630k figure comes from looking at the industries in the "State of California" summary sheet that have a "25th percentile" wage of 10.50 or less, then taking 25% of the workers in those industries to get a lower-bound estimate.
From the reports fine prints: "Estimates of the number of minimum wage workers in this report pertain only to workers who are paid hourly rates. Salaried workers and other workers who are not paid by the hour are excluded, even though some have earnings that, if converted to hourly rates, would be at or below the federal minimum wage. Consequently, the estimates presented in this report likely underestimate the actual number of workers with hourly earnings at or below the minimum wage."
Could it be that the structure of labor changed since 1979 with more salaried worker at minimum wage?
FWIW, you can't be classified as salaried and exempt from FLSA if you're getting paid minimum wage and working 40 hours/week or less. The federal limit for salaried exempt is equivalent to like $17/hour, and many states tie it to a multiple of minimum wage (e.g. 2x minimum wage in California)
If there was a significant % of salaried workers at minimum wage that would be quite a story. But this seems rather unlikely, unless you have some evidence to the contrary?
You realise your point is moot right? The economic arguments against the minimum wage rely on the idea that it's a necessity to underpay for business to function. The less people underpaid, the less strong the argument for having to ensure a low or no minimum wage.
The economic arguments against minimum wage are that you are not underpaying the employees in the first place. If the only job these people can do pays minimum wage then that is how it is. If they could do better jobs they wouldn't get paid minimum wage. Therefore the minimum wage either does nothing and is purely cosmetic or when it does something it prevents the labor market from functioning properly.
It's like rent control. It's just a tool for politicians to deflect blame and shift the problem elsewhere for the benefit of their own careers.
Meanwhile a job guarantee would actually solve the problem by putting a salary floor but since everyone is asking for a minimum wage increase it is not going to happen.
My "point", if there was any, is just that very few earn minimum wage. Therefore comparing <random high earner group> to minimum wage is pointless and kind of strange.
More meaningful would be comparing to the first quintile of wage earners.
Well, without standing on one side or the other, humans typically do have tools to attempt to predict potential outcomes. For example, you normally would not put a fork into a socket while telling me you can't decide what to do without doing it. I am not saying analogy is applicable here, but there are some studies suggesting simply 'raising' minimum wage will not work the way some proponents argue.
Sure. There is no denying that. I will only add that the predictions I think you are referring to never made it beyond numbers on a sheet ( bond buying and the like ). Supply increased, economy was stabilized, but money touched main street directly.
No, the true minimum is -infinity, and $0 is quite common. The legal minimum wage just excludes a particular range. Jobs that would naturally be in that range get pushed to one side or the other, with working conditions adjusting to compensate.
Some jobs go to 0, called "volunteer work" or "unpaid internship", and they get friendly conditions. There might be very flexible hours, a nice break room with delicious snacks, and work-sponsored parties.
Some other jobs go to the legal minimum wage, with work conditions degrading. The employer becomes more demanding because that is possible at the increased level of pay. Hours become inflexible for the employee, but flexible on short notice for the employer. The break room gets bad-value vending machines. People get fired for trivial things.
Especially the last one is simply not true, because firing a minimum wage worker is more a problem for the employer than the employee, who can find another such job within a week.
I really don't undressed what you are trying to say. Can you explain why, the fact that this is the minimum wage and your not supposed to stay at it has anything to do with this?
The minimum wage hasn't kept up with other things (it feels to me that it should be $15-$25) and the overall trend of inequality is undeniable (the very top, both in terms of wealth and income, have done much better than the median person, who in turn has done much better than those near the bottom) but comparing minimum wage to bonus is highly misleading, as Wall Street comp has moved increasingly to a bonus-heavy structure, which means bonuses have grown much faster than salaries. And this is just an incredibly misleading way to frame this:
> But those paydays have been skyrocketing for decades. Since 1985, Wall Street traders' bonuses have grown 1,217% - and that's just part of their overall pay, which was more than $406,000 on average in 2019, according to data from DiNapoli's office.
There's insinuation here that bonuses have grown 1,217% and since that's just part of the pay, Wall Street employees did even better than what's implied by the growth rate But that's just bad math - the salary had to also grow by the same rate in order for the overall pay to have the same growth rate. I don't have this data but they probably do and it's unlikely that they would've cherry-picked the bonus data if the salaries show the same trend.
Also, given the increase in automation and outsourcing of non-critical functions to less expensive areas (even moving back office functions to New Jersey would contribute to the trend), it's likely that there are fewer low-paying jobs on Wall Street as compared to the past. For instance, if you look at the source data linked to in the article:
The total amount grew by less than the amount per person from 1985 to 2011 (despite Wall Street being a much bigger part of the economy that employs far more people) and this means the sample in 2011 is likely biased towards a more elite subset of finance professionals.
I work at least 50 hours a week. A teenager at MacDonalds now earns a good fraction of my income if they work the same hours. Despite my 4 year degree, near decade of experience and the responsibility's that I hold.
This sort of thinking is corrosive to society at large. It’s not a zero-sum game.
But, if you must, take heart in the fact that the teenager will never make more than $minimum in that job, where presumably your income will continue to rise commensurate with experience.
That's not corrosive at all. If anything, it's the kind of thinking that leads to recognizing one's worth. No person should stay in a job in which he is of the view the he is not commensurately compensated. Nor should he wait for some vague future in which that might the case "eventually". This was the point of raising the minimum wage in the first place. Why would you think it just stops there?
In many ways he is losing out. Rent for example increases with ability to pay (in NZ at least), so if govt raised welfare payments and min wage, his rent could go up without seeing a wage increase.
I do think it's OP fault for not taking action though, not the govt. It's like my dad who has complained he is underpaid for the past 10 years yet still doesn't switch job..
His income will continue to rise but so will cries for progressive taxation on income or assets.
It's a never ending story of jealousy and wealth inequality.
Market signals can't go backwards in time so I feel like everyone replying is looking at this the wrong way. The learning here is that some fraction of new versions of this gentleman or lady xupybd will have a stronger market incentive to not go to the trouble and risk and just go for the guaranteed $20/hr making more competition for the $20 hr no education jobs. Maybe the higher IQ people will push average teenagers out of such jobs. Finally the market will equalize when the supply for 4 year degree jobs drops and they are forced to increase the pay.
Exactly this. I was working low wage jobs 6 days a week. That made me realize I couldn't support a family living like that. I went and got an engineering degree.
Maybe not McDonald's but something outside with very little responsibility and a bit of exercise would be nice.
Don't get me wrong I love to code and would probably find my self doing that again but every crunch time of an unrealistic deadline that had nothing to do with the effort required to complete the project has me fantasizing about spending six months in the summer picking fruit.
Everyone who works hard has a right to live comfortably and not in fear of some giant cost coming forcing them to squirrel away piles of money.
Stem should be about building tomorrow and making a better society, the personal fortune building has polluted the field and is distracting us from more important problems. Having a $500,000 stock portfolio shouldn't be mandatory for a decent life.
There's a reason for our technological stagnations mapping to the rise in inequality.
STEM jobs generally pay more than non-STEM jobs, and I'd say graduate jobs range between $20-26/hr.
If someone without a degree is making $20/hr and you're making barely more than that, why the hell did you waste 4 years to get a degree? I know someone who is in this exact situation.
I'd honestly still be a programmer if the pay was poor. In fact, I do it for free quite a bit and I enjoy it more.
People are motivated by more than mindless greed and universities shouldn't be transactional skills training camps. It should be about building an enlightened and educated society.
College tuition in New Zealand are not structured like the United States. It's much more reasonable
But I refuse to be confined by the structures intentionally legislated by decades of Austrian economic policy to try to convince me that there is no alternative.
The debt could be erased, for example, if someone chooses a position of high societal ROI, such as say, an urban planner. Reward people if a need of society is satisfied.
Things can trivially be reshaped to encourage what we want instead of us always feeling pressured to do what we don't. Conforming our laws and incentives to a particular ideology wasn't necessary, it was a choice we can change.
Considering the low yield on treasury bonds it would be foolish to not invest that money into higher education. After all, if you just let it sit there it is going nowhere. It's neither going to employ people today, nor ensure that workers of the future are highly qualified.
The fact that you mentioned Austrian economics is actually quite relevant here. All economic theories are ideologically driven because there is no meaning of life. There is no objective metric to optimize for. Austrian economics' goal is the minimum possible economy. Inflation driven ideologies have the maximum possible economy as their goal. We get to choose what we want for ourselves and we definitively should use that power.
I assume your objection is that this is unfair to you who spent all that time and effort into getting your current role? What would you have done differently had you known the future would be like this?
So, McDonalds employees should not have a good salary because... It hurts your feelings? I've seen better arguments.
You are playing exactly in the game that the extremely wealthy want you to play. Being disdainful or even hateful of the teenager that flips burgers all day long, while they delegate their entire work, do nothing but lines of cocaine and jet-ski while you kill yourself working 50 hours a week (most likely for them, too), earn hundreds to thousands of times your salary, yet the shit job that is making burgers is the problem?
> You are playing exactly in the game that the extremely wealthy want you to play.
The extremely wealthy probably don't care that much - they aren't reducing their income to afford an increased minimum wage, they're reducing yours.
(Assuming, of course, that you are not part of the extremely wealthy).
When a business's costs increase, they pass it on to the consumers (you). When they can't pass it on any further they reduce their costs, with the easiest cost to reduce being employee costs. Since they can't reduce the cost of minimum wage, they'll reduce the costs of the other employees.
You can't rein in the excesses of the extremely rich by mandating minimum wage. You might be able to do so by regulation (tax rules, maybe? Clamping down on tax havens would do more to even things out than any other step you may wish to take).
50 hours a week sounds brutal. I don't see the problem with the teenager (or adult with family) earning $20, but maybe you should consider working somewhere with shorter days?
Despite my comment I like life here. I wasn't really trying to give more than a data point from another part of the world.
My personal view is that a strong enough economy should be able to provide most people with a better than minimum wage job. But if you bump the minimum wage too high you simply raise the price of everything.
NZ pay in general is very poor compared to other developed countries in my opinion.
When you compare SF tech salaries to NZ tech salaries it's just ridiculous though. I would say SF TC is 4x or more than NZ salaries (Stock grants are not common) for similar positions.
SF salaries are ridiculous compared to anywhere else.
Not even Switzerland can compare.
The only places where you can earn just as much as you do in SF is consulting anywhere in the rich world or those few positions in Chinese megacities.
I am actually surprised SF did not lower salaries exactly for this because there's nowhere else to go if you want to at least keep your SF salary.
Maybe you're just not as good at your job or it isn't as valuable as you think it is. Capitalism isn't a senority system; degrees,experience and responsibility mean jack if you can't convince someone you are worth it.
Alternatively, if you think flipping burgers for a "good fraction" of your current income is a good deal that you are envious of, then maybe you should go flip burgers. If not, what are you complaining about?
Yes. It's your wage that's the issue, not theirs. Feeling like you deserve more, should never be a reason to deprive others. New Zealands cost of living is extremely high, and wages need to be commensurate to allow ordinary social reproduction - marriage, children, rent, groceries.
In the case of McDonald's the kiosks only generated more throughput, actually adding work, so all the staff assigned to taking orders was put into other work.
Meanwhile self-checkout, while actually reducing throughput somewhat, made it possible for the workers to take on other tasks in the store - of which there are many.
There isnt that many jobs in a grocery store that need many people. Stocking shelves and cleaning mostly. Once those are automated there will be a lot less jobs.
If the jobs were that easy to automate they would have been automated at the current rate. Min wage going from $18-20 doesn't suddenly make that all-in-one supermarket bot doable. Automating real world jobs is hard and often not viable especially for dynamic work. Even the no-brainier automation like self-checkouts are actually not saving much apparently. (could be false, heard it on a anti-min wage channel).
There is this robot called Marty whose reason for existence I still have to discover. I thought it was a roomba style robot but with a camera for navigation. Turns out it does nothing except make the messes it reports to staff even worse.
If you compare menu prices at fast food chains in areas with high minimum wages (i.e. Seattle's $15) vs areas with low minimum wages, (i.e. the US's federal ~$8) the cost of items is higher but not as high as you might think.
That's just a wage increase from a single point in the supply chain. With a national minimum wage increase, all of the incremental wage incremental wage increases get passed to the consumer.
Or perhaps deceases the waste and abuse of the corporation. Maybe they don't do the executive island getaway or have the company condo in the Swiss alps.
They'll jack up the prices for any reason, don't get me wrong, but it's not because they have to pay people more. It's because they see it as an excuse to pay themselves more.
New Zealand prices for Subway, after converting currencies are more or less the same as American prices (+/- $.50 - the ingredients are slightly different)
The people controlling the price of the sandwich are also the ones who want to pay their workers less.
We shouldn't cower and run at the thought of the bosses using strategies to fight back by comically jacking up their prices and then cynically blaming it on the government.
Beware a lot of shady employment practices going on in the low-wage sector of NZ, always people getting busted for paying lower than min wage to foreigners. I've personally never seen a kiwi working at either Subway in my city, and i get it quite often.
According to this [1] (first thing I was able to find, no clue how accurate): Another major cost for McDonald’s is payroll and employee benefits. These account for 36% of its company-operated restaurant expenses.
I don't know in what world a third is "only a small part". The same article mentions According to PayScale, the average worker in the fast-food industry makes $8.50 per hour. Increase that to $44 and you end up with a much more expensive burger.
The article you link fails to mention that McDonald's also spent about 8.5 billion on stock buybacks and dividends in 2018, which would have been enough to give every one of their 210,000 employees an extra 40,000 dollars that year on top of what they already made that year. Not quite $44 an hour, but a hell of a lot better than minimum wage - and the company wouldn't need to spend a single extra cent or raise any prices in order to do it.
In the extreme case, what if the minimum wage was $500000000 dollars. That would not work, and it would create a society where everything is done under the table. Now, keep halving that value and ask at what point do people no longer feel required to do things under the table in order to make a basic living (sans criminals). It's not obvious what the right number is.
On the other extreme, if the minimum wage was $0, it would be up to people to determine what they're willing to work for. At some point in the next millennium, all work will be creative work and the concept of a minimum wage probably won't even make sense anymore.
>At some point in the next millennium, all work will be creative work and the concept of a minimum wage probably won't even make sense anymore.
That would require us to stop our biological urges to reproduce endlessly. No matter how much technological advancement you have, if the population grows faster than technological progress you're not going to have the necessary surplus for an utopia.
I'm not sure what your point is? There's very little in human society where we know the precise right value objectively. We still make choices in the absence of perfect information.
> We still make choices in the absence of perfect information.
The point is that imperfect choices are likely to be made with imperfect information. So, it's perfectly reasonable for people to be "for" and "against" the minimum wage being $44. Most people do not know the answer, so there's some consensus happening. Maybe every person should be part of direct consensus instead of a few people who are designated decision makers.
Humans appoint a few individuals to make decisions on problems that are not known at the time of being appointed, so it seems like imperfect consensus. Would people have voted differently in 2016 if they knew there would be a pandemic in 2020? Maybe. Maybe not. Systems should have ways of course-correcting on a much smaller scale than 4 years.
Guessing whether or not we should double minimum wage every few years doesn't work well. Numbers that don't take into account cost of living don't work. Why is the IRA income cut-off the same for someone who lives in Manhattan as it is for someone who lives in Omaha? The whole system seems off. Guessing a number for minimum wage and then mandating that until the next president updates it seems like the wrong approach.
The best would be guaranteed basic income and ending minimum wage. Best of both worlds...
People can "choose" to work or be creative and maybe start a rock band, or a business.
This makes a lot more jobs available, more supply of jobs = more competition = higher wages organically.
GBI guarantees nobody's homeless, everybody has a roof.
Essentially poverty is gone, and some equilibrium between libertarianism, socialism, capitalism exists... sure there are players who this won't benefit as much... (Amazon, Walmart, etc...) but the rest of us...it just makes sense.
Taxation will need to be re-thought, maybe land-value tax? Georgism has some interesting concepts as an economic model...
Disregarding the merits of wage equality. If the minimum wage had grown at the same rate as Wall Street bonuses, so to would have inflation and $44 dollars would be worth far less than it is now.
This is the same line of thinking that pins the country's economic performance to the stock market. Stock market performance is not a strong indicator of the country's economic performance.
Wall Street bonuses are up because Wall Street is making more money. Perhaps because Boomers have all their money saved up and invested with Wall Street banks that use it to make more money.
Businesses aren't making that much more money, and while CEO pay has exploded, there's usually only 1 CEO per company. Walmart's CEO makes $22m total compensation per year, if they made the same as their average employee you'd be able to pay each of the 1.6m US employees $14 more per year. Big whoop. The apparent value that the best CEO for the job can bring Walmart per year far exceeds $22m, but a cashier can be replaced by a machine.
What we're seeing are the effects of automation and the devaluation of replaceable workers it causes.
My recommendation? Middle managers all the way up to C-suite rent-seek when they ask people to do more without raising wages to compensate for the additional effort. Counter-rent-seeking is a totally valid, reasonable response: unionize.
People who can leverage multiple technologies can multiply their efforts. Mass communication, mass distribution and automation of all sorts.
But Wall Street bonuses are subsidized by the fact the government socializes their biggest failures. Bailouts just encourage them to take greater risks, leveraging debt in dangerous ways that will blow up the system again.