Comment by darawk | Hacker News Reader

Comment by darawk | Hacker News Reader

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I think the core of the issue isn't whether economic inequality is good or bad. I think most reasonable people can agree that some economic inequality is good and healthy and incentivizes innovation and productivity. I think we can also agree that absolute inequality (one person with everything, and everyone else with nothing) is also a bad thing. This means that the right answer is somewhere in between, and where we draw that line is where people disagree. Holding up either side as saying "inequality is bad" or "inequality is good" is, therefore, a straw-man. No reasonable person is saying either of those things.

What we do have to ask ourselves is how much inequality should we tolerate in the name of progress? Would Larry and Sergei not have created Google had they made only 1/10th of the fortunes they have today? What about 1/100th, or 1/5th?

My personal view on the subject is that that multiplier is set too high at the moment, and that society would churn out innovators just fine if there were extreme taxes at the ultra-high end of the income spectrum. I would be very surprised indeed if Larry and Sergei would have chosen to abandon their little search engine project if they only had the potential to make $100 million each.

I think any positions taken on this subject that don't discuss it as a question of where to place this multiplier are disingenuous nonsense, to be perfectly frank. And this is my, and I think many people's issue with PG's essay: he seems to be taking the position that some types of economic inequality are good and some are bad. But it's not how someone made the money that's good or bad, it's whether or not it's really necessary that they have that much.

Very, very well put. This is was what I've been thinking while watching this back-and-forth unfold (both this one involving PG and in general over the last few years).

In my mind, whether wealth is zero sum or not is irrelevant. The discussion around income inequality is about the area under the curve. If that area increases again and again and again but the bottom, say, 90% remain in the same state, that's not progress.

> "I think any positions taken on this subject that don't discuss it as a question of where to place this multiplier are disingenuous nonsense"

Personally, I think "where to place this multiplier" is not anywhere close to the most relevant question.

What matters isn't how big the multiplier is. What matters is what's causing it, and what problems it causes. If a big multiplier is caused by an atmosphere that promotes innovation, that's better than a small multiplier caused by a stagnant environment, which is better than a big multiplier caused by massive corruption and oppression. Norway, Sweden, and Finland have some of the lowest Gini coefficients in the world, way "better" than the US or the UK -- but so do Pakistan and Afghanistan. "Where to put the multiplier" is, at best, a secondary question after fixing all of the primary problems, and possibly a completely irrelevant question.

Where to place the multiplier only becomes irrelevant when the bottom is acceptably high. If you think that the bottom is acceptably high, then you may accept an unlimited multiplier.

I agree with you that a big multiplier caused by innovation is better than one caused by stagnation and rent seeking, but I don't think that we would be willing to accept any multiplier just because it promoted innovation. So the question remains: how much inequality is worth how much innovation?

Assuming you accept PG's premise that more inequality equals more innovation

> "only becomes irrelevant when the bottom is acceptably high"
or, put another way, only becomes relevant when the bottom is unacceptably low.
I'm much more interested in worrying about where the bottom is than worrying about the multiplier. It's a proxy measure -- perhaps a good proxy measure, but still a proxy measure. Instead of focusing efforts on the proxy measure as a whole, focus on specific issues that matter at the low end. If it happens that some specific issue is best resolved by closing tax loopholes or steepening the tax progression curve, OK -- but don't do it just to "lower inequality", do it to solve a specific problem.

I mostly agree. However, I think it's a little more than a proxy measure. I think people often conflate the notion of capitalism the resource allocation algorithm with capitalism the moral philosophy.
The former says that assigning people directly the fruits of their labors leads to an efficient marketplace and ultimately greater welfare for all. The latter says that the efficacy of the former grants those people a moral right to those fruits.
The former is almost certainly true - capitalism is much more effective at accelerating efficiency and innovation than anything else we've tried. But the moral corollary doesn't necessarily follow. And if you accept the former but deny the latter, you're faced with a question: Do we really need extreme outliers of wealth in order to achieve the benefits of capitalism? And if the answer is no, then does it really make sense to let those outliers keep all those resources?

+1 for being well put, but I find the talk of "how much inequality should we tolerate", or "where the multiplier should be", or if it's "necessary that they have that much" to be much more bothersome than inequality itself, as though we should have a right to decide how much someone can earn.
I don't think we do (and by "we", I include government).

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