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Comment by pitaj | Hacker News Reader

> unregulated capitalism

Ah yes, the unbridled laissez-faire capitalist markets throughout the world. It couldn't possibly be that our markets are more regulated than ever before, or that the very regulations and bureaucracy meant to protect us have caused these failures.

No no no, it's capitalism's fault. It's certainly not that government power has for decades been exploited by the incumbents to kill competition.

The market has failed. Now government regulation is necessary to protect us from the evil rich corporations who want nothing but profit. Rest assured, if we allowed them to operate freely it would result in catastrophe!

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The US has allowed complete unbridled capitalism during the gilded age. Quoting Wikpedia "From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation's wealth, while the top 10% owned roughly three fourths of it.[61] The bottom 40% had no wealth at all.[59] In terms of property, the wealthiest 1% owned 51%, while the bottom 44% claimed 1.1%"

So pure, unregulated capitalism, lead to wealth inequality far, far more extreme than our current situation.

58 Peter R. Shergold (1982). Working-Class Life: The "American Standard" in Comparative Perspective, 1899–1913. University of Pittsburgh Press. pp. 5–7, 222, 224. ISBN 978-0822976981.

59 Steve Fraser (2015). The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power. Little, Brown and Company. p. 66. ISBN 0316185434.

IIRC, before the industrial revolution, wealth inequality was much much worse, with a majority living on subsistence farming.

Wealth inequality is misleading as it doesn't represent standard of living very well. Income inequality is better in that regard.

Just remember that inequality per se is not a bad thing. Capitalism seems to me to be the only way to get people out of poverty, which is, of course, what we want.

Right, inequality isn't inherently a bad thing, its when it get so extreme that it impedes class mobility and shrinks the middle class. We have to strike a really careful of regulations and freedom to create a desirable society.

I think it is impossible to ever reach consensus on what is the right balance between freedom and regulation, especially because regulation is not decided upon with that goal in mind. Whatever gets votes or whoever has the most lobbying power will decide what is regulated.

With regard to class mobility, can we say at what level it gets too extreme or conversely at what level it is just perfect? A country such as Albania has a lower Gini coefficient than the US but is much, much poorer, but as such has less income inequality. I don’t believe that social mobility is much better there (I happen to have a good friend that lives in Tirana).

And yet there was explosive growth in the middle class in that era, the poor moving up into the middle class, and the US moving into a superpower economy. The standard of living went up, way up.

I would argue that is a "despite the greediest Robber Barons that ever Robbed, wealth was created by the industrial age on such a scale that some escaped and was shared more equally"

Some statists regulate markets into inefficiency, then other statists use the inefficiency as justification for more regulation. Yet other statists use crony capitalism as justification for giving the state more power, as if the problem of crony capitalism was one with capitalism itself rather than the state having too much power already! The statists don't necessarily do this in a coordinated, conscious or intentional way. Most of them sincerely believe that regulation is for the best. As electors their vote has an infinitesimal chance of being decisive, so the cost to them of having irrational beliefs about politics is negligible. Simultaneously they have preferences over beliefs. Whether having beliefs similar to those of people they want to associate with, loyalty to a political ideology or signaling moral qualities, when the political influence of any person in a large electorate is so small people will have irrational beliefs.

Good law in a democracy is a positive externality. Desirable policies benefit everyone but their private benefit to an individual is small even if the individual is altruistic. Government is supposed to resolve market failures, but it itself is the sole reason they exist.

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