(Replying to PARENT post)
Yeah that was my point. The Cato Institute is a biased, partisan think tank and not a credible source. But let's dig into it.
> Poverty may fall as wealth inequality rises, such as when entrepreneurs build fortunes by generating economic growth. Or poverty may rise as wealth inequality rises, such as when crony capitalists gain preferences that distort the economy and reduce growth.
Entrepreneurs building vast fortunes (I'm not talking about a few million, but hundreds of millions or billions of dollars) is a bug, and in a country where many people choose between meds and food deeply immoral. We should redistribute that wealth.
The second point is actually my point, and while I'd like them to cite something (there are weird strategic cites throughout), I'll take it. But I'd like to reemphasize this real quick: "poverty may rise as wealth inequality rises, such as when crony capitalists gain preferences that distort the economy and reduce growth". That's the whole ballgame right there, crony capitalism increases wealth inequality and reduces growth.
> High poverty levels, which are clearly undesirable, are often caused by bad policies, such as a lack of open markets and equal treatment. Wealth inequality is different—it cannot be judged good or bad by itself because it may reflect either a growing economy that is lifting all boats or a shrinking economy caused by corruption.
The US has one of the most free markets in the world, and yet over 20% of our children live in poverty. A lack of open markets is not the cause of poverty. An unwillingness to redistribute income and wealth is.
> WhatsApp... created huge value for consumers by reducing communication costs
There is no cite for this. It's far more likely it was worth that money to Facebook to corner the messaging market, which provided no value whatsoever but did lead to less market choice.
> Jason Furman, the former chair of President Barack Obama’s Council of Economic Advisers, was right to praise the company as a “progressive success story” for its role in reducing prices.
Right-wing economists trot this out all the time, but he wrote that in 2005 and it's a weird appeal to authority besides. A more modern discussion is here [1]. Here's a quote:
> Vedder didn’t seem to hold Walmart responsible for the economic situation its workers faced. Rather, he argued that it’s just economic reality: “Not everybody is going to be in the middle class. Not everyone has the skill sets to do this ... Are there some people in poverty because of low wages? Yes. Will there always be? Yes. In every society, there’s going to be some people making more than others. It’s naive to say, ‘Let’s pay the low-income people more.’”
The consensus is that Wal-Mart being good or bad is irrelevant, whatever it is is a function of capitalism. That's pretty bleak. Wal-Mart's also a terrible example because of the labor and health care costs it farms off onto the federal government. When we defend their actions and their effect on the economy as capitalism working as intended, "entity that's demonstratively destructive to local businesses and wages, hugely burdensome to the welfare state, but uniquely enriching to its owners" says it all.
> Clearly, recent gains by the top 1 percent have not come at the expense of other Americans.
This is, and I'm gonna use this term specifically here, "super false" [2].
> [Gini coefficients] do not support the idea that wealth inequality is bad for [income, life expectancy, and education levels]
That's because using them in that way leads to a correlation/causation fallacy. If you want better information on this, look at life expectancy and education outcomes by income. You probably don't need to though, because you can guess they decline as income declines.
> A Credit Suisse study found that the share of global household wealth owned by the top 1 percent of households worldwide was roughly unchanged between 2000 and 2018.
This paper cherry-picks like crazy. Let me quote you something from the very first page of this study: "The bottom half of wealth holders collectively accounted for less than 1% of total global wealth in mid-2019, while the richest 10% own 82% of global wealth and the top 1% alone own 45%." So yeah, maybe it is unchanged. It's still insanely high.
> Yet commentators on the political left seem more concerned that some countries with broadly rising incomes have experienced increases in wealth inequality. This seems like “spiteful egalitarianism,” as Feldstein called it. That is, a knee‐ jerk dislike of the wealthy even when their wealth stems from productive activities that benefit the overall economy.
Besides being pretty clear ad-hominem, my actual position here is that it's impossible for Bezos to contribute ~.85% of US GDP [3] and it's a bug we should fix with taxes.
I could go on. But in short, this presentation isn't a good faith argument. It uses multiple fallacies and cherry-picks data to further its political agenda. It's not unique to that section, or that presentation. It's what The Cato Institute does.
~~~
> It shows that inequality and innovation are correlated across the globe. There is no way to disentangle causality there, and it almost certainly flows in both directions.
Agree that it's a vicious cycle and requires some kind of intervention to fix.
> So you think all labor relations are inherently exploitation? People are incapable of agreeing to exchange their labor for money?
I think that the labor market is fundamentally coercive and exploitative, yes. When one party needs shelter, food, and medicine and the other just needs a warm body to drive a truck, those parties are not on equal footing and the relationship is coercive. That's why businesses are against things like social welfare programs, Medicare for all, labor standards, and collective bargaining and for things like right to work, independent contracting, and arbitration. Even companies that hire highly skilled workers like SWEs collude to suppress wages (Adobe, Apple, Google, and Intel). Look at the list of things businesses are against and for, which are the ones we have? I wonder why that is.
[1]: https://www.theatlantic.com/business/archive/2017/04/walmart...
[2]: https://voxeu.org/article/winners-and-losers-rising-american...
[3]: https://qz.com/work/1410621/jeff-bezos-makes-more-than-his-l...
(Replying to PARENT post)
It shows that inequality and innovation are correlated across the globe. There is no way to disentangle causality there, and it almost certainly flows in both directions.
> Oh so this is your point [1]. No I'm not talking about any inequality, that's a ridiculous strawman (and seemingly wrong, judging by other sources inequality and not poverty is still bad for growth). I'm talking about bonkers levels of inequality causing incomes to stagnate while capital gains skyrocket, leaving tons of money in the investment accounts of the rich and not in the savings accounts of the 99% of the rest of us. Wealthy people by and large don't invest in innovation (look at the share of SV VC money for example), they hoard it, which undermines pretty much all of right-wing economic theory. The only policy measure that will fix this is taxation.
No, what it's clear you aren't talking about is inequality at all. If you look at the heading of the very first link you sent, it states my point, in the same words! You are talking about economic mobility.
> Agree; I don't find wealth immoral or unethical on its own. I do find it immoral under capitalism, where by definition profit comes from exploitation (plundering the commons, upselling labor, etc.) And I don't see a better way to provide for Bezos' workers other than by taxing his immense wealth, which he got from their labor besides.
So you think all labor relations are inherently exploitation? People are incapable of agreeing to exchange their labor for money?
> No, when I say corruption I mean a very specific thing: bribing elected officials for special treatment. There's a whole index called the "Corruption Perception Index" to track the public's perception of corruption (which is damaging in and of itself), and there are studies [7] that measure it [8] more fully.
Sure, but in what way is this corruption blocking the building that Andresen is talking about? I can point you to a myriad of ways in which regulation is doing so. But it's not obvious at all to me that corruption comes into play at all.