economic inequality

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We published a new topic page on economic inequality
2 months ago
- Economic inequality has gained significant public attention over the last two decades, with improved data covering more countries and longer time periods.
- Inequality varies widely across countries and is not inevitable; national policies and institutions can influence its level.
- Global income inequality has decreased recently due to rapid growth in Asia, but within many countries, inequality has risen or remained stable.
- Three key international databases—World Bank Poverty and Inequality Platform, Luxembourg Income Study, and World Inequality Database—offer different strengths, such as global coverage, comparability, and tracking top incomes.
- Household survey data, used by most databases, often misses the richest individuals, leading to potential underestimation of inequality.
- The World Inequality Database uses tax records and national accounts to better capture top incomes but measures a broader income concept than surveys.
Economic Inequality
2 months ago
- Economic inequality has multiple causes, both bad (tax loopholes, drug addiction) and good (like Larry Page and Sergey Brin's startup).
- Treating inequality as a single phenomenon is a mistake; the pie fallacy wrongly assumes wealth is taken from the poor.
- Wealth can be created (e.g., a woodworker) rather than taken (e.g., high-frequency trader), differentiating good from bad inequality.
- Startups are a major source of wealth creation; eliminating great variations in wealth would mean eliminating startups, which is unwise.
- Variation in productivity is the irreducible core of inequality, accelerating with technology and not easily eradicated.
- Policy should focus on specific problems like poverty and abusive practices, not on inequality as a broad target.
- Aiming at economic inequality may miss the real issues; we should instead attack poverty and wrongful wealth acquisition.
After the Ladder
2 months ago
- The traditional corporate ladder, where employees worked their way up for job security, has been replaced by a startup culture that seeks upfront payment and equity.
- The shift creates an appearance of increased economic inequality, but statistics miss the value of safe jobs like sinecures, which are effectively annuities.
- Corporate ladder positions held implicit value akin to 'goodwill,' but takeovers in the 1980s undermined this system.
- Corporate balance sheets ignored debts to loyal employees, making raiders profitable by dismantling companies.
- The new model of startups involves more risk but avoids bad management and corporate politics, though projects in big companies were also vulnerable to arbitrary cancellations.
- The corporate ladder is likely gone for good; the new model is more liquid and efficient, but the financial difference may be smaller than perceived.
Inequality and Risk
2 months ago
- Reducing economic inequality essentially means taking money from the rich, which diminishes their willingness to take risks.
- Startups are inherently risky and require proportionate rewards; without them, startup creation declines.
- Startups drive technological growth and job creation; eliminating them leads to slower innovation and economic stagnation.
- A better approach is to break the link between wealth and power through transparency and anti-corruption measures, rather than attacking wealth directly.
- Risk and reward are proportional; suppressing inequality suppresses risk-taking, harming economic progress.
The Refragmentation
2 months ago
- The author hypothesizes that fragmentation in US politics, culture, and economy stems from the erosion of forces that previously pushed society together, specifically World War II and the rise of large corporations.
- World War II decreased economic and social variation through wage controls, high taxes, and military conscription, creating a flattening effect that persisted after the war.
- The 20th century saw the rise of big national corporations that produced cultural and economic cohesion by standardizing products, employment practices, and social norms, leading to a conformist society.
- Starting in the 1970s, the Duplo economy disintegrated due to factors like globalization, technological innovation, deregulation, and the rise of startups, driving fragmentation in business, income, and culture.
- The breakup of mid-century cohesion led to increased economic inequality, social diversity, and mobility, as salaries became market-driven and individuals pursued varied paths to fortune.
- The author concludes that fragmentation is a reversion to long-term trends amplified by technology, making it unlikely to fully reverse; efforts should focus on mitigating its consequences rather than eliminating it.
Stop pretending billionaires built the future
2 months ago
- High taxes on the rich in mid-20th century America led to greater economic equality and innovation, such as the GI Bill and NASA funding.
- Tax cuts since the 1980s have increased wealth inequality and stagnant wages, linking innovation primarily to billionaire incentives.
- Historical evidence shows innovation thrived during periods of high taxation and government investment, not billionaire payouts.
Tech Workers Face Evaporating Financial Security as AI Transforms Industry
2 months ago
- Susan Smith, a former Meta executive earning over $500,000, lost her job amid Silicon Valley's AI push and layoffs, reflecting a shift from economic security to widespread precariousness in tech.
- The tech industry has seen over 800,000 layoffs since 2022, with AI transforming jobs into a cutthroat environment where workers are pressured to automate their roles, leading to disillusionment and fear of scarcity.
- AI is accelerating workplace changes, with companies emphasizing AI adoption in performance reviews and creating inequality as a smaller group benefits from IPOs, while many face job instability and devalued skills.
- Economists note that sectors like tech are achieving higher output with fewer workers, signaling a broader trend of 'doing more with less' that is spreading to white-collar professions.
- The division between 'superstar' companies/individuals and others is intensifying in Silicon Valley, mirroring broader economic inequality, with top tech firms and cities dominating wealth and productivity.
America pays workers just 27% of what its wealth allows – the worst in the OECD
2 months ago
- The United States, despite its wealth, consistently underperforms in providing basic economic and social rights compared to other high-income nations.
- The U.S. scores around 80% on health, below peers like Canada (90%) and Australia (93%), with declines expected due to policy changes reducing health insurance coverage.
- On the right to food, the U.S. scores about 81%, ranking 30th out of 37 OECD countries, with recent cuts to food assistance programs increasing hunger.
- For work and income, the U.S. achieves only 27% of its potential, the worst among OECD members, reflecting growing economic inequality and insufficient wages.
- In education, the U.S. scores 76% overall, with strong access (90.7%) but low quality (61.3%), placing it 20th among 38 OECD countries.
The Case for Nationalizing Artificial Intelligence
3 months ago
- AI development is built on the collective work of humanity, including books, music, and videos, without crediting or compensating contributors.
- The AI investment boom is creating a speculative bubble that could crash the global economy and displace workers on a massive scale.
- Traditional policy responses like bailouts are inadequate for AI; public ownership, such as a sovereign wealth fund for AI stocks, is proposed as a fairer solution.
- Public ownership of AI aligns with national interest and democratic principles, countering the control by a tech oligarchy that reaps profits from public investments and expropriated intellectual work.
- Nationalizing AI could redistribute wealth to fund social programs, reduce economic inequality, and rebalance power between capital and labor, transforming the economy in the public interest.
The Economy Is K-Shaped
3 months ago
- The stock market is up while grocery bills are also rising.
- The economy is described as booming but driven by only a few companies investing in GPUs.
- AI acts like a dam, trapping economic gains at the top.
- Productivity increases significantly without corresponding job growth.
- Economic surplus is reinvested in more computing power.
- Stock markets reach all-time highs while wages stagnate for decades.
- The economic ladder is being pulled up, with middle-tier jobs automated away.
- What remains are high-end roles and tasks robots cannot yet perform.
- Owning equity or hardware becomes the new entry requirement for economic success.
- Trickle-down economics is ineffective, creating a split between those above and below the economic dam.
The Demoralization of the White-Collar Worker
3 months ago
- The author bought a home after 20 years of disciplined saving, but had to relocate from Chicago to an affordable rural town, questioning why they cannot afford a city home.
- Homeownership is a key wealth-building tool; homeowners have vastly higher net worth than renters, yet rising prices and investor purchases make it increasingly inaccessible.
- Productivity has grown significantly since 1979, but wage growth has lagged, with gains going to executives, shareholders, and corporate profits instead of typical workers.
- White-collar job postings and salaries have stagnated or declined, with many workers facing salary cuts when switching jobs, reflecting a broader economic shift.
- Healthcare in the U.S. is costly and inefficient, with high premiums, frequent claim denials, and barriers to care, leading to medical debt and worsened health outcomes.
- Retirement security has eroded as pensions have been replaced by 401(k)s, leaving many with minimal savings, while costs like housing and healthcare consume income.
- Childcare costs have surged, often exceeding rent, and combined with student debt and housing expenses, strain family budgets even with dual incomes.
- The 'Great Detachment' describes widespread worker disengagement, driven by broken employer contracts, stagnant wages, and rational responses to unfair systems.
- Comparisons with other developed nations show the U.S. lacks public supports like affordable healthcare, childcare, and paid leave, exacerbating worker demoralization.
- The demoralization is a rational recognition of a broken social contract, leading to adjustments like relocating or reducing expectations, with no easy solutions in sight.

economic inequality

We published a new topic page on economic inequality

Economic Inequality

After the Ladder

Inequality and Risk

The Refragmentation

Stop pretending billionaires built the future

Tech Workers Face Evaporating Financial Security as AI Transforms Industry

America pays workers just 27% of what its wealth allows – the worst in the OECD

The Case for Nationalizing Artificial Intelligence

The Economy Is K-Shaped

The Demoralization of the White-Collar Worker