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Income Inequality: Too Big to Ignore
- Thread starter kirylm
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That article left a bad taste in my mouth. In my mind, it isn't the inequality that needs something done about it, but about the number of opportunities people have of doing away with that inequality for themselves.
America should be the country of opportunity, not handouts. And if shareholders vote that their CEO can receive $30,000,000 a year, then so be it. That's the whole concept of corporate governance.
It isn't about "haves vs. have nots" in my mind. In my mind, it's about "connected vs. not", "brand-name degrees vs. not", etc...
If given the same opportunities, one person becomes rich, and another poor, then there is no inequality there in my mind. So long as both had the same opportunities, then all is fair in love and war.
The question is how we decide on equality of opportunity, rather than equality of incomes, standards of living, yadda yadda. True, some rich don't deserve their wealth, but at the same time, there are quite a few poor people who *are* deserving of the slump they are in.
After all, a good poker player with a short stack against weaker players has a much better chance there than with a large stack against more skilled opponents.
Or am I being too simplistic in believing that America should be the country of opportunity, not of handouts?
America should be the country of opportunity, not handouts. And if shareholders vote that their CEO can receive $30,000,000 a year, then so be it. That's the whole concept of corporate governance.
It isn't about "haves vs. have nots" in my mind. In my mind, it's about "connected vs. not", "brand-name degrees vs. not", etc...
If given the same opportunities, one person becomes rich, and another poor, then there is no inequality there in my mind. So long as both had the same opportunities, then all is fair in love and war.
The question is how we decide on equality of opportunity, rather than equality of incomes, standards of living, yadda yadda. True, some rich don't deserve their wealth, but at the same time, there are quite a few poor people who *are* deserving of the slump they are in.
After all, a good poker player with a short stack against weaker players has a much better chance there than with a large stack against more skilled opponents.
Or am I being too simplistic in believing that America should be the country of opportunity, not of handouts?
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People are babies nowadays. People really need to take charge of their lives. Go to school, save your money and make smart financial decisions. If you do well in high school you can most likely go to a school and pay very little. Get a degree in something marketable and you will be fine. Live within your means, save your money and you will have a comfortable life.
When you have kids you will be able to provide them with better opportunities than you had, they will go to better schools and start off higher. This is how wealth is created, how families move up the ladder in life.
There will always be people who get lucky, have a head start, got hooked up. Spend less time crying in your milk and more time making something happen.
I look around and see losers and people who make things happen. Anyone can start a business, carve a niche, be creative. I was at the bar last night and saw a guy drawing people. He probably made $150 cash for 5 hours on a Sat night. People can sell stuff on Ebay, Amazon, Craigslist. People can make websites (Andy) and become a knowledge leader. People can get a masters and teach a class at night at a community college. You can do work working, walk dogs, watch babies, etc. Long story short, there is plenty of money to be had for those who are creative and daring.
When you have kids you will be able to provide them with better opportunities than you had, they will go to better schools and start off higher. This is how wealth is created, how families move up the ladder in life.
There will always be people who get lucky, have a head start, got hooked up. Spend less time crying in your milk and more time making something happen.
I look around and see losers and people who make things happen. Anyone can start a business, carve a niche, be creative. I was at the bar last night and saw a guy drawing people. He probably made $150 cash for 5 hours on a Sat night. People can sell stuff on Ebay, Amazon, Craigslist. People can make websites (Andy) and become a knowledge leader. People can get a masters and teach a class at night at a community college. You can do work working, walk dogs, watch babies, etc. Long story short, there is plenty of money to be had for those who are creative and daring.
DominiConnor
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IlyaKEightSix is right, the right place for government is maximising opportunity, and patching people up when the process goes bad for the bottom 10% or so.
Social tensions which affect both rich & poor arise when people come to believe that there is no way within "the system" to move their lives forward. Look at the places with high unemployment and you see trouble, big time. China is on average much poorer than the Palestinian authority area, but has rather less violence, because there is 'progress'.
The key bad term is correlation of wealth between generations. In the USA this is amongst the highest in the developed world, and not even good for a developing country. Israel by one measure is close to the opposite extreme, if you take Israeli citizens, and serious social strife within that group is predictably rare, but if you take the area under it's guns the correlation shoots up hard, as does the level of violence.
The emotive term 'handouts' is often used by the right, even though they fail to spot that most people pay the majority of their earnings in some form of tax in almost every country. Thus spending on education is more usefully viewed as investment with highly uncertain returns.
For no good reason, most of the American right follow the teachings of the paedophiles in the Catholic church, and oppose birth control of all kinds, except that used by themselves of course. As has been shown depressingly often, early children of poor parents are on average less economically useful, and the mothers are much less likely to return to the workforce in any significant way.
I started from a school where in my cohort, you were more likely to die before leaving than go to university, and where a decent % did time in prison before I graduated. We only had a computer because we 'acquired' it because my gang realised it was a way out of this shit.
That's left me with some useful life skills, (and a bit of attitude), but the important group isn't people like me, I could have earned more through drugs, but the middle 80% who were let down by the system, and still are.
The the rich/right talk of 'opportunities' they typically underestimate the size of the problem, and think a few pretty text books and the occasional visit from a celebrity sportsman will deliver equal opportunities. They fail to spot that state schools are often staffed by people simply unfit for teaching, or any other purpose, that careers education is a joke.
Also, people from poorer backgrounds have different risk aversion functions, quite rationally so, and advice that doesn't address this will go very wrong.
But the big killer problem is white middle class women.
They infest the education and training process, and warp it for their own ends and 'sisters'.
Almost everywhere, it is working class boys who under-perform and fail to move themselves forward more than girls. In the USA it is various types of "coloured" boys, in Britain it is white boys who under achieve. Yet educational resources for middle class white girls are vastly higher in proportion to issues, and as above telling the dears to go on the pill isn't politically acceptable, even though it's cheap and extremely effective.
There is also the dickshit idea that parents should have 'choice'.
This idea comes from people like me, who know how to make good decisions, but by definition parents of poor children are not good at this sort of choice. Look at the rate of religious observance in such people, and ask yourself if a person who thinks your life will be sorted out by a beardie man in a cloud but who can't even read the Bible, can judge whether skills in physics are likely to be more useful than progeamming ?
Social tensions which affect both rich & poor arise when people come to believe that there is no way within "the system" to move their lives forward. Look at the places with high unemployment and you see trouble, big time. China is on average much poorer than the Palestinian authority area, but has rather less violence, because there is 'progress'.
The key bad term is correlation of wealth between generations. In the USA this is amongst the highest in the developed world, and not even good for a developing country. Israel by one measure is close to the opposite extreme, if you take Israeli citizens, and serious social strife within that group is predictably rare, but if you take the area under it's guns the correlation shoots up hard, as does the level of violence.
The emotive term 'handouts' is often used by the right, even though they fail to spot that most people pay the majority of their earnings in some form of tax in almost every country. Thus spending on education is more usefully viewed as investment with highly uncertain returns.
For no good reason, most of the American right follow the teachings of the paedophiles in the Catholic church, and oppose birth control of all kinds, except that used by themselves of course. As has been shown depressingly often, early children of poor parents are on average less economically useful, and the mothers are much less likely to return to the workforce in any significant way.
I started from a school where in my cohort, you were more likely to die before leaving than go to university, and where a decent % did time in prison before I graduated. We only had a computer because we 'acquired' it because my gang realised it was a way out of this shit.
That's left me with some useful life skills, (and a bit of attitude), but the important group isn't people like me, I could have earned more through drugs, but the middle 80% who were let down by the system, and still are.
The the rich/right talk of 'opportunities' they typically underestimate the size of the problem, and think a few pretty text books and the occasional visit from a celebrity sportsman will deliver equal opportunities. They fail to spot that state schools are often staffed by people simply unfit for teaching, or any other purpose, that careers education is a joke.
Also, people from poorer backgrounds have different risk aversion functions, quite rationally so, and advice that doesn't address this will go very wrong.
But the big killer problem is white middle class women.
They infest the education and training process, and warp it for their own ends and 'sisters'.
Almost everywhere, it is working class boys who under-perform and fail to move themselves forward more than girls. In the USA it is various types of "coloured" boys, in Britain it is white boys who under achieve. Yet educational resources for middle class white girls are vastly higher in proportion to issues, and as above telling the dears to go on the pill isn't politically acceptable, even though it's cheap and extremely effective.
There is also the dickshit idea that parents should have 'choice'.
This idea comes from people like me, who know how to make good decisions, but by definition parents of poor children are not good at this sort of choice. Look at the rate of religious observance in such people, and ask yourself if a person who thinks your life will be sorted out by a beardie man in a cloud but who can't even read the Bible, can judge whether skills in physics are likely to be more useful than progeamming ?
DominiConnor
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Societies can survive with close to infinite ratios of wealth, we know this because that has been the norm for most of history, and has existed in every type of society we have yet to devise.
'Fairness' is a service supplied by a government, in competition with others.
People don't want to buy it as much as you might think.
Migration tends to countries with less even distributions of income, but with greater opportunities, which correlates surprisingly well with being English speaking.
The effect of automation across all parts of the economy means that those with demanded skills will move rapidly ahead of those with skills where demand is less well met.
Governments have tried to fight this, and all they have done is screwed up the parts of the economy that had an opportunity to grow.
The reason tens of millions of Indians learned Java was that this gave them the opportunity to earn a lot more than the average in their country. It would have been trivial to tax them into the average, so of course fewer would have bothered, and many would have left. That would have had a crushing effect on the spectacular growth of what is now a key part of the whole economy there.
Some Indian Java jockeys earn 1,000 times what some peasants in India earn, do you tax them or not ? The 1K ones can leave, as can the 800, probably the x500 as well
You see why anti-globalisation protestors and other types of fascist want people to stay where they are put.
You can't do social engineering if the people you want to shaft can just leave. It doesn't matter if the basis for that is because they have too much money or too much melanin in their skin, or of their superstitions are different to your superstitions.
Most of China and India is almost uninhabitable by Western standards, so have a growing number enclaves where skilled workers from other countries will choose to live. Dubai and Singapore have both attempted to follow that model. I suspect that will grow as a trend.
Places with awful levels of inequality will struggle to attract and retain people, in the same way that companies with poor working conditions bleed key staff.
But also the market for fairness is itself very unfair presently.
$100 can do a lot more for people in the Congo than Manhattan, if you want to take 50% of my pay for 'fairness' why should it go for people whose 'poverty' is defined as "not being able to take at least one foreign holiday per year" (the official British definition), when I'd rather it went to people who face death from poor water ?
'Fairness' is a service supplied by a government, in competition with others.
People don't want to buy it as much as you might think.
Migration tends to countries with less even distributions of income, but with greater opportunities, which correlates surprisingly well with being English speaking.
The effect of automation across all parts of the economy means that those with demanded skills will move rapidly ahead of those with skills where demand is less well met.
Governments have tried to fight this, and all they have done is screwed up the parts of the economy that had an opportunity to grow.
The reason tens of millions of Indians learned Java was that this gave them the opportunity to earn a lot more than the average in their country. It would have been trivial to tax them into the average, so of course fewer would have bothered, and many would have left. That would have had a crushing effect on the spectacular growth of what is now a key part of the whole economy there.
Some Indian Java jockeys earn 1,000 times what some peasants in India earn, do you tax them or not ? The 1K ones can leave, as can the 800, probably the x500 as well
You see why anti-globalisation protestors and other types of fascist want people to stay where they are put.
You can't do social engineering if the people you want to shaft can just leave. It doesn't matter if the basis for that is because they have too much money or too much melanin in their skin, or of their superstitions are different to your superstitions.
Most of China and India is almost uninhabitable by Western standards, so have a growing number enclaves where skilled workers from other countries will choose to live. Dubai and Singapore have both attempted to follow that model. I suspect that will grow as a trend.
Places with awful levels of inequality will struggle to attract and retain people, in the same way that companies with poor working conditions bleed key staff.
But also the market for fairness is itself very unfair presently.
$100 can do a lot more for people in the Congo than Manhattan, if you want to take 50% of my pay for 'fairness' why should it go for people whose 'poverty' is defined as "not being able to take at least one foreign holiday per year" (the official British definition), when I'd rather it went to people who face death from poor water ?
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Talking about entrepreneurship, I came across this article on Newsweek this morning about a trend where students start their own business while in school
Startup Fever: College Students Have It Bad - BusinessWeek
Since Anthony mentioned me and making website, I just want to make few comments. It's extremely easy for anyone to have a website, a blog or any web presence. It's also a proven fact that majority of these websites will fail to attract audience so if making money is the sole purpose out of starting a website, it's destined to fail from the start.
If you are passionate about a knowledge domain and can work on it several hours per day for the next 5 years while paying out of your pocket for all expense, then a website is a good idea. If not, I would not recommend it.
Quantnet was started for and by people who are passionate about this niche field of quant finance education and we are where we are today solely because of that passion.
DominiConnor
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Andy is right, and the QuantNet team deserve our respect for the job they have done.
Of course a web presence is not a business, else the world would have hundreds of millions of billionaires.
My older son recently asked me how you make a successful business, and I've been trying to explain it from first principles, which is hard, very hard. I've just got back from a lecture by Bruno Dupire on his latest work on vol modelling, and it's harder than that.
I do reject the idea that 'anyone can be an entrepreneur' as being equivalent to 'anyone can be a special ops commander'. It's an unusual and complex mix of skills, talents and attitude that happen to work in a particular time and place. I know some very smart people who do tough jobs well, but they'd make terrible entrepreneurs, and being smart, they dodge that bullet.
Of course a web presence is not a business, else the world would have hundreds of millions of billionaires.
My older son recently asked me how you make a successful business, and I've been trying to explain it from first principles, which is hard, very hard. I've just got back from a lecture by Bruno Dupire on his latest work on vol modelling, and it's harder than that.
I do reject the idea that 'anyone can be an entrepreneur' as being equivalent to 'anyone can be a special ops commander'. It's an unusual and complex mix of skills, talents and attitude that happen to work in a particular time and place. I know some very smart people who do tough jobs well, but they'd make terrible entrepreneurs, and being smart, they dodge that bullet.
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Ehhh...I believe that so long as people understand they had a chance and blew it, they'd have nothing to stand on. But nowadays, when you hear stories of alums from your alma mater who got way lower GPAs and by any stretch of the imagination, would be in the same boat as you are (if not worse), yet they're ahead and you're forced to twiddle your thumbs...
That gets my goat more than any "income inequality". If George Soros takes home $1 Billion a year and I only get $65k, I wouldn't be angry with that. So long as I get the same opportunity that others got before me, I'll be happy.
Lack of opportunity is a much bigger issue than lack of equality. Equality of opportunity is capitalism. Equality of outcome is communism.
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I partially agree with what you said.
There is a luck factor in all of this too.
Not really. Once you are in the job market, you better make the max of what you have (skills, education, GPA, network...). Some people are successful even graduating with low GPA, from an average program,... Some people are even successful without education or after dropping out (think Bill Gates, Michael Dell,..)
There is a luck factor in all of this too.
100%. I would probably make it: "Equality of income is communism"
DominiConnor
Quant Headhunter
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IlyaKEightSix is both right and wrong about people who "blow their chances".
I've blown any number myself, indeed one reason I feel qualified to address large audiences and make hardline statements about careers is that I have learned from some errors so dumb they sound like the output of a standup comic.
He espouses the view that people who screwup don't have anything to stand on, essentially they are failed people. He thus of course seems to be of the right hand side of the political spectrum.
I'm right wing of him...
Everyone screws up, do what I do for a living, and you learn that people who some here would admire have made real errors. The reason I'm more right wing than him, is a view I gained from people in the armed forces who believe that the success of a nation is a function of the quality of the people in it and everything else is luck.
If you give up on people, you are pissing away wealth. People are expensive to build, and you wouldn't throw away your Lexus because the tyre went flat and thus "failed".
If you talk to people who hate Jews, blacks, hispanics, asians et al, you typically don't find that they see them as 'inferior'. They want to blame them for their own failures, and or if they happen to be a bit more educated may choose to blame the government for not 'helping business'.
What I'm saying is that blaming people for screwing up is poor management, they just wait for you to stop whining or shouting and then go back to doing things they believe will work for them.
Saying "you blew it" is merely to make yourself feel better, and a very likely outcome is for them to blame you rather than yourself.
People often know when they've screwed up big time, but typically too late to do anything about it, and it is a very human characteristic to blame others, preferably some group who has it in for you, combining cunning and malice without the virtues you posess.
A huge reason the USA used to be so successful was that people screwed up a lot. Typically they would pick themselves up, and try again. Often this did not stop them getting backers, and there was little social or legal punishment for honest entrepreneurship that didn't work out
I've blown any number myself, indeed one reason I feel qualified to address large audiences and make hardline statements about careers is that I have learned from some errors so dumb they sound like the output of a standup comic.
He espouses the view that people who screwup don't have anything to stand on, essentially they are failed people. He thus of course seems to be of the right hand side of the political spectrum.
I'm right wing of him...
Everyone screws up, do what I do for a living, and you learn that people who some here would admire have made real errors. The reason I'm more right wing than him, is a view I gained from people in the armed forces who believe that the success of a nation is a function of the quality of the people in it and everything else is luck.
If you give up on people, you are pissing away wealth. People are expensive to build, and you wouldn't throw away your Lexus because the tyre went flat and thus "failed".
If you talk to people who hate Jews, blacks, hispanics, asians et al, you typically don't find that they see them as 'inferior'. They want to blame them for their own failures, and or if they happen to be a bit more educated may choose to blame the government for not 'helping business'.
What I'm saying is that blaming people for screwing up is poor management, they just wait for you to stop whining or shouting and then go back to doing things they believe will work for them.
Saying "you blew it" is merely to make yourself feel better, and a very likely outcome is for them to blame you rather than yourself.
People often know when they've screwed up big time, but typically too late to do anything about it, and it is a very human characteristic to blame others, preferably some group who has it in for you, combining cunning and malice without the virtues you posess.
A huge reason the USA used to be so successful was that people screwed up a lot. Typically they would pick themselves up, and try again. Often this did not stop them getting backers, and there was little social or legal punishment for honest entrepreneurship that didn't work out
- Joined
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Inequality.
My thoughts on this topic stem from a conversation I had a few evenings ago, regarding the current health care debate here in the US.
There are plenty of people here in the US who are successful, or good at the job they do. That job though may be an unskilled job. They may turn up on time, work hard and long hours, but at the end of the working week still do not have enough money to pay for health care for example - or are not eligible.
Now the current system relies on certain jobs being performed, we haven't gotten to the stage where we have automated away every unskilled job for which there are hundreds of possible employees.
As a by-product of this, if people can not access health care via the open market, they will turn to the political system to provide it. As I pointed out to a republican I know (smart person and not a tea bagger type by any means) you have a choice, you either pay people more so they can afford health care provided privatley on the market or you don't (providing the cost of health care does not decrease through some other variable, thus making it affordable to low income families).
If you don't then people will go to the emergency room or they will vote for a public health care option. Somebody working a 60 hour week who can't afford to pay for medication, but who doesn't qualify for medicaid is in a place that none of us would choose to be in.
Health care isn't like a TV or a car or a vacation to St Croix, it is a necessity of life for everybody.
I also hear the argument about "choosing to have health care". Fine some people may not want it. However if they get hit by a bus, do we refuse to patch them up? Do they have to carry a card saying "I don't pay, don't treat me". What if they forget to carry it ? Who pays?
The current system says an Emergency room visit must be treated, so arguments against universal health care effectively still leave the hospitals and local authorities bearing the cost.
The fact is, anyone with an ounce of sense will choose to have health coverage, even if they choose when they think it is appropriate to visit the doctor. The argument that people should just work harder (how does one do that with cancer and bankrupt by medical bills?) is a vapid argument.
I see health care as being a necessity for a functioning society's ability to reach its full potential and frankly in the US it has become out of reach for many people who do much needed work.
Just my 2C's worth
and sorry if slightly off topic, however I hope it illustrates where I stand on the original idea.
My thoughts on this topic stem from a conversation I had a few evenings ago, regarding the current health care debate here in the US.
There are plenty of people here in the US who are successful, or good at the job they do. That job though may be an unskilled job. They may turn up on time, work hard and long hours, but at the end of the working week still do not have enough money to pay for health care for example - or are not eligible.
Now the current system relies on certain jobs being performed, we haven't gotten to the stage where we have automated away every unskilled job for which there are hundreds of possible employees.
As a by-product of this, if people can not access health care via the open market, they will turn to the political system to provide it. As I pointed out to a republican I know (smart person and not a tea bagger type by any means) you have a choice, you either pay people more so they can afford health care provided privatley on the market or you don't (providing the cost of health care does not decrease through some other variable, thus making it affordable to low income families).
If you don't then people will go to the emergency room or they will vote for a public health care option. Somebody working a 60 hour week who can't afford to pay for medication, but who doesn't qualify for medicaid is in a place that none of us would choose to be in.
Health care isn't like a TV or a car or a vacation to St Croix, it is a necessity of life for everybody.
I also hear the argument about "choosing to have health care". Fine some people may not want it. However if they get hit by a bus, do we refuse to patch them up? Do they have to carry a card saying "I don't pay, don't treat me". What if they forget to carry it ? Who pays?
The current system says an Emergency room visit must be treated, so arguments against universal health care effectively still leave the hospitals and local authorities bearing the cost.
The fact is, anyone with an ounce of sense will choose to have health coverage, even if they choose when they think it is appropriate to visit the doctor. The argument that people should just work harder (how does one do that with cancer and bankrupt by medical bills?) is a vapid argument.
I see health care as being a necessity for a functioning society's ability to reach its full potential and frankly in the US it has become out of reach for many people who do much needed work.
Just my 2C's worth
and sorry if slightly off topic, however I hope it illustrates where I stand on the original idea.