Capitalism Rules, Socialism and Communism Suck Thread

[wufwugy]

What I've gathered from the economists I read and that I've spoken with, nobody knows what causes inequality or what can change it, and income is a meaningless concept.

[spoonitnow]

What I've gathered from the economists I read and that I've spoken with, nobody knows what causes inequality or what can change it, and income is a meaningless concept.

Chance + inherent difference in skill.

[Poopadoop]

What I've gathered from the economists I read and that I've spoken with, nobody knows what causes inequality or what can change it, and income is a meaningless concept.

This article seems to have some ideas garnered from people in authority.

https://www.weforum.org/agenda/2015/...ity-in-the-us/

[wufwugy]

This article seems to have some ideas garnered from people in authority.

https://www.weforum.org/agenda/2015/...ity-in-the-us/

Yes they have ideas, and they're trying to figure it out.


Full disclosure, I have essentially three different experiences with economists on this.

(1) One of my macro professors held the preferred explanation of the "traumatized worker". That is that workers are more fearful of negotiating their wages up due to the threat of being replaced by cheaper outsourced labor. I think this explanation is decent even though I don't know if it shows up in the data. It is an idea some serious economists have taken seriously. An existential problem with this explanation, though, is that it only looks bad when you look at certain data (like only US instead of global) and data in a certain way (like conflating income levels in different countries).

She was also a fan of blaming lack of labor regulations. Lucky for us, she wasn't a labor economist, and wasn't very good and was not kept on by the university.

(2) One of my micro professors, who specializes in the topic of inequality, said that while people have ideas about what causes it and what to do, nobody knows.

(3) Popular economist blogger Scott Sumner argues that the data is wrong and misleading. I already covered the misleading part, but the "wrong" part includes things like the data that say inequality has been growing are flat out wrong. Once all forms of compensation are adjusted for, the change since the 70s disappears. I've seen these data in the past but I don't have them handy.



Something else that might be the most important part of all this is that methods economists use to measure value changes in goods and services are, for a lack of a better word, abysmal. For example, computers are continually improving and adopting new services. Economists don't know quite how to measure those changes in terms that accurately compare to previous states. According to blogger at econlog David Henderson, when he began researching how other economists do it, he was surprised at how bad the methods are. It's not the the economists are making mistakes, but that nobody even knows how to do it.

In a way, this shows us how it may be that poor people can own refrigerators and televisions and smart phones and people still call them poor. They go from being poor to being incredibly wealthy based on the method of measurement. Furthermore, the measuring is getting even harder because of how much is becoming digital. My go-to example that encapsulates all this is in music. How much time and energy and money did people spend CDs back in the 90s compared to how little people spend today for a far superior product? My personal costs decreased by >90%/month while the quality and quantity of my consumed products and services increased by some unquantifiable (but probably large) amount.

[Poopadoop]

Food for thought:

http://www.demos.org/blog/10/20/15/u...mark-17-charts