RichardGibbons

But corporations are people, so you're taking the tax from two people and saying it all applies to one!?! :)

Totally right, IMO. More importantly, you then don't have "too big to fail".

Basically everything in that wikipedia link implies that there isn't significant economic mobility in the USA. It isn't under dispute. The answer to your question is that the inequality has been great.

Yeah, you'll also find you're wrong about that. Search for "social mobility", and you'll find out that USA is typically one of the worst countries in the world when it comes to social mobility. Basically, the rich get richer, and the anecdotal dot-com millionaires are not representative. e.g. http://www.guardian.co.uk/business/2010/mar/10/oecd-uk-worst-social-mobility Basically, if you look at the evidence, it's very hard to escape the conclusion that in the USA, the richer are getting richer, and the poorer are getting poorer. That said, I think that this topic is one of those where "it's is difficult to get a man to understand something, when his salary depends upon his not understanding it".

I suspect he's figured out that there's the potential to create as much positive change through his public persona as he does through his wealth. In effect, he's solving the global problems with his money, and solving with the national problems with his jawboning. He's an impressive guy, making such an effort near the end of his life to leave the world in a better place than it was when he entered it.

Well, you can think that, but you could also look at the evidence. Consider the "Winners take all" graphs here, particularly the second one. http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph Basically, for a generation, all the income growth has gone to the upper 20%. There's a bunch of evidence that show this. I speculate that's a natural consequence of globalization and union busting (both relatively good things, IMO). I'd agree with you that we're risking rioting in the street because of things like this. It seems to me pretty likely that if OWS does not result in significant changes, there will be a much more violent version of OWS some time in the next decade. That's why I believe that we should look for ways to reduce inequality. Finland, for instance, seems to have figured out some good ways to reduce inequality, while maintaining a productive economy. There are probably lessons to be learned there.

Yeah, I largely agree with you, Cardboard. The reason that I've raised this argument is because the last 2 pages before my comment were a bunch of rich guys chanting, "It's all the poor's fault that they're in that situation. All they have to do is step up." And that's clearly insane, and it's a bad idea to let insanity go unchallenged, because someone might believe it. The easiest way to do that is to create a counterexample that shows it's insane, which I did. (Tim, the reason that it seemed ridiculous was because it is. Take what the person is saying to the natural extreme is what creates a counterexample.) My main point is, inequalities in society are necessary, and saying "It's the poor people's fault that they're poor" is simplistic because we need the poor (and a bunch of other reasons). At the same time, if you get too much inequality, bad stuff happens. We've lived for a generation where the benefits of society's growth has gone basically entirely to the rich. The rich might like that, but it's a really bad thing, because you will eventually get society breaking some random direction. Like the Chavez in Venezuela and the rise of the religious rule in Iran. USA is in a pretty good place, and it would be bad to make the inequality so great that the poor rise up and take the country in some random direction that has a good chance of being much worse than where we are now. If you get big enough inequalities, I think it's pretty obvious that it will eventually break, and the outcome will be very unpredictable, but probably bad. To me, the easiest solution that's the most likely to have a good outcome is to reduce income inequality. Actually doing it is a bit harder. :)

So, you think the solution is for everyone to upgrade their skills? Hmm, so you'd prefer to live in a world where there are no barbers, baristas, fast food restaurants, people growing and harvesting food, child care, grocery stores, malls, garbage men, physical laborers etc. I think it would be a pretty bad thing to eliminate any retail business, any businesses involving food, and really, any other business that uses low-cost labor in its supply chain. I'm pretty sure that, given long enough without food, I'd die, and it wouldn't surprise me if the same thing would happen to you. Or do you really mean that you'd just like to retain the illusion that that's possible for everyone to be wealthy, so that you can pretend that the inequities of society are entirely because the poor don't make an effort?

Because it's a lie that they've made more true sacrifices than anyone else. People like to espouse this myth, but good luck telling that to the people working two jobs to keep food on the table. Largely, success is a matter of luck (being smart probably helps too, but being smart is also a matter of luck). I think from a monetary standpoint, I'm more successful than most of my peer group. But it was mostly luck, and there's many areas where I wasn't as lucky. That's the whole idea behind the ovarian lottery. If you don't want to pay your fair share, I understand it -- you would like to keep everything you have. But you'll have to deal with it, because that's the cost of living in a democracy, and because it's basically indefensible allocating such a huge percentage of the total output of society to such a small percentage of people. And people are figuring that out.

The refutation is that, as income inequality gets too high, the poor/middle class will rise up and kill the upper class. This is very bad for you. There are also other bad things, like lack of roads making commerce hard, lack of laws and police making avoiding being beaten up, robbed, and raped more likely, and various things like death and various hardships resulting from negative externalities.

Netnet, yeah, that's pretty clear to anyone who looks at the evidence. That said, in a way, Packer is right -- Obama hasn't done a great job. His main problem was that he was negotiating in good faith, and starting from a position that should be acceptable to both parties. Instead, he should have recognized a bit sooner that the Republicans weren't negotiating in good faith. So, his strategy should have been to take an unreasonable position from the start, so that he could have more point to concede. In that way, the Republicans could have claimed a victory, but the results would have been what Obama actually wanted from the start. That said, Obama does deserve some leeway. It wasn't at all clear from the start that the Republicans' only goal would be to oppose anything that was proposed. And, one should generally assume from the start that you're working with someone who's negotiating in good faith, rather than assuming that they don't actually have principles, but are just being obstructionist. But he should have figured out much faster that the Republicans' primary goal isn't to achieve the most beneficial outcome for the nation.

"If a minimum wage is a good thing at $10.00/hour, wouldn't it be an even better thing at $20.00/hour or higher?" So, do you live your life this way? Eating 2500 calories a day is much better than eating 500 calories a day, so you try to eat as much as possible every day, often exceeding 10,000 calories? There are plenty of things in life where the maximum benefit doesn't come at the minimum possible value nor the maximal possible value. It seems very clear to me that minimum wage is likely one of those things.

It's because of stock/option equivalence. A synthetic short, which is short calls and long puts, is equivalent to a short position. So, if there's a bunch of people who want to short but can't find shares, you get the price to borrow the shares increasing. Then, of course, it would make sense to do a synthetic short instead, to avoiding the expense of borrowing. So everyone would do that instead. So, that pumps up the price of puts and decreases the price of calls. (How much? Well, I'd guess that it would get skewed to such an extent that you'd get the same profit from lending out your long shares as you would doing a synthetic long.) For what it's worth, this also happened with Fairfax back in the day. When the stock was at $150 or so, you could make $10 by converting from long stock to a synthetic long. Worked out pretty well. :)

Not much, though it does depend on the degree of badness of the outcomes. Luckily, the cost of solving global warming is fairly low, like 3-5% of GDP, so call it roughly the cost of the Iraq/Afghanistan wars (to bring it back it to Uccmal's point). So, I'm assuming here you're talking about other expensive, low probability guesses. Awesome! We're agreed. I never would have pegged you for someone willing to spend money on environmentalism! Yeah, I'm being facetious. I know that you haven't actually bothered looking at the costs, and therefore believe that saying "it costs too much" is a persuasive argument. I know that you don't understand that the costs are relatively low compared to potential risk of, say, something that disrupts food supplies causing a large portion of the earth's population to die. That said, I can understand that you probably don't want to understand the issue. It takes some time to read about it and think it through, and this is definitely one of those "don't read stuff that disagrees with our beliefs, or would be inconvenient" things. It is kind of ironic, though, that an argument that you believe is evidence that we shouldn't address global warming is actually an argument that we should.

Hence the 1 in 6. If we knew, then it would either be 6 in 6 or 0 in 6. If you want to play Russian roulette for your family, that's fine. Don't worry about it -- the odds are in your favor that they won't die, and heck, you can get an extra 3-5% of your income if you win! Adaptation is part of the rolling the die thing. If humans weren't adaptable, things would be significantly worse. So I agree with you 100% that, if we're not willing to address the issue directly, we should try to adapt to the situation to reduce the pain as much as possible. The book Heat, by Monbiot, talks about ways to address the issue. It surprisingly isn't that hard, except for the long-haul travel issue. I would imagine that most of the scientists would wager their own money on global warming, assuming "approximately right" is sufficient to win (e.g. Newton was not right, but he was approximately right) and they get paid off if they win. It's relatively clear-cut, almost unanimous agreement. Maybe not their entire salaries, because that would be stupid, but an amount that's significant to them. It really is a no-brainer decision to address it before it becomes a problem. But I still don't think that humanity as a whole will do it, for the same sorts of reasons that we don't bother to solve debt problems and all these other things.

Yes, probably. Because it's very difficult to know what the effect of global warming could be, and there's some chance that it could result in the earth becoming much less inhabitable, causing famines or other nasty things to happen. It seems like a really bad idea to take the risk of a really bad outcome occurring, when it's not that expensive avoiding that the chance of that outcome happening. e.g. suppose I give you a 6-sided die, and say, if I roll a 1 on this die, you and your family will all die in the next 24 hours. If I roll any other number, you and your family will be fine. Would you pay something to avoid having that die rolled? I think I'd be willing to pay a fair amount rather than gamble that I hit the 83%. That said, I think humanity is likely to take the gamble, because as in general, we care much more about short-term benefits to ourselves than long-term esoteric risks.

I'm not claiming that there were charges, just that there could still be wrongdoing. There's a huge gulf between wrongdoing and prosecutable crimes.

Ending an investigation with no charges does not imply that there was no wrongdoing.

I'd say that the biggest thing to come out of it is the thinking with respect to competitive advantages. For me as an entrepreneur, it's not really about selling stuff. It's about building a moat. As such, I generally ignore ideas that wouldn't end up with a business that has a significant moat. And it also results in decisions to build the moat rather than profit in the short term. Recently, the idea of focusing on "unloved" areas is also becoming more appealing to me, kind of akin to looking at unloved value investments. Was it Lynch or someone else who suggested that you look for the most boring or disgusting areas of the market, and look to invest there? As an entrepreneur, that means focusing my efforts on niches and geographies that are boring/ugly and where my skill set is rare.

I think he's answered that already. :) The great thing about this conversation is that, though only a couple people have actually talked about their net worth, the conversation itself is pretty useful in judging people's credibility. I love the irony. Personally, I'm in the camp of "the strength of someone's arguments is a better determinant of their credibility than the size of their paycheck". So, I won't feel obliged to talk about my net worth. (That said, I don't make that many strong arguments on this board either, so, in the absence of $$$ evidence, I suggest the people want to categorize me put me in the "bozo" camp.) What I want to see now is a conversation between Moore and Harry. I think they'd either be the best of friends or completely contemptuous of each other. But I don't know which. :)

With respect to food subsidies, I have a hypothesis that they may be accomplishing a good thing. I suspect that in an efficient, non-subsidized market, there would be little incentive to overproduce. As a result, I suspect that in certain years (say one in twenty), there would be droughts, which, without the oversupply caused by subsidies, would result in starvation.

Sorry. You kind of refuted what people describe as the main benefit a gold standard, and I figured you realized that. Basically, I think what it amounts to is that the gold standard wouldn't provide the restriction against the government growing the money supply, because the government changing the ratio would be built in. That said, thinking about it a bit more, it could still be beneficial, in that when the government changes the ratio, at least it would be visible to everyone. So it would be more difficult to devalue money without people knowing. I don't think the scenario is particularly pie in the sky -- if you have any two things growing geometrically at different growth rates, one is eventually going to grow much, much bigger than the other. Ok, I tell you what. Let's each take 10 people. I'll have 10 of them build a house. You have 5 of them build a house, and 5 of them dig up rocks. Then we'll see who finishes building the house first. You may get your house, but it won't be as fast as I get my house. So, digging up rocks isn't mutually exclusive with spaceflight. It just involves allocating resources in a way that reduces the overall productivity of society. (Yes, I know that right, it doesn't cost that much today because not that many people are mining gold. But I thought we were talking about a world where people try to get enough gold to match the growth in GDP, so that lots of people have to spend time mining gold and looking for more efficient ways of mining gold rather than becoming scientists and brain surgeons etc. (Hey, does this this remind anyone of Wall Street? :) )) Fair enough. I think you're probably right that we won't get it.

As an serial entrepreneur, I'd say that the tax is basically irrelevant until it gets over 60%. I'd suggest that some of the better ways to encourage entrepreneurship are through socialized medicine and improved education. If you don't have socialized medicine then you're gambling with your family members' lives if you quit your job and lose your health insurance to start a risky venture. The more educated populace you have, the more people will be able to start businesses and the higher their chance of success. That's why the pro-business party is so eager to fund government healthcare and education. Oh wait. Never mind.

So, basically what you're saying is that it doesn't really work, or at least doesn't solve the problem of money printing. Governments can still basically print as much money as they want by changing the ratio, and indeed will be forced to do so as the economic output and supply of gold diverge. I find it fascinating that it's so easy to refute the "gold standard ensures the government doesn't cause high inflation through money printing" argument. So, you'd opt to spend the resources of humanity digging up rocks instead of, say, travelling to other planets, inventing cheap limitless energy sources, learning about the way the universe works, creating great art, curing diseases, and eliminating the ravages of aging? It provides jobs, but so does pretty well everything that improves the standard of living. It seems like the opportunity cost would be very high. Thanks for your help on this. It seemed to me that it didn't make sense, but I figured that my ignorance just meant that I was missing something. The fact that someone so knowledgeable about gold and mining in general talks about changing ratios to solve the basic divergence argument really clarifies the issue for me.

So with the gold standard, how do things work as labor produces value in excess of the world's gold supply? For instance, suppose the entire world consists of $1 backed by 1 oz of gold, and 1 person producing 1 widget per year that they sell for $1. Suppose that a bunch of people are born, and productivity goes up with the new iWidgetMaker, so that you have 10 people each producing 10 widgets per year. What's supposed to happen in this scenario? Your economy is still 1 oz of gold, but you have 100 widgets to trade. Are you supposed to just get super high velocity of money so that the widget still costs $1 and backed by 1 oz, but people are moving that $1 around 100 times faster? Or is there supposed to be huge deflation so that the cost of the widget decreases to be worth a penny, 1/100th of an oz? Or is your economy basically constrained by how fast you can produce gold, such that a huge portion of humanities resource goes towards finding more effective ways of digging up rocks? If the total economic output is growing at a higher geometric rate than the growth rate in gold, how is the gold standard supposed to handle that divergence? (This isn't a rhetorical question. I haven't thought about the issue much, so I'm curious whether there's something simple I'm missing, or whether gold standard advocates just pretend it isn't a problem.)