Inequality

[kenberg]

There are different ways to look at the problem and ew come from different experiences. But it might be worthwhile to divide the issue into two fundamentally different blocks.

 

1. Opportunity to choose, based on interest and ability: This is my natural starting point. I feel I was most fortunate to live when and where I could choose my path, and I worry that this is more difficult now than it was when I was young.

 

2. The changing nature of useful employment: Gerben and Akwoo, and others, develop this idea. I think they might respond to my version 1 by saying that it's fine for someone with mathematical talent (I ahve some such talent, no one ever mistook me for Einstein) to be able to develop it, but the fact is there are many who have no talent that can be developed into a marketable skill in today's world. I apologize if I am mis-stating their views.

 

In both 1 and 2, we can argue about whether the problem is real. My point here is merely that these are two very different aspects of the inequality problem.

 

 

 

Perhaps Mike's arguments should go into category 3: To what extent is it true that government or society or whatever is discouraging people from making the most of their talents? It's a fair question even if, as I think is correct, most of us do not agree with Mike's conclusions.

 

I am not rich. Anyone who knows me does not have to be told that. But we are secure enough so that we can sometimes lend a hand to others, and right now we are engaged in something like that. The fundamental question is not what the expense will be, although certainly that has to be kept within bounds we can handle. Rather the fundamental question is whether it will do any good. If it works, we are happy. If not, then not. A very Christian, and conservative, friend, now deceased, worked through his church directly helping some people at a personal level. He would sometimes get very very frustrated. It's good to help, but people are supposed to do their part by not acting like total idiots.

 

All of this is easier to see in one on one settings, but it applies in the large also.

[mike777]

"To move the discussion regarding inequality away from risk; perhaps to a discussion that inequality can be reduced by learning how to gain from randomness, uncertainty , disorder, errors, stressors, etc rather than trying to stabilize them"

 

At the very least to honor people and try and increase the number in the tail who are willing to take on this risk, who want to risk gains from uncertainty,,,etc, rather than focus on govt programs aimed at the vast middle and stability.

 

However I do understand those of you who prefer to focus on stability and making the middle class more robust...I just ask you consider another approach that goes far beyond robust( see#4) in fighting inequality.

 

Again I have no issue with overprotecting the weak, the very weak, ----

 

Definition of ROBUST

 

---

 

 

btw1 ya ken you understood my post.. I think what the xpense is key. Do you have skin, real skin in the game, not what you believe is good or best with no skin.

 

 

1

 

a: having or exhibiting strength or vigorous health

 

b: having or showing vigor, strength, or firmness <a robust debate> <a robust faith>

 

c: strongly formed or constructed : sturdy <a robust plastic>

 

d: capable of performing without failure under a wide range of conditions <robust software>

[hrothgar]

Absolutely! No one in business that I know romanticizes risk the way Mike seems to do.

 

Why would you listen to anything that Mike says?

Look at the following from his last post

 

As for Germany it seems that they took on great risk as a society when it came to a nuke first policy to stop Russian tanks that would render large parts of West Germany a wasteland for a thousand years. I mean their policy was to launch nukes on their own country. Germany took giant risks in intregrating East Germany back into one country.

 

1. Germany never had nuclear weapons

2. NATO policy included the possibility of launching nuclear strikes against the Russians, however, these policies were by no means popular in Germany (Germany had one of the strongest "No Nukes" movements in Europe)

[mike777]

fwiw germany agreed to launch nukes on and against its own territory to stop tanks..

 

This was a very brave and risky decision the brave Germans took. I honor them.

 

 

I am surprised people dont know history...recent historyh.

 

With that said there was robust debate on this topic in West Germany...not so much in the East.

[hrothgar]

"To move the discussion regarding inequality away from risk; perhaps to a discussion that inequality can be reduced by learning how to gain from randomness, uncertainty , disorder, errors, stressors, etc rather than trying to stabilize them"

 

The problem with this theory is that economics and history both clearly demonstrate that humans are risk adverse.

 

If I offer someone a choice between

 

A. One dollar

B. A 50% chance of two dollars and a 50% chance of zeros dollars

 

the vast majority of people will choose option A

 

Indeed, if I offer someone a choice between

 

A. 98 cents

B. A 50% chance of two dollars and a 50% chance of zeros dollars

 

An awful lot of them will choose option A. This has a lower expected value, but people are willing to sacrifice $$$ to decrease their risk.

 

If you don't believe these types of experiments, consider insurance.

Buying insurance is sacrificing expected value for risk and its one of the biggest market out there.

[mike777]

I hope in my numerous posts I agree that risk takers are a tiny minority...I only wish to try and increase that number, to honor and enoble rather than degrade the few.

 

Thus my one recommendation which to be fair posters hated.

 

In any event I hope to move the discussion and the many thoughtful posters to the issue beyond robust for the vast middle and to overprotect the very weak.

 

I suggest a way to reduce inequality.

[hrothgar]

fwiw germany agreed to launch nukes on and against its own territory to stop tanks..

 

This was a very brave and risky decision the brave Germans took. I honor them.

 

I am surprised people dont know history...recent historyh.

 

With that said there was robust debate on this topic in West Germany...not so much in the East.

 

Mike

 

1. My father taught East / East West German relations for years

2. When I was growing up, the Frankfurter Allgemeine Zeitung was required reading in my house for dinner table conversation

3. I spent many a summer living in Germany growing up

4. When I graduated college, my first job in DC was working for the Defense Budget Project at the Center on Budget and Policy Priorities working on inventory depletion models for ammo in Western Europe

 

I'm not the one that doesn't know recent history.

 

1. The German's had no effective voice in determining NATO first use policy.

2. Domestic polls in Germany clearly showed that the German population was opposed to NATO's first use policy

 

No German government has ever been willing to leave NATO over the first use doctrine.

However, this policy was never very popular within the country and the Germany was the first NATO member to formally petition that NATO adopt a no first use policy.

 

BTW, you might want to remember that those "brave Germans" were an occupied country up until 1955.

The US started deploying tactical nuclear weapons in West Germany at least a year before the end of the occupation.

[mike777]

regarding germany....posters make my main point

 

 

germans brave and risk takers between 1946 and 2000.

 

I respect and salute you.

 

 

 

See your own posts.

 

 

regarding the thread of ineq....I make a contrariwise post....

 

I hope you think my posts worthwhile to think about.

 

--

 

fwiw I view east germany as a liberal country and the worst....

[kenberg]

btw1 ya ken you understood my post.. I think what the xpense is key. Do you have skin, real skin in the game, not what you believe is good or best with no skin.

 

If you mean to be insulting, you are succeeding. If you mean to be making a clear point, you are failing. What skin in what game? What is the difference between skin and real skin? An do you really want to get into a public discussion of who has more skin in some game or another? I really have no idea what you are talking about here, and I doubt I would much like it if I could figure it out. I guess your basic point, since you seem to think I understand your points and in some sense I think that I do, is that you are the one with real skin in the game, whatever this cliche means, and the rest of us are just posers out here babbling.

Message received, over and out.

[Winstonm]

It sounds to me like Mike is channeling Ayn Rand.

[PassedOut]

It sounds to me like Mike is channeling Ayn Rand.

How can one know?

[jdeegan]

It takes a bigger problem or mistake for a large business to fail than a small one. Its size usually gives it a bigger safety net.

 

You're right that a large business has greater inherent risk. For instance, the likelihood that there's an employee out sick on any particular day is probably close to 100%. But conversely, that employee is less likely to be critical to the success of the business -- the adage "no one is irreplaceable" is mostly true. A large company is more likely to make a mistake that costs the company millions of dollars, but that might be only 1% of annual profits for them, while a mistake of $100,000 could wipe out most of the profit of a small business.

:P I would like to add another dimension to this Goldilocks debate. Is the porridge too hot or too cold or just right? Properly done government regulation of food service health and safety makes it much easier for new potential entrants to the business. Otherwise, only local restaurants with long term community ties and the big fast food chains with well-established internal health measure controls will have a chance to break into a market.

[onoway]

:P I would like to add another dimension to this Goldilocks debate. Is the porridge too hot or too cold or just right? Properly done government regulation of food service health and safety makes it much easier for new potential entrants to the business. Otherwise, only local restaurants with long term community ties and the big fast food chains with well-established internal health measure controls will have a chance to break into a market.

Not sure I agree. I believe the fastest growing segment of business in food service industry is the food truck business. They are causing any amount of controversy in some cities because they are seen by restaurants to have huge advantages. It generally takes a very large amount of money to start a restaurant, quite a bit less to start a food truck business. Those who start there can then make enough money to fund a more traditional style of restaurant. However, from the interviews I've seen, most of the owners would prefer to have more trucks out on the road, and at least two are working on franchises. Several owners cited fewer hassles as the major advantage. It's a very interesting development.

 

New restaurants often are higher end enterprises, and with fewer people able to afford them...... So wanna be restaraunteers fight back by taking to the streets maybe? B-)

[onoway]

Another point is that the key phrase is "properly done".Some regulations are bizarre, as having to have a separate sink designated only for washing hands. I have seen such a sink passed by inspectors when it wasn't even looking as though it was hooked up to anything, it was just attached to the wall. Nobody missed it, they washed hands in one of the three other sinks in use. But if an inspector had wanted to, they could have forced the owner into spending several thousand dollars to hook that sink up. Just because.

 

Also, government regs are often ignored as any food inspector or anyone who has ever prepared or taken a food safe course can tell you. Basically no city I have ever heard of has enough inspectors to see if regs are being followed. Most places, nothing much happens even if they aren't unless it is a serial violation or extremely severe, like one restaurant having skinned coyotes in their freezer. That one hit so many buttons at once they could be and were shut down. However, as in most cities, the owners could just clean things up, change their business name and open up again.

 

In most places, once approved for business it's a gamble whether or not a place will ever get inspected again unless someone brings the place to the health department's attention. I bet every single person knows someone who has had at least mild food poisoning at one time or another, which suggests that something was very far indeed out of order with how the food was being handled. So it's actually often more stringent to get going now than to keep on once you've had the initial inspection, even if there are health regulation violations from the ongoing business.

[hrothgar]

New restaurants often are higher end enterprises, and with fewer people able to afford them...... So wanna be restaraunteers fight back by taking to the streets maybe? B-)

 

One major difference that I've noticed between the US and Asia is the lack of good street food.

 

If you travel in Thailand, China, Singapore, etc. you run across large numbers of vendors selling food on the street.

They'll have portable braziers, a wok, an ice chest, maybe even a table and a few chairs.

In many cases, the best meals that I encountered in these countries were a quick lunch from a street food vendor.

The food was cheap, quick, and often phenomenal. (I also got nailed by some nasty cases of food poisoning a couple times, so you take your chances)

 

Their really isn't anything like this in the US.

Even the food trucks are a weak approximation...

[nige1]

The problem with this theory is that economics and history both clearly demonstrate that humans are risk adverse.

If I offer someone a choice between

A. One dollar

B. A 50% chance of two dollars and a 50% chance of zeros dollars

the vast majority of people will choose option A

Indeed, if I offer someone a choice between

A. 98 cents

B. A 50% chance of two dollars and a 50% chance of zeros dollars

An awful lot of them will choose option A. This has a lower expected value, but people are willing to sacrifice $$ to decrease their risk.

If you don't believe these types of experiments, consider insurance.

Buying insurance is sacrificing expected value for risk and its one of the biggest market out there.

Gambling (e.g on the stock-market) is the converse, which some others choose.

[hrothgar]

Gambling (e.g on the stock-market) is the converse, which some others choose.

 

Economists typically explain away gambling by assuming that the act of playing cards or pulling a slot machine lever generates utility in and of itself.

(Of course, some people are also delusional enough to think that gambling offers a positive expected value and a small number of people are sufficiently skilled that gambling really does offer positive expected value)

 

In addition, few people gamble away more than a small percentage of their assets.

They insure much more.

 

The most obvious counter example to this are low income individuals who pay the stupidity tax play the lottery.

[nige1]

Economists typically explain away gambling by assuming that the act of playing cards or pulling a slot machine lever generates utility in and of itself.(Of course, some people are also delusional enough to think that gambling offers a positive expected value and a small number of people are sufficiently skilled that gambling really does offer positive expected value)

In addition, few people gamble away more than a small percentage of their assets.They insure much more.

The most obvious counter example to this are low income individuals who pay the stupidity tax play the lottery.

Few people spend more than a small percentage of their assets on insurance or gambling.

Insurance is a small outlay to counter an unlikely calamity.

Gambling is a small outlay to gain an unlikely but life-changing windfall.

They are converses. To an observer, both are mug's bets, in terms of expectation.

But we stupid paupers may regard the lottery as our only hope of escape :)

[kenberg]

I now have car insurance beyond liability. Getting simple minded in my old age. From 1954 (first car) until now (new car) I had liability only. Seemed right. Still does, actually, but Becky will sleep better. I did hit a deer some years back but otherwise not having had collision insurance has been pure gain. And it avoids silliness. After I hit the deer I was advised by people who carried insurance and knew about such things that it was very important that I assert that the deer ran into my car instead of saying that I hit the deer. I prefer to go through life w/o making such distinctions.

 

There have been a couple of scares. In 1980 I bought an Isuzu diesel and not long after I went into a wild back and forth skid on a road that was surprisingly slippery. Crazy, but my mind focused on the damage I would do to the car. I managed to get it back on track after a bit. In 1990 I bought a Honda and a little bit later someone stole it. Oops. But I got it back a few hours later. As near as I could tell, some kids wanted to get from here to there and so they did. The key bolt was destroyed, but that was all.

 

I do carry house insurance.

 

I have mixed feelings about the lottery and other state run gambling enterprises. The way to win is, of course, to let someone else play and that's what I do. Maryland is in the process of greatly expanding its gambling operations. When it first was put to referendum it was as a small scale operation and, it was said, it would stay small. Anyone who believed that probably buys gold watches for a buck. Gambling brings in money, sure, at least in some way. But ultimately it siphons off a lot, and it puts the state in the at best amoral position of encouraging its citizens to do something stupid. I don't much like it, but the world is as it is.

[mike777]

If you mean to be insulting, you are succeeding. If you mean to be making a clear point, you are failing. What skin in what game? What is the difference between skin and real skin? An do you really want to get into a public discussion of who has more skin in some game or another? I really have no idea what you are talking about here, and I doubt I would much like it if I could figure it out. I guess your basic point, since you seem to think I understand your points and in some sense I think that I do, is that you are the one with real skin in the game, whatever this cliche means, and the rest of us are just posers out here babbling.

Message received, over and out.

 

 

wow I certainly did not mean to be insulting in any way and in no way am I talking about myself. I do appreciate reading your thoughtful posts.

 

Not sure how to make my main point any clearer than I have tried in my previous posts on how to attack inequality by other methods than focusing on the vast middle. To try and focus on the tail rather than the average.

 

yes skin in the game means having money at risk in the company being discusssed. For example you are the owner of a local rest. you are a hard worker and productive but you can still fail and lose money you have at risk. But failing rest. makes room for a new and improving rest on an industry scale. Thus failure can improve an industry. An example of not having skin in the game would be nonowners telling all the rest. they have to raise wages to fight inequality.

Another example is airlines....when a plane crashes the industry learns and makes flying much safer over the long term..These are 2 example of industries that gain from uncertainity, failure and volatility, trial and error. btw giant airline companies go bust all the time.

 

Now note will all the new bank laws with the purpose of making them more stable..they are in fact bigger and risker than before 2008. Risk to the system has increased.

 

 

 

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as for the size issue, I think the perceived safety for large companies is an illusion as I have stated before. Even crony capitalism and govt stepping in seems only a stop gap for owners taking losses. For example in retail....think sears, kmart, kreesge...etc....walmart is huge but not unbeatable. Size does give walmart some advantages such as purchasing power but it can also make the hidden risks harder to find and attack. Sears was much much bigger than Walmart for many years.

 

Size risk can also apply to countries as to compare say Russia to a citystate such as Monaco.

[onoway]

One major difference that I've noticed between the US and Asia is the lack of good street food.

 

If you travel in Thailand, China, Singapore, etc. you run across large numbers of vendors selling food on the street.

They'll have portable braziers, a wok, an ice chest, maybe even a table and a few chairs.

In many cases, the best meals that I encountered in these countries were a quick lunch from a street food vendor.

The food was cheap, quick, and often phenomenal. (I also got nailed by some nasty cases of food poisoning a couple times, so you take your chances)

 

Their really isn't anything like this in the US.

Even the food trucks are a weak approximation...

That's because regulations won't allow them. Even the food trucks have faced an uphill battle in lots of places. Which was my point in responding to JDeegan about government regulations opening up new opportunity...doesn't appear to work that way.The government isn't prepared to let citizens take the risk of food poisoning (even though it still happens anyway in spite of all the regulations).

[mike777]

fwiw I think you last sentence is your main point. try and stablize and the result is?

 

fwiw prefer a trial and error process where winners ...win... and losers fail....

 

 

on average you...

 

the point being to attack inequality.....

[hrothgar]

That's because regulations won't allow them. Even the food trucks have faced an uphill battle in lots of places. Which was my point in responding to JDeegan about government regulations opening up new opportunity...doesn't appear to work that way.The government isn't prepared to let citizens take the risk of food poisoning (even though it still happens anyway in spite of all the regulations).

 

I don't think that regulation is the only reason that you don't find the same sort of street food here in the US.

Look back 100 years where the regulatory difference where much less.

 

You'd still find precisely the same type of street food vendors in China.

You wouldn't find anything at the same scale here in the United States.

(The closest thing that I am aware of is the tamale vendors that you used to find in the South West)

[barmar]

I don't think that regulation is the only reason that you don't find the same sort of street food here in the US.

Look back 100 years where the regulatory difference where much less.

 

You'd still find precisely the same type of street food vendors in China.

You wouldn't find anything at the same scale here in the United States.

(The closest thing that I am aware of is the tamale vendors that you used to find in the South West)

I think it's just a cultural thing, similar to open-air bazaars that are common in some countries, but not others.

 

For some reason, I also associate cultures with bazaars and street food with barter economies. Is there a correlation?

[barmar]

btw giant airline companies go bust all the time.

But when they do, they usually get acquired by some other giant airline.

 

That's another difference between big and small businesses. When a small business goes broke, it usually just closes up shop. Big companies go through bankruptcy restructuring, or they look for a way to get acquired (there are usually some valuable pieces of the company, or contracts that someone wants to take over).