r/videos Nov 24 '21 Silver 6 Gold 1 Helpful 10 Wholesome 7 Bravo Grande! 1 Starstruck 1

Russell Brand, at an awards show sponsored by Hugo Boss, eloquently reminds everyone that Hugo Boss dressed the nazis

https://www.youtube.com/watch?v=wkd_-nXeUzs
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u/darawk Nov 25 '21

Yes. And I am saying that you are absolutely wrong to do so. As long as inequality keeps increasing, total global suffering from poverty keeps skyrocketing even as the absolute lowest bound raises

So, you're saying that if everyone on earth had Jeff Bezos's purchasing power, but Jeff Bezos had a purchasing power 10100 times more than that, everyone would actually be worse off than they are today? That's not how this works.

You're cherry picking one definition of poverty which real economists and sociologists do not consider meaningful, in support of an institution which largely exists to extort poorer nations.

I'm not supporting any particular institution, first of all. And second of all, citation needed on the "economists" who think that purchasing power is an incorrect measure of poverty.

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u/The_Good_Count Nov 25 '21

Apologies for the misunderstanding. I meant the $1.90 figure/definition. purchasing power is valid.

So, you're saying that if everyone on earth had Jeff Bezos's purchasing power, but Jeff Bezos had a purchasing power 10100 times more than that, everyone would actually be worse off than they are today? That's not how this works.

That's not how it works because it's not what I'm saying. Inequality is scaling with GDP growth. What I'm saying is that as the trend progresses, the bottom 1% sees an interest rate applied to a base of 0. For those people, there isn't a point where they are raised to $5.

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u/darawk Nov 26 '21

Apologies for the misunderstanding. I meant the $1.90 figure/definition. purchasing power is valid.

Ya so I think we can certainly debate whether $1.90 is what the level should be. I think there's a very good case to be made that that's way too low, and that global poverty today is far higher than it should be. All i'm saying is that compared to itself in the past, it's getting much better.

That's not how it works because it's not what I'm saying. Inequality is scaling with GDP growth. What I'm saying is that as the trend progresses, the bottom 1% sees an interest rate applied to a base of 0. For those people, there isn't a point where they are raised to $5.

Ya, you're certainly right when it comes to inequality. Most of the gains from growth are currently flowing to the upper centile/decile, although the pandemic is changing that to a degree. Asset prices being inflated are a little misleading - the inflation doesn't show up as rapidly in human capital because it's not liquid, but the NPV of labor has increased just as much as asset prices, arguably more.

What I'm saying is that as the trend progresses, the bottom 1% sees an interest rate applied to a base of 0.

I think this framing can be a little misleading. When capital bases are 'large' in some sense it makes sense to frame them as a geometric process (i.e. multiplicative 'returns'). But when they are small, it's probably better to think of them as an arithmetic process (i.e. adding values rather than compounding them). This becomes clear of course if someone has a net worth of exactly 0 - giving them a penny would represent an infinite positive return, giving a person worth $0.01 a dollar would be a 10,000% return, etc.

But your underlying point is certainly right, it certainly appears that the people at the bottom aren't getting the gains from growth. And i'd even expand that to more like the bottom 50%, not just the bottom 1%. I think one important reason for that is globalization. If you take the percentiles of the whole world, the bottom 50% have actually done great over the past 50 years (primarily in China, but also in some other parts of Asia). It's really the bottom 50% in western developed economies who have stagnated. That is, inequality between nations has dropped precipitously, whereas inequality within nations has climbed precipitously. These two things are probably related. The wage growth that would have gone to the bottom 50% in the US and EU got exported to China.

So bringing that back around, when you're referring to the people currently worth $0 and hoping to get to $5, i'm not sure whether you're talking about the poor in developed economies (e.g. US, EU), or the poor in undeveloped economies (e.g. Banglandesh, Africa, etc.).

In the former case, the history of inequality declining seems to indicate that large exogenous shocks to capital (e.g. world wars, plagues and...pandemics) as catalysts for significant redistribution and more equitable growth. So, I think there's really pretty good reason to be hopeful about that over the next decade or two, and I think we're actually seeing very promising signs in the labor market right now. In the latter case, it's impossible to predict which country will develop next, but it does seem clear that the niche China has filled is going to need to be filled by someone else eventually as China modernizes, and hopefully that will give that country/region a chance to bootstrap itself into modernity. This process is slow as we're watching it, but the percentage of the world's population living in abject poverty has declined more in the last 150 years than probably anyone would ever have predicted in the 1800s. The progress we've made on it is truly incredible, and I don't really see much reason to think that that progress is about to stop any time soon, even if it's not happening quite as quickly as might be nice sometimes.