[ExI] Middle Class Doomed?

Kelly Anderson kellycoinguy at gmail.com
Thu Oct 10 20:58:20 UTC 2013

On Wed, Oct 9, 2013 at 5:33 PM, Anders Sandberg <anders at aleph.se> wrote:

>  On 09/10/2013 21:37, Kelly Anderson wrote:
> On Mon, Sep 30, 2013 at 2:17 PM, Anders Sandberg <anders at aleph.se> wrote:
>>  Whether it is a natural law is a good question, actually.
>  The folks at the Santa Fe Institute certainly seem to think that it is.
> They are smart people, pursuing original lines of thinking, but it makes a
> lot of sense to me.
> That is just a disguised argument from authority.

That is a really great point.

> Santa Fe is great, but remember that they also are motivated to hope for
> universal laws of complexity. We need better arguments for it than that it
> is popular at cool places.

Complexity is a new science. It is probably early to expect a lot of really
strong results from a science this young. Nevertheless, I personally find
it to be very compelling and entirely worth pursuing.

> It is not just that power-law tails are found in all industrialised
>> economies, but they seem to follow robustly from a lot of models too (e.g.
>> http://arxiv.org/abs/condmat/0002374 ).
>  Do you happen to know what they mean by "distribution of wealth tends to
> be very broadly distributed when exchanges are limited" Anders?
> When the interaction between agents is more limited than "everybody trades
> with everybody" the distribution gets more lumpy and unequal.

I see. Thanks. Does that happen in real economies? I guess maybe like in
old Soviet Russia??? Would the lack of certain kinds of stores in American
inner cities be an example of this kind of lumpiness?

>   The question sort of comes down to this, "Is it always a good thing
> when the exponent is adjusted so that the middle class is larger?"
>  It seems obvious, but perhaps it isn't so obvious. I'm not entirely
> sure, but my gut says a healthy middle class is a good thing.
> OK, here is a utilitarian argument: wellbeing as a function of wealth is a
> very convex function.

Happiness is only positively influenced by a rise out of abject poverty.
Once you reach a certain level, happiness is no longer correlated with
wealth. Is that what you mean when you say it is a convex function?

> So the sum total wellbeing is maximized if the distribution of wealth is
> equal.

I kind of understand, but some people are savers, and some spenders, so
even if you achieved this, there is no possible way to maintain it for any
length of time. Just imagine if everyone in America had the same amount of
money one day. Ten percent would blow through that money in a matter of
weeks. Ten percent would serve those people and end up with twice as much
money in a matter of weeks, and you would be well on your way back to a
Pareto distribution in a matter of months. How would you prevent that?

Of course, one might counter by pointing out that (1) maybe we cannot sum
> or compare individual wellbeing, (2) maybe it is not the sum that should be
> maximized, and (3) reallocation schemes might be impermissible for
> deontological reasons.

Well being is also not correlated to wealth, other than escaping abject
poverty. So well being isn't a function of money, so using money (rather
than education or therapy for example) to distribute well being is a kind
of false argument, don't you suppose?

While I think you can sum or compare individual well being theoretically,
it would be difficult to do so in actual practice. I prefer to let each
person pursue their own well being as they see fit to do so.

The founding fathers of America famously asked for the ability to pursue
happiness, not to have happiness. Equality of opportunity is not equality
of outcome.

> A classical leftist argument is that wealth is power, so a more equal
> distribution distributes power in society widely. The problem is that it is
> not clear how power actually scales with wealth. It could be that it is
> convex like sqrt(W) or concave like W^2. If it is convex even power law
> tails are not too bad, while concave might make even very equal societies
> look falsely egalitarian while small coalitions rule. And a realistic view
> that things are a messy combination of skill, ambition and wealth might
> imply that in different domains different forms hold.

It is clearly a complex subject. However, I question the premise to some
extent. If you and I had equal power, and you are clearly more intelligent
than I, then giving us equal power could lead to a worse outcome than if
you made the decisions by yourself. So one COULD argue that the best
outcome would be if the most intelligent person to be found was made into
the dictator of us all. However, there is limited bandwidth to one person's
thinking, no matter how intelligent they are, so distributing power to the
more intelligent or ambitious or even wealthy might not be a necessarily
bad thing. There is a reason that we elect successful people to the office
of President (the current occupant being the exception to the rule.)

>  What I'm seeing is that globalization, the Internet and dematerialization
> are things that push the winner-take-all paradigm to levels that it hasn't
> previously attained.
> Yes. This is true. It also reaches the limit: it is not possible to be
> more global than totally global. Once we have good translation everybody
> will be in the same big domain.

Except that  we still have countries with less infrastructure, with poorer
educational systems, with religious domination (Iran, Utah), and other
factors that will keep things unequal for quite some time.

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