The core issue in market heavy economies is that people with money make money and everyone else doesn't. Being smart and hard working and having poor parents means you will be poor. Being dumb and lazy with rich parents means you will be rich. Maybe with 3 or 4 full generations of nothing but hard work and luck you might make it up from working to middle class. Maybe.
This is never really discussed directly. Only using a proxy like race or caste.
It's equally probable to say that the driving factor is caste discrimination, which is the underlying cause of economic inequalities. They are two highly correlated variables, and disaggregation is difficult, but there's no (a priori) reason to assume the drive is economics and the "proxy" is race.
The caste system is worse than just being rich or poor. Poor people rarely accept that they have to be poor and it's the natural order of things.
I remember when I saw this for the first time and it left me speechless. I'd work with a team of Indians, all officially with the same job title and qualifications. But while most of the guys (this was a long time ago, it was all guys) would really work hard, there would always be one who knew nothing about the job and didn't even bother to pretend he's working. He would literally just walk around acting like the CEO on inspection, or even like a slave owner, wearing a suit that cost as much as the yearly salary of the other guys. He was of course paid a lot more then the rest of the team even if he couldn't find his way out of a wet paper bag.
But what shocked me the most was that the rest of the guys, even when they knew I'm (very publicly) on their side, still talked as if this is the natural order of things. It was not only normal, it was expected. I realized that it's not like a prisoner obeying the guards because they have guns, it's like someone obeying a priest because "he talks to God".
Those colleagues accepted that their position is immutable, that those things were happening exactly the way they were supposed to happen. The "natural order of things". Maybe things changed in recent times, I certainly hope nobody accepts their position just because someone wants an easier time discriminating them.
There are educational systems that mitigate that problem. Not perfectly, but to a large degree.
Many people studying today had poor parents that never had any form of higher education. I don't think the US systems is good at this. It concentrates on excellence or at least the appearance of it, although there are probably exceptions if you parents are rich or influential. Bad thing is that it works to a degree because the smartest heads get concentrated while others need to be content with lower quality education. A system that should be obsolete with modern logistics of information. Tech is currently leveraging that weakness by building an even worse alternative with their own campuses. While integrating the industry in universities can be quite the advantage, I doubt this will be a helpful basis. There will be people that like to live in infrastructure belonging to their employer, it is just the modern version of a cult.
I don't know about the issues in India, but perhaps lower caste members just don't have access to education. Financing education in the US is difficult because economic imbalance and ridiculous prices on education. Of course that works as a selector if you don't get a scholarship.
I think it is fairly possible to have a broad education system that doesn't determine your future if you fuck up elementary school. Instead there need to transient systems that allow to build upon your educational career, because pupils learn at different speed and had different advantages like private tutors.
>I don't know about the issues in India, but perhaps lower caste members just don't have access to education.
The caste system is about natural born status not tied to economics, but ancestral in nature. You're born into your caste and there isn't mobility within the system. So, try as you might, if you're in the lower caste you're in the lower caste and people higher up are going to treat you that way regardless.
I'm not overly familiar with it myself, but I understand it's a deeply ingrained cultural thing that sounds damaging beyond belief and incredibly bad idea, yet somehow inescapable.
No, because in the west debt is not inherited. Wealth is, which is an advantage to the right, but even then the majority of people - even rich don't get that advantage right away.
The big help the not-poor get is parents help their education. Not monetary help (that exists, but the poor get scholarships which in theory makes up the difference), but help as in a background that values education. If your peers and family expect you to get pregnant and drop out at 14 - it isn't really possible to get ahead in modern society the way most of us take for granted.
Having more money allows you to make mistakes. Having rich parents allow you to make mistakes that are normally unrecoverable for normal people (e.g. going to college and getting kicked out), because money buys you opportunities.
Inheritance is just like caste, you are born with an advantage over others.
> Being dumb and lazy with rich parents means you will be rich.
What I've noticed from observing people in all classes is that money is an amplifier. Lazy rich people who are dumb are more likely to lose their wealth than smart rich people that are hardworking.
I do agree that the game is still heavily skewed in their favor, but that doesn't mean they can get away as easily as their more virtuous counterparts.
He also has the name, connections and status that help him get more money. Despite his bankruptcies, there are still people willing to do business with him, invest in his projects, etc. At the moment he's probably mostly propped up by Russian money, but those Russians would not do that for just any bum on the streets.
Not so. Most people lose money on it. He has a knack for sticking other people with the bill for his bankruptcies while he gets his money out in time. The only bank that still wants to do business with him is the Deutsche Bank, and a lot of people suspect there might be some sort of money laundering or other questionable transactions going on.
No, 3-4 generations is about right. The first generation needs to work hard just to ensure there is enough food for the next. Without enough food everything else is done: intelligence is greatly harmed by not enough food. That Food then lets the next generation work a little smarter, and send their kids to school instead of the kids having to work as well just to ensure there is enough. The kids now have some education to work with, but unless they get scholarships it isn't enough to get ahead, but it is enough to save for their kids scholarships. There you go, 3-4 generations to get out of the hole - assuming everyone all works hard to get out, anyone can drop back (either from laziness or bad luck).
Luck is important too. I read an article about a widow in India being giving a loan for a tractor. 2 months payments on the loan have to amount to about a year of her previous income (note that the other 10 months need to be repaid - this is a loan not a gift). A tractor is such a force multiplier that she is able to make the payments all year and save up enough to dream of sending her son to a good school. This whole thing depends on someone being willing to risk giving someone a loan who clearly doesn't make enough to pay it off.
I post this not really as a rebuttal to your post, or the grandparent, but more of a "here's what success a couple of generations later" actually looks like and what some of its characteristics may be.
While I agree with the general point you make, I think it is a mistake to say race or caste is a proxy because it gives the impression that there's a "genuine" order of things behind the curtain of illusions. This is not a good model for a better understanding of the world around us imo. Hierarchies whether based on material resources or status seems to exist everywhere but are instantiated differently in each place for historical reasons. Race or cast is not a proxy for real hierarchies hidden behind them, it is how some of those hierarchies have taken form at some point in history (and will hopefully disappear at some other point).
As the anthropologist Maurice Godelier puts it in the L'idéel et le matériel, it is not about seeing another reality behind reality but about seeing the same reality with a different look.
Middle class not rich. Getting out of being poor is hard on its own. Getting from middle class is "easy" in that random children from middle class raise to rich all the time. However poor have other disadvantages that they need to deal with, and that is hard to do in one generation.
Well, most of the rich people I know had rich parents.
If you can live with your parents while building your company or they gift you a few thousand dollars, that's often the make or break factor that saves your ass when pivoting a few times.
>"Oh look at those poor backward indians!!" Well, most of the rich people I know had rich parents.
Yes. But those indians in favor of the caste system remain "backward" - it's not just something like poverty keeping the lower castes back and the rich getting an extra advantage over others to have their kids be rich.
It adds a further layer of pure discrimination akin to very heavy racism.
Imagine the poor considered not only poor, but inferior human beings -- and not allowed (or accepted by "civilized" upper caste people, when legal) to do many things even if they have the money to do them.
I've always thought it's that last point you touch on, that's most important.
There are mechanisms (and we can discuss their effectiveness) that try to balance the playing field in provision of opportunity - but there's a huge gap in "provision to cope with failure"
e.g. Two people graduate with equal abilities and are offered an opportunity to found a start-up.
One of those people knows his parents can cover rent/food if things don't go to plan, and the other will be homeless (or maybe more likely would have accumulate personal debt, or leave the city and move back to parents).
One of those people is more likely to be able to take that risk and therefore more likely to reap a reward.
I'm not even sure I can think of a fair way to level this.
That's not necessarily the only way. Another way would be if the market was in a state where the EV of starting a company was roughly the same as the EV of working for someone else. People living cheque to cheque would still have less options, but they wouldn't be inherently worse, and over time inequality would stabilize instead of compounding (which I suspect is what is happening currently).
I don't actually think this is a better solution than progressive taxation and decent welfare though (and I'd also have no idea how you'd coax the market in that direction anyway), because it doesn't also solve the problem of the economy losing out on potential successful businesses because their owners weren't wealthy enough to start them.
> over time inequality would stabilize instead of compounding (which I suspect is what is happening currently).
You really think inequality is stablizing instead of compounding at the moment? Wealth ratios between highest and lowest have gone through the roof over the last 50 years.
In countries with good and available education, competent people from poor families can get good careers. It makes a lot of sense to run companies there as well, as recruiting works well - people are sorted by ability rather than money.
This is definitely a problem, but not just the mobility is the problem.
If the economy is organized so that a small minority is rich, and the vast majority is poor, then even if the fraction of people of different castes, races, genders, whatever at each echelon of wealth is similar. And even if you have a good chance = uniform-distribution draw - of ending up as "one of the rich" - that chance can never be anything but lousy for the vast majority of people.
(Also, social inequality skews the focus of production and consumption so that things masses of people need and want just aren't available.)
It is sometimes (often even) discussed directly, but being cross-correlated to these proxies means that there are different perspectives on what the operative or underlying essence is.
Part of the definition of class that is often overlooked in discussions is that it's not just about money. This is why the socio qualifier gets added into the "socio-economic" designation... even though people sometimes use the dash and then ignore it.
A class implies a hereditary, cultural and quasi-ethnic aspect. So does caste, obviously.
100% agree but you should acknowledge the survivorship bias that skews perception away from what you’re asserting. Some people get lucky with everything falling in place while being poor or middle class and get rocketed to upper class. In any case the game is so rigged in a deterministic fashion.
It's frequently brought up in radical leftist discourse* (marxism, anarchism, etc…) or even center-left discourse (social democracy, social liberalism, etc…).
AFAICT it seems to be taboo outside these circles.
* I should mention that many people make big point that you shouldn't use economic points like this to ignore things like racism, i.e.: while racism intersects with economics you can't treat it like it's the same problem.
If you mean the stickiness of the upper-middle-class, then it's a fairly well-known phenomenon, and I don't think it's _taboo_ anywhere. Maybe some upper-middle-class people with upper-middle-class parents might take vague offense (on the basis that they believe they got where they are purely through hard work or whatever) but I can't imagine anyone thinking of it as taboo.
That's exactly how I feel. It's taboo to discuss that our economic system is just as rigged as (say) China's.
I also should have been clearer: racism is definately also a factor. Poor minorities fare so badly because they get both racism AND classism (or whatever the appropriate term is for the natural increase of both wealth and poverty).
I think one of the major upsides of the cold war was that western countries were very eager to show we could do better than those dirty commies. That birthed all sorts of programs to give people a chance of improving their lots. Most of those are dead now.
I see it discussed constantly all over the internet. Also it's not entirely true; there's a bunch of examples where people did make it big.
All too often this position boils down to "Capitalism bad" which then just attracts the "Communism bad" opposition and ends in a pointless shitshow buzzword exchange.
>Also it's not entirely true; there's a bunch of examples where people did make it big.
That's totally irrelevant though. People are not saying it's impossible for poor to start a company and make it big (in which case those would be counter-examples), they say it's many times harder.
The discrimination lies in the extra difficulty. As someone said, the rich kids starting a startup get to play startup in "easy mode" (which also doesn't mean they'll succeed easily in the market -- just that devoting time to and trying to succeed is far more easy and less rick prone for them).
One of the main human drives in life is to provide for their children. Why shouldn't you be able to spend all the resources you can to give your kids advantage?
What I find curious about this discussion, which often occurs when people discuss what advantages are fair and unfair, estate tax and the like, is that they perceive each human being as a completely independent actor. Whereas for me, at least, it's more natural to think in terms of families. If the first generation achieved success, should it be reset in the next one? Why? The example you're talking about, with people reaching incredibly high success from nothing, are exceptions; usually it takes two or three generations at least.
And it's never only about money. Family culture, outlook toward education, work ethic, etc, these things survive when the family loses all of it's fortune or goes through even more dramatic events — though it's easier to notice when you live in a country that lived through a couple of revolutions, bloody wars and a couple of genocides in the last century than in US.
> Why shouldn't you be able to spend all the resources you can to give your kids advantage?
Because it's absolutely toxic for society as a whole if inequality gets amplified over generations.
Estate tax should ideally be 100% above a reasonable cap. And by "reasonable" I mean a sum definitely below "never needs to work to support a middle class lifestyle".
> If the first generation achieved success, should it be reset in the next one?
Yes, absolutely.
> Why?
Because many opportunities are essentially zero-sum.
I think it's bad if runs rampantly forever as eventually someone nefarious (which is more people than you might think) accumulates too much power and turns large swathes of society into a machine that benefits only them to everyone's detriment.
But at the same time it seems the pursuit of wealth engenders risk taking that brings about benefits for large swathes of society and turns society into a machine that constantly improves itself.
I like the game as it is, but perhaps a healthy modification would be to add a reset button where every couple of hundred years the slate is wiped clean and it all just starts again.
Tbh, I think that happens naturally though usually after a society has destroyed itself due to the first problem.
It'll happen to this one too eventually, so I don't see the need specifically to try to structure things in a way that will never go wrong or end badly. I don't think you can actually accomplish that with any one structure. It seems to be a game where some people win until it's game over and everyone loses.
>I think it's bad if runs rampantly forever as eventually someone nefarious (which is more people than you might think) accumulates too much power and turns large swathes of society into a machine that benefits only them to everyone's detriment.
It's bad longe before it gets to that point, just less obvious.
> But at the same time it seems the pursuit of wealth engenders risk taking that brings about benefits for large swathes of society and turns society into a machine that constantly improves itself.
Putting a cap on inheritance would not impede that in the least. Quite the opposite: inequality prevents a lot of risk taking and improvement from happening.
> I like the game as it is, but perhaps a healthy modification would be to add a reset button where every couple of hundred years the slate is wiped clean and it all just starts again.
That doesn't sound healthy at all because it represents an unneccessarily huge disruption.
>That doesn't sound healthy at all because it represents an unneccessarily huge disruption
It's no different than you or I dying, just on a much bigger scale. It's a huge disruption,
sure, but that's sort of the point. Civilizations come and go, as do the people in them. There are just too many variables for things to be able to persist in a stable state in perpetuity.
Well, that almost looks a classic conflict of interests of a society versus interests of an individual, but only at the first glance. Because when you dig in, you realise that it's the most successful and capable individuals that are most interested in building something for their children and next generations of their family — and that's the most marginalised and useless ones that have to get the most by redistribution. And the more you enact redistribution policies in one country or another, the more those types of individuals self-select. The ones who're most able to build and create something will always be able to leave. Ones who complain about disadvantages, on the other hand — those you're stuck with, I'm afraid.
And if you dig in a little deeper, you realize that that's a bunch of social Darwinist bullshit perpetrated by those already rich who stand to gain the most from inequality - No different from the concept of nobility in centuries past.
Very telling are those "ands" and what's left out: "successful and capable (implied: rich)". "marginalised and useless (implied: poor)". Those traits don't go together automatically at all unless you use circular logic to define them in the first place.
I'm not sure why you interpreted the comment you are replying to as an attack on the actions of rich people instead of a complaint about societies failure to provide opportunities to poor people.
Perhaps because you know those two things are linked?
In these countries, what survives more than anything else is political connections. If your family has the right friends you can do well, even after big setbacks.
Or just your family knows how to teach you how move in the upper culture. I always come back to how much of life is a confidence game. You can often get pretty far if all you have is knowing how to play the game.
I often think people that grow up in disadvantaged circumstances have a major problem a) Learning the wrong game. Sometimes one that ultimately gets you in trouble. b) not knowing how to play the other game. The one that unlocks all the opportunities.
I saw a remark by Miltom Friedman, basically he think beiing able to inherit your wealth to the next generaltion is one of the biggest drivers of the economy.
This is never really discussed directly. Only using a proxy like race or caste.