Come essay heading in up

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Come essay heading in up

August This essay is derived from a talk at Defcon Suppose you wanted to get rid of economic inequality. There are two ways to do it: But they amount to the same thing, because if you want to give money to the poor, you have to get it from somewhere.

You can't get it from the poor, or they just end up where they started. You have to get it from the rich. There is of course a way to make the poor richer without simply shifting money from the rich. You could help the poor become more productive-- for example, by improving access to education.

Instead of taking money from engineers and giving it to checkout clerks, you could enable people who would have become checkout clerks to become engineers.

This is an excellent strategy for making the poor richer. But the evidence of the last years shows that it doesn't reduce economic inequality, because it makes the rich richer too.

If there are more engineers, then there are more opportunities to hire them and to sell them things. Henry Ford couldn't have made a fortune building cars in a society in which most people were still subsistence farmers; he would have had neither workers nor customers.

If you want to reduce economic inequality instead of just improving the overall standard of living, it's not enough just to raise up the poor.

Come essay heading in up

What if one of your newly minted engineers gets ambitious and goes on to become another Bill Gates? Economic inequality will be as bad as ever. If you actually want to compress the gap between rich and poor, you have to push down on the top as well as pushing up on the bottom.

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How do you push down on the top? You could try to decrease the productivity of the people who make the most money: But this approach is hard to implement.

The only practical solution is to let people do the best work they can, and then either by taxation or by limiting what they can charge to confiscate whatever you deem to be surplus. So let's be clear what reducing economic inequality means.

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It is identical with taking money from the rich. When you transform a mathematical expression into another form, you often notice new things. So it is in this case.

Taking money from the rich turns out to have consequences one might not foresee when one phrases the same idea in terms of "reducing inequality. So if you lop off the top of the possible rewards, you thereby decrease people's willingness to take risks.

Transposing into our original expression, we get: There are whole classes of risks that are no longer worth taking if the maximum return is decreased.

One reason high tax rates are disastrous is that this class of risks includes starting new companies.

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