[FoRK] Helpful inequality

[Stephen Williams]

Jeff Bone wrote:
>
> Right on.  Hanson's one smart cookie. ;-)  (Always have thought that, 
> of course.)
>
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> http://www.overcomingbias.com/2010/01/helpful-inequality.html
>
> Helpful Inequality
>
> By Robin Hanson · January 10, 2010 11:00 am · Discuss · « Prev · Next »
> We find significant and sizeable negative peer effects arising from 
> students at the very bottom of the ability distribution, but little 
> evidence that the average peer quality and the very top peers 
> significantly affect pupils’ academic achievements.
>
> More here.  Thus we’d probably do better to isolate the worst kids in 
> their own school or work hell; they’d be worse off but the gains to 
> other students would more than compensate.  

 From a social and cultural point of view, mixed in with rule breaking 
and exploration in High School, this makes a lot of sense.  Hard to 
arrange it just so, but possible.  Right now, most communities either 
force everyone together or have a cliff where kids are thrown off of 
into the pit of the "other" school.  The nature and quality of the 
"other" options is what separates good districts from bad districts, but 
few or none do it right yet.  Ideally, you need to keep fluidity so that 
one false move or bad quarter doesn't doom you to the dungeon.  As long 
as there is rapid mobility between realms, it is a great idea.  
Unfortunately, often the insidious things start small and aren't clearly 
a problem until long after they have become infused in a clique.  Making 
negative effects of attitude, habits, and choices apparent much sooner 
would be very good.  Feedback loops longer than a few weeks are useless 
to a large chunk of teenagers.  And any extremely discontinuous 
penalties lead to fatalism in some significant subgroup.

> At the other end of the status spectrum, the number of new businesses 
> we get seems limited by the number of folks personally wealthy enough 
> to start new businesses.  So having more really rich folks benefits 
> everyone via innovation.  Detailshere:
>
> Since richer entrepreneurs make larger investments and expect to have 
> more wealth in the future, it is the relatively poor entrepreneurs who 
> decide to take more risk and would be more likely to exit from 
> business in the future. As a result, the model predicts that survival 
> of entrepreneurial business is positively related to entrepreneurial 
> assets, which is consistent with empirical findings. … Since agents 
> enter entrepreneurship with relatively low wealth levels, our model 
> also implies that young businesses exhibit lower survival rates, and, 
> conditional on survival, small (younger) firms grow faster than larger 
> (older) ones. All these implications are in line with strong empirical 
> evidence from the literature on firm dynamics.

The problem is that many with wealth aren't A) adventurous and B) don't 
feel enough social responsibility to start businesses or otherwise 
directly foster the creative engines.  Many have been convinced that 
they are doing that by investing in the stock market or some other 
indirect feeding of the Big Business Machine.  I feel that, in the 
average case, that is exactly like thinking that you are directly 
helping the homeless guy you saw today by paying more Federal taxes.

I firmly feel it is my responsibility to, after doing as well as I can 
with my children and significant others, to use my skills to A) do the 
most good and, given A, B) make the most money so that I can find new 
ways to do or help other people do A.  Having wealth creates a 
responsibility to perform at least as much as having high ability.  
Being neutral or negative in effect on the world is the only real sin 
there is.

For any wealthy individuals who truly pursue and directly support 
entrepreneurialism in a consistent and significant way, I would vote for 
zero taxes during those years they are cogent and active.  When they are 
successful, I'd even vote for a rebate on some of the tax revenue they 
created (probably for some specific situations).  For those hoarding and 
riding their wealth, I would double their taxes (or something along 
those lines).  I totally applaud the former and despise, to some degree, 
the latter.  And I despise societies that make the former harder than it 
is naturally, often by directly protecting big business thereby 
enshrining reverse economies of scale out of fear or ignorance.  (Japan 
perhaps?  France probably -- their socialistish environment for small 
businesses is onerous.)

On the relatively poor entrepreneurs starting businesses, they tend to 
disappear more often, however they are more driven and are able to take 
existential risks more to some extent.  Different businesses may require 
different types of actors for competitive success.

sdw
http://sdw.st/wp/world/commentary/re-fork-helpful-inequality
>
> I’m not saying these are the only issues for how much inequality we 
> want, but they seem to me neglected issues.
>
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> jb