I just read the PG essay and have to agree with the parent post. From what I can see, his argument boils down to this: increasing wealth concentration is caused by many things. Some of these things are 'bad' (e.g. rent-seeking, bribing politicians) in and of themselves, and should be addressed. Some of these things are 'good' (e.g. economic productivity varies from person to person, all other things equal), and it would be ill-advised to do away with these things by blindly optimising towards 'less wealth inequality' (as it would make everyone worse off, in an absolute sense).
Obviously an oversimplification, as the essay also hints at a 'undetermined' category. On this, the essay touches on two issues I've been thinking about for the past 5 years:
1) As capital (i.e. the means of production) becomes increasingly digital, it becomes cheaper to acquire and production can occur at a marginal cost of near 0 (e.g. it costs facebook virtually nothing when a person makes a new account). Cheaper to acquire means fewer people needed to pool money to attain capital. And marginal cost near 0 means more 'winner-takes-all' markets (e.g. natural monopolies, network monopolies etc.). All this will result in more wealth concentrated in fewer hands.
2) Digital capital is highly mobile. AWS instances can be moved to another country almost instantaneously and without cost. This makes it hard for governments to tax returns to digital capital, barring some global tax agreement. So governments have very little scope for redistributing this increasingly concentrated wealth.
We badly need to have a public (and probably global) conversation along similar lines as PG's essay: do we consider these good or bad things? are we ok with the resulting society? what should we do (if anything) about this?
Instead the conversation seems to be dominated by people who are fixated on remedying the symptoms, rather than the underlying disease(s). Supremely frustrating, and will eventually result in more extreme policy outcomes (i.e. expropriation vs. free-for-all).
Obviously an oversimplification, as the essay also hints at a 'undetermined' category. On this, the essay touches on two issues I've been thinking about for the past 5 years:
1) As capital (i.e. the means of production) becomes increasingly digital, it becomes cheaper to acquire and production can occur at a marginal cost of near 0 (e.g. it costs facebook virtually nothing when a person makes a new account). Cheaper to acquire means fewer people needed to pool money to attain capital. And marginal cost near 0 means more 'winner-takes-all' markets (e.g. natural monopolies, network monopolies etc.). All this will result in more wealth concentrated in fewer hands.
2) Digital capital is highly mobile. AWS instances can be moved to another country almost instantaneously and without cost. This makes it hard for governments to tax returns to digital capital, barring some global tax agreement. So governments have very little scope for redistributing this increasingly concentrated wealth.
We badly need to have a public (and probably global) conversation along similar lines as PG's essay: do we consider these good or bad things? are we ok with the resulting society? what should we do (if anything) about this?
Instead the conversation seems to be dominated by people who are fixated on remedying the symptoms, rather than the underlying disease(s). Supremely frustrating, and will eventually result in more extreme policy outcomes (i.e. expropriation vs. free-for-all).