Some strange quirk in the cosmic order of things led to Landmark shipping me Piketty’s ‘Capital in the Twenty-First century’ instead of Rana Dasgupta’s Capital! I kept the book (yet to read it though) because economic disparity has been an interest area for a while now, I had touched upon it in the context of AI and job loss in Artificial Humanity. Reading The Black Swan has only accelerated this interest.
Taleb divides the world into Mediocristan and Extremistan to point out the extent of predictability in the context. Mediocristan can safely use Gaussian distribution, (bell curve) but in Extemistan, that’s dangerous. From what I understand, given that there’s no real limit upper limit of scale, individual wealth will increasingly behave in a more Extremistan way. To quote his own example, “You randomly sample two persons from the US population. You are told that they earn jointly a million dollars per annum. What is the most likely breakdown of their income? In Mediocristan, the most likely combination is half a million each. In Extremistan, it would be $50,000 and $950,000.” He states that almost all social matters are from Extremistan.
Given that unless genetically inherited, one’s source of wealth is a profession, here’s another input. Taleb divides professions into scalable and non scalable professions. (read more) Professions where you are paid by the hour are not scalable, because there is a limit to the time you can spend. Scalable professions, on the other hand, allow you to make more money without an equivalent increase in labor / time. eg. writing a novel. However, these are usually winner-take-‘all’ markets. The difference between a JK Rowling and the guy who sold a hundred copies of his book. Taleb advises non scalable professions because of the luck factor in scalability.
In the early days of the internet, I always thought of it as the great equaliser. The Access Economy, as Digital Tonto calls it. (read) One that allowed everyone an opportunity at a scalable profession. But though it did give me reasons to believe, of late I have wondered whether it is really so. The last portion of this post sums up my current thoughts – that it changed the access criteria, but has since then become a force in creating a new breed of ‘aristocrats’ and widened the gulf between the haves and have-nots.
One part of me says that this is the portion of the ‘The Second Machine Age‘ before abundance sets in. That ulimately, the internet (which I regard as probably the first version of a collective AI) will create more opportunities, of the kind we had not thought of. What many of us see as luxuries will become common later because advancement cannot really happen uniformly. Another part argues that any notion of sustained reduced disparity is a lost cause and that as we advance further, the gaps will keep widening. The third thought is that all of this is a cycle. Each significant ‘event’ (eg. internet) in the initial stages offers opportunities for wealth creation and then creates an economy that divides starkly. If this is so, we need to ensure that we do not limit access at the beginning of the event based on performance in the previous event. But is that too utopian?
The first thing that came to my mind as I read this was the app ecosystem and the youtube ecosytem. The whole virality of social media. Though the system appears equal for everyone there is a lottery in the form of external factors, such as a recommendation from an influencer or news event that makes the app or video highly relevant. The same is true when we are talking about economics as well. The context should never be ignored, but it is always the case when we talk about medians and averages.
IMO uniformity is impossible in any day and age. An interesting point when talking about uniformity is marxism. Marx’s views was that once a country had developed enough, there needs to be a revolution where one person is given all the powers to bring in equality. However no communist country ever progressed beyond step 2. At step 2 the dictator accumulates all the wealth, but it can never be done in a time frame of 5 years as it is supposed to be done theoratically. Eventually he turns into a brute and is uprooted.
PS: Thinking out loud, not sure if I’m making a lot of sense here.
Agree on the first part. The early days of a new system (completely unrelated to anything that exists already) does offer a level playing field.
Maybe there’s a reason why Marx’ views never played out. After a system with hierarchies is created, it wouldn’t like to go back to equality, I guess.