The Daily View: Silicon Valley Diversity, Basic Income, Wealth Inequality

Intel Budgets $300 Million for Diversity

The left wants to believe a lack of diversity is a sign of discrimination. It never occurred to them that maybe certain groups are underrepresented in certain industries because they either choose to not pursue that line of work or they are simply unqualified. The solution according to the left is to lower standards, spread lies, sue, and protest. And then they complain that the economy isn’t adding enough jobs, as if the are the innocent parties in all of this…

Why the Tech Elite Is Getting Behind Universal Basic Income

It’s understandable why Silicon Valley supports a basic income. Compared to, say, designer clothing, cruises or sports cars, many of the products and services produced by Silicon Valley (apps and social media websites) tend to be readily accessible to unemployed and low income populations, and finally, the government would be paying the tab for what will amount to free profit for these companies.

I like the idea of a high-IQ basic income – a basic income that is only applicable to people with certain college degrees and or an IQ above a certain threshold. It would pay more than welfare and have no preconditions but high intelligence. Statistically speaking, high IQ people are more likely to create companies, innovate and do other things that improve the economy and living standards, so giving them money would allow these individuals to devote more energy to creating cool technologies, art, and companies than trying to pay the bills. This is not the most egalitarian way of dealing with the potential job and mential loss from automation, but the money would not be wasted. The problem with giving low-IQ individuals a basic income is that the money won’t be put to good use, and existing welfare programs are good enough for this subset of the population and quite expensive to begin with; a basic income would increase expenses considerably, especially if existing welfare programs are not phased out.

Joseph Stiglitz: Economics Has to Come to Terms With Wealth and Income Inequality

Neanderthal, economist, or both?

Joseph E. Stiglitz, another short, bearded, neanderthal-like liberal akin Robert Reich and Paul Krugman writes:

Joseph Stiglitz: Firstly, when you grow up as I did in Gary, Indiana, it was sort of prototypical of a divided America. You had lot of people in poverty. We didn’t have the 1 percent, but we had the 5 percent. I had no idea what real inequality was like, but we had a lot of people at the bottom. And secondly, it goes back to the years I went to college and the Civil Rights Movement. You remember Martin Luther King’s march was a march for the end of discrimination and for economic empowerment. So I think a lot of us realized at that time that we weren’t going to fully address the problems of a divided America — of race discrimination — if we didn’t do something about the economic differentials.

Some people are wealthier than others – not because of discrimination, but because they produce more economic value by virtue of being smarter, harder-working, and more creative. As Murray and others have noted, a lot of wealth inequality is also attributed to the cognitive differences between individuals, the ramifications of which have been magnified in the post-2008 winner-take-all hyper-competitive economy. It’s not the fault of rich people exploiting the poor; the wealth gap is an IQ gap. SAT scores, a good proxy for IQ scores, are highly correlated with income:

There’s a lot more here:

JS: Yes. I think that the thrust of my book, The Price of Inequality, and a lot of other work has been to question the margin of productivity theory, which is a theory that has been prevalent for 200 years. A lot of people have questioned it, but my work is a renewal of questioning. And I think that some of the very interesting work that Piketty and his associates have done is providing some empirical basis for doing it. Not only the example that I just gave that if you look at the people at the top, monopolists actually constrain output. People who make the most productive contributions, people who make lasers or transistors, or the inventor of the computer, DNA researchers, none of these are the top wealthiest people in the country. So if you look at the people who contributed the most, and the people who are there at the top, they’re not the same. That’s the second piece.

Wealth is created by creating economic value, and in a free market system as optimized by the USA whoever creates more value, both directly and indirectly, tends to be rewarded with more wealth. Bill Gates, for example, has created trillions of dollars of economic value directly from Microsoft, and indirectly from the many companies and consumers that rely on Microsoft products. The same for Apple and Facebook. These companies sustain an immense ecosystem of 3rd parities such as developers, brands, and peripheral makers. If Facebook suddenly vanished, the loss of economic output, both directly and indirectly, would be equivalent to that of a small country. The thousands of advertisers that use Facebook, including many of the Fortune 500, would have lower revenue. Many of the developers would go out of business. The companies that provide Facebook’s servers and electricity would have lower earnings. Billions of dollars of shareholder value would go away.

In refutation to his second point, there have been many instances of inventors becoming very wealthy (Thomas Edison, Elon Musk, James H. Clark to name a few). Jonathan Ive, who helped design some of the most successful Apple products, such as the iPad, is very wealthy. It’s not like these inventors and creators are not being compensated, but a patent or a product is useless in a vacuum. Ive’s iconic designs would have been useless without Apple to bring them to market. Entrepreneurs like Gates, Jobs, and Ellison become wealthy not just by creating a product or a patent, but by creating environments that foster a cacophony of micro economies.