Fair income distribution and the pareto principle

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Offline Fraktalist

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« on: January 15, 2019, 01:18:18 PM »
This is an anwer to this post by quazor:
https://fractalforums.org/forum-help-and-support/31/ff-needs-you-donate-to-keep-the-site-up-and-ad-free/1501/msg12258#msg12258

wow, who would have thought such a diverse group of nerds would all be such revolutionaries?   :awe:
well done, team!  :D  :thumbs:
hehe, nice. I too like that many people here share similar views.
the question is if this is limited to fractalforums and maybe even just coincidence.
or if it's everyone waking up to some truths that are getting harder and harder to hide.


a handful of people own more wealth and resources than half the world's population combined, and this is by design, not by accident.  this doesnt come about by a few people working really hard and getting the just rewards of what theyve earned, as you would be led to believe.  the central-banking debt-money system that has been put in place the world over is designed to make slaves of us all.  contrary to the fear mongering promulgated by the rich and powerful who paint pictures of "socialist" dystopian nightmares to scare you away from ever entertaining the thought of any policies or practices that would ever actually benefit the common man, their central-banking debt-money system is the biggest wealth-redistribution scheme ever devised.  except of course it takes all the real wealth produced by the average person and funnels it straight to the top.  and in developing nations you have institutions such as the IMF going in, lending them their debt money, and then taking all their resources.  from the worst off in the third world to the best off in the first world, all of our qualities of life could and should be SO much higher than they currently are.

Now it's funny you post this in a forum about fractals.
Because the distribution of income, just as earthquakes, city sizes, the wear of your rug...... - follows a simple pattern.
I am sure you have heard of the 80/20 rule and the pareto principle. https://en.wikipedia.org/wiki/Pareto_principle#In_economics

Quazor, your post reminded me of a very fundamental problem my world view is facing.
I love to believe in a better world. In the good in humans, that it is possible to distribute wealth more fair.
But if you're honest: the 80/20 principle says otherwise.
And it seems it doesn't really matter how it happens, who/what causes this omnipresent distribution-ratio. Is it by human design? Well some humans, those with wealth work to keep their wealth. And those who own little, work to gain wealth.

And the pareto principle, like it or not, seems to be the natural balance between those two forces.

So.. is a fair distribution possible at all? Can we enforce it?
These things keep me up at night.
Communism didn't work. Socialism worked to some extend, but not sustainable.

I've personally come to the conclusion that pareto (and thus unfair distribution) will stay with us.
No matter what we try.
The only way to make the world better is to raise the overall wealth. Which kind of has been happening in the last 30 years, even though our feeling and perception of the world (due to negative-focussed media reporting) tell us different. Bad poverty, famine, no water, the chance to die in a war, all these have improved a lot globally over the last 30 years.
So that's good.
Yet we still must fight back against those who want to push distribution for those 20% towards 1%.
A neverending battle.

I think the unconditional basic income is a big step. Creating a basis on which EVERY human being can live a humane life, guaranteed, without a catch. So that having nothing still means you can live a good life.



But what can we personally do to stay on top and be part of the 20%, not the 80%?

Simple: Buy Bitcoin.
There will never be mroe than 21 million btc. There currently are 7 billion people. Which makes 0.003btc per person on planet earth.
It costs you 11$ to own average.
It's still very easy to get into the top 20% https://bitinfocharts.com/de/top-100-richest-bitcoin-addresses.html
If you own 0.1btc (worth 350$ right now) you are in the most wealthy 10%.
It won't stay that easy for long.
(and yes, bitcoin will matter a LOT in the future)

Linkback: https://fractalforums.org/humanity/53/fair-income-distribution-and-the-pareto-principle/2548/

Offline Sabine62

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« Reply #1 on: January 15, 2019, 02:49:55 PM »
Thank you, Fraktalist :)


I do not think this discussion is 'new' as such (it's current regularly for many years in discussions with family and friends here), though I Do like knowing that there are some here on FF that Think about this subject :)

My reply up in the other thread was of course a bit supercharged  ;D , I like to push a few buttons a little and see if anything (at all) happens, but in general it's my conviction of the world we live in: a very small very wealthy group controlling the world with focus only on personal gain stopping at nothing and added to that a feeling that we're not exactly heading the other way lately, on the contrary. Before 'the crisis' the 1% richest in the Netherlands owned about one fifth of the country's wealth, and that has grown to one quarter now (mind you: wealth not stored on Dutch banks is not included...). Might not be much different in the rest of the world.

Add to that that I am very much aware that the comparative luxury I live in in Europe exists basically because of exploitation of human beings and resources in other parts of the world, and what makes that even more painful is that there is really not a lot I can do that makes a real difference. I vote, take care where I shop and what I buy, and try not to buy at all but recycle/share/give away/exchange where I can, choose a bank that is a little less greedy and has a little bit more 'conscience', things like that, but those are nothing in the big picture.

I wish I could say that I believe initiatives like the unconditional basic income could have a chance, I honestly do  :yes: There seems no political will, and pilots seem often poorly designed including only very small groups...

Fraktalists tip of buying bitcoin: maybe a good idea for middle incomes (I am not really following developmentrs in that area (bitcoin)) , but spending 350 dollars on such a commodity seems impossible to me for people with low incomes (those that should benefit most).

I am just a skeptical paranoid, "hope for the best, prepare for the worst"-thingy  ::) ;D ;D ;D
To thine own self be true

Offline quaz0r

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« Reply #2 on: January 15, 2019, 03:21:41 PM »
cryptocurrency is definitely the future, or at least it certainly should be.  i loved the idea when it first started but i rolled my eyes at the notion that it would ever get anywhere, as how could you ever expect the ignorant masses to ever get into such a thing to the degree you would need to see mass adoption?  or even a little bit of adoption outside a few hardcore nerds... needless to say i am very surprised to see how far we've come with it already.  the barrier to entry and the way the end user interacts with it and manages it still needs to evolve quite a bit before any true mass adoption occurs, however.  also, i fear that as long as it's perceived value and people's interest in it is so closely tied to fiat, the old guard in control of the legacy financial system can manipulate the price at any time and to any degree they wish, to make it so volatile as to keep people away and keep it untenable as a currency anyone would actually want to use as such.

as to the mystery of how best to structure society to make a utopian civilization, it just isn't possible.  no matter what structure or system you come up with, the typical human failings like greed and corruption will always exist to drag things down to the same miserable denominator as always.  everyone always loves to confidently declare that socialism/communism "has failed", but the same is of course true for capitalism.  we are currently living it, so the history books have yet to be written on it, the same as you would read about some historical dystopian failure.  but we are definitely experiencing the end stages of corrupt predatory crony capitalism and the central banking debt money scheme.  look at something like greece as an example.  it was simply one of the first dominoes to fall.  and if you look at all the unrest in the world, how it continues to escalate, like the yellow vest movement, that sort of stuff isnt happening because our system is working.  the current system is in its death throes, and continues to spiral out of control.

even though there really is no answer to creating a utopian society, the concept of decentralization is definitely a game changer.  the decentralization of information and communication through the internet, and now the decentralization of money through cryptocurrency.  these sorts of things are probably the closest we will come to truly being able to create a better society.

Offline lycium

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« Reply #3 on: January 15, 2019, 05:27:28 PM »
I'm big on crypto, but it won't be Bitcoin that revolutionises everything. (It might not even be Ethereum, even if they switch to Proof of Stake based consensus.) One of them will, though.

I also don't see how crypto is a solution to wealth inequality, since crypto assets are even more unequally distributed.

Offline quaz0r

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« Reply #4 on: January 15, 2019, 05:45:42 PM »
yeah, its not a solution to wealth inequality.  though it could be in a way depending how you look at it, for instance wherever any government or other central authority seeks to discriminate or restrict access to banking or other money services.

Offline Sabine62

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« Reply #5 on: January 15, 2019, 06:14:37 PM »
I am wondering on how the decentralization of information/the internet should work 'for a better world', quaz0r.
I think I miss your point.

In my view the internet as it is now (evolving) is rather a way of undermining societies than support them. Veracity of the enormous amount of information available is hard to trace, if not really careful, people tend to end up and being 'fortified' in their own bubble by choosing the same information-provider over and over again (and having many many different bubbles makes sure none of them gets really powerful), information gathered on the behaviour of vast amounts of people is sold for lots and lots of money and I am probably not the only one that suspects that this data can be and almost certainly is used to steer behaviour (and not only in the comparativey harmless way to let us buy that particular brand of *beeb*). Not to speak of the psychological strain that social media and 'always online' seem to generate.

The French yellow-vests look like a great example of an internet unifying people (temporarily), but the truth is, I hear the same complaints here and uniting or taking to the streets doesn't happen here, certainly not on the 'France'-scale. And why the difference? France has a great history of revolting, they are Used to fight and strike if things go wrong in their eyes.

I would Love the internet to work for us, but am Really skeptical, so would like to have your thoughts!

Offline Fraktalist

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« Reply #6 on: January 15, 2019, 07:09:56 PM »
cryptocurrency is definitely the future
... needless to say i am very surprised to see how far we've come with it already. 

the current system is in its death throes, and continues to spiral out of control.

the decentralization of information and communication through the internet, and now the decentralization of money through cryptocurrency.  these sorts of things are probably the closest we will come to truly being able to create a better society.

and this leaves only one conclusion (at least for me). buy bitcoin.

cryptocurrency is not just about the decentralization of money, but about the decentralization of trust! it will game-change contracts, supply chains, anything were you need to trust an unknown third party.
we can't even think about all the implications this will have. just like it was impossible to foresee in 1990 how the internet looks today.


ask a venezuelan if they care about the volatility.
1 million dollar in venezuelan currency bought 2 years ago are worth 25$ today.
what will happen to a cryptocurrency with impossible inflation, when our monetary system breaks down on a worldwide scale?



I also don't see how crypto is a solution to wealth inequality, since crypto assets are even more unequally distributed.
It might not solve the pareto distribution of wealth.
but those who know about and are willing to take the steps NOW will have an incredible advantage of being in the top 20 or even top 1% in the future.
No one can say which currency will be the "survivor" or if we will end up with hundreds of different ones (my guess).
But I believe that bitcoin will keep evolving and scaling as it did in the past 10 years. The developing community is huge, the hashpower of the network is unrivaled. the public perception of bitcoin (compared to altcoins) is also that bitcoin is king. (I think you should be diversified and stay uptodate, but that leads too far for this thread now ;))

Fraktalists tip of buying bitcoin: maybe a good idea for middle incomes (I am not really following developmentrs in that area (bitcoin)) , but spending 350 dollars on such a commodity seems impossible to me for people with low incomes (those that should benefit most).
I am just a skeptical paranoid, "hope for the best, prepare for the worst"-thingy  ::) ;D ;D ;D
But even people with low income can buy small fractions, like 5$ or even just 1 $ every month. If the long term up-trend will stay (and I am convinced it will) this will make a huge difference, they might not be in the top 1% of the world, but maybe in the top1% of a poor country.

Offline quaz0r

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« Reply #7 on: January 15, 2019, 09:46:27 PM »
i think there is a common misperception that bitcoin is the original technology that stays mostly constant, and all the development and innovation happens in altcoins, and at least eventually some altcoin is destined to overtake bitcoin with its superior technology.  in reality bitcoin has the developers and all the greatest minds behind it.  they move slow and cautiously, but that is good.  they are working on all the relevant technologies involving privacy, smart contracts, second layer networks, etc.  of course new tech only gets deployed when the best possible implementation is discovered/created and all the kinks get worked out.  so while it might seem that bitcoin stays mostly stagnant while all the exciting new things are happening with ethereum or monero or whatever the altcoin du jour is, all those shitcoins will immediately lose relevance when bitcoin deploys a similar or superior implementation, which it will.

Offline Spyke

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« Reply #8 on: January 16, 2019, 12:51:44 AM »
It seems that bitcoin is neutral with respect to income or wealth inequity. I may need to think on that some more.

One way to reduce income inequity is UBI (Universal Basic Income). Just last week I read some research on UBI in the US. http://rooseveltinstitute.org/wp-content/uploads/2017/08/Modeling-the-Macroeconomic-Effects-of-a-Universal-Basic-Income.pdf

(I was sick of all the usual screaming on both sides of the debate. Especially unsupported claims that we cannot afford UBI. Finding an actual, and not pay-walled, academic paper on the topic was not easy.)

This paper models twelve scenarios. It does not make a policy recommendation. I thought scenario 12, $12000 annual ubi, financed by increased taxes, was the most interesting. It had 2.62% increase in GDP,  and a 1.39% reduction in deficit, with a modest 0.56% increase in inflation, compared to the baseline model of no ubi.

One might expect the transfer payments to have zero net effect on GDP and national debt. But the transfer is from people with lower propensity to consume to people with higher MPC, which results in economic growth.

IMHO this should be strongly considered.

Another scenario, financing the UBI with deficit spending, produced 3.77% increase in inflation and 9.33% increase in government deficit. I think these numbers are too high to consider the deficit spending option. But that does not seem to bother politicians.

Earl Hinrichs, offering free opinions on everything.

Offline FractalDave

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« Reply #9 on: January 16, 2019, 03:51:38 AM »
One way to reduce income inequity is UBI (Universal Basic Income). Just last week I read some research on UBI in the US. http://rooseveltinstitute.org/wp-content/uploads/2017/08/Modeling-the-Macroeconomic-Effects-of-a-Universal-Basic-Income.pdf

IMO we are rapidly approaching the point where this is absolutely essential as technology reduces the numbers required in traditional employment. However that needs a far bigger rethink in Socio-Economic terms than just considering UBI.
The meaning and purpose of life is to give life purpose and meaning.

Offline quaz0r

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« Reply #10 on: January 16, 2019, 04:27:52 AM »
it always strikes me as silly and myopic all this panic over the machines taking our jobs and causing mass joblessness and poverty.  overall doesnt technology and society simply continue naturally evolving?  im sure they had similar concerns when the machines took der jurbs with respect to farming or transportation or every other example you can think of, well society just evolves and people end up doing something else.  instead of everyone harvesting crops by hand to feed themselves now they go work in an office and stop by the grocery store on the way home.  if machines can flip the burgers and scrub the toilets and work the assembly line well, good riddance to all the human misery caused by people having to do that shit like slaves.  good riddance to the former human misery and hello to the advancement of society...as always with technological evolution, right?

that said, certainly there can and will be uncertain times whilst undergoing such transitions, especially in our fucked up human society that concentrates all the wealth and power in the hands of a few.  things like UBI could and should certainly be used to try to balance things out in an inherently unfair and imbalanced system.  kind of an economic affirmative action, you admit that the system is inherently fucked up so you decide to try to manually tip the scale back the other way by brute force for lack of any immediately obvious better options.

Offline 3DickUlus

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« Reply #11 on: January 16, 2019, 05:36:59 AM »
I'm hoping for a "StarTrekian" universe.

Offline FractalDave

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« Reply #12 on: January 16, 2019, 11:26:37 AM »
I'm hoping for a "StarTrekian" universe.

Gene Rodenberry/John Lennon all the way ;)

Offline Sabine62

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« Reply #13 on: January 16, 2019, 09:58:44 PM »
ST: I am in the midst of a re-run of series 1, so yep  ;)

Offline 3DickUlus

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« Reply #14 on: January 17, 2019, 02:02:14 AM »
We currently have a greed based society, it will be nice when people wake up to the fact that vying for capitol is what's holding us back. I want to study math and physics and fractal theory and.... well I just don't have time because 99% of my time is dedicated to aquiring enough cash to pay for the things I need to live. Not a lot of things, just the basics and the only way I see to get ahead of the game is to participate in the greed driven social construct and get people to give me money without having to give them anything in return... that's called fraud in my books but it seems that is the way of the world, get as much as you can for as little as possible.

In a StarTrekian universe I could persue my interests and contribute to society by getting good at it and sharing my knowledge and skills with others... it's a great dream worth holding on to imho.

edit: gotta call myself out on that number 99% it's really more like 75% of my daytime which works out to 35% or so of my whole day... and I get weekends off so.... yeah, but still, not much time left in my day to chase my interests what with household duties and all.
« Last Edit: January 17, 2019, 04:45:32 AM by 3DickUlus »