Tim writes:
<i>But in formerly rich countries, many people who used to be paid well for their work now have to compete for lower-paid jobs, while those who already own meaningful capital take a larger and larger share of the pie.<p>This is the real “pie fallacy” — the idea that as long as the pie is getting bigger, everyone is better off. It’s true that through technology, trade, and the spread of knowledge, we have made a bigger pie. But that doesn’t mean that some people aren’t getting far more of the benefit, while others are losing out.</i><p>This highlights probably the biggest flaw in Graham&#x27;s original article, and if he does reply to Tim&#x27;s critique I hope at minimum he addresses this point. The reason that the wealthy are claiming an increasing slice of the growing pie is that we&#x27;ve institutionalized, in the form of law and custom, many, many, &quot;rich-get-richer&quot; rules. Tim enumerates a few of them, but there are many such mechanisms woven into the economy, some of them not so obvious. (For example, recently HN featured a Priceonomics article showing how cigarettes effectively transfer wealth from the poor to the rich: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=10941671." rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=10941671.</a>)<p>There are only two ways to combat the rising rate of inequality: 1) modify all those rules and customs to make them wealth-neutral (unlikely), or 2) legislate new counter-rules that move wealth the other way. Any other solution is wishful thinking and not mathematically viable.