Episode 483: We Love Inequality

In this episode, we look at what happens when artificial intelligence is put in charge of real-world systems, starting with an experiment in automated pricing and what it reveals about incentives, scarcity, and control. We turn to Denmark’s decision to shut down its national postal service, using it to examine the decline of physical mail, environmental tradeoffs, and why government monopolies struggle to compete with private delivery. We highlight the week’s “foolishness,” including the rise of competitive spreadsheet championships, before turning to a broader discussion about inequality. We examine IQ distributions, bell curves, and why inequality is often confused with poverty, exploring the limits of measures like the Gini coefficient, the difference between snapshot and lifetime earnings, and the role of incentives, envy, and value creation. We close by contrasting equality of opportunity with equality of outcome and asking what societies should actually care about when assessing fairness and prosperity.

00:00 Introduction and Overview

00:27 AI Runs a Vending Machine at the Wall Street Journal

01:52 When AI Meets Communism and Price Controls

03:52 Why AI Isn’t Replacing Humans Anytime Soon

04:32 Denmark Shuts Down Its Postal Service

06:11 Is Physical Mail Environmentally Absurd?

07:39 Why the Postal Service Can’t Compete

11:43 The Foolishness of the Week: Excel World Championships

13:25 Are Spreadsheets More Important Than Football?

15:08 Main Topic Setup: Should We Care About Inequality?

16:13 IQ, Bell Curves, and Random Distributions

23:05 Why Inequality Is Not the Same as Poverty

25:36 The Gini Coefficient and Its Limits

28:57 Sports, Superstars, and Value Creation

38:00 Taxes, Transfers, and the Illusion of Inequality

41:57 Lifetime Earnings vs Snapshot Inequality

45:14 Equality of Opportunity vs Equality of Outcome

49:30 Envy, Incentives, and Human Motivation

53:38 Closing Thoughts on Inequality and Society

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