In capitalism it does mean that you use it to stay on top. You attract more capital, build more moats, consolidate more competitors, exploit more labor... It's why we have a winner takes all economy with record high wealth inequality.
No. You use moats, consolidation and capital to stay on top. You don't use the power law.
I think there's a basic misunderstanding here. If I say that you are in the 80th percentile, that doesn't mean anything other than you are, right at this moment, in the 80th percentile. It doesn't say anything about your position in the future, and even if it says that the 80th percentile will still be there in the future you may not be in it. You can't use the fact that I have described your position to maintain your position.
Incorrect. If you're in the 80th percentile, you're permanently locked out of opportunities available to those in the 99th percentile because they can build effective barriers with their capital. I'm hardly the first to say this, it's well trod territory. Here's some basics if you want to read up on it: https://www.aeaweb.org/articles?id=10.1257/jep.30.1.185
That's not because of the power law, though. That's because of the circumstances that give rise to the power law. I'm saying that the power law does not cause any of this.
Did you not read what you linked? It deals with the causes of power laws in economics, it does not by any means say that power laws cause stagnancy among the relevant population. It does not say this because that would make no sense.
Power laws when applied to economics are an indicator that there are underlying processes (effective barriers with capital may be one) that cause the distribution to look this way. They are an illustration, not a cause.
