
“If poor people knew how rich rich people are, there'd be riots in the streets” - senthil_rajasek
https://rwer.wordpress.com/2018/03/06/if-poor-people-knew-how-rich-rich-people-are-there-would-be-riots-in-the-streets/
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Buetol
The url should be changed to: [https://rwer.wordpress.com/2018/03/06/if-poor-
people-knew-ho...](https://rwer.wordpress.com/2018/03/06/if-poor-people-knew-
how-rich-rich-people-are-there-would-be-riots-in-the-streets/)

Also, like Piketty said in his book, this trend could be inversed and
stabilized if we had more taxes on capital, that's literally the solution to
world hunger / education / healthcare.

~~~
forapurpose
Could you provide some detail about what Piketty said?

~~~
burke
This is, I'm sure, butchering the details to some degree or another, but in
brief:

Piketty's primary thesis is that as the rate of return on capital grows, so
too does inequality between holders of capital and the lower classes. The rate
of return on capital has been increasing steadily since the start of the
industrial revolution. In order to reduce inequality without abolishing our
entire system of economy and government, the most obvious lever is to reduce
the rate of return on capital. The most obvious way to do _that_ is to tax it.

~~~
adamchalmers
Specifically, he calls for a global tax on all capital, regardless of whether
it's real estate, financial assets, homes, bonds, bank accounts. That way
people can't get around it by shifting their assets overseas or into different
forms.

Obviously this would be difficult to implement, but it can be done by
individual states, then countries, then by groups like the EU, etc.

~~~
WkndTriathlete
I think this is impossible to implement without a significant fraction of the
G-8 or G-20 countries electing technocrats to office.

Right now I'm envisioning Merkel and Macron asking themselves what on earth is
happening in the rest of the West, especially in the wake of the election
results in Italy over the past couple of days.

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sokoloff
> “If we take out housing and pensions [which in another part of the article
> we observe 'those two categories comprise most of the so-called wealth of
> most Americans'] and calculate just the shares of financial or business
> wealth — and, thus, equities, fixed-income claims, and business assets — the
> degree of inequality is much, much worse.

So, if we take out the first two elements of the American dream and likely the
first two items that Americans save for, which we've discovered represent most
of the wealth of the middle and upper middle class, we find that the remaining
wealth is even more unequal.

Well, duh...

~~~
leggomylibro
Basic housing and a sense of security are things that we should like all of
our citizens to have access to.

I don't see that it's particularly unreasonable to remove those costs from
consideration when we consider a person's wealth. Sure, they are enormous
assets for the individual. But if the individual didn't _need_ a place to
sleep, it would be a gobsmackingly terrible investment to put most of your
life's earnings into one basket like that. It's an investment made under
duress, and the anticipated appreciation in value comes from the fact that
future generations will be similarly forced.

~~~
gjm11
It would make some sense to subtract off a fixed amount for "basic housing"
and another for a basic pension.

But that's not what Ruccio wants to do. He wants to exclude _all_ housing and
pension wealth. That's crazy! It means that given two people in the exact same
financial situation, if one of them decides they want to spend more of their
money on a really nice house (or a house somewhere really expensive) then
suddenly that person is -- for the purposes of Ruccio's calculations -- much
poorer. Likewise if one of them decides they want to move a load of their
money into (tax-efficient) pension funds. Nonsense: this reflects a difference
in priorities and preferences, not in wealth.

~~~
jakelazaroff
This isn't about the relative wealth of two people in similar financial
situations, it's about the relative wealth of hundreds of millions of people
in vastly different financial situations.

Sure, caps for "basic housing" and "basic pension" might make small
comparisons easier. But unless 90% of Americans are (in aggregate) so
overspending on housing and pensions that it substantially affects their
wealth relative to the top 1%, it's not really crazy to exclude it all.

~~~
sokoloff
By the proposed methodology, if I sold stocks and paid off my mortgage, I'd
thereby become poorer and if I did a max cash-out refinance, blew half of it
Vegas and bought stocks with the other half of that money, I'd become richer.

That seems like a flaw in the methodology to me.

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gjm11
The actual claim seems to be: inequality looks much more extreme if instead of
comparing people's total wealth you compute their wealth _minus_ housing and
pensions.

I dare say that's true, but I don't see any good reason why you should do the
comparison that way. (Other than a desire to make the figures look more
extreme, I guess.)

Suppose Alice has $500k in pension funds, a house worth $400k, and $100k in
ordinary non-retirement savings. And suppose Bob has $100k in pension funds,
rents rather than owns his house (a similar one to Alice's), and has $900k in
ordinary non-retirement savings.

Apparently Ruccio wants us to consider Bob much richer than Alice, because he
has $900k in non-housing non-pension wealth whereas Alice only has $100k of
that. But their real situations are extremely similar, and most likely Alice
is actually better off because her pension funds will be subject to less tax.

~~~
pranjalv123
Housing and pension wealth are a fundamentally different kind of wealth than,
e.g. factories, farmland, businesses, rental properties etc.

The clearest contrast is between a house and a factory. If you own a factory,
you have economic _power_ \- you can hire workers, pay them $X dollars, and
get $X+Y dollars from what they produce.

The point is that housing and pension wealth doesn't produce surplus, whereas
financial and business wealth does. I don't know if I fully understand the
pensions argument, but I absolutely agree with the housing argument.

~~~
gjm11
I think there's an interesting distinction to be made between wealth that
naturally produces more wealth (like owning a successful business, or a share
of it) and wealth that doesn't (like owning a fancy house).

And (something something Piketty r>g something) there is something to be said
for measuring how "productive" wealth is distributed, as distinct from things
like gold and housing and bank accounts.

But:

That isn't what Ruccio is proposing, nor is yours or anything like it the
reason he gives.

My pension funds are approximately 100% equities. They will, if the businesses
they're invested in do well, grow. They provide me, in principle, with a tiny
amount of power over those businesses (though I'm not sure I have any way to
exercise it). But Ruccio wants those _excluded_ from my net wealth when
calculating his statistics.

The money in my bank account is (as far as I'm concerned) just cash. I suppose
my bank gets to use (most of) it for productive investments, but it makes no
surplus for me. But Ruccio wants that _included_ in my net wealth when
calculating his statistics.

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maxxxxx
You just have to look at the first graph you know that something is going
extremely wrong. That trend is not sustainable and will split society apart.

~~~
mirimir
> That trend is not sustainable and will split society apart.

Has society ever been together? The middle class is a relatively recent thing.

~~~
maxxxxx
I think historically societies have been divided into haves and have-nots.
Over the last 200 years we slowly have moved a state where it was accepted
that all citizens have a stake in a country and should have a say (democracy)
and it was understood that if the country does better the benefits should be
distributed to all and motivate them.

If we go back to the state where improvements in the economy only go to a few
people and the rest stagnates we can forget about democracy and just go back
to aristocracy.

~~~
mirimir
That's where we're headed, I agree. But I do believe that the degree of equity
has been exaggerated. Spend much time in Central America, for example, and the
gulf between classes is obvious. In the US it's far less so. Partly it's
pretense. But it's also geographical segregation. It's really in your face, in
parts of Manhattan.

~~~
maxxxxx
I think what counts is the trend and that doesn't look good.

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hackbinary
Wait, what? If poor people knew .... ?!

There were riots in England in 2011. There has been rioting in the US.

Usually this rioting is kicked off by police brutality, but it seems to me
that it quickly descends into looting.

