
Challenging the myth that the rich are specially-talented wealth creators - sjclemmy
http://blogs.lse.ac.uk/politicsandpolicy/we-need-to-challenge-the-myth-that-the-rich-are-specially-talented-wealth-creators
======
oconnor663
> If you buy some shares in M&S or BP on the stock market, the money you pay
> goes to the previous owner, not the company. You are what Keynes called a
> ‘functionless investor.’ When such so-called ‘investments’ pay off they
> extract wealth from the economy without creating anything in return.

This doesn't seem very coherent. How could a company ever sell stock to raise
capital, if the people who bought that stock didn't have a functioning market
to resell it on?

Obligatory link to Hans Rosling's economic play-by-play of the last 50 years:
[https://youtu.be/hVimVzgtD6w?t=4m12s](https://youtu.be/hVimVzgtD6w?t=4m12s)

~~~
MichaelBurge
I think capital allocation is sometimes too abstract for people to see the
value in.

If I bought some land, built a windmill with my bare hands out of stone and
wood that I cut and shopped myself, and became the flour producer for the
entire region, people tend to say it's a deserved reward.

If I bought that company, paid people to do all the work setting up a dozen
more windmills, paid people to manage the new bigger company, and then sold it
again to the highest bidder, now suddenly I'm rent-seeking and profiting off
of the poor. Even if those things wouldn't have gotten done without this
intervention.

It's like a Ship of Theseus: If you split up the flour company into its
constituent pieces and slowly hire other people to do them, at what point does
it become unethical rent-seeking?

Even someone who buys an income stream solely to ride it out with the minimum
amount of maintenance is at least taking a risk to their capital. And even if
they protect it with an insurance policy or similar, they're at least locking
up the money for a dedicated purpose usually for an extended period of time.
People are often afraid of taking risk or limiting their options, so people
who do so are providing some value.

~~~
maxerickson
Rent seeking is jargon. It doesn't refer to running a business.

[https://en.wikipedia.org/wiki/Rent-
seeking](https://en.wikipedia.org/wiki/Rent-seeking)

[https://en.wikipedia.org/wiki/Economic_rent](https://en.wikipedia.org/wiki/Economic_rent)

It refers to the economic consequences of things like regulatory capture and
corruption.

~~~
force_reboot
You are are applying the standard definition of rent/rent seeking used by
economists. But MichaelBurge's post is using the language of the original
article, which claims that renting out an apartment, or making capital gains
from a business, "rent seeking".

So MichaelBurge is making a valid critique of the original article, whether or
not the article was correct in using the term "rent seeking"

------
11thEarlOfMar
Part of the reasoning here is that rentiers are not contributing to wealth
creation and therefore their earnings on the rent are parasitic, therefore
'unjust and dysfuctional':

"Since it’s a payment for nothing that didn’t already exist, it’s a deadweight
cost, and so not only unjust but also dysfunctional for the economy. "

The practice of renting exists as an option to owning. By renting, renters can
engage in an activity with less up front capital to buying. For example, a
contractor building a concrete sidewalk may choose to rent the mixer rather
than owning it, so that it's cost is a cost of sale for the service, rather
than a fixed cost that requires maintenance, storage and transportation. In
that sense, the rental is a component of a larger transaction involving actual
work being performed, and not parasitic. Moreover, by offering the mixer for
rent, the 'rentier' reduces the total number of mixers that need to be
produced, as it is a shared resource to contractors and they each do not need
to own their own.

The same principle pertains to business. A fast growing startup may know they
only need a space for a short time and will grow out of it. So it would make
no sense to purchase the property they will inhabit for a short time. The rent
they pay is an alternative to mortgage or cash, and it makes sense for their
business purposes, which in theory _do_ produce something of value.

In the example of home rental, making homes available for rent enables
families to live in accommodations that they would not be able to purchase.
These accommodations are not without cost to the owner: Taxes, utilities,
maintenance, security and administration are all associated costs that rent
payments offset. What the rentier provides in most cases, is a better quality
of life than the family could have if they were forced to own the property
they lived in.

~~~
hueving
Unless subsidized or losing money, the rent is more than a mortgage payment
would be. If we had low enough transaction costs it would be better if
everyone just owned their homes via mortgage for even short time frames.

~~~
petra
In Israel, in the 50's-80's, in government housing there was a kind of rent
that accumulated towards payment of your house. And i'm not 100% sure, but
maybe even if you needed to move houses(in coordination with government rent
company), the collected money would have transported with you to your new
house.

EDIT: just to add context - Israel had a huge challenge - it was created with
the goal of being a home for every jew globally - and most have come - which
lead for a huge demand for housing, for many poor people. And for the first
decades of it's history it was mostly successful at that. And it didn't seem
to inhibit growth or employment.

~~~
styrophone
Rent-to-own in general exists as a concept in many places, but it has a sour
reputation due to the predatory practice of vanishing equity. Essentially, a
renter is sold on a higher rent price on the premise that it will result in
their eventual ownership. However, if they fail to make rent or must leave
early for various circumstances, they have no equity to recoup. In some cases,
this serves as an incentive to force out a tenant, and in worse cases, that's
the design of the scheme from the beginning. Government housing programs tend
not to fall under this category, but I have heard of some governments (e.g.
Singapore) revoking housing rights without return of any capital as a penalty
for certain violations.

~~~
petra
Yes, under capitalism, everything that can be corrupted will be corrupted.
This generally seem to be less of a problem for the nordic countries somehow,
probably a combination of strong regulation and a culture a bit more geared
towards fairness.

BTW, Singapore has an home ownership rate of 90%, so it seems like a big
success.

------
_yosefk
TTIP is pushed by _corporations_ , not individual rich people. A corporation
will want that even if every one of its stockholders has a below-median
wealth. More generally, organizations and people working for them will pursue
their goals and these goals will be misaligned with the interests of the
population at large even if nobody is involved whose net worth is particularly
remarkable. If corporations are eliminated and most work is done by government
agencies, then these new organizations simply become more shielded from all
sorts of punishment from the population compared to corporations.

The rising nominal wealth of the richest people since 2008 is largely a result
of asset price inflation resulting from low interest rates; the wealthy person
is not more wealthy, however, holding a more expensive stock if the dividends
and the profits are about the same as they used to be when interest rates were
higher and stocks were cheaper, in fact the wealthy person is largely worse
off since risk-free income is gone.

As to "unjust and dysfunctional"... aren't we all. At least a rich person can
lose money in a variety of scenarios and can be intimidated by this
possibility. A tenured academic pays no price whatever he does, so he's more
scary that way.

edit: I'm not saying people aren't responsible, just that many of those
responsible aren't that rich, and even if you mandate a ceiling on wealth and
income, guess what, people will still want to get things done (because you
will have a mechanism making them want to, otherwise nothing gets done - of
course you can very much choose that, too), and guess what, people will get
"their" things done at your expense.

In fact _it 's people who blame the rich who claim that people aren't
responsible_ (their _money_ /assets - the thing making them _rich_ people on
top of just "people" \- is responsible.) I'm absolutely saying that _people_
are responsible, and taking money from people will not solve very much.

This is not to say that nothing can be done; jailing wealthy criminals is a
good start. A great economist whom nobody will blame for excessive concern for
the welfare of the wealthy who'll be glad to show you his list of things to
do, but who's nonetheless not "Pikettian", is Dean Baker.

~~~
jonathankoren
Please. Corporations are run by people. People with agendas. And at the upper
echelons it's agendas to make them selves as rich as possible. This idea that
somehow people aren't responsible is absurd. Presumably you work for a
corporation. Do you check your brain at the door when you go in and turn
yourself over to Master Control at the start of each day? No, of course not.
It's long past time to give up this fiction.

~~~
ams6110
There are people at all levels of society who's agenda is "make them selves as
rich as possible" from drug dealers and pimps to restaurant owners, car
dealers, realtors, lawyers, doctors, you name it. Nothing special about
corporate executives.

~~~
jonathankoren
The scale of their power is what makes them special. Tell me, when was the
last time you made a decision than tanked an entire regional economy, or
perhaps ruined the finances of a thousand families while lining your pockets?
When was the last time you decided to simply ignore the law and then had the
government come to you shaking how to change it to make you legal again? When
was the last time you had law changed for your personal benefit? I don't think
you can.

That's what makes it different.

~~~
ommunist
Exactly. I saw such things with my own eyes.

~~~
jonathankoren
We all have.

------
tokenadult
The important point to notice here (I have seen comments previously posted
that talk about the "1 percent") is that a middle-class American and people in
other countries with similar levels of prosperity is very close to the world 1
percent level of income and of wealth. The simple fact of the matter is that
today's "average" people in developed countries are staggeringly rich compared
to most of human experience for most of history.

[https://www.gapminder.org/videos/dont-panic-end-
poverty/](https://www.gapminder.org/videos/dont-panic-end-poverty/)

------
onetimeusename
There are a few things I disagree with.

1) Income from rent is not unearned. The reason it is called unearned is
because nothing new was created. However, many services are this way. For
example, fees paid to lawyers, or insurance fees and so on. Income earned from
rent is income that comes from providing a service which is shelter or land
for other uses.

2) Investment income is not parasitic. A share is a portion of a company. If
someone buys a share, they are buying into ownership at a price they think is
worthwhile. The prices of the shares are largely based on the value of the
company. The value of a company can continue to go up and so profits come from
the company being more valuable, not parasitically. Also, many shares provide
dividends which is income and the right to vote.

3) It doesn't make any sense to me that rentiers free ride on the labour of
others. Do they not have to pay for the goods and services they use?

~~~
jsprogrammer
Shelter and land are not a service but a physical resource.

~~~
onetimeusename
They are a physical resource but renting them is subject to contractual
agreements between parties because what is actually being paid for is a
_right_ to use land not the land itself. A renter must provide maintenance of
a property for example. Another way to think of it is to say that a taxi
provides a service temporarily, not the physical car itself. Renting is
similar.

~~~
jsprogrammer
Yeah, selling a right to use land is not a service either.

It is literal trolling.

~~~
onetimeusename
If renting things is trolling then the world is full of trolls. If the
solution to this is to confiscate resources for collective government to
control, all that is being done is transferring the right to rent from one
group of trolls to another. Then we have to start debating which group of
trolls we would prefer to negotiate with. I already have my answer for that
one.

~~~
jsprogrammer
I'm not sure all renting is trolling, but I do agree that the world is full of
trolls.

I said nothing about confiscation, government control, or transferrence of
(made up) rights.

------
lumberjack
Honestly, I do not even care about how "fair" the wealth distribution is. They
have their billions. All I want is some job security. I think most average
people feel the same way.

~~~
vlunkr
My feelings exactly. Just because they have an outrageous amount of money
doesn't mean there isn't enough for me.

------
mtrn
From a developer perspective many aspects of the current system (with respect
to resource usage and allocation) look like technical debt. Governments may
try to make ends meet with limited budgets and come up with sometimes
nonsensical or just not really thought out solutions to problems. Meanwhile
the world learns about the Panama papers and related things, getting the
impression, that not everybody is happy with contributing back to the
community at large.

The simple minded software developers solution would be to radically cut out
the cruft (complex laws and tax systems) and implement a simplified version,
that would be harder to game and easier to debug.

~~~
physicalist
...but in the world of software, everyone wants programs that work better. The
very rich have no short term interest in a system that's hard to game.
Therefore they're going to use their considerable influence to prevent just
that.

~~~
ommunist
You probably are talking about some alternative Universe. In this world
programs are made to make certain shareholders rich by exploiting certain
markets. Including creation of encapsulated artificial markets with
maintaining artificial needs, Facebook being the good example.

------
adwhit
HN tends to be extremely reactionary to posts like this. Perhaps because the
tech/startup scene is all about getting rich quick, or perhaps because HN has
come to partially reflect the personal views of PG.

There will be a reckoning. The world is 'unsustainably unequal' at the moment.
There are huge problems on the horizon - superbugs, climate change, resource
depletion, environmental degradation, overpopulation. These problems can only
be solved when governments act in the interests of all of humankind. This will
not happen when the 1% hold all the money and all the power (which is the same
thing).

I hope we can reign in the rentiering, tax-avoiding, propaganda-publishing
rich and reclaim democracy before Something Bad happens. Otherwise, when the
SHTF, the 1% will deservedly shoulder all the blame. And that will be the
reckoning.

~~~
mbfg
i understand your sentiment here, and in the view of history this is true. The
problem is that now, or very soon, we are/will be in a state where the 1% can
easily put down the 99% politically, socially, financially and yes militarily.
So there may be a reckoning at some point. But it will and badly for the 99%.
This was mostly true throughout history as well, it's just become a more
certainty now.

~~~
Joeri
100.000 british men simply cannot control 350 million Indians, if those
Indians refuse to cooperate.

Throughout history it has been the case that sustained perceived inequality
inevitably leads to revolution. We're nowhere near that point, but if trend
lines continue and the middle class gets wiped out, it will happen. Democracy
is supposed to prevent things from getting that bad, but we have seen that
free elections are easily manipulated when you control the money and the
message people hear, which is why these presidential elections will once again
be a vote for either of two pro-super-rich candidates.

Ironically it is in the super-rich's best interest to raise taxes on
themselves to stop this from getting out of hand.

~~~
ams6110
The election is looking like it will come down to Trump v. Sanders. Both of
whom were the LAST choice of the "elite" who supposedly are pulling all the
puppet strings.

~~~
ajoy39
I don't know how you can look at the democratic primary an think it looks like
Sanders will be the nominee.

------
nickpsecurity
My theory is it's a cartel of cartels. It was always a possibility given all
the markets naturally seem to develop oligopolies and shift to cartel-like
behavior. Buying off politicians to protect profit or market share was also
common. So, what happened is that they started acting collectively for
whatever interests them. They still compete or argue for other things but
certain laws and trends are valuable for all rich capitalists.

Project Censored published a great report that surveys many of the
organizations, their boards, and so on. First report whose theory is very
similar to my own research.

[http://projectcensored.org/the-global-1-exposing-the-
transna...](http://projectcensored.org/the-global-1-exposing-the-
transnational-ruling-class/)

As you can see, the boards have considerable overlap where people who appear
to be competing in one sector are working together in another. There's also a
clear incentive, per doctrine of maximizing selfish gain, for board members
and CEO's to all give each other ridiculously high compensation while driving
it down for laborers. The reason: they can. Why else?

So, it's a combination of corrupt politicians, elites at CEO/board level, and
media whose boards work similarly. The worst part is that the media is
critical to changing the situation but has financial incentive to avoid that
ever happening. That's why they so deviously self-censor on these issues to
the point Americans can't get mad enough about the specific problem to do
something with specific solutions. Media never presents either. Instead, works
on side issues or total distractions (esp shootings or celebs) that prevent
threats to stability of plutocracy.

EDIT: Given not everyone likes this source, I'd be interested in any similar
data and analysis from academics published in a peer-reviewed journal. No
paywalls, though. Can't fight elitism with more elitism. ;)

~~~
ommunist
I am giving you the important data point. 2010. Lady Barbara Judge in Astana.
2015 UK is building 5 new nuclear power stations, and public is generally
unaware of the fact.

~~~
nickpsecurity
Her background is like a whose-who of scheming companies and groups. She was
apparently pretty effective, too. Not that great an example, though, given
people only care about nuclear so much.

Our best example in recent times is still 2008. In this case, the elites crash
the whole system, get paid off for it, and get criminal immunity. This kind of
event and resulting deal should be non-existent in a democracy. Whereas, in
Iceland, they overthrew the dirty politicians, jailed them, jailed the bankers
involved, seized banks, and reoriented their banks and news to prevent such
things in future. Healthy democracy in action.

The media's role in keeping elite's schemes going is pivotal. I think the
strategy has to be on them. Anyone doing a revolution should hit the media
rather than just the government. Make sure each side gets a say with reporters
digging into root problems and potential solutions. People can then push for
what they believe will work through regular, government structures. They can't
act without being informed. So, corporate media is root problem here.

Note: I've observed the same thing in Russia. Their media, at least RT, is
even worse as it's basically a government spokespiece. Ours still compete with
each other with at least several calling out government in big ways without
anyone getting shot. The times they self-censor and are pervasively corrupt
are protecting capitalist class that funds them. So, huge problem, but enough
media protection here to maybe accomplish something. I'm more worried for
Russians given Putin's recent laws on bloggers, etc plus risk journalists face
in general.

~~~
ommunist
In Russia censorship was always the cage. In the US it was always a skeleton.

~~~
nickpsecurity
That's an interesting way to state it. Could you elaborate to make sure I'm
understanding the metaphor?

~~~
ommunist
In the US professional media participants are literally trained not to touch
sensitive parts of the social discourse. Hence the political correctness - the
modern doublespeak, and natural avoidance of entire massive sets of facts
underlying important social problems and drivers. E.g. no reports in the U.S.
media on French toxic waste dumping to the sea within Somalian territorial
waters. But! A hell lot of publications about 'somalian pirates' afterwards.
When these poor fishermen were literally left without source of food not only
for them, but for their next generations.

Just in case I am too thin, the US journalist will rarely if ever publish fact
that will cost him a career prospect, or give him label of 'red'. Even if he
or she has certain sympathies. This is self-censorship and it is very
effective.

~~~
nickpsecurity
Appreciate the clarification and very interesting example with Somalia
situation. I hadn't heard of that one despite avoiding corporate media where
possible. That was kind of your point, though. ;)

So, I guess you're analogy means that the Russians in power (eg government)
force the journalists to shut-up whereas in America the corporations and
journalists do it themselves on sensitive topics for selfish gain? I'd agree
with that if it's what your metaphor meant.

------
11thEarlOfMar
How does the title: "We need to challenge the myth that the rich are
specially-talented wealth creators"

Become: "The very rich are unjust and dysfunctional" ?

~~~
dempseye
It's a quote directly out of the byline. It is also, according to the author,
the main thesis of his new book.

Is there some rule on here that the title of the submission must correspond
exactly to the title of the linked article?

~~~
pohl
Yes, from the "Guidelines" link at the bottom of HN:

 _Otherwise please use the original title, unless it is misleading or
linkbait._

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
ghufran_syed
Does "unjust and dysfunctional" = "u r a fag" [DH0]?

[http://paulgraham.com/disagree.html](http://paulgraham.com/disagree.html)

Let me try and do a little better: I would argue that this kind of rhetoric is
not significantly different from social movements in various countries of the
20th century, the end results were not quite as benign as its supporters
anticipated: 'During the land reform, a significant numbers of landlords and
well-to-do peasants were beaten to death at mass meetings organised by the
Communist Party as land was taken from them and given to poorer peasants.[169]
The Campaign to Suppress Counter-revolutionaries,[170] involved public
executions that targeted mainly former Kuomintang officials, businessmen
accused of "disturbing" the market, former employees of Western companies and
intellectuals whose loyalty was suspect.[171] In 1976, the U.S. State
department estimated as many as a million were killed in the land reform, and
800,000 killed in the counter-revolutionary campaign.[172]

Mao himself claimed that a total of 700,000 people were killed in attacks on
"counter-revolutionaries" during the years 1950–52.[173] However, because
there was a policy to select "at least one landlord, and usually several, in
virtually every village for public execution",[174] the number of deaths range
between 2 million[174][175] and 5 million.[176][177] In addition, at least 1.5
million people,[178] perhaps as many as 4 to 6 million,[179] were sent to
"reform through labour" camps where many perished.[179] Mao played a personal
role in organizing the mass repressions and established a system of execution
quotas,[180] which were often exceeded.[170] He defended these killings as
necessary for the securing of power.[181]' [typo edited]
[https://en.m.wikipedia.org/wiki/Mao_Zedong](https://en.m.wikipedia.org/wiki/Mao_Zedong)

~~~
asuffield
Yes, it is precisely that. It's very easy to take shots at extremely rich
people, because they won't bother to show up and defend themselves and nobody
else will either.

The main problem I have with this is that it's not very interesting and
doesn't solve anything.

~~~
brador
Should extremely rich exist as a thing? What benefit does it bring humanity
over the alternative?

~~~
zanny
This is the primary problem with the discourse. People can agree pretty
universally a tyrant, dictator, or emperor is a _bad_ thing. You do not want
heredity to determine power, and you do not want one individual to have
violent dominance over anyone else, because _you_ will often be the "anyone
else" if you are not the aggressor.

But that is about the only difference between how the modern gears of power
operate versus how they did millennia ago. Rather than just kill your brothers
and claim the throne and execute the dissidents and having your firstborn son
inherit the crown from you, your children inherit ludicrous wealth that
translates into the same power to buy the violent arm of the state for your
own ends.

Except now the peasantry cannot just storm the castle, behead the king, and
replace him with another. There are kings from across the globe that control
your society through its economy, and the present incumbents of radically
concentrated power will argue everyone is king when they own wealth in the
global capitalistic system.

That, in practice, is pure deception[1], but you will have people by thousands
at the bottom congregating to defend those off the chart, despite the ones at
the top constantly using their power to harm all those below them.

If we _did_ have what the rich claim we do - democratized distributed power -
we would _need_ dramatically less wealth inequality, because that wealth, and
the distribution of it, represents who has authority in the global capitalist
economy. That is not an argument for socialism, communism, fascism, anything
_political_. It is a reflection of tautological truths about having a global
capitalistic market system that determines _who_ is powerful by way of capital
and fiat ownership, and that if you want to have a more democratic _humanity_
you must first deal with the fact that money is power, and when power is
aggregated into the hands of very few, you don't have democracy.

We are not at the point to argue practicalities, or dogma, or anything else
beyond understanding. What we need is just for near universal acknowledgement
that this paradigm _exists_ , is how the world operates _today_ , and that you
probably would want to do something about it because we can already
universally agree we don't like tyrants, and that we should not like tyrants
in any form they take, even the ones that are not immediately and obviously
apparent to most.

[https://www.youtube.com/watch?v=QPKKQnijnsM](https://www.youtube.com/watch?v=QPKKQnijnsM)

~~~
morgante
> Rather than just kill your brothers and claim the throne and execute the
> dissidents and having your firstborn son inherit the crown from you, your
> children inherit ludicrous wealth that translates into the same power to buy
> the violent arm of the state for your own ends.

Except inherited wealth is at all-time lows.

If you look at the richest people in the world today, the majority of them
made their own way into those ranks. They didn't inherit it from anyone.

~~~
zanny
I should have worded it better, but it is not just strictly biological
children. There is an entire cultural social class above what most call "rich"
that encompasses the heads of major universities, companies, investment firms,
and governments that represent a fraction of one percent of the population but
have consistently controlled the vast majority of capital and have gradually
increased their ownership stake since the most democratized periods
surrounding World War 2 (though they were only so democratized because the
pool of people in consideration was smaller - part of the problem in modern
global capitalism is that almost _everyone_ on the planet is now a
participant, and thus there are now billions of people to exploit and bully
than millions in industrialized western states that simply cut ties to the
rest of the world with the death of classical imperialism in the early 20th
century).

In reality, money might not stay in one families direct hands, but upward
mobility is at generational lows _in the west_ , and in particular the number
of successful new businesses, and those which elevate anyone out of the
working class into either middle or upper class, are diminishing
significantly[1].

[1]:
[https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf](https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf)

~~~
brador
Would a yearly single flat tax of XX% of total net worth for every human in
the world solve the problem? Essentially a literal redistribution of wealth,
but could it work?

~~~
zanny
Flat taxes do not work, because the established system is one where there are
two classes globally - the consumer class, that is productive to consume
resources with the fruits of their labor, and the capital class, that owns the
means of production and use the wealth that creates them to make more wealth.

If you take 30% of everyones income, the working class loses standard of
living and upward mobility while the capitalist class reevaluates their
investments to insure that, despite a 30% annual expense, you are growing your
wealth regardless.

It is also a dangerous precedent. If your intention to tax sufficiently high
to start peeling back the democracy distorting wealth inequality, the wealthy
will just flee you, and you must remember - as they exist today, they are the
arbiters of society, and dictate who lives and dies through economics. If
anyone outright attacked them like that, you _should_ expect a war in return.

~~~
brador
That's why I said a global yearly total flat tax on total net worth, not
income.

If that could be made to work and the pieces set up to work, would it be a
solution?

------
morgante
This is a rather poor article.

In particular, it seems to imply that the wealthy are inherently rentiers. By
the logic of this article, virtually all investors are "functionless
investors" since they are not directly investing in a business by buying
shares from the business. Of course, this neglects the fact that having a
market for shares is in fact necessary for anyone to buy shares in the first
place.

Also, it would be nice to have a definition of how exactly the wealthy are
"dysfunctional." They seem to be pretty functional at accumulating wealth. But
they're also pretty functional at expanding and building a wealthy
society—Apple made Steve Jobs very rich, but it also made all of us a little
wealthier as well.

As for justice, today's rich are more meritocratic than any in the past.

------
pjdemers
About "rent seeking" and "passive income": Everybody gets old. Technology
companies don't hire the old. And in technology, old is > 45\. Which isn't
that old given that my life expectancy is about 85. So, darn right I'm "rent
seeking". And I save like mad so I can generate "passive income". I assume
that I will be pushed out of the workforce very soon - and I don't want to
live on welfare for 40 years. Nor do I want to be restocking the shelves at
Target when I'm 80.

------
wtbob
> If you buy some shares in M&S or BP on the stock market, the money you pay
> goes to the previous owner, not the company. You are what Keynes called a
> ‘functionless investor.’ When such so-called ‘investments’ pay off they
> extract wealth from the economy without creating anything in return.

Ummm, no: when you pay off the previous owner you reimburse him for the risk
he took. What's this guy's solution — not allowing folks to sell their assets?
That seems a bit extreme, and liable to destroy the economy utterly.

------
ommunist
No problem with that. Its a system. Rich stays rich, poor stays poor.
Exceptions only proves the validity of this general rule.

[http://www.spiegel.de/static/happ/_pattern/story/foundation/...](http://www.spiegel.de/static/happ/_pattern/story/foundation/v2/pub/j65309.html)

My favourite joke about 'How you managed to become a millionaire' has a morale
that power and wealth is always inherited. Gates maybe a 'self-made'
multibillionaire, but his very functioning in this quality only makes "rich
stays rich" principle to stand. I would be fascinated would Gates finance
social revolution in Mexico, to make people there less poor. Will never
happen, because once you rich, you support agenda of the rich.

~~~
ArkyBeagle
But wouldn't be irresponsible hubris for Gates to meddle in Mexico? It was
when William Randolph Hearst meddled in Mexico.

If "social revolution in Mexico" looks like "social revolution in Egypt" then
I fail to see a probable upside.

~~~
ommunist
ok, call it 'social rearrangement'. Lets make Mexico more democratic, give
more power to people, protect elections, and give basic income to every
Mexican. Gates's money is more than enough to provide basic income to 10
generations of mexican people. Will never happen though.

~~~
ArkyBeagle
I happen to work with someone who is still a citizen of Mexico living in the
US ( there is family land in Mexico and he can't keep it and be a US citizen )
, and according to him, it's extremely complicated. The big complicating
factor is probably the US War on Drugs.

But he has stories - like his brother fixed up a car nicely. There's a tax on
that, and the car was simply taken, and his brother was taken to jail.

If you slosh money around in Mexico, chances are that somebody will take it
upon themselves to collect it for themselves.

All this being said, Mexico itself seems to be slowly becoming less poor over
time. They are, ironically, starting to have problems with people from Central
and South America, both criminals an ostensibly non-criminals.

~~~
ommunist
This is just fascinating. Thank you for sharing that.

------
swehner
Got a 403, here's a copy,
[https://web.archive.org/web/20160227170731/http://blogs.lse....](https://web.archive.org/web/20160227170731/http://blogs.lse.ac.uk/politicsandpolicy/we-
need-to-challenge-the-myth-that-the-rich-are-specially-talented-wealth-
creators/)

------
nathan_f77
What's the solution? I hear rants all the time, but no-one ever offers any
concrete steps, or suggestions for new laws.

~~~
ausjke
Revolution is the final answer, as always, the majority will win no matter
what.

Taxes, welfare etc slow-down/mitigate that, but that's not enough for the so-
called 99%.

~~~
lgieron
I'm not sure I call a revolution "a win" \- see the French revolution
(hundreds of thousands dead in cleansings, country ruled by ruthless dictator)
or Bolshevik or Chinese Communist Revolutions. I'm finding it hard to come up
with a positive counterexample.

~~~
rskar
American revolution? Is that one a flop? (I mean for now, future trajectories
aside.)

~~~
douche
Quite possibly the only popular revolution of the modern age that didn't end
in massacres. Probably because it was, despite all the rhetoric, controlled by
a group of generally conservative oligarchs who really weren't trying to shake
things up that dramatically.

~~~
ommunist
It did not ended with a massacre only because it started with that. Ask ghe
First Nations. Lacotas for example.

~~~
douche
That's kind of an idiotic comment. The thirteen colonies had almost no contact
with the plains tribes, like the Lacota, precisely because the British
government had attempted to block passage of settlers past the Appalachians
after the Seven Years War.

------
known
[http://www.monbiot.com/2011/11/07/the-self-attribution-
falla...](http://www.monbiot.com/2011/11/07/the-self-attribution-fallacy)

------
hahagavkdr
"I know more about how you should spend your money than you do"

------
xyzzy4
Nearly all people, rich and poor, make decisions for personal gain.

~~~
JoeAltmaier
Agreed. At some point, its important for the powerful to change their tactics.
They often fail to adapt to their new power (that wealth brings). This is the
reason for anti-trust laws, regulations on banks (which have been largely
dismantled) etc. Because so few people rethink their motivations when their
power to affect people goes from one-at-a-time (like most of us) to thousands
and then millions of people. If they stay capricious and selfish then every
whim, tantrum and greedy indulgence hurts society in ways they have failed to
consider. Some few have made the transition, often at the urging of family.

------
nxzero
Very rich are just average people; meaning there's a mix of types of people
that are very rich; aka billion or more.

Feel like most people have never known anyone super rich or for that matter,
very poor.

Lastly, while it's true that there are more super wealth individuals than
likely any point in history currently - the quality of life is also better on
average too.

~~~
jonknee
> Very rich are just average people; meaning there's a mix of types of people
> that are very rich; aka billion or more.

Being very rich is by definition not being average. There are ~1,800
billionaires in the world and none are average.

~~~
nxzero
I see, then what by definition is an average person?

~~~
ommunist
Joe the Schmoe, 15-75K USD per year in the 1st world. Barak the Schmack,
10-100 usd per month in the 3rd world.

Surprisingly there is no more the 2nd world. since the USSR is no more and
Ivan the Plan had no salary comparable to its monetary value, but a hell lot
of social services he and his family used for free. Like free education for
example.

~~~
nxzero
I see, the super rich have more money than the super poor; how obvious, no
idea why I missed that.

Any idea if there other differences, or are the super rich and very poor on
average the same? If not how so?

Also, might be worth noting if this is based on meeting people in the real
world?

~~~
ommunist
I am in the unique situation to answer your question. I know what it is being
very poor, quite literally suffered from hunger in 1993-94. And now I am
adjusting value propositions for old family owners real estate in Europe. The
difference is that these old families in a way shaped policies in their
countries of residence to make their lives comfortable. E.g. private islands
with golf courses in the heart of national nature reserve, and no one else
allowed build anything close, or around the location. They are not directly
writing laws. They are influencing persons, incentivise entire lifespans of
policy makers to make necessary outcomes. So the first and very important
difference - planning horizon. Poor people plan for days if not hours. Super
rich plan for years, if not decades. Really powerful people plan for
generations.

~~~
nxzero
You're talking about resources, which is the same thing as saying the the rich
are rich and the poor are poor.

I'm saying people are people, super wealth people are not a certain special
type of person, nor are they the same type of people.

------
api
So they're just like everyone else?

------
ommunist
remember 1917 in Russia, and how much the SovietUnion did for the world and
its nations until 1991, by just removing the rich and concentrating power with
government, led by proper ideology. Stalin got the country of illiterate
peasants with ploughs and left it with 100% literacy, and the nukes.

~~~
B1FF_PSUVM
> remember 1917 in Russia,

Yep. 'Someone' tossed a Bolshevik grenade at Russia, and made sure that
Eurasia would be knocked out for the rest of the century.

Worked brilliantly.

~~~
ommunist
What do you mean 'knocked out'? The social justice maintenance system in the
USSR worked. There were no rich, but your honest labour and intellectual
efforts were properly rewarded there up to end of the 60-ies. That was
foundation for prosperity of the 80-ies. But elites betrayed the country and
in 90-ies it was over.

------
ageofwant
Being separated from other people causes brain damage. This truth works on
many levels.

[https://www.reddit.com/r/AskReddit/comments/4lianf/whats_a_d...](https://www.reddit.com/r/AskReddit/comments/4lianf/whats_a_dead_giveaway_that_someone_has_come_from/)

Read through that reddit thread, can you relate ? Empathy certainly is a
function of social distance. The very rich are very distant, have very little
empathy, and are therefore mentally ill.

~~~
ommunist
No, they are OK. They just have other problems, not another scale like 'I do
not have 100K to close my mortgage and that guy has no extra 2BN to buy that
robotics facility in Korea'. They live in another dimension. It is called
power, when they decide about values of your currencies for example - remember
what Soros did to the sterling pound.

