
Billionaires extract wealth rather than create it - corporate_shi11
https://www.newstatesman.com/politics/economy/2019/12/how-billionaires-extract-wealth-rather-create-it
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seibelj
Who would you rather have another $100 million dollars - the US government or
Bill Gates? One has a track record of creating incredible products, the other
is a literal dumpster fire, blowing $100bil ain’t nothing to the government.

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thebradbain
I don't really subscribe to this idea that the US Government burns money as a
rule. I'm sure there's many places that could be streamlined or made more
efficient. But to blanket state that the US government as a whole is wasteful
garbage seems naive, considering the immense scale and breadth of functions
they carry out. The US Government employs 2.5 million people (3.8 million if
you include the US Army, for which spending actually represents 61% [!] of the
current US Budget) – the scale is personally hard for me to grok, at least.
One thing that changed my mind about government spending is to look at the
budget of a government program or facet of a program you're personally
familiar with, and at least in my experience, it blows my mind what they can
accomplish with what they're allocated.

For example, the entire yearly operating budget of Big Bend, a national park
bigger than the state of Rhode Island, is only $7 million, including employee
salaries, maintenance and restoration, emergency services, special
programming, on-site research, and educational outreach – and it brought in
around more than $27 million in visitor spending last year. From a money-
making standpoint (which I don't think is the purpose of a government so much
as to serve the public interest), that represents an extremely good return on
investment – not to mention all the positive externalities of such a venture.

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tumba
I believe you are incorrect about the US Army’s percent of the federal budget.
Total defense spending (all branches) represents around 15% of the budget.

Source:
[https://en.wikipedia.org/wiki/Expenditures_in_the_United_Sta...](https://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget)

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thebradbain
Ah, great catch! I’m admittedly nowhere near an expert in this regard. I was
looking at the US Discretionary spending budget, and mistakenly thought that
was representative of the total budget

I was looking at the discretionary budget breakdown:
[https://www.pgpf.org/chart-
archive/0070_discretionary_spendi...](https://www.pgpf.org/chart-
archive/0070_discretionary_spending_categories)

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DATACOMMANDER
Real-estate speculation is basically rent-seeking, but inheritance is not. If
someone amasses a fortune by creating wealth and leaves his assets to his
offspring, they are not parasitic even if they never work. What matters is how
the wealth was _originally_ accumulated.

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Porthos9K
Why do you believe that inheritance is not parasitic or rent-seeking behavior?
Large fortunes exert a gravitational effect, attracting more money and thus
making their owners much more powerful than they would otherwise be.

The way I see it, the unchecked growth of intergenerational wealth is how we
end up with aristocracy, and I would rather prevent aristocracy from rising
than try to overthrow it once it's entrenched.

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DATACOMMANDER
Actually, most fortunes go to zero within a few generations. The “1%
squared”—the top 0.01%—is not a monolithic group of people. I’d wager that 90%
of the 0.01% had grandparents who were not even part of the 1%.

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Porthos9K
I don't find your argument persuasive.

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DATACOMMANDER
Okay.

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snidane
Rent seeking is natural. That's why we get progress.

Nobody would ever invest time and money to a business idea whose profits would
get immediately competed away. Everybody would on the other hand invest into a
business with guaranteed profits which cannot be competed away - ie. a
monopoly.

That's producer's perspective. Consumer would on the other hand rather see
competition among producers, because lack of competition leads to overpriced
shitty products. However fierce competition leads to shitty and dangerous
products too, because of need to cut corners and lack od funding for long term
research (eg. current day airline industry).

So there must be a middle ground. Some degree of rents (profit which cannot be
competed away) is necessary for progress and product quality.

There are several kinds of rents that I see.

1\. Short term innovation monopoly These rents are usually short termed until
they get copied by others. These are perceived to be fair and even if not,
they have short life span, so who cares. Wait 5-10 years before the market
catches up.

2\. Rents from natural monopoly. Generally all network infrastructure falls
under this because the first mover has great advantage over potential
successors eg. by laying railroads, sewers, power grid or network cables in
geographically optimal location. Other natural monopolies are eg. law or stuff
which might harm you (drugs, pharma) - people prefer goods that everybody else
uses and distrust smaller unknown alternatives.

3\. Government blessed monopolies. For many industries it is more profitable
to strangle competition than to better their products. Eg. patents,
Mergers&Acquisitions, price undercutting and especially lobbying of
regulations targetted against potential competitors - often in form of
'safety' regulations supposed to protect customers. Pharma industry would be a
prime example.

4\. Front running is another form of guaranteed income posing as legitimate
business.

In finance: you are a banker and your client asks you to buy a stock for him.
You buy the stock for yourself, which hikes the price and then you sell it to
your customer at higher price.

In housing: you know that there is a massive trend of jobs concentrating in
cities. You cheaply buy all land and houses in a prospering city, because you
know that it will be needed by future generations. They will pay you huge
rents later on. Nobody can stop you because your 'customers' are often not
even born yet.

In both cases you seemingly offered your customer a service which they
voluntarily paid you for, but something feels fishy about it.

All in all there are good rents and bad rents. How about distinguishing
between the two and reversing the weird current tax system, which collects
from the good ones (income, corporate and sales taxes) and giving to the bad
bad ones (subsidies, redistribution).

Since often the government guarantees some company a monopoly, why shouldn't
it pay for that privilege. Monopoly based taxation seems to me like quite a
fair tax system.

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corporate_shi11
What would a tax on subsidies look like? Wouldn't that just be a reduced
subsidy, which is still a subsidy?

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tyzerdak
This true but alternative is much worse.

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zaro
Which alternative? It's not like there is only one alternative, and they can't
all possibly be much worse.

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drpixie
In a very fundamental way, there is no such thing as "wealth creation", there
is only wealth acquisition. Wealth is a zero-sum game. No business actually
makes money (well apart from a government mint:), but they do move it from
elsewhere. No VC creates wealth - they get money from other people, perhaps in
exchange for goods or services, but at the end of the day the total amount of
money hasn't changed.

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MR4D
You have absolutely zero understanding of wealth.

An example to prove my point:

You have an apple seed. You plant the apple seed. You tend to the growing
plant (soon a tree). A few years of work tending to the plant, and you get
hundreds of apples every year.

No money is necessary. Wealth is about abundance. Money is just one type of
scorecard.

Apologies for the strong tone, but the type of thinking that you just
displayed has destroyed civilizations in the past.

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d-d
_> You have an apple seed_

So where'd you get the seed? Or the land? Or the time to plant and tend to the
tree?

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corporate_shi11
You either already own or pay for the seed, the land and the man-hours to tend
the tree. This both employs people and brings more abundance into the world.

