
World's richest 500 see their wealth increase by $1T this year - rstoj
https://www.theguardian.com/inequality/2017/dec/27/worlds-richest-500-see-increased-their-wealth-by-1tn-this-year
======
volgo
As capitalism matures, it's clear to anyone with a thread of financial
literacy that most wealth is created through capital gains rather than salary.
We're approaching a state (at least in developed countries) where productivity
is so high, that you can literally park your money in 500 of the biggest
businesses and you're almost guaranteed a 7% annual return (if you hold stocks
for the long term).

Using the commonly accepted safe withdraw rate of 4%, if you inherit $3
million (which is not even that much), you can safely collect $120,000 of
capital gains/dividend income every year without _doing anything_. This also
frees you up to work on other things that will acquire you even more wealth.
People whose parents didn't leave them a large inheritance have to rely on
salary, which is taxed at a higher rate and more difficult to earn.

In effect, late stage capitalism becomes the anti-thesis of the spirit of
capitalism - devoid of competition, free innovation, and upward mobility. In
an ideal capitalism society, the most talented should earn the most, but the
compounding effect of capital makes it so that whoever holds wealth the
longest earns the most.

~~~
Danihan
I agree with much of what you said, yet I just don't see it as all that _bad_
of a situation.

I still think there is a lot of upward mobility even in that scenario -- the
smarter people I know earn good salaries and have nice lifestyles. Nicer than
their parents, in most cases, mainly because consumer technology constantly
gets better and cheaper.

And there is still opportunity for risk takers to start their own companies,
and it's really not all _that_ hard with some traction to get acquired by a
bigger player.

Of course, people with a lot of capital get rewarded for holding onto it /
being conservative with it, but that's just common sense, not throwing good
money after bad.

It's like we're all supposed to say, "Yeah! Late stage capitalism is so
awful!" and nod along, but it doesn't _feel_ awful to me at all. I have a 2016
Mazda that cost $18k and it's just awesome for the price. I bought a brand new
iPhone SE for $150. I bought a 50 inch TV on black Friday for $200.

My parents as kids didn't have running water in their houses.

I'm not all about materialism, but I'm really at a loss for what exactly I'm
supposed to be feeling outraged about. I don't even really make that high of a
salary, just average middle class.

~~~
knolan
My parents had paid off their mortgage when they were my age. My father was
self employed and my mother a housewife. I’m on a reasonably good salary but
banks won’t loan us enough to buy an averaged sized family home even though we
have a reasonable deposit. My partner would have to be on an equally sized
salary but her teaching job pays very little.

Sure we have some nicer gadgets and personal comforts but the cost of
accommodation and property has skyrocketed way out of proportion.

~~~
jknoepfler
I suspect a lot of these comparisons are not apples to apples.

Declining wages are real, but populations are declining in the affordable but
undesirable towns where property is cheap that my parents and grandparents
bought into.

My mother's parents bought their first home in Minot, North Dakota and saved
up for a tiny home in St. Paul, Minnesota. He was an engineer who put himself
through school while living in a boxcar in Montana in the depression. She was
a housewife. They scraped and saved, and did well for themselves despite hard
circumstances (the depression, world war II, etc.)

My parents bought a starter home in Bloomington, MN. He was an attorney, she
stayed at home. They moved to a wealthier suburb to find better schools when
they could afford to.

Both sets saved aggressively, didn't go out, didn't drink, maintained cars
themselves, didn't take elaborate vac actions, and lived in relatively low
cost areas.

Me? I live in a booming tech hub. Prices aren't even comparable. I spend on
food and wine and travel. I have a fancy phone I don't need and take my car to
a mechanic for standard maintenance. I "can't afford a home" because I don't
want to repeat the decisions of my elders. I could certainly buy a home in
Minot with cash, and could get a mortgage in Bloomington without too much
effort, but I don't prefer those options to what I'm doing now.

That's speaking for me only, but I'm pretty skeptical that prudent living
doesn't have similar or better payouts than it did fifty years ago.

~~~
justicezyx
The problem is not that the growth is not there. But the sharing the growth
corresponding to people's contribution.

Do the super rich really should enjoy the wealth? Are those really justified?
Do their employees has done proportionally smaller amount of contribution to
only entitle to that much less wealth in salary?

~~~
charlesdm
Wealth != salary. Most wealthy people who got wealthy didn't get there by
making a large salary, they (at some point) booked capital gains on something.

Nothing is stopping you from venturing out into the world and setting up a
business, and making your way into the 1%.

Most work is commodity work. And in a lot of cases, you have a significant
amount of people who can solve a problem. This results in a race to the bottom
in terms of compensation.

~~~
Can_Not
> Nothing is stopping you from venturing out into the world and setting up a
> business, and making your way into the 1%.

Nothing except the 1%-ers who are pulling up every ladder behind them they
can.

------
twoodfin
This article provides paragraph after paragraph of supporting data that the
richest have gotten richer, but none that I can see supporting its claim that
“billions of poorer people across the world have seen their wealth standstill
or decline”.

~~~
notyourwork
Is it possible for everyone’s wealth to increase? I think they might be
assuming this is not possible and there if richest wealth increases by this
much it had to come from the rest?

~~~
ghostbrainalpha
Yes it is possible for everyone's wealth to increase.

In the year 1900 Global GDP was 1 Trillion. Today it is 77 Trillion.

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

In Layman's the Global Pie is growing. The number of people living in extreme
poverty has fallen DRASTICALLY over the last 25 years.
[https://twitter.com/humanprogress/status/913901718823489538](https://twitter.com/humanprogress/status/913901718823489538)

So the people with the smallest piece of the pie are slowly getting a larger
piece, but the people who already have the biggest piece of pie are getting
even bigger pieces faster. But because the pie is growing, it doesn't mean
that their larger piece is making someone else get a smaller piece.

The only people who have a proportionally smaller piece than they used to are
in the middle class. Which is what happens when first world work more closely
with developing nations. Taking more people out of extreme poverty but putting
slight downward pressure on the middle class.

~~~
mtgx
Even if it did increase, most of that increase is just inflation anyway. And
it's usually the wealthy that benefit from inflation (at least more than
regular people do).

~~~
ghostbrainalpha
Compare the "regular" person of today to the "regular" person of 50 years ago.

Is it easier or harder to afford basic foodstuffs? Do they eat out (luxury)
more or less? If they own a home, is it larger or the same size? Who travels
more? Who has better healthcare? Who spends more on entertainment? How much do
they spend on the family pet? Who spent more time furthering their education?

All of these are measures of wealth, and the modern "regular" person would be
wealthier in every one of these categories. And that's not even factoring in
advances in technology that make the quality of life of a person better even
if there share of societal wealth goes down.

~~~
ntsplnkv2
This is very shortsighted-claiming that all of these trends have to do with
being richer, is simply absurd. Also, "regular" person? What age? Male?
Female? What does that even mean? This is just utter nonsense. But I will
humor you:

> Is it easier or harder to afford basic foodstuffs?

Processed foods are far easier to afford, but they are extremely unhealthy. As
for other basics, many have gone up over the last 50 years.

> Do they eat out (luxury) more or less?

Women now work. 50 years ago they did not. Less time/people to cook at home.
Not like everyone is eating at steakhouses. They just don't have the time so
they go to Chipotle or McDonalds or Panera.

> If they own a home, is it larger or the same size?

Most people own legacy homes-they are the same size because they are the same
homes. New builds are building bigger houses but what "regular" person builds
new homes?

> Who has better healthcare?

This has more to do with advancements in medicine and technology than people
becoming richer.

> Who spends more on entertainment? How much do they spend on the family pet?
> Who spent more time furthering their education?

Furthering education is largely on credit, so this is a bad measure.

> and the modern "regular" person would be wealthier in every one of these
> categories.

Nope.

~~~
ghostbrainalpha
> This has more to do with advancements in medicine and technology than people
> becoming richer.

It's impossible to separate people becoming richer from advancements in
technology. We didn't grow GDP by 77 times, because we work 77 times harder.

Improvements in underlying technology are what help us create more wealth. The
problem is that the new wealth being created and benefits of that new
technology is being shared so proportionally.

------
aerophilic
There was an interesting study posted (I believe here) on how a flat 10% re-
distribution (10% taxed from everyone, then redistributed evenly across
everyone, aka basic income), created a more stable "society" in simulation. It
did this by helping support a larger "middle class". Does anyone know the
link/can point me to the study? Google is failing me at the moment...

~~~
sintaxi
With UBI everyone will have more money but overall production would drop which
is the only meaningful way to improve peoples lives. So people would be worse
off because prices would adjust to the decreased supply and the increased
demand of goods and services.

~~~
justherefortart
Why would overall production drop when there is more capital in the market?

Maybe read up a bit on fiscal multipliers. Government spending
(redistribution) is one of the better ones.
[https://en.wikipedia.org/wiki/Fiscal_multiplier](https://en.wikipedia.org/wiki/Fiscal_multiplier)

------
logicallee
$1tn / 500 = $2 bn

$2 bn / 7.6 billion = 0.263

Another way to think about it is that the 500 oligarchs of the world were able
to capture a worldwide average of 26.63¢ from _each_ person. In the course of
365 days it's as though each person in the world bought each of the 500
oligarchs in the world a full $0.26/$1.50 = nearly 1/5th of a single vending
machine 20 ounce bottle of coke. Multiply that by 500 and you can have a very
proper sit-down meal anywhere in the world.

Of course, maybe they generated $500, or $1000, or $3,000 in wealth to do so.

After all, the worldwide real income increased by well over twice that.

But it's that fifth of a bottle of coke that bothers me, personally. Why
should bill gates get a quarter from me? He obviously didn't work for it as
much as I did. If anything _he_ should be paying _me_. Why, you ask?

What did I make that he uses? Why, I might as well ask: what do the 500
oligarchs of the world make that anyone uses - wait, don't answer that, I have
a point to make here and it would kind of ruin it to know the answer.

My point is, the rich need to stop getting richer. It's just not right.

/s

[1] [http://www.ilo.org/global/research/global-reports/global-
wag...](http://www.ilo.org/global/research/global-reports/global-wage-
report/2016/lang--en/index.htm)

------
Fej
> advisers to the super-rich are warning them of a “strike back” from the
> squeezed majority

That's an understatement. When revolutions come, the rich are always the first
at the guillotine.

Of course, that's rather unlikely, but these people have so much money that
they can afford to make that consideration.

------
jknoepfler
This isn't interesting at all, and should not be a headline in a respectable
newspaper. The wealth gains are on par with market gains. The absolute dollar
value of the gains is almost certainly not headline worthy. The richest
individuals lost trillions a few years ago in the crash, they gain trillions
in a boom. That's exactly what one would expect.

I'm fiercely opposed to the regressive turn the economy has taken, but I'm
just as fiercely opposed to hysterical garbage journalism. We won't correct
the broken social contract by heaping nonsense upon injustice.

I'm all ears for constructive policies to tie earnings for the least wealthy
to market gains, since the real problem is lack of ability to invest wages in
the market, but I don't see that on offer here.

------
barnfire
If the wealthy had any interest in self-preservation, they would advocate
higher taxes on themselves or some sort of UBI. But I'm sure Sam Walton's kids
think they deserve everything they have.

------
stretchwithme
That's how it is when the Federal Reserve creates an asset bubble to deal with
an asset bubble collapse.

This is NOT something a capitalist country should be doing. It's not the job
of government to make your investments work out. It's YOURS.

------
erikb
And I'm sitting here being happy that my "stock fortune" approaches four
digits.

------
vbuwivbiu
A small percentage of bank accounts should be randomly swapped each year, and
the owners of the swapped accounts become part of a reality TV show to follow
how they dealt with their change of fortune

~~~
jacquesm
That's called the lottery. A typical lottery winner will be back where they
started after a few years.

~~~
vbuwivbiu
no I mean the reverse! A random rich person looses all their money

------
Radim
Curious are the ways in which a world born of binary, "carries over" and
manifests the very same patterns in broader social settings, into seemingly
unrelated levels of abstraction. Similarity across scales.

Binary winner-take-all, all-or-nothing markets?

There seem to be deeper natural forces at play; the proposed _evil divide_
between the rich and poor just incidental symptom. Surface ripples in a
powerful river.

~~~
jamcohen
I think it's just a consequence of the fact that having money enables the
acquisition of more money. It explains the long tail in wealth distribution.

~~~
Radim
Sure, but that's been the case for thousands of years.

The novelty is in the global nature of the competition, the physical and
informational proximity that accelerate evolution of patterns. That's what
makes them spread so quickly and prominently, across seemingly unrelated
scales and disciplines.

Another curious manifestation is how humans are changing the way they treat
each other, how they structure their (human) relationships. Did humans tame
the computers, or did computers tame the humans?

------
tw1010
So what? Inequality should only matter to you personally if it means the lower
bound on income, the poorest of the poor, is going down. If the richest is
getting richer, maybe that means the poorest are becoming poorer as a
consequence, but not necessarily, in fact, most likely not.

~~~
staticassertion
It matters to me personally that a small group of people have such a massive
amount of power. It's already completely uneven regarding voting power - I can
vote once in an election, but if I had a trillion dollars I could vote once,
and then I could pay lobbyists, and fund advertisements, etc. I, as a single
person or small group, with a trillion dollars, can have a massive influence.

This is regardless of how poor anyone else is.

No one should have this kind of money, it's really absurd.

~~~
charlesdm
Didn't Trump get elected with 1/7th the budget of Hillary Clinton?

~~~
staticassertion
I don't think boiling any single political event down to money is going to be
meaningful.

I can't imagine anyone denying that lobbyists exist and that large amounts of
money can buy you a lot of political power.

~~~
pmc1
> large amounts of money can buy you a lot of political power.

That is not true. Hillary spent the most money in any American campaign
(nearly $1 Billion) and still lost. Strategy matters more than money

[https://www.vox.com/policy-and-
politics/2017/3/8/14848636/hi...](https://www.vox.com/policy-and-
politics/2017/3/8/14848636/hillary-clinton-tv-ads)

~~~
staticassertion
See the post you replied to for the same response.

------
xandar11
Top 500 YouTubers see their subscribers_count increase by 100 million this
year. Meanwhile, I got 0 increase in subscribers. It's not fair!

Just imagine how much influence these popular YouTubers have compared to
regular folks, the impact they have on cultural and political life. Should we
allow a tiny group of YouTubers to have such a massive subscribers_count and
influence?

I say NO! Behind every popular YouTube channel lies a great crime.

------
sintaxi
In other words, the 500 wealthiest people added a trillion dollars of value to
the economy this year.

Edit: you all that are down-voting need to learn how the economy works.

~~~
EliRivers
The creation of wealth, in various forms, is what adds "value" to the economy;
rich people ending up owning/controlling that wealth isn't the same thing as
those rich people having created that wealth.

Edit: Don't passive-aggressively revel in victimhood. If you feel
misunderstood, explain better - don't blame your audience.

~~~
sintaxi
Providing capital to those with talent IS providing value. Thats why
entrepreneurs exchange a portion of their company for the capital - capital
has value and helps the entrepreneur. Money doesn't appreciate in value by
doing nothing. Once you have wealth you can use it to make more wealth by
taking risk based on the demands of the market.

~~~
EliRivers
That is a much better comment than your previous one.

I would counter that right now, money is ridiculously cheap. Interest rates
are breathtakingly low. There are enormous amounts of money running around
begging to be borrowed. As such, if this system you posit was accurate, then
the very wealthy would be seeing the smallest returns on their money for
decades, as they effectively competed to be the lender/investor to the people
creating wealth.

But that's not what we're seeing.

It's also not what we see with investing in the stock market; that provides
nothing to a company beyond the first time a stock is sold (barring a
secondary argument that there is value in demonstrating that people are
trading shares in the company which makes everyone feel good about the company
and there's a value in that), but the rich are seeing some fantastic returns
on their money in the stock market, extracting a nice steady stream of
dividends and capital value increases, without having given a penny to the
company named on the stock.

As an aside and speaking purely from my own experiences, I draw more each year
from the stock market than my country's median salary, and I'm generating no
wealth whatsoever for that (although I expect some would argue that by _not_
selling all my shares, I'm providing value and that's what I'm being rewarded
for). I could retire and get by for the rest of my life, entirely on the backs
of others. The rich do the same to a breathtaking degree.

