So for this influencer, I imagine it's tough to live a regular life once he is forced to. If he wants to vacation with his friends, they are renting a 20ft boat rather than a 200ft boat.
Miles? Ultimately not that many -- or not enough to be of long term value. It was enough to get high enough in the status tiers for reliable upgrades, but for the most part, a few ad-hoc spontaneous flights and that giant bank of miles you built up over the years evaporates over night.
It's a weird carrot on the stick that you kind of fall into. To ensure status, I would take purposefully crappy flights just to rack up the miles.
Looking back it was a silly thing to chase and a really stupid use of time.
After going through that, and playing the airmiles game, airline miles seem to only exist to trigger human emotions around the fear of losing out and the same kind of dopamine dependency that's exploited by grindy video games and gambling. You need 5million experience to level up, and dammit, it feels so good when it rolls over.
As an example, let's say you're a regular business traveler flying a $5k business class round-trip from NYC to London on American Airlines. You have the highest status level which gives you a 120% bonus on miles earned. Each dollar spent on the flight thus earns you 11 miles, so that one round-trip is worth 55k miles. Source: https://www.aa.com/i18n/aadvantage-program/miles/aadvantage-...
But wait, there's more. Of course you also bought the $5k flight on your AA credit card, which gives another 2 miles per dollar spent, which puts the total up to 65k miles earned for one 7k mile round-trip flight. Or maybe you put it on your Chase Sapphire Reserve card, which gives you 3X Chase Ultimate Rewards points for travel spending, so 55k AA miles + 15k UR points. Now imagine that you're doing this trip several times per month and the miles/points add up very quickly; you can get to a million in no time.
American Airlines, for example, only gives you gold status (the lowest level) for life at 1M miles.
With status multipliers (but flying meat space), the most I ever hit was 623k miles in a year. I suspect it was close to 300k 'real' miles. Our travel person was booking 'round the world' tickets to save money at that point.
They devalue existing miles but remain competitive going forward by requiring, and giving, more miles for the same trip.
He can much more easily free himself from work and want by skipping the super expensive yacht, putting several million dollars in a nice diversified portfolio, and withdrawing 3% per year. Not saying that's easy, but it's way easier than the yacht plan.
My girlfriend and I did it in the Abacos for a week, just the two of us. Sailing from island to island each day in the crystal Caribbean water. It's cost effective, super fun, and way more accessible than people realize.
I think this man is a bit of a canary in the coalmine for the rest of us. Even for those of us who do not depend on social media for our income, enough of human communication is wrapped up in social media to affect our lives in a significant way, whether we want it to or not.
I do use snapchat pretty often, but I'm only friends on there with people I actually met and I only really interact with smaller groupchats of my close friends. I never look at the third party content in the app. It is an excellent outlet for when I gotta show my friends how this asshole parked halfway up the curb, or how my cat is bouncing off the walls, or brief highlights from late night shenanigans. All temporary and fleeting, and I'm really just hoping my friends snort a little more air out of their nostril and smirk when they see it, nothing more. Probably not the type of engagement that Snap has in mind, so we will see how long the app is tolerable.
To me, HN is a refuge!
On the picture that asks if I want the yacht, the classic car or the private jet, I found myself thinking that I'd like to build a replica of the classic car. That'd be way more fun than owning any of the three and would save about 99% of the budget. I guess I missed the point.
If you own a super yacht then isn't this sort of up to you? I mean, you don't have to invite a tone of people to mess up your toilets.
Who spends $50 million on a car?
Someone who has so much money that $50M feels the same to them as the price of the hotwheels feels to you. (Also, people without that much money who are impulsive).
The car? Meh...
In my preferred world, no single person would be able to afford a large yacht. However, I have no problem with yachts per se. Yacht enthusiasts could join cooperatives, for example. Just like I think its silly that individuals can be so wealthy that they can afford massive private golf courses, but think that people who want to play golf should be able to join a golf club.
“But for the guy who owns the Eclipse [Roman Abramovich, a Russian oligarch], that’s not the point. He’s not chartering that thing out. It has a submarine and a missile detection system. See, the power of owning a magnificent yacht like that is in how you’re telling the world that you’re beyond buying and selling. You have more money than there is money to have. You’ve transcended. There are no frontiers left for you on dry land. I mean, true peace is only at sea.”
That's not necessarily how the taxes were structured and the money might have gone into other things that hurt luxury yacht craftsmen.
We'd probably be better off with even one smaller yacht and paying the craftsmen to dig holes and fill them back in with the excess time. Less status to the yacht-buyer, but the same goes to his competitor buyers so it probably nets out, and then you have less exposure to fiber-glass dust and solvents and stuff for the workmen who are now doing something just slightly less productive from a marginal utility standpoint. Probably a net win overall.
The way the repeated messaging was effective in getting everybody talking about the same (ridiculous) thing was an early taste of what was to come in right-wing media.
The yacht costs $2,995,000, but, thanks to the current luxury tax that kicks in at $100,000, you have to fork over another $289,500. Rich people aren't happy about paying this extra money. Even if they can afford it, they think it's unfair. And in some cases, they're refusing to pay it -- simply by refusing to buy new boats and planes.
>> The yacht costs $2,995,000, but, thanks to the current luxury tax that kicks in at $100,000, you have to fork over another $289,500. Rich people aren't happy about paying this extra money. Even if they can afford it, they think it's unfair. And in some cases, they're refusing to pay it -- simply by refusing to buy new boats and planes.
> Funny stuff.
Hilarious, and so transparently selfish and self-serving. Something tells me that if you can afford to spend $3 million on a conspicuous-consumption item like a yacht, you'll still find $3.3 million affordable. They just don't like paying taxes. I'd bet they'd have to raise the luxury tax to a level quite a bit higher than 10% to negatively affect the yacht industry.
Even the tax did hurt the yacht industry, the important question is: what did people spend their money on instead? If a tax kills the yacht industry, but strengthens industries more beneficial to the common good, I think that's a positive result.
First, understand that because of the 1987 stock market crash and the 1990 recession, many of the toymakers were in deep trouble even before the luxury tax took effect.
The evidence that a luxury tax was the harbinger of doom for these people is not so great. The bigger thing which struck me about this story at the time, and I think it's pretty crucial, is that the evils of luxury taxes are probably exaggerated if you have to refer back to the same example all the time.
Oh wait...it turns out we make more luxury yachts in the US now then we did when the 25-year old article you cited was published.
Not seeking to benefit anyone, just prevent anyone from being fantastically well off, while endorsing those who are merely incredibly well off.
It's a crabs-in-a-bucket mentality that says it's OK to be in the ultra-rich club that can wastefully spend $mega for a yacht club membership, but not $mega++ to buy it. And specifically "large yacht" - so conspicuous consumption is OK, but not beyond his personal threshold.
You could say the same thing at every level: In my preferred world, no one would be able to afford a vacation home, only time-shares. Or a private automobile, only ride-shares.
No. Wealth is a social fact, not a natural fact. It is the consequence of policy choices.
And most of the stuff you go on about is really just unsubstantiated nonsense. You are actually claiming that the existence of ultra-billionaires as consumers of luxury goods leads to technological innovation.
Regarding the policy choices:
Joe and I have equal income. Joe spends his full income every year. I invest 50% of my income. After 40 years of average stock market returns, I have accumulated 1000 times my annual income as wealth.
What policy choices created this wealth disparity?
Joe and I both retire. How much of my wealth do I need to give to Joe?
Your math is as far off as your reasoning. The long-term average return is 7%, so after 40 years your first years' investments would only have multiplied by only 15x - subsequent years' even less, and that's not adjusting for inflation. If your income exactly kept pace with inflation, you'd end up with 151x your income in original dollars or 43x in inflation-adjusted ones. I'm sure you think you'd get bigger raises than that, and you're probably right, but then again 50% savings (especially after tax) is pretty unsustainable, so you're off by between one and two orders of magnitude.
> What policy choices created this wealth disparity?
That's almost a non sequitur, since even if policy choices didn't create that wealth disparity they could well have created others. But, as it turns out, they even contribute to that one. How is it that those investments of yours return 7% on average, year after year after year. How is it that capital grows at ~2x the rate of wages? The answer has a lot to do with property (especially intellectual property) law, liability law, tax law, subsidies, tariffs, free infrastructure, etc. That's a lot of policy choices favoring your choices over Joe's. Maybe those are even the right policy choices, but to pretend that they didn't have any effect at all is ridiculous.
> How much of my wealth do I need to give to Joe?
None, but that's the (deliberately) wrong question. The real question is how much you should give to the society that sustains both of you, or how much you should never have had at all. There's a lot of room for debate on that, but first we have to get the facts and figures right - something you have so far seemed loth to do. Care to join a real debate?
Capital returns more than labor growth rate because of many factors. The most obvious is that capital is a productivity multiplier, so it adds value and should be compensated, and the growth rate is naturally a multiple of the labor growth rate. (Capital investment allowed Model T production to go from 12 man hours to 3 man hours - 4X productivity.)
Time value of money/discount rate: Would you pay more for $1000 today, or for $1000 inflation-adjusted in 30 years? If capital doesn't grow at least as fast as inflation, may as well just spend it on consumption now, leaving no money for those capital investments and that 4X productivity gain.
You'd expect labor growth rate to only match inflation (you make one Model T, you get one Model T). Wage growth has also been depressed for the last several decades by additional workers entering the market (e.g., rise of two-income households) and supply vs demand - 50% more people willing to make Model T's at wage X.
Let's start the debate with real numbers at a lower bound: Assume 0 capital gains (I stick it in a mattress and only get out what I put in), saving 25% of my income for 40 years, I'd still end up w/ 10 years of my average income as wealth.
Joe has 0.
> how much you should give to the society that sustains both of you, or how much you should never have had at all.
Should I give Joe or society any of that money? Is any of it money I should never have had at all? That money was already taxed, so society already took what it considered its fair piece of that pie (and the hidden tax of inflation took its share, too!)
The fact of wealth disparity does not imply unfairness.
How about if instead of sticking it in a mattress, I let Henry Ford use that money to build a factory, and it lets him build 4X the cars so that people who want cars can buy them, should I not get some of that added value as well?
Now, maybe Henry should get a part of that money, for his great ideas (say, 33% of the increase). And maybe we should make sure that the workers get a bigger piece than they would have (if labor costs were 50% of the cost of the car, say they get a 50% wage increase?) and we should drop the price to the customer as well (25% discount?) and assume lots of other costs are fixed per car. 4X cars, 25% discount gives 3X revenue. Labor costs went to .75X. Henry gets 1X. Return on capital is 1.25X. Uncle Sam gets his piece in various ways - sales tax on the cars, income tax on the company, on the workers, on Henry, on the capital gains.
And everybody in the picture is better off - customers, labor, company, capital investor, and unrelated parties that benefit from tax revenue, all because I chose not to "spend" that money.
Now, society has taken its piece of the pie in all the ways above (and society chose to set the size of its piece in advance), and you're coming back and saying society needs another piece, just because I didn't spend my money like Joe?
Nobody said anything about capital returning less than inflation. The question is why should it - no, why does it - return more than labor? You're spinning all over the place trying not to address that.
> That money was already taxed
The principal was taxed, not the appreciation. Or, to put it in even clearer perspective, the labor was taxed but not the capital gains. Why? No matter how you slice it, that's a pretty serious policy decision. Why shouldn't capital gains be taxed at least as much as labor? If capital is so amazingly effective, it would still be advantageous to accumulate it.
> The fact of wealth disparity does not imply unfairness.
It implies fairness even less.
Except where I addressed it above:
"capital is a productivity multiplier, so...the growth rate is naturally a multiple of the labor growth rate...at least as fast as inflation...You'd expect labor growth rate to only match inflation..."
So labor only grows as fast as inflation (unless it's getting a larger piece of the pie) and capital investment is a multiple of that, and returns at least as much as inflation, or it doesn't exist. Sorry if that wasn't clear.
The "already taxed" comment followed a "savings in a mattress" example, so no appreciation, no capital gains. I saved 10 years of income over 40 years. I have wealth. It's already been taxed. Do I owe society another part of my unequal wealth?
> Why shouldn't capital gains be taxed at least as much as labor?
Maybe they should not be taxed as much as labor. Maybe more. Maybe less. It's not immediately obvious that either should be taxed more. Thus the reason for the wealth inequality even with zero capital gains example (capital loss after inflation).
Reasons to tax capital gains less would be to promote investing, because we want to encourage people to save for and invest in the future, and because that is the mechanism to create wealth & jobs for the country.
Reasons to tax capital gains more are mostly that the rich can afford it more (taxing luxury spending rather than necessities). Also if seeking tax revenue, it's like Willie Sutton's career choice of robbing banks - that's where the money is.
What I'd like to know is, what's the best tax strategy to increase the overall standard of living in, say, 100 years?
Unfortunately, economists differ strongly in answering that questions - but most people just say "more! less!" but have no "the ideal is X".
> > The fact of wealth disparity does not imply unfairness.
> It implies fairness even less
I can agree with that - wealth disparity implies neither fairness nor unfairness.
There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest. Having been created by humans, the system we have is very much shaped by ideology and self-interest. It's an evolved system, and evolution does not favor morality.
> I saved 10 years of income over 40 years. I have wealth. It's already been taxed. Do I owe society another part of my unequal wealth?
In that very particular and thoroughly unrealistic case, I would say no. OTOH, that ten years' worth of income is a pittance once inflation has been factored in. It's not creating the kind of massive inequality that the superyacht owners - remember the original topic? - personify.
It can be infuriatingly dishonest, but usually it's just infuriatingly ignorant.
How to say it differently? We've previously agreed that capital must have positive returns (discount rate/time value of money). Labor gains do not compound (each year, I can only provide 1 year of labor. Gains from labor not consumed become capital for future investment). Capital gains do compound (next year, I have original capital plus capital gains plus labor gains minus consumption to invest). Compounding naturally leads to higher rates of growth for capital than for labor, because compounding multiplies productivity and inflation gains of labor, and surplus gains from labor also become capital.
Propose a different system, please, preferably one that has a demonstrated history of raising hundreds of millions of people out of poverty.
> In that very particular and thoroughly unrealistic case, I would say no.
Good, now we have a starting point. We have established that some inequality is allowable and natural, and is caused by saving funds rather than spending on current consumption.
Now how about if we allow capital gains that just offset inflation? (Still good, right? no need for more taxes?)
How about capital gains that just match the time-value-of-money/discount rate? (I'd still say Society has claimed its predefined share, but you may differ - fine, introduce capital gains taxes)
How about if I let Henry Ford use the money for 40 years to make his factories more productive (4X), double his workers wages (2X one year, voluntarily), give his customers discounts (model N was $3000, Model T dropped from $850 to $300), largely create the American middle class, and pay lots of taxes to the government as a company, as workers, as the owner of the company, and as capital gains?
Ford paid 100% of initial capital as dividends in the first year (https://www.quora.com/How-did-Henry-Ford-start-Ford-Motor-Co...). That's the kind of return that generates great wealth for investors and society (or obscene wealth, if you prefer).
And if it turns out that left me with, say, 200 billion dollars (Henry Ford net worth adjusted for inflation), what did I do wrong?
How did it become immoral or unfair that Henry Ford paid all the taxes society required (up-front and as capital gains) while making every party better off (customers, workers, even non-parties to the transactions who benefit from the tax revenue or make money off all those worker wages)?
Please identify at what point that turned against the welfare of society? Why would having 100 or 10,000 Henry Fords that provide similar benefits to hundreds of thousands of people (and reap similar $200 billion rewards) be a bad thing, even if they could each individually buy a mega yacht or two?
Is it by crossing some arbitrary wealth threshold?
Or just when spending some of that accumulated wealth - maybe it was when Ford bought a yacht in 1917 https://www.thehenryford.org/collections-and-research/digita... It was at least partly for business purposes, so maybe he got a tax deduction. Can't find length or cost on it, so I can't tell if it crossed that 250'/$275M immoral line. Sorry.
No, we have not. It might have positive returns, but then again it might not. There's certainly no reason for society to help it along.
> Propose a different system, please
You're trying to set up a false dichotomy here, between a system in which capital is absolutely unfettered and privileged relative to labor, vs. a welfare society where capital is not allowed to exist. Yet another dishonest freshman-debate tactic. Here in reality, there's a whole range of tax and other legal choices under which capital can still flourish without turning into oligarchy.
> How did it become immoral or unfair that Henry Ford paid all the taxes society required
Are you unaware of how Henry Ford and others like him were helped along by the government? Where did his raw resources come from, and under what property-rights regime were they mined from the commons? On what publicly subsidized transportation systems did those raw materials reach him? Most egregiously, who was paying the goons who broke union leaders' heads to keep labor costs down? The "taxes society required" were a bargain compared to the value received and externalities allowed. As great as Henry Ford might have been, if he had been taxed appropriately in the first place he wouldn't have been nearly as rich. Even more to the point, his offspring who had never had to earn their massive wealth in a meritocratic free market would not have been able to extend that wealth into a true dynasty.
I have no problem at all with people getting just as rich as they want through fair trade. What I do have a problem with is whole dynasties persisting because of corruption, privilege, and ignored externalities. In a real free market billion-dollar fortunes would still be possible, but they'd be rare and temporary.
You had previously written: "Nobody said anything about capital returning less than inflation."
I should have said, providers of capital must "expect positive returns on average."
> You're trying to set up a false dichotomy here, between a system in which capital is absolutely unfettered and privileged relative to labor, vs. a welfare society where capital is not allowed to exist. Yet another dishonest freshman-debate tactic. Here in reality, there's a whole range of tax and other legal choices under which capital can still flourish without turning into oligarchy.
Absolutely not. That false dichotomy, and particularly capitalism "absolutely unfettered and privileged" is not in my statements. These repeated accusations of dishonesty don't contribute to a real debate.
I see capital's potential to improve returns as limited only by human creativity and the capital (physical and intellectual) available. Labor's productivity is largely determined by the capital applied. This is why modern workers produce so much more than stone age workers - they have the resources, techniques, and equipment needed to produce more than our ancestors could.
I also described capital owners paying taxes (determined by society) and assume obedience to other law, but I can't see a justification for some arbitrary upper limit on wealth because someone thinks "nobody should be able to afford X", whether X is a super yacht or a vacation home, etc. If someone makes a few million people each couple of thousand dollars better off, or a few billion people each a dollar better off, without external harm, let that person have a billion dollars.
> Are you unaware of how Henry Ford and others like him were helped along by the government?
Like when FDR banned Ford from government contracts and paid $169,000 more for 500 vehicles from a competitor because Ford wouldn't go along with the government's anti-competitive "auto code"?
But yes, all of society, including individuals and for-profit companies, benefits from good infrastructure, stable laws, enforcement of property rights, etc. And also yes, Ford did some very bad things, particularly later in his life. Violence is not acceptable.
Evidently the taxes paid at that time were sufficient to pay for those government services. We didn't start persistent ramp-ups in debt until later. I'm not sure you can prove Ford and others at the time weren't taxed appropriately.
Reward good behavior. Punish bad behavior, including bad behavior by companies and billionaires. Enforce laws. Establish taxes. Require payment of taxes. Limit political power of wealth, particularly power to enlist the government in granting, protecting, and extending wealth. Don't let people vote themselves money or buy preferential treatment.
> In a real free market billion-dollar fortunes would still be possible, but they'd be rare
Yes (caveats on the "billion-dollar" line regarding inflation and the general increase of wealth over the last centuries)
I'd also suggest that a huge fortune should only be earned by actually improving wealth for others, not through coercion, rent-seeking via government power, etc. This does play into the next item:
> and temporary.
With respect to dynasties, I agree the transfer of vast wealth across generations is concerning. I'm not sure how much well-being it provides heirs (is "never had to work a day in his life" really a blessing?). I do know that leaving a legacy is often a strong motivator for the wealthy, and I am encouraged by the Giving Pledge of Gates, Buffett, and others, to leave a legacy of good works done, rather than simply massive wealth at time of death.
Neither do all the fallacies. I'll stop pointing them out when you stop throwing them in.
> I see capital's potential to improve returns as limited only by human creativity and the capital (physical and intellectual) available. Labor's productivity is largely determined by the capital applied. This is why modern workers produce so much more than stone age workers - they have the resources, techniques, and equipment needed to produce more than our ancestors could.
You see wrong, then. Did it ever occur to you that people might be more productive because of advances in knowledge, which are independent of capital? Because of markets in which people can exchange the fruits of their specialized labor, even if little or no capital was involved? Physical capital certainly can improve productivity in many industries, but there's way too much financial capital out there that's not really tied to the physical kind. There's no reason arbitrage, rent seeking, and flat-out betting should be taxed more favorably than making stuff.
> Like when FDR banned Ford
Yeah, like decades after Ford had already become a tycoon, and had no effect on whether he remained one. Exactly like that, except not at all.
>> they have the resources, techniques, and equipment needed to produce more than our ancestors could.
> Did it ever occur to you that people might be more productive because of advances in knowledge, which are independent of capital?
This is known as "knowledge capital". See, for example https://mitpress.mit.edu/books/knowledge-capital-nations
For other forms of non-privately owned capital and their effect on productivity and growth, see also https://en.wikipedia.org/wiki/Public_capital
> There's no reason arbitrage, rent seeking, and flat-out betting should be taxed more favorably than making stuff.
Agreed. Rent-seeking is harmful, speculation is likely harmful, and though arbitrage may be helpful, I doubt it's valuable enough to justify preferential treatment.
I said above "Maybe [capital gains] should not be taxed as much as labor. Maybe more. Maybe less. It's not immediately obvious that either should be taxed more." And I believe that applies even on applications of capital that are beneficial.
I do think the incentive structure of income and capital gains taxes is inferior to consumption taxes, but that's probably a different debate.
> > Like when FDR banned Ford
> Yeah, like decades after Ford had already become a tycoon, and had no effect on whether he remained one. Exactly like that, except not at all.
It was a mildly humorous aside, showing that Ford faced definite government discrimination, regardless of any unspecified government support he received. (I'd be interested if you know of any specific government assistance to Ford during Henry's lifetime that wasn't general infrastructure available to everyone).
I'm quite satisfied with the conclusion we reached a few posts above:
"I have no problem at all with people getting just as rich as they want through fair trade. What I do have a problem with is whole dynasties persisting because of corruption, privilege, and ignored externalities."
And my addendum: "I'd also suggest that a huge fortune should only be earned by actually improving wealth for others, not through coercion, rent-seeking via government power, etc. "
I'll let you have the last word.
Or alternatively we create a policy that:
1) no superspacecrafts are allowed. Not one
2) no individual owners are allowed? Oh no what if the Walton's bought their own? Now that would be UNFAIR
3) No fun is allowed aboard the spacecraft, it must only be used for the common good in a strictly utilitarian sense.
4) Joe gets half
Capital gains represent increase in wealth in the economy, whether taxed preferentially or not.
The example remains the same even with 0 capital gains: After 40 years, at 0 gain, I've saved 20 times my annual income to support my family through retirement. Joe has saved 0.
How much of of my wealth do I need to give him?
Equal opportunity + freedom of choice = unequal outcomes
Only considering raw, natural resources, are they not distributed unequally around the world? Some regions have naturally more forests than iron deposits, for example.
If you dissolved society (perhaps a la hunter-gatherers) would not there still be differences? Perhaps one is faster and would collect more berries than his brother, etc, etc...
You are correct in that there might policies that might lead to increased wealth and others that will reduce it. However how would you propose to "police" superyachts?
Furthermore, what makes you think that consumption and the fulfilling of human needs (including superyachts; billionaires must need them otherwise nobody would build them) is not behind technological innovation? I was going to say Economics might substantiate this claim, but I think it is self-apparent. Otherwise what would be the driver of innovation?
It is a social fact because ownership is a social fact, not a natural fact.
in my preferred world, no-one would be so rich they could afford to own and maintain 250+ ft yachts on their own.
however, i am not averse to people just being rich enough to join clubs that can jointly afford such a thing.
i am also averse to individuals being rich enough to have their own full-scale private golf courses; but am not averse to people playing games of golf.
>“But for the guy who owns the Eclipse [Roman Abramovich, a Russian oligarch], that’s not the point. He’s not chartering that thing out. It has a submarine and a missile detection system. See, the power of owning a magnificent yacht like that is in how you’re telling the world that you’re beyond buying and selling. You have more money than there is money to have. You’ve transcended. There are no frontiers left for you on dry land. I mean, true peace is only at sea.”
Can you point me to the place where we write that? Because I certainly don't see it.
I'm speculating, but the world he imagines is one where the wealth of those who are 10x and up richer don't exist because feedback mechanisms (e.g. tax) exist to use that excess wealth to help those who are now 1000x poorer.
Central African Republic, $712, US average $62,000.
There's a 100x disparity in averages. You don't get shared yacht enthusiast clubs at $62,000/year. High earners distort this a lot, and if you actually save a large percentage of your income in two-earner, high-earning households, you will accumulate a lot of wealth. Should they not be able to save it? Not be able to spend it after they've saved it?
Hence the "crabs in a bucket" mentality. It's OK for me to be way richer than others, but nobody can be way richer than me.
You seem to think that if some Americans are richer than sone Africans, then it’s fine for some Americans to be richer than other Americans. Conversely, if some Americans want to tax some other Americans, why aren’t they willing to surrender 90% of their wealth to the globally impoverished?
It’s not about guilt, and it’s only partly about fairness per se. It’s about what kind of society we want to live in. Unequal wealth is unequal power. Extremely unequal wealth is extremely unequal power. If you don’t believe me, you don’t have to stop with Citizens United. Consider the French Revolution.
Your examples consistently attribute (exaggerated) returns to virtue, never allowing for chance. Did Bill Gates foresee the PC revolution? Maybe, but so did a lot of other people. Was he smarter? To a degree, perhaps. But he was late to the Internet party, much less did he predict it. He couldn’t know how the courts would decide the rights to the WIMP model developed by xerox. He couldn’t know how the AT&T divestiture would work out. He couldn’t know how copyright would be extended in Microsoft’s favor. He couldn’t foresee the toothlessness of antitrust enforcement.
Could the worker taking a job in a Ford factory in 1980 be expected to predict the US trade policy that would foreclose his career? Did the college graduate joining a bank that year have any idea how important finance would become? One was whipsawed, the other saw a windfall. Where does that fit into your ant-and-grasshopper parable?
"in my preferred world, no-one would be so rich"
I'm not sure if you're complaining that the "preferred world" includes ultra-poor non-americans or that it includes ultra-rich non-americans, or that the disparity of wealth and power is so huge between americans and africans, or you think that it would somehow be A-OK if only all americans had some particular limited inequality.
Legal and political systems may be largely separate, but economies are increasingly tied together. Globalization, foreign aid, military intervention, interfering in elections, and even separate political systems may become intertwined.
By no means do I think Bill Gates is an angel, or Henry Ford is without fault.
I do think that they are two good examples of people who got incredibly wealthy by capturing a very tiny fraction of the wealth they and their companies created for society.
In a hypothetical world where the richest are only 10x richer than the other across the world, your $712 vs $62k data comparison simply doesn't exist.
Ultimately, my beef is with you making a straw man argument.
What part of this are you going to make illegal?
Individual choices, even with absolutely equal starting conditions, yield unequal outcomes.
That said: if somebody wanted to implement something like this, nothing needs to be made illegal. It could easily be done with a more aggressive form of progressive taxation on income or on total assets (as exists in some European countries).
That wasn't even true for 50%, let alone 10%. Wrong facts lead to wrong conclusions. Get facts.
That's a pretty low threshold for "too much wealth".
Edit: sibling since posted
But it's not OK for one individual to invest that money for 20 years and then buy it.
How about a world where everyone has basic needs met, but a few can afford a large yacht?
Or a world where everyone can afford a yacht club membership, but a few people can afford TWO large yachts?
jonnycomputer wrote "In my preferred world, no single person would be able to afford a large yacht."
I'll say it again: "What an awful attitude." It just proposes taking away from people who have what he thinks is too much, without any benefit stated or implied for anyone else.
Inequality, rent-seeking, and now fraud are all topics that have been added later.
Did I touch a nerve or something?
It's like Hillary Clinton saying she'd put coal miners out of business - it sounds hateful, regardless of the intent.
I can sympathize, with goods I'm not that concerned but the thought of (for example) a small group of people locking up the world's limited amount of beachfront, riverfront, and lakefront for themselves seems deeply wrong.
I agree on the excludability issue, but I'm not sure where it ends. I'd also add beautiful mountain valleys, etc. Forests? Interesting deserts? Waterfalls? Intellectual techniques? (at least patents have limited time) Cultural stories? cultural clothing? Foods?
I'm not sure how to balance "my family earned money/had power a long time ago, so I can exclude anyone else from this forever" with "I want to work hard and save to provide for my family".
I wonder if there will need to be a change in what can be passed on to future generations (we no longer allow political power to be inherited, does it make sense for economic power?). Can eminent domain play a role in the public re-acquiring assets? Both of those have really scary implications, though...
So at the cost of one man's ego, we could replace the lead pipes in 36,667 homes in Flint, Michigan.
Which is the greater loss of social welfare: the lost enjoyment of a yacht or clean safe water for tens of thousands of children?
If I couldn't trade money for interesting machines, I would take an easier job and contribute less to the world. I'm not alone in this, but the status quo that lets me keep the majority of my earnings is what encouraged me to better myself and become valuable.
I'm not saying it's a bad idea to replace the pipes in Flint, I'm just saying that we have more good ideas than we have other people's money. Sure, replace the pipes in Flint but don't do it in a way that means replaced pipes are the last pound of flesh we're ever going to get out the wealthy.
Beyond that, it's important to build limits into policy - remember the adage that 8 out of 9 people enjoy gang bangs. Just because something makes more people better off doesn't mean we can discount the costs to those who are made worse off.
2. If you couldn't trade money for interesting machines, then you'd likely do something else with it. If you could keep less of the money you earn than you do now, you'd probably continue doing exactly what you are doing now. In fact, you might work harder at it because you'd need to afford to buy those things that you really want. There is a point at which taxation is counter-productive, but I guarantee it is far below the level at which people can individually afford their own luxury yachts and private jets, especially when the pleasures these afford might be gotten by joining exclusive clubs that jointly can afford them.
3. Lead poisoning cause social welfare costs that persist across generations. The net utility gained by ensuring tens of thousands can be healthy and productive members of society instead of societal burdens far exceeds those you mention.
4. Suppose some very rich person spends an extra 100k on a golden toilet to replace his old silver toilet. I guarantee you that utility gained by that replacement is greatly exceeded by buying a homeless family a home with it. So, yeah, definitely, lets put the two on equal footing.
No dispute there, but if people are engaging in counterproductive wealth transfers, there's a case for intervention and we don't need to amend the tax code for that.
>If you couldn't trade money for interesting machines, then you'd likely do something else with it.
Not really, I'm not super interested in luxury / the simple pleasures in life are often enough for me. I would work to make sure I could afford hamburgers, but I'm not the sort of person who would put in additional effort to eat steak. If I couldn't play with machines, I would play with my mind and recreational drugs.
Taxation isn't the only thing that discourages work - regulations on what we can buy and how we can use it discourage as much. If supersonic flight were more legal, I can promise you that I'd buy a jet, but since that's not an option, I'm saving the money for early retirement.
If we're trying to design a policy that encourages people to do productive things, we can have a rock talk. However, if we're simply trying to eliminate wealth gradients in a way that makes materially poor people better off, understand that's a one time event. And there's usually a reason poor people are poor, if they squander their one-time redistribution money, you're really going to wish people were out there working and producing surplus value for you to redistribute to those who can't take care of themselves.
3. Again, I don't dispute the ROI of this investment. My point is that we have more investment opportunities than we have money. Malaria nets, childhood nutrition, primary schooling for girls, etc - there are great places for us to park money. How would you prioritize?
4. Why stop at precious metal toilet seats and houses? Why not redistribute everything owned by above-median wealth holders to below-median wealth holders and erase any gradient of material well-being?
Again, my concern is redistributionists tend to offer no limits on what they want to distribute. This is the same line of attack that incels use to advocate for redistribution of sexual access.
If they love the work, they'll be willing to do it for a reasonable salary, rather than to make mega-millions. But if they don't, why should we throw money at them to prevent them from retiring?
It's kind of annoying, because in the end, there's no stylistic difference. So my IG feed gets bombarded with content from the same handful of people. Gets old real quick.
I could never see why people thought IG or Twitter were so bad until that day, and I'm almost certain it's because they've followed a few corporate accounts and now all their friends are drowned out in the noise.
It's the same on YT.
Ideally, to me, my social network would be a small group of people I know and love.
My favourite car buying statistic is the difference between Bentley and Bugatti owners;
On average people who buy a Bentley already own 8 cars.
On average people who buy a Bugatti already own 84 cars.
Some cars just aren't bought to be driven around. They're works of art and collector's toys; they're not cars as any normal person would consider them.
> Bugatti customer has about 84 cars, 3 jets and one yacht
A 1959 Ferrari for example was sold for $18 million.
Yacht is a purpose classification, there are little boats in my local habour that a couple of old people drive out into the open water every weekend in the summer, and then there's something like Britannia, the ex-Royal Yacht that is a permanent floating museum in Edingburgh. Both are yachts because they are (or in Britannia's case were) for the pleasure use of the owners rather than being military, transport or for any commercial purpose.
So it's not difficult _at all_ to spend $100M on a yacht, whereas it's pretty tricky to do that for a car.
Worse, unlike cars as yachts grow more expensive a staff becomes at first a good idea and then essential - even if you barely use it you may be spending $1M plus per year on staff.
Or maybe first customer for a new car brand, e.g. Benny Caiola
Which points to these not being well-considered deeply researched purchases. So I can see instagram playing a pretty big role.
I don't know any details but always wonder about this... an easy-to-move super-expensive asset, physically in Cannes but legally in the Bahamas... there must be many schemes.
But....if you keep buying loads of cars from Lamborghini, eventually you will end up on a list of people who get to put a deposit for brand new cars that haven't even been announced yet. And if you get an opportunity to do that, then you do that. Because then you get to buy cars like the Centenario, like the Reventon, like the Veneno - and you can be 100% certain that those will go only up in price regardless of what their sticker price is.
Come to think of it I recall there being a (gender neutral!) quote that provides sound financial advice regarding all three...
So you can dream of being able to drop X million to own a dream of being on a yacht all the time. Then you realize you're not on it all the time, because you have a life, and whether you're on it or not you're dropping close to X million a year to keep the crew on hand and keep the yacht ready, and if you want to offset that, you're now running a yacht charter business.
I suppose it's possible to claim yacht expenses as business expenses for things like entertaining clients, etc, and in some cases that might be quite legitimate. But I don't think people get away with nearly as much tax avoidance shenanigans as most people think - The tax man isn't that stupid and trying to claim that sort of use for luxury products is just asking for an audit.
It might be different for super-yachts with really high yearly costs, but for the under 100 ft category of pleasure yachts that cost 10-30k per year upkeep I don't think the net benefit would be worth the complexity. At least for those _trying_ to play honestly. I'm pretty sure every lawyer/dentist/doctor etc that owns one asks their accountant the same type of question, but I don't believe most bother setting it up like that.
source: I own a pleasure craft/yacht big enough to charter regularly to offset the ownership costs, but don't do it on the advice of my accountant.
IIRC it was drag racers or something similar.
It all depends on how tangled a web you weave.
For example, this case only came to light due to a leak via Paradise Papers: https://www.businessinsider.com/how-lewis-hamilton-avoided-p...
I have lived in Florida around boats all of my life. There are quite a few yachts 55' and longer that have a legal entity registered on Sunbiz (http://search.sunbiz.org/Inquiry/CorporationSearch/ByName) and a sign that says they are available for charter. This sign never comes out of storage.
IE: the IRS is probably into such schemes and taxes are generally lower.
Not so in a lot of EU countries.
I doubt yachts are given much thought by the German or Austrian tax authorities.
>The guess in the industry is that those people literally see an article or an ad for a new Lambo(or whatever) and they just buy one on an impulse.
The same thing happens on the bottom of the price spectrum too. When cars like the Focus RS and Civic Type R came out, people were gladly putting down $10k+ over MSRP (which was already around $35k) without ever leaving the lot, all for a souped up economy car. I don't think it has anything to do with having so much money that someone doesn't care, it's the auto enthusiast mindset of knowing exactly what you want.
I already had a WRX I was trading on it, but still. It was kind of neat buying it like that.
In my experience of owners, including myself, people are super precious about their WRXs and they are pampered and fawned over beyond all reason. Mine was festooned with aftermarket parts, stickers, lighting, sound upgrade and DVD, noisy muffler etc.
OTOH, my STI is more of a 'no fucks' style tool, no mods, not even a sticker. Great car, probably way too much car for me if I'm honest, but safe and predictable. Just fast. Was nice to get one straight off the truck, 8 miles on the ODO.
And if anyone doubts the mettle on one of these, take a look at the following showing a not heavily modified standard car: https://youtu.be/mejMde6z1Nw?t=861 [Top 20 Finish in a WRC Event - Almost Unheard Of!!]
Only a tiny minority of followers is active in most mediums. HN can kill a website with 100K views in a couple of hours, but you just see like 200-300 people commenting on a given post.
>I also don't get who he's trying to influence. Which millionaire is going to decide to buy a specific yacht because they saw an Instagram picture of it ?
You'd be surprised.
That's exactly how a large part of that world thinks and buys ultra-expensive stuff. They don't do "comparison reviews" and tests, or consider the pros and cons. That's for us, middle class guys, with our paychecks.
"That other rich guy/sheik has one of those" is more of an incentive than any actual need.
And that's exactly the yacht companies pay such influencers too. Because they know they reach their target market.
When I worked retail in college I dealt with impulsive millionaires all of the time. They would spend up to $50k without blinking on computers and crap. I sold a neurosurgeon $75k worth of laptops, games, and accessories so his kids, nephews and nieces could amuse themselves on a ski road trip. My dads neighbor (Wall St type who plays gentleman farmer) bought a kenworth and custom trailer so he could haul 3 cars to a salt flat with his buddies once a year. The impulsive buys get bigger with bank account.
If you’re some princling, pictures of a gulfstream or yacht are the equivalent of a lady in a bikini leaning over a sports car in a magazine.
Use terms like "machine learning" and "AI", maybe "blockchain" if you really need to seal the deal.
"Who's more impressed? Your friends when they enter just another mansion, or your friends when they enter the only mansion that addresses its owner by name?"
Though you might need to grade homework/projects on your time off, as well as develop lesson plans.
(I went to a Super Bowl party, and there were teachers grading worksheets in the corner.)
What about AIG?
Insurance companies in general are generous with their CEOs. Total compensation for CEO of Allstate was $42 million in 2010 (last time I checked them).
Depends how many times, I guess. If you keep seeing something you like the look of, you're going to at least be curious. I've certainly bought sneakers and other fashion items solely from seeing pictures of them and as a %age of my disposable income that probably works out similarly to someone rich buying a yacht.
FWIW I had 300 followers or so but rarely managed to even get 10% of likes. Usually like 3% ha-ha.
It's not about "that" yacht or boat. It's about "a" yacht or boat. It's about convincing the wealthiest people that that boating is a better way to spend their fun money than another vacation house or restoring antique cars.
It's not like people are on their yacht liking IG pictures all day - realistically his account is probably paid out of he gets a couple of people to buy a superyacht.
The story's images have 5k, 10k, 10k likes. His IG has a range (small sample) from <1k to 32k, commonly 3-15k. Most of the low likes are, it seems, not yacht pictures.
(Except if we're talking about a pretty girl or something, where the followers are also mild-remote-stalker types).
Brin was rumored to be building a giant dirigible at Moffett, but not much has been heard since 2017.
This ending struck me as not how someone would actually speak in real life. Too poetic to be an actual quote.
It could be improved by journalistic standards of disclosure - but instagram/facebook already requires that, though I don't know that it is widely followed/enforced: https://www.facebook.com/policies/brandedcontent
"Self educated" is really orthogonal to professional vs. hobbyist, and if somebody is a professional in that sense then damn right I think they should be honest about it. Being a professional is fine, being a hobbyist is fine, but neither should try to pass as the other. That's deceptive, in the astroturf-like way I already mentioned.
Old: Manufacturers create advertising, including professional models. Journalists write reviews, but aren't generally in photographs of the items. Manufacturers try to build positive relations (influence) with journalists in various ways.
Social media influencers: Self-selected individuals produce content about products, often including themselves as the "models" in the product photos, hoping to build a following so they can get paid by sellers for publicizing products.
It's all marketing, and almost all of it is fake, and it requires finding voices you trust and agree with.
In other words, the difference between a livelihood and a pastime. Like I (and the dictionary) said. A "professional model" is someone who makes their living at it, and I challenge you to find an instance of a non-idiot using it to mean someone who only got paid a modest amount one time.
> it requires finding voices you trust and agree with.
Ideally, it also means those voices are trustworthy. Among other things, that means being honest about whether they're professionals or amateurs. That precludes "influencers" pretending to have genuine passion about something when in fact they're being paid to fake that passion. Encouraging and rewarding deceptive behavior is not a good thing, even in marketing.
So it's better to have professional models in ads being paid to fake that passion rather than self-educated hobbyists?
The difference isn't "paid vs not paid", it's "model" vs "someone who consistently produces content about a topic". They're both getting paid, but theyachtguy at least started out with some passion for the topic, and you have a chance to evaluate how well theyachtguy's opinions match yours.
If they're faking it then yes. You keep conflating "self-educated" with "hobbyist" and it's starting to seem a bit disingenuous. A self-educated person who is making a substantial portion of their income from promoting products is a professional. They shouldn't portray themselves otherwise, and if they do they're being dishonest. That's not a problem with professional models or actors who are clearly performing a role.
Since disclosure of interest is strictly relevant to the conversation, do you by any chance have a horse in this race? I don't. I barely even use Instagram, and my only experience with modeling was one charity fashion show when I was a child. I have never been paid to promote anything, nor do I wish to enter that line of work. Can you say the same?
You said you'd like theyachtguy to lose business. I contrasted his role starting out as a self-educated hobbyist with a paid model. He has migrated to a full-time job, because he produces content people like. I think that is still more useful than a paid model appearing in an ad (certainly not less useful).
I think we can agree that the problem isn't whether someone is self-educated or not, or what percentage of their income they derive from the activity, the problem is if they are claiming as true opinions positions that are really just paid positions. As we agreed above, disclosure is important.
As for me, I created an amazon affiliate account a dozen years ago but I don't think I ever got anything from it, not sure I have an instagram account, have maybe a couple of dozen social media posts in my life, and you're one up on me in modeling.
If you hustle someone who's rich, they're probably still going to be rich next month.
Nope. Preying on anyone is bad. A rich person could lose everything in a hustle the same as a poor person. It's only the extent of the hustle that makes it better or worse. E.g., hustling someone for a fraction of their assets is better than taking all of their assets. The value of the assets is not relevant.
But it is made worse by the status of the victims.
Also, I'd say that victim-status is the variable that's responsible for most (but certainly not all) of the "shittiness" of the activity.
It's pretty clear that it's worse to hustle a poor person out of 85% of their assets, and have them wind up homeless under a bridge, than it is to hustle a rich person out of 85% of their assets, and have them wind up living a comfortable upper-middle-class life. Both these scenarios involve the same "fraction of [personal] assets," which shows that some simple numerical comparison doesn't properly capture the essence of what we're talking about.
When the yachts are idle, which is the majority of the time, they are typically plugged into shore power and are thus just consuming electricity from the grid. The electrical systems of these things are typically far more efficient than your home because they must generate their own electricity when at sea.
As for the wasting of money, you'll note that most of the cost of building a yacht is labor because they are mostly one-off builds and can't take advantage of automation. The article mentions that they cost 10% of the purchase price per month in upkeep. The vast majority of those costs are labor.
These things are among the most efficient devices for transferring wealth from the rich to the middle class. I wouldn't discourage their use at all.
I also wonder how much of the yacht business is really about money laundering or tax-evasion. Like the art collecting world. If your company buys the boat in one country, reflags it to Panama, sells it in Monaco the next tax year... I don't know any details but I'm sure there's substantial room here to massage what numbers you present to various tax collectors.
Indeed, it's pretty hard to tell. Both seem entirely plausible and I just have no way to guess how such buyers think.
Realistically speaking, are these areas lacking money? Will throwing more money at the problem solve it, or is it another one of those "nine women can't make a baby in one month" problems?
Really, I find it hard to care about what other people do with their own time, effort or money. I'm not trying to stan billionaires, but really, who cares that they bought a yacht?
These could consume the wealth of several billionaires, make a difference to hundreds of thousands of individuals, and still not make much of a visible dent in the scope of the problems.
Also, depending on the problem you're trying to solve, "hundreds of thousands of individuals" could very well constitute your entire problem space.
The real question though, is why not both? Most people buying super yachts could probably afford to set up a philanthropic fund of some kind.