Someone should introduce an economical concept equivalent to escape velocity in physics.
If you throw an object towards space from Earth, it will always fall back to Earth, unless you throw it with enough speed (IIRC something close to 11km/s), with which it will eventually "escape" Earth's gravity.
I have a feeling that money follow the same rule: If you have some money but below a certain level, and don't do anything, that amount of money will be eaten by you, taxes, and inflation. But if you have enough money, current rates mean that taxes & inflation will erode your capital slower than the interest you'll earn from that capital alone, and so money is inevitably growing on itself.
As a society, we should prevent "escape capital" to be a thing.
I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...
What you describe has something to do with this: Being poor is expensive.
Everyone who struggled financially at some point in their time intuitively knows how much harder it is to make (and keep) money if you're poor. Saving your first 10 bucks is _way_ harder than saving your first 100 bucks so to speak.
And this is even more true if you're losing money / are behind. Paying off a dollar of debt is monumentally harder than saving a dollar. And it is much more taxing and stressful to boot. If you don't pay off that dollar, someone (perhaps the police even) will come knocking.
This is one of the reasons why I believe a society should collectively provide the basics (like a family does) for everyone as long as that's possible. Even completely ignoring the ethical concerns.
We would progress much faster if nobody had to worry about fundamental issues like shelter, food, basic transportation, education and so on. Imagine all the Einsteins and Picassos we are missing out on, because they struggle to pay their rent and can't afford education. Even ignoring the geniuses, think of all the little compounding things that would happen. All the craftspeople who don't have time to tinker. All the nurses who don't have time (and energy) for bedside manners etc.
A lot of things we produce (and put a lot of energy into) would be less necessary, because they didn't have to fight the symptoms of a broken system.
> if nobody had to worry about fundamental issues like shelter, food, basic transportation, education and so on
unfortunately, the people who are able to make this a reality tomorrow also hold to a strange viewpoint:
they truly believe that, in the absence of some pressure, a person who has their basic needs provided will ultimately venture to do nothing
completely failing to see the greatest irony of their belief, that even doing nothing would arguably be a better life than the debt-ridden existence you mentioned...
This viewpoint existed (to a more extreme degree) in the 18th and 19th century too.
"If we give everyone the vote then...", "If workers have protections then...", "If women had equal rights then..." etc.
It's interesting how stubbornly this false and negative image of humanity has persisted even though every time we made progress the opposite was found to be true.
Yes, we are lazy, greedy and dumb. But we are also disciplined, helpful and smart to a much higher degree. Not because someone holds a whip, but because we just want to. We should maybe stop optimizing society to cater to the few people (or circumstances) where this isn't the case.
Of course not everyone gets the vote. Not everyone gets the worker protections or can be women with equal rights, as you put it.
The issue here is not if we should provide these things but actually to provide them to as many people as possible. Sadly, people think we can just agree to do it or something and it magically happens.
My take is move slowly. Anyone who doesn't food and housing, try to make that happen for them as best we can. That's different than just decreeing from on high that ALL PEOPLE SHALL HAVE HOUSING!!
A little bit of suffering drives growth, too much and things start to decline. If you go work out at the gym your muscles will grow, but if you fatigue them to an extreme you’ll get rhabdo and they’ll start to break down.
We’re at a point where the majority of humanity is struggling with cost of living while others live in excess at their expense. This will cause species level decline if we don’t fix it.
Capitalism is abusive and exploitative; it abuses people and the environment to feed itself. It is a vampire. If humanity is going to survive we need to start acknowledging Capitalism for what it is: abuse!
This is a true observation, a part of it also comes from the threshold where you can afford a team of personal financial advisors and some lawyers for wealth management.
The masses have to pay taxes but i've met plenty of wealthy people that reach this "escape velocity" when they can afford people to setup intricate schemes to absolutely minimise taxes, then their money become almost autonomous as other people are constantly working on increasing their small cut of it while you are doing very little.
So while most countries have some progressive tax system on the surface, this only penalises "new money", the middle classes and the naive or inexperienced founders - the really rich pay less than everyone else, so there is in effect a regressive tax system globally favouring old money or people well connected to the law and financial complexes.
A good example of these gates to the upper classes, at least in EU, is from a fundamental level like early tax brackets, because if any regular person "hits it big" in some way, a lot of the money will disappear into taxes and bureaucratic mazes, favouring the workers who average out their pay over many years staying in lower brackets or rich people who'd just put the money into a company or fund.
So the "system" really doesn't like people entering the upper echelons and will do everything to siphon your money before this escape velocity.
Wealth taxes used to be quite common before the wealthy figured out how to use powerful propaganda frameworks like neoclassical economics and neoliberal ideology to make sure they keep getting even wealthier and more powerful.
The financial elite gets the mercantile middle classes hit the hardest by their bell curve tax system to rally for their own tax exemptions and deregulation also making these ideologies easy to spread in bourgeois or even petite bourgeois society while they'll never really reap the benefits.
Also reading the history about the advent and transformation of neoclassical economics it seems it was exactly that, a well thought out scheme to dupe the middle and lower classes to accept a system never really intended to favour them.
Classical liberalism seems almost left wing in this context, and that is not weird when realising this was a project thought by a nexus of plutocrats like Rockefeller in combination with the dawning sciences of propaganda and control of the dangerous masses that could become enamoured with socialism.
A new ideology had to be spread and so the intelligentsia of the day met up very openly to discuss rebranding various older unnamable ideologies for the masses to steer them from collective power or true autonomy.
It sounds very conspiratorial like this if it wasn't right there in history in the culture around Edward Bernais, american oligarchs or italian fascists talking about the need for "A new liberalism" in the 1920's and masses that could be "moulded" with ideology or phantasms created top down.
Concentration of capital isn't polarizing, it's a perfectly cromulent criticism. What's polarizing was the promotion of an economic/politcal system which to date has had a perfect record of turning into a totalitarian dictatorship.
Most western European countries have implemented roughly all Demands of the Communist Party in Germany, although some of these have been rolled back in the neoliberal era.
The countries with the most comprehensive welfare states all have capitalist economies. Since communism destroys wealth (and lives) rather than create any, there doesn't end up being a lot to spread around.
Soviet Union (Marxism-Leninism) created a lot of wealth. I don't think it's a good implementation of socialism but your claim that "communism destroys wealth (and lives) rather than create" is just plain false.
Most descriptions of the evils of communism usually describe Fascism. As we all know, fascism destroys wealth and lives, except for the oligarchs that manage to float to the top.
Fascism is quite a vague concept (as is communism), but I think you're right that the "exclusive collectionism" (exclusive to e.g. nationality or ethnicity) and extreme hierarchies (e.g. the fuhrer-principle) are close to what the Cold War propaganda attributes to socialism.
Socialism is one of those heavily mis-defined/used words. I tend to stick to the economic definition. As in "A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit." (quote from Wikipedia socialist economics). one of the downsides of discussions about socialism is inevitably someone starts using long convoluted sentences like the above.
Socialism as political definitions have been merged and smashed together with communism and fascism in Nazism and conservatism etc. etc.
In Marx's model, inequality indeed increases. But so does absolute poverty. Marx predicted a future in which a tiny handful of people own everything and subject their workers to slave-like conditions. The latter part hasn't happened; working conditions have improved dramatically over the past few centuries. The middle class, which most Americans are part of, is not something we see in Marx.
There's a fundamental lesson here that Marxists still don't seem to understand: an economy can have lots of inequality and very little poverty and, while not perfect, this is a good place to be.
> I too fail to understand why it's so polarizing for the 99.5% not benefitting from it.
Normal people see a rich guy and think "good for him, he worked hard, is smart and lucky" not "he isn't any better than me, it's unfair that he has more than me". For some reason Marxists think the second thought is admirable.
Marx didn't really predict the slave-like conditions. He (and especially Engels) described the conditions that were created in industrialized countries (especially UK) by capitalism.
The marxist analysis had a major effect to how capitalism was reigned in to make the working conditions and living standards better. In the 20th century almost all European countries had major socialist and communist parties, often in power, and enacted major socialist policies. E.g. almost all concrete policy demands of Marx and Engels[1] have been implemented in most (western) countries and most of them are nowadays taken for granted.
Marxism has very little to do with envy you described. The luxuries aren't really a problem. The problem is the economic (and political) power of concentrations of capital whose interest it is to make working conditions worse. You're attacking a strawman, and most likely against your own interests.
If it's this clear, I'm sure you can give a quote?
Marx was clear that capitalism produces booms and busts, which implies non-monotonic development. He did predict that, when left on its own devices, capitalism will in the long term collapse on itself due to the tendency of the rate of profit to fall.
Collapses where huge governmental intervention in economy is needed happen quite consistently. E.g. in the USA the market mechanism collapsed in 1893, 1929 and 2008. And it is arguably still on central banks' life support.
What Marx and revolutionary marxism was maybe a bit too sceptical of was sustainability of social democratic states, known also as mixed economies. Altough it does seem that most mixed economies (e.g. the nordic countries) are regressing towards more capitalist domination.
Capitalism and socialism aren't some specific systems and no country is 100% either. Even USSR didn't say in its dogma that it has achieved full socialism, let alone communism.
Largely because most modern capitalist societies have at least half-implemented many of things Marx proposed. We don't live in a world where we can know whether Western European capitalism of the industrial revolution proceeded monotonically and so have not basis for objectivity for a conclusion that Marx was wrong.
Improving working conditions and wages clearly prove that Marx was wrong. It is ironic that, in some cases, Marxist arguments led to changes that disproved Marx's teachings.
Sorry, there is nothing in Marx's writting that says that working conditions cannot improve. I recall that in one of Das Capital's chapter in the first volume he tried several models of how capitalism could evolve. One of them expected that workers could get better wages... just so that they could consume more goods produced, but never owning the means of production or controlling the society and the power.
A) In the class struggle the workers conquer more rights using strikes, organizing themselves, etc. There are several pages in Marx's writing detailing this happening.
B) Like any other commodity, the labor force could became more expensive, entirely following capitalist rules. This would be the case if the price of food increases: you cannot pay for your workers less than the needed for their subsistence in a sustainable model, which means that increases in the living price requires more wages. But this also could happen in other scenarios, like if the society becomes more complex. If now the workers need more things to properly function just because the society is more complex and they require more things in order to produce more complex labor. Then they would get more wages to buy their computers, TVs, pay for education, etc. As a bonus, now these things can also be sold, helping capital to reproduce itself. Marx says that what the workers need in order to produce their own livelihood, the standard of living of their day, is socially and historically determined. This is not a fixed thing.
What Marx says is not that wages cannot improve in capitalism, but that the surplus value would always increase (except for changes caused by scenario A). Which was a perfectly correct prediction: if you check how worker productivity increased over time and how wages increased, you would notice that there is a gap that is always increasing. Moreover, the workers also could not own the relevant means of production: they always would need to sell their labor force.
And the working conditions in Amazon warehouses are horrible. Workers in 50s or 70s had definitely better conditions and purchasing power. Despite all efficiency improvements, purchasing power of US workers is stagnating since 70s
https://www.pewresearch.org/short-reads/2018/08/07/for-most-...
The conditions improved because of Marx's teaching, without worker actions nothing would improve, it didn't happen out of capital owners' voluntary decision. It happened because of strikes and many were violently supressed. Just a few in USA: https://www.history.com/news/strikes-labor-movement
> Normal people see a rich guy and think "good for him, he worked hard, is smart and lucky"
Normal people are often hardworking (much more than capital owners) and sometimes smart as well. However to get rich, you must be lucky (usually you get born into wealth). Sometimes you need to be lucky just to get out of poverty.
I think majority doesn't care that their doctor is kinda rich and can go heli-skiing. They are angry that someone is so rich they can't even spend the money while his workers are struggling.
https://mkorostoff.github.io/1-pixel-wealth/
Working conditions get better and worse over time according to politics and economics. Marx predicted that they only get worse.
Conditions were in some ways better in the 50s. They are in some ways better today than in the 50s. And they're way better today than in Marx's lifetime. But my point is that there's no reason the pendulum can't swing back without the overthrow of capitalism, and that is contrary to Marx's teachings. Therefore it's true and ironic that Marxists played a role in improving working conditions.
In terms of class resentment, I think you're wrong. It's mostly upper-middle class people who hate the "ultra rich". And there's nothing unnatural about extreme inequality, though it's not desirable in every way.
Because he also prescribed violently overthrowing democracy. He had some great ideas, and some truly ridiculous ideas. I can appreciate his inspired insights about capitalism, but I reject his deification. It's easy to criticise an operational system. It's much, much harder to prescribe and implement workable solutions, and I think that's where Marx failed. "Tear it all down and make everything awesome" is just silly. Based on his works, dozens of countries have tried, or are currently trying, to implement communism. More than 100 million people have died as a result. It's time to accept reality: his prescription doesn't work. We know capitalism is flawed. That doesn't mean we should tear it down. So far it is our least bad social and economic structure.
Karl Marx didn't prescribe "violently overthrowing democracy".
He predicted(correctly, in my opinion) that the current ruling elite would not give up their power over the institutions peacefully, thus violent revolution is a requirement to implement the communist system.
He very explicitly did so. Have you not read his most popular works?
> The purposeless massacres perpetrated since the June and October events, the tedious offering of sacrifices since February and March, the very cannibalism of the counterrevolution will convince the nations that there is only one way in which the murderous death agonies of the old society and the bloody birth throes of the new society can be shortened, simplified and concentrated, and that way is revolutionary terror.
> Both for the production on a mass scale of this communist consciousness, and ... the alteration of men on a mass scale is, necessary, ... a revolution; this revolution is necessary, therefore, not only because the ruling class cannot be overthrown in any other way, but also because the class overthrowing it can only in a revolution succeed in ridding itself of all the muck of ages and become fitted to found society anew.
Because of combined factors: people as a collective are stupid, elected lawmakers and political parties are incentived to keep the status quo, and you only need 50%+1, or less to be elected in democracy. The wealthiest only need to cater to politicians, then keeping 49% people slightly above the pull force even less, and it'll keep the condition like it is.
But still there's no better governments than democracy right now.
I suspect many people are also lured into increasing this escape velocity by keeping up with the Joneses together with easy debt. It’s much easier to get rich if your assets earn, say, 10% (average index return) instead of losing 10% annually via the credit card interest over “assets” that you don’t own.
Especially consumer electronics and cars are surprisingly bad “assets” if you do the math. New phones lose about 20% of value per year. So if you combine that with credit card interest, the return on investment is spectacularly bad.
Taxes and inflation one can measure (reasonably) objectively, but personal spending is always going to vary wildly. Say one gets 10% in the stock market over the long term, let's say inflation is 4% so that's 6% after inflation, and say 4% after taxes[0].
Median personal income is $40k, and median family income is $75k (2022 dollars). That means an individual would need $1M in savings, and a family would need $1.875M. Which is a fair bit of money, and anybody who accumulates it will probably be accustomed to a higher-than-median lifestyle.
>As a society, we should prevent "escape capital" to be a thing.
No, we shouldn't, because in normal language this is called "retirement". Somebody who has saved enough to retire has reached "escape capital", and this is something we should be trying to encourage more broadly. As you say this is out of reach for most, so what we should be trying to do is get more people to reach this threshold, not less. Many have suggested a wealth tax; I'm personally in favor but I think it's unconstitutional (in the US)[2].
[0] If one is funding their lifestyle they would need to sell stock/collect dividends, which would be taxable.
Its an interesting idea and neat way to perhaps explain it but I think it misses out the important part. People don't do a good job preparing for their future. You mentioned it but I think emphasis should be put on the person, thats where most of the money is going, not inflation or taxes. The last two certainly play a role but no where near as much as the person spending the money.
Maybe I look at history with rose tinted glasses but my experience tells me people are spending more and more money. We are a consumer society on steroids. I see so many individuals driving around in $60k cars, living in massive homes, buying tons of junk on Amazon. I wonder if that has more to do with it.
As for preventing escape capital. The issue is, I am not sure how you do it. It is easy to had wave and say a tax but I believe its very hard to create new rules without unintended consequences. I am not opposed to the idea but I am not sure what other consequences will be felt.
While true to some degree that people don't prepare sufficiently, many simply cannot prepare. Taking aside the U.S. which bankrupts hundreds of thousands a year through an insane health care system (providing both highest cost and one of the lowest outcome on the quality side across the developed world), most people in most xountries have not much svsing possibilities to begin with. The best use of money is most often to invest in your housing, or your kids' education, not to mention food, regular healthcare, and basic amenities (1/10 of the world population can barely afford shoes or a toothbrush...).
Where more wisdom could come in is for much of the lower and the increasingly nonexistant upper middle class. But this is a fraction of the population.
If you want to tell a family with two adults working in lower wage jobs and two kids, and renting an apartment, to "save" there is usually not much margin, and their saving amounts to building up a small emergeny reserve which is eaten up by any family emergency or damage to car or housing. Little chance to save for old age ..
Agree. I think education is part of the answer, I don't know what the rest of the answer is unfortunately. I think its too easy to just point at the rich and blame them but I don't know if that is a productive solution.
Things getting more expensive over time is inflation, things getting bigger over time is the market responding to consumer desires...someone making so much money the interest eats the entire monitary supply is consumed is an extinction event.
The mind isn't great at groking just how much money we're talking about here. The people making the money are a combination of things: Not doing it for the money, doing it to rack up a high score, doing other things while the money does it's thing.
But the big takeaway is that money is effectively removed from the economy. When you can afford 200 100M yachts...you're not GOING TO BUY 200 100M yachts, so the yacht builders aren't going to use that money to further stimulate the economy.
"Hey man, I made a company that pays me $200B"
No, you didn't, you got in front of a money hose that shunted a crazy amount of money into your coffers due to gaming a market. You got lucky, and you can't DO anything with 99% of those funds, you just can't use it fast enough.
>Maybe I look at history with rose tinted glasses but my experience tells me people are spending more and more money.
They are... On rent. And food (even the exact same food). And everything else. Wages haven't kept up with housing for some 30 years and we're seeing the consequences now. The housing crash didn't help either.
Likewise, stuff got more expensive over the pandemic. Gas is triple the price now, streaming services is starting to approach cable prices once again, Dollar menu fast food isn't a thing anymore. The best coupons I could find is $4 for 2 burgers. And a typical combo can easily cost $15 by itself. $20k new cars aren't a thing anymore, and the used car market also inflated. The $3500 used Nissan with 140k miles bought in 2018 is seeing 9-10k on Craigslist.
I'm seeing the opposite effect you are. People aren't going out anymore: they can't even afford a monthly bar crawl where what used to be weekly or multiple times a week outing. Much less traveling happening. People who used to live alone are rooming up again because rent keeps increasing. Spending power and QoL is going down.
Define rich. Not buying $10 slices of avocado toast daily and investing the money instead into an index fund will definitely create some wealth over time.
His point, I’m sure, is that the common criticism of the middle class wasting money on avocado toast is somehow stopping them saving that money and being super wealthy.
But, in reality, that amount of money, while non-trivial (~$3500/year) over a lifetime (not counting inflation) saved is still a fraction of a running error on a billionaire’s wealth. Over 40 years at current 5% is <$500,000.
Personally, I’d have the avocado toast.
Endlessly avocado for personal austerity while the super wealthy consume in ever increasing amounts is nonsense.
And I agree on most of these points. I did a poor job but what I was getting at in my original post was
1)We need education or something similar to help the poor from getting poorer.
2)I am not opposed to the idea of transferring wealth but I believe it is easier said than done. I don’t believe it’s something that would happen anytime soon in America and I get the feeling it’s the same in the UK. Because of that, I like to explore other solutions.
I agree, the billionaires have better lawyers and accountants than the governments. They also have far more flexibility.
The UK has been such a finance powerhouse for a long time because it ignores all the issues and foibles of the super wealthy customers it serves.
As soon as they start punishing them with taxes and rules they’ll just move. It would only work with a global alliance which would never happen. You’d end up with even more wealth moving to small specialized off shore jurisdictions.
I largely agree with what you mean, just not the way it was expressed.
I actually think something closer to name and shame, or setting better examples would work better. Trying to get Musk to emulate Carnegie setting up the libraries, Guggenheim and his art. Encourage and reward the behavior that sees the wealthy spending money to create great and lasting public institutions, rather than great and lasting private wealth.
All coupled with an insane inheritance tax without loopholes.
Thanks for the discourse. I think my tone changed when I saw the sarcasm with avocado toast because I grow tired too quickly when people just dismiss discussions and ideas so quickly.
The current economic system would collapse if people started saving their money significantly more. Money isn't a resource like canned food or barrels of oil that can be stored to prepare for the future. You can't eat money.
Money is a claim for resources that mostly don't yet even exist. To make use of money somebody has to do the labor and extract the resources to produce something useful.
This is a known concept in economics. A person with only one dollar will have a very difficult time turning that into 1 + x dollars. Probably impossivle. A hundred dollars is slightly more likely to generate positive ROI, but still improbable. Zero dollars has a strong gravitational pull.
When I was undergrad 20 years ago, we had to calculate the “escape” velocity which was ~7.5 million at the time, where one dollar is more likely to become more than one for an average person’s expenditures. It was probably the point where a T-bill investment return passes median net income, something like that. It definitely wasn’t exactly rocket science like the rest of the metaphor.
“Your total money is decreasing” is not the same thing as “all your money is gone” - it’s leading in that direction, but if it takes 20 or 30 years to get there that’s usually enough for people to retire on.
20-30 years of savings is a fortune already though, how do we make it so that all professions allow for such savings to be accumulated if we don't allow for interest rates or dividends?
And if the 20-30 years isn't enough, do we re-employ 80-year olds that have been retired for 20-30 years?
I'm nowhere near the mentioned 0.5% and still don't think this is a good idea.
In fact I think society should do the opposite, "escape velocity" should be made attainable by more people, not fewer.
If people can retire by 50 (instead of 70 or whatever it will be after another decade of this economy) more young people will get employed at better salaries, and 50 year olds can still come up with cool things do do with their lives.
> It should be impossible to survive from saved money? Wouldn't that mean that everybody has to work until they die?
Come on, it depends on the duration, and it is long stretch from parent poster's thought to your "cannot live of saved money" for some time (though would claim, the states that have/had this guaranteed by the state had it more right anyway, basic survivability for retire time should not depend on savings in modern society, only luxury).
I mean the opposite, what you seem to want, that you can live indefinitely off a certain amount of saved money, we all know cannot be similarly true for everybody?
What exactly do you think wealthy people do with their money? Buy a big vault and swim around in it like Scrooge McDuck? They invest in new businesses, donate to charities. Heck, Bill Gates’ foundation is curing malaria in Africa. What makes you think the government getting the money is going to be more effective? I think it will largely just swell the bureaucracy and lead to more waste, not less.
Well, I’m not exactly opposed to spending more on useful infrastructure… but I see serious political reformation as a pre-condition to any major increases in taxation regardless of the target.
As I see it, we’d be stealing from the rich and giving to rich lobbying interests in some fashion.
I feel, for the US, the Covid stimulus was pretty telling in how money gets allocated to us and to them.
This article does not provide any actual evidence for that idea though. In particular, the richest person in the world - and I think possibly also the one whose wealth grew the most - wasn't even a billionaire until fairly recently, and the basic investment thesis that's made his companies so valuable is that they'll take a big share of the global car market, wrecking the income of existing car companies and destroying the wealth invested in them. Actually, I think all five of the people this article is about became billionaires in the last 30 years or so, displacing the previous richest people in the world as they did so.
You've also got to remember that by focusing on the richest people in the world right now the article is effectively cherry-picking the people who've done the best in terms of wealth whilst ignoring those whose wealth has failed to grow so well.
> article is effectively cherry-picking the people who've done the best in terms of wealth
Well yes, but that's the point of the article. The systems we have in place allow for, and ensure, insane wealth concentration in a few people. It doesn't matter who they are or if they change.
> As a society, we should prevent "escape capital" to be a thing.
Why, though? You always hear people say that one person having too much wealth is a problem but rarely hear a good reason. Just because one person is richer, does not mean another is poorer. Wealth is not a limited pie where everyone only gets one piece of it. Wealth is created. If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth.
> Wealth is not a limited pie where everyone only gets one piece of it.
This is where you're mistaken, because wealth is not simply a collection of material goods. Wealth is power, and power is a zero sum game. You don't have power over someone else unless they have less power than you.
The ultra-wealthy already have all of their material needs and desires met. They run out of things to buy with their money. You don't actually need a billion to buy all of the houses, cars, boats, and other stuff that you want. Beyond a certain point, the only thing left to buy is people. And that's what the ultra-wealthy do. They exercise power over other people. That's precisely why they're never satisfied with their level of wealth, and continue to accumulate it despite not needing to buy any more material things. The more wealth you have, and the less other people have, the more power you have over others.
Wealth buys politicians. It buys laws. It can buy entire countries.
Of course wealth is power. If you have 10 million dollars and I don't, you have more power than me. You can do many things I can't. But perhaps you did cancer research for 20 years and found a cure for cancer while I spent my money on vacations and partying. This incentive acted as it should. The world now has a cure for cancer. We can't now say that you should have the same wealth/power as me because power/wealth is bad.
> But perhaps you did cancer research for 20 years and found a cure for cancer while I spent my money on vacations and partying.
LOL nice straw man.
> The world now has a cure for cancer.
Except it doesn't.
> We can't now say that you should have the same wealth/power as me because power/wealth is bad.
https://en.wikipedia.org/wiki/Jonas_Salk Salk was immediately hailed as a "miracle worker" when the vaccine's success was first made public in April 1955, and chose to not patent the vaccine or seek any profit from it in order to maximize its global distribution.
It seems corporations are the ones influencing laws with spending. Even then, it's the constituents that are the problem. Are they really so gullible that a new attack ad funded by donations to the politician will sway them? Are they even paying attention? It's the attention and strength of the constituency that will make a democratic society better.
If you really want to fix the voting in a somewhat realistic way, you will completely do away with campaign spending, allocate a government website with a page for each candidate to display their positions, have the site searchable by your address, and have an alternative that you can request by mail if you don't have access to a computer. You also need to ban the news from reporting on the campaign to get around this, including the observation biases that come from all those early polls. Suddendly campaign funding becomes a non-issue, and we're likely to see less manipulation.
Even if you eliminated the wealthy altogether, you could still have outsized impacts by many groups due to the most extreme people being willing to donate more. This is essentially what we see primary elections due to the low voter turnout - the most motivated/extreme people have a larger say.
Wealth is indeed power rather than simply a collection of material goods, and most of all the wealth this article talks about is the power to run specific large businesses in the way those specific wealthy people want. That is, the way capitalism works in this case is that control over businesses and the ability to dictate how they allocate resources is given to individuals who are in some sense "successful" at running those businesses in that they manage to make lots of revenue and convince investors they'll do a good job of continuing to do so going forward.
The reasons why this system might be attractive may become more obvious if we consider some alternatives. For example, in Russia currently the power to control big businesses is given to politically well connected "oligarchs", and anyone whose business success exceeds their political influence tends to find that business is taken off them and given to someone much less capable but better connected. This does not lead to a functining economy. (There's a popular idea on the left that capitalism has oligarchs too which we just don't call that, which misses this important difference.) We could also imagine a system where this power is distributed democratically, and everyone in the country gets a say in how all the businesses are run. The problem with this is that in order to make decisions that are as well informed as even just some dude who happened to be in the right place at the right time, every member of the public would have to dedicate as much time to informing themselves as all of those random dudes collectively do already. That is, it's structurally impossible to just distribute this power out to everyone.
Also, most of the things that populist campaigners claim that wealth redistribution will achieve are about more material goods for everyone which relies on those material goods or at least the capacity to produce them being there already and just horded by the super-rich - just handing out power will not satisfy people's expectations for wealth redistribution and wealth taxes.
You seem to be presenting some false dichotomies here. I'm not calling for the abolition of privately owned businesses. I'm an entrepreneur myself.
It's crucial to note a couple of things:
(1) The world's wealthiest people accumulated their wealth from publicly owned corporations, not from privately owned businesses. In fact, there are famous cases where a publicly owned corporation ousted its own founder, e.g., Apple and Uber.
(2) The world's wealthiest people get even wealthier after they stop running businesses. Jeff Bezos, Bill Gates, Steve Ballmer, et al., are wealthier now when "retired" than when they were CEOs! Gates even claimed he's giving most of his money away, but somehow that's having the opposite effect. Gates can't give money away faster than he makes it, despite "retirement".
The point is not necessarily to "socialize" businesses. The point is to limit the size of businesses and of individual accumulations of wealth, for the good of society as a whole, to prevent them from accumulating too much power over society. One of the ways to do that is via progressive taxation that heavily taxes higher amounts of income and wealth. It's not confiscating the business or individual wealth as a whole; it's just trimming off the edges, so to speak.
I personally feel that publicly owned corporations are a problem and should be discouraged. They're effectively the tragedy of the commons. I prefer privately owned businesses. And it's more difficult for privately owned businesses to become huge, because there's never an influx of public capital.
> control over businesses and the ability to dictate how they allocate resources is given to individuals who are in some sense "successful" at running those businesses
You've got cause and effect reversed. The control comes first, the success comes later.
> Also, most of the things that populist campaigners claim that wealth redistribution will achieve are about more material goods for everyone which relies on those material goods or at least the capacity to produce them being there already and just horded by the super-rich - just handing out power will not satisfy people's expectations for wealth redistribution and wealth taxes.
My point was that the ultra-wealthy are motivated by power rather than material goods, because all of their material desires are already satisfied.
Of course non-wealthy people are motivated by material needs, because theirs haven't been satisfied. Indeed, wealth inequality results in hunger, homelessless, lack of health care, situations that we would not tolerate if everyone were equal and in the same boat.
>> And that's what the ultra-wealthy do. They exercise power over other people.
Arguably, there is always SOMEONE doing this, even without ultra-wealth. Perhaps the argument could be made that the ultra-wealthy are the least malign manifestation of power-hungry sociopathic megalomania?
It's not like Stalin in the 30s or Mao in the 50s were using wealth to buy people, for example. But they sure as Hell led to really negative outcomes for the people they influenced. Far more negative than any damage that Musk/Bezos/Buffet/et al are doing now, IMO.
Of course there are always some people striving for power over others. And of course the current billionaires are not as bad as Stalin or Mao. That's not really the question. The question is whether society should strive to prevent individuals from acquiring great power over the masses, and my answer is yes. In other words, even though billionaires are not as bad as dictators, billionaires should still be discouraged rather than encouraged.
What I was arguing against was this: "If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth." It's not clear that they do bring up the standard of living for everyone else. For example, poor people can't afford to buy a Tesla, so what has Musk done to raise the standard of living for the poor? Let's be honest: Tesla caters to the wealthy. Moreover, as I argued, it's not just about material goods. It's about power. It's also about personal freedom for the masses; how much personal freedom would you trade just to have more material goods?
>the question is whether society should strive to prevent individuals from acquiring great power over the masses
Whatever people or person has the authority to prevent individuals from acquiring great power over the masses.....has great power over the masses.
The power-hungry don't like being told they can't do something. Another possible outcome is the uber-rich start converting their wealth into men-at-arms to secure their power. Every time my wealth ticks over from $998M to $999M I burn $1M secretly acquiring the loyalty of violent men. Eventually my wealth goes from $999M to $1B and the Equality Enforcers pay me a visit....only to find out the hard way that they didn't bring enough bannermen. I don't think its particularly far-fetched to conclude that eventually men with near-limitless resources and near-limitless egos will resort to armed conflict before they allow some paper-pushing bureaucrats to put them back in a box. Maybe that's not the character of Buffet or even Musk, but on a long enough timeline I consider it a certainty. It's better for everyone that they collect yachts and "atmosphere models"( https://www.youtube.com/watch?v=jSvvvrKhx0w ) instead.
> For example, poor people can't afford to buy a Tesla, so what has Musk done to raise the standard of living for the poor?
I think in a system as complex as the world economy it's difficult to pinpoint this with any certainty. MAYBE one could argue that Tesla forced a paradigm shift onto other automakers and that the entire industry dragging its feet to produce EVs is a net quality of life improvement for the civilization in the aggregate due to reduced emissions?
Why are we judging the wealthy by their utility to the poor anyway? Belle Delphine isn't a billionaire, but at one point she was making >$1 million per month shaking her butt on a webcam and selling used bathwater to lonely males. Are we going to judge EVERYONE by how they've raised the standard of living for the poor? Where is the cutoff point? $1B net worth? $1M annual income? The market principles which have elevated Elon Musk to the top of his industry have similarly elevated Belle Delphine to the top of hers, with massively disproportionate earnings compared to the bottom-tier OnlyFans content creators. Do we have enough moral outrage for them both? Why or why not? Who has the authority to judge?
> how much personal freedom would you trade just to have more material goods?
I'm a military reservist who is considering returning to full Active Duty for several years so trading away my personal freedom is.....quite normal to me. That said....I have pretty modest material desires, and am mostly trading my personal freedom for.....wealth accumulation! If you're going to own something, own something that other people need, and that generates revenue.
> Whatever people or person has the authority to prevent individuals from acquiring great power over the masses.....has great power over the masses.
I'm talking about the masses. The masses of people should prevent individuals from acquiring great power over them.
> Why are we judging the wealthy by their utility to the poor anyway?
That didn't come from me but from the person I was originally replying to: "If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth."
I guess it was supposed to be some kind of justification for massive inequality. That's not my criterion though.
> Why, though? You always hear people say that one person having too much wealth is a problem but rarely hear a good reason.
Historically, most societies where this happened ended up with large violent episodes as a response, so we should want to prevent that.
While it's possible to enlarge the pie for everyone, to anyone that wants to buy a house it's obviously not the case in today's economy. In some cases the economy is zero-sum, especially with things that are inherently limited such as good real-estate.
" to anyone that wants to buy a house it's obviously not the case in today's economy."
Land is very much a limited resource. But most of the problems today are due to the distribution and consumer wants. In much of the US, you could easily buy some land and put a trailer or small manufactured house on it (or buy forclosed, vacant, etc). The problem is the jobs, especially the good ones, are concentrated in a dozen or so major metro areas with higher population density. The. You have the preference of most people who want good public schools, yards, big fancy single family houses, etc. Most people don't want a small house, and due to the job distribution can't live in the less populated areas.
>If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth.
how would that be proved - that is to say there is probably a reasonably causal line to say that their ideas and actions brought up the standard of living for themselves, but the causal line to determine ideas and actions bringing up standard of living for other people would probably be difficult to calculate.
I guess they meant that elusive "trickle down economics" concept which always looks like Bigfoot - everybody talks about it but nobody has actually seen it.
"Wealth is not a zero sum game" has some truth in it but is ultimately false.
There's only so much inhabitable space, only so many resources and only so many people on earth. You only have so much time to live and even thinking over generational legacy, we're fundamentally limited by time. Infinite growth doesn't exist in any meaningful and practical sense of the word.
And if we're coming back to the original argument: You can't be ultra wealthy without exploitation. Someone, somewhere has to generate all the value you feel entitled to have, because you inherited a bunch of wealth. And "someone" is a vast understatement.
There is some line where power and wealth not only become completely unwieldy, because the disconnect between responsibility and power is too great, but also parasitical.
I have no idea where that line is and how to solve this problem. But it _is_ a problem and I'm tired of hearing ideological platitudes that try to naturalize and defend it.
I say this all with a caveat: I have nothing personal against people who are wealthy or even ultra wealthy. Ultimately they are just part of a larger, hard to solve issue like everyone else.
It does, because power is bought with money and if you buy a vote, the richest win.
Also, resources are not infinite. Eg: There is a limit to the number of the best doctors and their time. Fresh air is locally finite, and jets do pollute more per person.
So despite the fact that in theory we are not playing a zero sum game, practically at the scale of one life, many things can be approximated as such.
'Wealth' is too nebulous a term to discuss anything socioeconomic related. When 'wealth' is measured in material- land, housing, money... these are all finite. You seem to be creatively measuring 'wealth' as immaterial things like ideas and actions. Be precise.
In addition to the reasons others have cited, I think the corrosive effect of wealth inequality on social cohesion is under-appreciated. The wealthy fear their wealth being taken, so they live in gated communities and hire guards. The society they have walled out and the society they have walled in see their interests as diverging. Neither wants to invest in the other, protect the other. The less wealthy see that wealth buys power, which buys "voice." The government responds to voice, so however democratic their nation is on paper, they don't perceive the government as responsive to their desires -- and in fact it is less measurably less responsive to their desires -- so they have less stake in preserving its legitimacy and stability. Why preserve the tool someone else uses to cheat you? And so on.
Unequal societies are low-trust societies. Low-trust societies are less capable of providing public services efficiently. They are less capable of making and achieving long-term goals. They are more prone to corruption and criminality. If you don't trust the agents of the state to keep you safe, you are more prone to taking matters into your own hands, less prone to cooperating with the agents of the state to address crime. And so on.
This comment reads as either trolling or a very naive take but I'll bite.
Why obscene wealth is a problem? Even my 10yo knows that. Extreme asymmetry and inequality. From different treatment by the government, to the justice system, to access to health care, education to getting in a position where being rich means you can exploit poor people to get richer with zero consequences.
How this has to be explained to someone on this forum is beyond me, but here we are.
>From different treatment by the government, to the justice system, to access to health care, education to getting in a position where being rich means you can exploit poor people to get richer with zero consequences
All the things you mention are problems that need solving, but they are wrong in themselves separated from the wealth. A wealthy person might not be doing any of those things.
Wealth in a free capitalist society is generally the result of increased economic activity which often benefits many more than the billionaires that appear as side effects. This is a good thing which should be kept, but we need to ensure that society isn't corrupted in the process.
We used to have much more extreme divisions of wealth than we do now, kings and nobility a few hundred years ago, and we made laws to limit their influence. So it can be done.
> We used to have much more extreme divisions of wealth than we do now, kings and nobility a few hundred years ago, and we made laws to limit their influence. So it can be done.
I think your comment is optimistic to the point of being naive. Wealth disparity has been increasing in the last 200 years.
>I think your comment is optimistic to the point of being naive. Wealth disparity has been increasing in the last 200 years.
You mention disparity as if it is a problem but ignore that most of the population is much better off. Your source clearly shows that in 1800 the world population was mostly poor, while in 2015 it was mostly _not_ poor. This despite the population being 7x larger.
Which is exactly my point - the system that generates billionaires has done so as a side effect of generating enough wealth to lift a several times larger world population above the poverty line.
Is disparity itself so offensive that we should let everyone be poor just to avoid billionaires? I can't get behind that, but I do want better laws to prevent corruption.
It's a bit like saying: oh look, everything's going better now because fewer people die from pneumonia now than a hundred years ago. You're missing the bigger picture. An average young person is now much less likely to afford housing than the generation before them and even less likely then their grandparents.
>everything's going better now because fewer people die from pneumonia now than a hundred years ago. You're missing the bigger picture.
I'm not talking about pneumonia though, and surely the bigger picture is that the average person in the world is better off today than they were before?
I think the mechanism that caused that has billionaires as a side effect, which is hard to eliminate without also eliminating the thing that makes everyone better off.
>An average young person is now much less likely to afford housing than the generation before them and even less likely then their grandparents. What does that mean to you?
To me it means that the housing markets in many countries are poorly regulated and speculation fueled by low interest rates have inflated prices.
If we actually read the maths presented by the article, it looks like many people did get poorer. You could argue there's no causation between them, but if correlation gives us civil unrest, we go fixing correlation (unless we prefer street wars).
"But if you have enough money, current rates mean that taxes & inflation will erode your capital slower than the interest you'll earn from that capital alone, and so money is inevitably growing on itself."
If it were based on interest, this is unlikely to be a problem unless interests rated exceeded tax rates.
The real issue is that most of the net worth is equity. These unrealized gains are not taxed. In some cases, a lot of the value is driven by speculation and not actually tied to the current profits of the company. This is why wealth taxes are brought up, or at least changes to capital gains taxes.
"As a society, we should prevent "escape capital" to be a thing."
This assumes that the ultrawealthy do not serve a purpose. Yeah, taxes should be increased on the top end, but probably not to the point of completwly eliminating the ultrawealthy. These people tend to use thier capital to fund other ventures. This can be important to startups and other organizations. Oftentimes they donate large amounts of money to charities or start charities in areas the government has neglected. There are alternatives to these, but I'm not convinced they are actually better. I think we just need to tweak capital gains tax on the ultrawealthy.
> The real issue is that most of the net worth is equity. These unrealized gains are not taxed. In some cases, a lot of the value is driven by speculation and not actually tied to the current profits of the company. This is why wealth taxes are brought up, or at least changes to capital gains taxes.
Of course, equity is still useful. One can borrow money using the assets as collateral, and rather than paying taxes on the (borrowed) money, one instead pays a comparatively small interest to the bank. Moreover, those unrealized gains never need be taxed so long as they are never converted to cash. The capital gains on the assets are then reset when the owner dies (the so-called "buy, borrow, die" strategy [1]).
I would venture that this is a massive loophole in the tax system that ought to be patched-out.
I'm not convinced that people in general are truly useful, but that brings about an entirely different philosophical discussion what what is actually useful and why humans should be considered as such.
I wonder if the ultrawealthy have doubly served their purpose in the last three years.
I don't disagree the ultrawealthy serve a purpose, just wondering, as most of us do — how much ultrawealth is enough?
In theory at least, the idea of taxes is to use our societies collective excess money to pay for things that we as a society would benefit from. Perhaps it's infrastructure, perhaps it's a modern high speed rail system, perhaps space exploration.
Instead though we have chosen to allow the billionaires to be the arbiter of where their excess capital goes.
"In theory at least, the idea of taxes is to use our societies collective excess money to pay for things that we as a society would benefit from."
This is one of the alternatives I was thinking about. Unfortunately, the way our current politics are, there's no guarantee that our system would actually allocate that money to what we actually need any better than the billionaires are. Given that the needy are a small minority, it's possible they fair even worse in a democratically controlled funding system, especially if the larger segment want more for themselves and have more influence.
I consider 'fuck you' money to be enough that it'll last until you die, while living comfortably. This is still an amount that you burn through in a lifetime. Something _like_ 'financial independance, retire early'.
I think the parent is suggesting a money threshold beyond which you can't really feasibly spend it fast enough (without being deliberately wasteful), so 'the rich get richer'.
> in a parallel to the existence of an event horizon at the perimeter of gravitational black holes, the possession of extremely large sums of money sends a person into an altered zone of consciousness where, though they appear to others to be acting normally, their own perception of the universe is completely altered and incommunicable to observers
No offense but we don't need a new economic concept. We need to adjust or priorities. Take this article, note the headline is not "The five people who gave away the highest percentage of their wealth" or "The five people who saved the most lives in 2023". Etc. You get the point.
We've collectively have bought into and become fixated on a single currency of measurement. We say "success" and don't bother to preface it with "financial" as if there are no other forms of success. There are.
Words create worlds. We have the words. But we don't use them to our (i.e., 99.5%) own advantage.
Capital begets Capital is the literal foundation of capitalism.
IE: My capital and your time are equal; thus a person who has much more capital has the buying power of many people.
it's mildly irritating that we know that in a relative closed system with finite resources the inequality rises (the entire point of Monopoly is to show this), yet we forget it in our day to day lives because we can't relate the microeconomics to macroeconomics for some reason.
True. But to be fair that's what they see, so there's no reason to believe otherwise. When scarcity is all you know then zero-sum is all you think. When the Top 5 double their worth, and the poorest lose - while that might be correlation - it certainly looks like cause (read: zero-sum).
Per another comment I left on this thread, we need to be aware of the language the rest of us use, as it does create worlds. And we keep creating a world that favors the systems, metrics and paradigms of The Few.
So we are saying it is a problem of perception? If we didn't know about the top 5's wealth, and the bottom was rising in wealth (Maybe lower rate than the top, but we don't know). There would be no problem?
Perception and "promotion". We've fetishized and normalized excessive wealth.
Imagine you collected Fubar Widgets and the media promoted you as having a Fubar Widget collection with 50+ billion such Widgets...most would look upon you as being a weirdo, with some sort of personality disorder, etc.
Do that with money, and the concept of normal and decent goes out the window. Your obsession...your hoarding (if you will)... Perfectly normal. Perfectly acceptable. But ultimately, textbook bonkers.
Mind you, I don't have a philosophical issue with excessive wealth per se. To me, it's strange, but what do I know? However, in the context of poverty and a slew of countless other ills in the world, such hoarding feels disturbing and disconnected. I don't see such behavior as being enviable, let alone put on a pedestal as we do.
I think this is just an "r>g" rule made famous by Piketty. When r (return on investment) is bigger than g (overall economy's growth), the rich get richer. It's unsustainable in a pure mathematical sense, the rich cannot own more than 100% of economy, so at some moment this system breaks, and one can only hope that it doesn't break violently.
Piketty somehow wrote a 1000 page book about that, and a slightly controversial one, but an idea is very simple and, I think, hard to argue against.
i'm not an economist, so ... but i think it would be possible for few people to own everything given that their wealth isn't just money in a bank but all sorts of assets with a life of their own. such a person then effectively represents something similar to a state or country. united companies of amazon ...
>why this is a polarizing issue as 99.5% of people are on the same side of the threshold
are we? I earn way less than mid-level programmer in SV and I'm pretty sure I'm on the "rich" side of threshold already. Granted I'm relatively frugal, live alone, and live in a (capital of a) low cost of living country but fact is a fact. I'm sure every single homeowner in California can achieve financial independency (if they sell their property and move somewhere cheap).
>I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...
Because 99.5% of the people are not on the same side. There is a class of bureaucrats and military that benefits from this status quo. It's currently happy, as it can easily stage a coup. (most billionaires are old people). The money is going to the right people; the reality is that 60-70% of the world population is disposable. In the US, 40% are already inactive. 20-30% are probably holding jobs that we can live without. Most of the other 30-40% could be out sourced though the "elites" are now re-thinking that because they can't trust off-shore stuff like before.
But that's the US, a developed country. The rest of the world is poor and useless and no one is quite interested in doing anything about it. (Except for China, though they are a bit obsessed about control to the detriment of their goals).
You can't sell your product if there's nobody that can buy it. I suspect the lower 70% you're talking about spend their money to keep the economy going. UBI? I dunno...jury is still out on that science experiment.
Automation has made a vast majority of our jobs irrelevant, and ChatGPT looks to make a much larger component similarly irrelevant, but you can't sell your crops if people can't buy your crops.
> You can't sell your product if there's nobody that can buy it.
Our current model is capitalists get rich selling piles of cheap stuff to the labor class.
I think the future might be petite bourgeoisie selling high-end, long-lasting products to each other. Picture the guy who has his own AI company selling AI to the guy who has a robot company, who sells robots to the guy who owns a coachbuilder such as [1] or [2], who sells cars to the AI guy and the robot guy. Then the car guy buys a watch from a watchsmith in Switzerland. Watch guy doesn't have any robots but maybe he uses AI to help him design new watches, which he builds by hand himself. Then all four of these guys eat by buying meat from a guy who uses robotic cattlehands to coral his herd of free-range grass-fed bison or something. Each of these five people work at the companies they own. They have no laborers underneath them that aren't AI or robots. They are just exchanging a small amount of high-value goods and services between each other.
The HUMAN labor class is gonna die or be subsidized just enough to keep from revolting.
The whole concept of the "American Dream" in the states, and the one and only selling point of the tories in the UK, is to make that 99.5% think they could one day be in the 0.5%. They won't of course, but the fact that they think it could happen means they support low taxes for the rich in case they ever become rich.
75% marginal tax rate on income over $1 million (in 1935) which is 22,241,021.90 today. Crazy to think how “low” that is relative to the top incomes today.
It's intriguing how many people frame this as "stealing." How do you think many people become billionaires? It isn't through fair competition and treating workers well.
> How do you think many people become billionaires?
Pareto Principle, offering some of the best market options on a planet with 8 billion people? Let's say I make a product that is 10% better than yours (maybe I burned more midnights engineering it, maybe I just had a radical trip on some DMT that gave me special insight, whatever). Let's say my product costs me $.90 to make, yours only costs $0.75 to make. We both sell at $1.00.....but 90% of the 8 billion people buy my obviously better product, and only 10% buy yours (maybe they hate something about me personally, or maybe my marketing simply didn't reach or convert them). I make $0.10 * (0.9 * 8B) = $720M. You make $0.25 * (0.1 * 8B) = $200M. I'm already over 3x richer than you, and ALMOST as close to billionaire as you are close to being impoverished ($0 net worth in this scenario). What part of my competition wasn't fair? What workers were mistreated?
THAT SAID.....I don't disagree that many wealthy families are scummy thieves with a sheen of respectability (like the Sacklers, for example).....just, I prefer that we not instantly reach for that excuse and dismiss the entire concept of extreme wealth accumulation as "well OBVIOUSLY they've got to have done something evil, there is no other explanation, so let's collectively punish their entire class" which is how most of these conversations conclude.
Because we've been trained to believe that we can be one of those people one day if only we work hard enough. It's not true, but it's the American dream.
> I totally fail to understand why this is a polarizing issue
Because for most people (especially in the US), this is emotional. As soon as you start talking about “taxing the rich” many people have a prepared inventory of feelings that get activated, and these feelings are telling them that even if I’m not rich, I could be some day, and this isn’t right.
If you want an example of the almost religious cult of personality around people with immense wealth, look no further than the people simping for Elon. The idea goes that surely these people are special, there’s a reason they have so much money, and by taking their money we'll accomplish nothing except crucifying these inventors that humankind relies upon.
Entire books (or perhaps libraries) have been written on the subject of the routines and life patterns of extremely rich people. They’re not like us.
I definitely believe that wealthy people should be taxed at similar or higher levels than the average middle class employee, and I am definitely not some Elon fanatic.
With that said, I do think that there is a reason they have so much money and that they are inventors that are pushing the boundaries. I don't understand why people refuse to accept that some people are smarter, work harder, think at a grander scale.
When's the last time you've done manual labor full time?
I'm so tired of this "hard work" meme. The hardest job I've ever had was to stack shampoo bottles in boxes for shipping. After 8 hours of that, I had to curl up in the fetal position. And the job paid crap.
I also don't believe that Elon Musk is smarter than the engineers who work for him and make nearly infinitely less money. In any case he's certainly not orders of magnitude smarter.
I see this argument frequently and I never could understand quite where it's coming from.
Throwing manual labor into the conversation is disingenuous since nobody would ever make the argument that some tech billionaire has a harder working life than someone shovelling gravel 16h per day. It's obvious that's not what anyone means, so why even point this out?
Elon Musk may not be "smarter" than the engineers who work for him, but then why didn't they start a company like Tesla? The argument for Elon's success is built into the results themselves. There's no going around that, without serious mental gymnastics.
Regardless of what other people mean by "hard work", what exactly do you mean by it, and how exactly do the wealthy work harder than everyone else?
> why didn't they start a company like Tesla
Musk technically didn't "start" Tesla, but anyway there are several reasons. For example:
1) They didn't have the capital. Musk himself didn't have the capital to invest in Tesla or SpaceX until several previous businesses were acquired by bigger businesses. eBay acquiring PayPal was the big one.
2) They didn't want to? The smartest people in the world tend not to be motivated primarily by money and greed. Also note that Musk started out working on websites and financial services, which is how he made his initial capital, but that wouldn't necessarily interest auto or space engineers.
Remember that Steve Jobs made most of his wealth from Pixar and selling it to Disney rather than from Apple. Was Steve Jobs "smart"? Sure, but WTF did Steve Jobs know about making films in 1986? Nothing. He was just a rich dude with some capital to invest. Why didn't some indie filmmaker become a billionaire instead? Because indie filmmakers don't have the capital.
> Regardless of what other people mean by "hard work", what exactly do you mean by it, and how exactly do the wealthy work harder than everyone else?
You get too caught up in the meaning of "hard work", as if your only purpose it to use its pedantic definition as a gotcha.
Hard work in the way you define it is not and should not be rewarded just for the sake of hard work. It cannot work this way and you don't want it to work this way, regardless of what you may think. If we did that, the world would stop working. So whether the wealthy work more or not is irrelevant.
> Musk
The anti-Musk sentiment is now at cult-like levels and I'm afraid that rational conversation is not on the table anymore. Somehow Elon's name is associated with some of the most revolutionary companies of the past decade, yet still you'd argue that he doesn't work hard, isn't smarter than his engineers, is basically just lucky. Whatever makes you feel better about yourself. If the guy who created SpaceX is not impressive to you, then I'm not sure who is.
He is kind of a moron in his tweets and has done some despicable shit, but I am able to separate this from his accomplishments.
> You get too caught up in the meaning of "hard work", as if your only purpose it to use its pedantic definition as a gotcha.
No, I personally don't use the phrase myself in normal conversation and would be glad if it simply disappeared entirely. I'm only responding to the people who use the phrase to justify massive inequality of wealth, so I'd like to hear what you think it means, and how it justifies that inequality.
> The anti-Musk sentiment is now at cult-like levels and I'm afraid that rational conversation is not on the table anymore.
The submitted article is about the "Five richest men", of which Musk is one, so it's not like I'm bringing up his name out of context. He is the context here.
> yet still you'd argue that he doesn't work hard
I didn't argue that. I don't even know what "hard work" is supposed to mean here, which is why I'm asking you. You're the one who said, "I don't understand why people refuse to accept that some people are smarter, work harder..." Yet you seemingly refuse to say what you mean by that. If manual labor isn't hard work, then what is hard work, exactly?
> is basically just lucky
He is lucky. You don't think the following is a lucky set of circumstances to get a massive payoff?
"Even though Musk founded the company, investors regarded him as inexperienced and replaced him with Intuit CEO Bill Harris by the end of the year. In 2000, X.com merged with online bank Confinity to avoid competition, as the latter's money-transfer service PayPal was more popular than X.com's service. Musk then returned as CEO of the merged company. His preference for Microsoft over Unix-based software caused a rift among the company's employees, and eventually led Confinity co-founder Peter Thiel to resign. With the company suffering from compounding technological issues and the lack of a cohesive business model, the board ousted Musk and replaced him with Thiel in September 2000. Under Thiel, the company focused on the money-transfer service and was renamed PayPal in 2001. In 2002, PayPal was acquired by eBay for $1.5 billion in stock, of which Musk—PayPal's largest shareholder with 11.72% of shares—received $175.8 million."
Without that lucky jackpot, none of your "revolutionary companies" would exist.
> Whatever makes you feel better about yourself.
I don't really care. I'm not a "failed billionaire". I've never in my life even aspired to wealth. It's not among my priorities. What I do care about is the disproportionate political power exercised by the ultra-wealthy, and how it makes our whole society worse.
> If the guy who created SpaceX is not impressive to you, then I'm not sure who is.
A lot of people are impressive to me, but I don't give a damn about SpaceX. I don't believe in the Mars fairy tale that's been sold to space nerds, and I wouldn't bat an eyelash if SpaceX folded and stopped operating tomorrow. Furthermore, I think there are too many rocket launches polluting the atmosphere and too many satellites being put in orbit. I'm not a fan.
Look, to be honest, I just think we have vastly different opinions and views on the world and how it works. There is absolutely nothing in your message that gave me any pause, and I think we start from irreconcilable positions.
> I'm only responding to the people who use the phrase to justify massive inequality of wealth, so I'd like to hear what you think it means, and how it justifies that inequality.
I do think that there is probably too much inequality for it to be healthy for society, but I am not of the opinion that "billionaires should not exist" or that anyone rich is some version of evil.
I believe fundamentally that two workers who have different productivity and/or different work ethics should be compensated differently. Elon Musk (and many rich people) have, on average, better work ethic and considerably better output. Just by the fact that Elon has been involved in so many successful ventures at a global level, that is by definition proof that he is doing something better than virtually all of us.
> I don't even know what "hard work" is supposed to mean here
In previous replies you associated hard work with physically strenuous work. I think they are orthogonal concerns. Working hard means making progress on problems at the edge of your abilities. By your definition, someone shovelling bricks for 8 hours is working harder than someone working 8h in an office. By mine, that is not necessarily true.
Also, even if your definition was true, paying someone purely on how 'hard' they work would still not be a good idea.
> Without that lucky jackpot, none of your "revolutionary companies" would exist.
This sentence does not sound as good as you think it does.
Sure, loads of people end up with the biggest percentage of shares in a company like PayPal and then also continue with other extremely impactful ventures, one after the other at the edge of technology. Repeated moonshots is "lucky".
> I don't believe in the Mars fairy tale that's been sold to space nerds
Me neither, but have a look at how many launches have happened each year before and after SpaceX, in a field entirely dominated by national agencies. No matter which way you cut it, SpaceX has ushered in a new era in space exploration. I won't even bother arguing more about this, this is honestly ridiculous.
> I believe fundamentally that two workers who have different productivity and/or different work ethics should be compensated differently. Elon Musk (and many rich people) have, on average, better work ethic and considerably better output.
Half the population has better than average work ethic.
Does Musk have a better work ethic than his lesser paid employees? That's dubious. After all, he infamously demanded that Twitter employees be "extremely hardcore" and work "long hours at high intensity". But these employees are not compensated nearly as much as Musk. They're not even rewarded at all in many cases. He still fired a bunch of them afterward, even the women who tweeted a photo of herself sleeping in the office.
What about the work ethic of the poor people who work multiple jobs because one job doesn't pay enough? How is there any relation whatsoever between work ethic and income? Note that Jeff Bezos, one of the other five richest men whose income doubled, actually quit his job! You don't make massive money from working for wages, you make massive money from owning assets and waiting for them to appreciate. This is how Musk got his PayPal payoff despite having been removed from power by other investors.
There are countless people in the world who are extremely smart and have a great work ethic. But that doesn't automatically bring great wealth. A lot of it is being in the right place at the right time. Do you need to be smart and have a good work ethic to take advantage of the opportunity? Yes, probably. But most people aren't lucky enough to get those opportunities in the first place.
It also helps to ruthlesslessly pursue wealth with no regard for ethics...
> Just by the fact that Elon has been involved in so many successful ventures at a global level, that is by definition proof that he is doing something better than virtually all of us.
He makes more money than virtually all of us. That's beyond dispute, and indeed the subject of the submitted article. It's basically a tautology though and not an explanation.
> Working hard means making progress on problems at the edge of your abilities.
Well, as I mentioned, loading shampoo bottles into crates for 8 hours was definitely on the edge of my abilities.
> Sure, loads of people end up with the biggest percentage of shares in a company like PayPal and then also continue with other extremely impactful ventures, one after the other at the edge of technology. Repeated moonshots is "lucky".
You're missing the point. Musk was kicked out of his own company not just once but twice for incompetence. Yet he still got a $175 million payoff. That's failing upwards.
He ought to be kicked out of Twitter for incompetence too, but unfortunately he can't be.
> have a look at how many launches have happened each year before and after SpaceX
I did, and I already said I don't like it: "I think there are too many rocket launches polluting the atmosphere and too many satellites being put in orbit."
Why would I pretend? That makes no sense. I have nothing to gain from pretending.
At this point, more than 24 hours after the article submission, which is apparently now flagged, and 14 hours after my previous comment, nobody is reading this thread except for you and me.
You can call me stupid if you want, though you would be sorely mistaken, but don't call me a liar.
I don't think you're stupid or a liar, but there are two strong trends I'm noticing recently - playing the contrarian and a hate for the rich.
To me, it is just an axiom that working harder is correlated with more wealth. What you've done in previous replies is a typical reductionist approach, which is to pretend that a multivariate problem, with those variables on various continuums, can be presented as "Elon Musk doesn't work harder than someone stocking shelves with shampoos". I honestly do not understand how someone frequenting HN could genuinely think that this is a valuable argument.
In simpler terms, if you exclude all the obvious counter-examples like inheritance, crypto pump and dumps, lottery winners and so on, it is empirically true that richer people work harder than poor people. Before you give some example of how some billionaire simply got lucky, I did say about that this is a multivariate equation. There are many, many things that go into it, and luck is one, hard work another.
The simple logic is: you work harder -> your productivity is higher -> you make more money. You may find some exaggerated counter-example, but this is the truth.
If Elon had just been involved in the PayPal business, yeah, he would be some forgotten rich dude living his life on some island. It boggles my mind that anyone can think of Tesla, SpaceX, OpenAI as unimpressive.
There is such a visceral hate for "rich people" that there is no room for any positives. This is looking to me more like a cult.
I don't "play" contrarian. If my views happen to be contrary to yours, or to the majority's, that's just how it is, how I am, and how I've always been from a very young age. Nonetheless, there are plenty of subjects on which I'm in agreement with the majority.
> hate for the rich
Well, my view is that our economic system tends to select for people who are unethical and ruthless, so if there's any hate, I would argue that it's a rational hate rather than an irrational hate. In general, though, my issue is with the system, and defenders of the system, rather than with the beneficiaries of the system.
> To me, it is just an axiom that working harder is correlated with more wealth.
To me, it's not an axiom. I don't consider it to be self-evident or even true. If you don't want to argue over your axiom and defend it from criticism, you're free to walk away, but you shouldn't be surprised when someone doesn't accept your beliefs as evidently true.
> It boggles my mind that anyone can think of Tesla, SpaceX, OpenAI as unimpressive.
The word "impressive" means "evoking admiration through size, quality, or skill". The question is, why should I have admiration for something I don't care about, or even something I dislike? If a person that I vehemently oppose gets elected POTUS, am I supposed to "admire the accomplishment"? Only 45 people have ever been President, so in that sense it's an accomplishment, yet "admiration" is not really the appropriate attitude in these case; more like "horror". I understand that if you admire Tesla, SpaceX, and OpenAI, then you might admire Musk too, but I personally don't give a crap about any of them and even consider aspects of them to be a negative for society.
Just to evoke Godwin's law, are we supposed to be "impressed" by the "accomplishments" of Hitler? He did have a major impact, changing the world forever, doing some unprecedented things, and greatly affecting tens of millions of people. (I'm reminded of the sarcastic conversation that Paul had with Stilgar and Korba in Dune Messiah.)
Back to the more mundane subject of wealth accumulation, from my perspective, gluttony and insatiable greed are not an accomplishment, they're a personality flaw, a pathology.
> There is such a visceral hate for "rich people" that there is no room for any positives. This is looking to me more like a cult.
I was happy to ignore Musk as much as possible until recently, and to me his followers seemed very much like a cult. Unfortunately, Musk acquired Twitter, which was my social network of choice, and then proceeded to wreck it in many ways, which is mainly why I hate him in particular. Again, it's not some weird "irrational" hate but rather a direct reaction to his actions.
> In general, though, my issue is with the system, and defenders of the system, rather than with the beneficiaries of the system.
Finally, we agree on something. This is exactly it. The problem is the system, which I am happy to change. The people who get rich are simply playing by the rules the system allows.
Rich or poor, we all do the same thing, we all try to maximize our income, reduce our taxes, use any crack in the system we find.
> To me, it's not an axiom.
I struggle to understand why anyone would think this. So you think hard work is inversely correlated with making more money? That would be an incredible statement to defend.
> The question is, why should I have admiration for something I don't care about, or even something I dislike?
If you have subjectively decided that Tesla, SpaceX and OpenAI are not impressive, then I'm afraid we simply view the world differently. I cannot comprehend how someone would be unimpressed with companies at the forefront of technological progress.
The only way in which I can explain your view is that you are not able to separate Musk's personality from his ventures. I can.
> Just to evoke Godwin's law, are we supposed to be "impressed" by the "accomplishments" of Hitler?
Anther clue that we simply think very differently. Yes, I am impressed by what Hitler 'accomplished'. I am also impressed by what Bin Laden 'accomplished', for example. Imagine if this same amount of work, ingenuity, scrappiness was applied from 'good'. Then we might have had two rich entrepreneurs that you'd find just as despicable simply for being rich.
> Back to the more mundane subject of wealth accumulation, from my perspective, gluttony and insatiable greed are not an accomplishment, they're a personality flaw, a pathology.
Back to what the real problem is - the system. Don't hate the player, hate the game. Also, if Musk wanted to actually just make money, I'm sure there are better avenues than doing the hard work of creating disruptive technologies.
> The people who get rich are simply playing by the rules the system allows.
The rich also tend to have the power to write the rules themselves, for their own benefit.
> Rich or poor, we all do the same thing, we all try to maximize our income, reduce our taxes, use any crack in the system we find.
This is not true at all. Individual businesspeople vary vastly in their ethics. I don't actually try to maximize my income, by any means necessary. I have personal standards that can't be measured in dollars, and I try to avoid actions that could profit me if they would screw over other people or harm society.
> I struggle to understand why anyone would think this.
It's unfortunate that you appear to have such a limited imagination, an inability to comprehend the possibility of other people rationally disagreeing with your beliefs.
> So you think hard work is inversely correlated with making more money?
Why do you present a false dichotomy? There could be little or no correlation, as opposed to an inverse correlation. In any case, I still don't know what the heck you mean by "hard work". You've already rejected the notion that manual labor is hard work, yet you refuse to explain exactly what it does mean, apparently because you fear that explaining would be some kind of "gotcha".
> I cannot comprehend how someone would be unimpressed with companies at the forefront of technological progress. The only way in which I can explain your view is that you are not able to separate Musk's personality from his ventures.
Again, there's an unfortunate failure of imagination here. Have you considered, for example, that I don't necessarily view them as "progress"? The irony is that I've already given some indication, mentioned more than once: "I think there are too many rocket launches polluting the atmosphere and too many satellites being put in orbit."
Anyway, since you're having such trouble comprehending, have you considered, you know, asking me, instead of putting ideas in my head?
On the other hand, you seem to believe that I'm obligated to admire Hitler, so given that starting point, I'm not sure there's anything I could say to explain my views to you in a way you'd understand.
> Yes, I am impressed by what Hitler 'accomplished'. I am also impressed by what Bin Laden 'accomplished', for example.
You're welcome to your views, but I think you'll find, if you state them explicitly to many people, that I won't be the only one who feels differently, and you're not necessarily even in the majority.
> Don't hate the player, hate the game.
Why not both?
> Also, if Musk wanted to actually just make money, I'm sure there are better avenues than doing the hard work of creating disruptive technologies.
Musk is already the wealthiest person in the world. To say "I'm sure there are better avenues" to making money just seems ridiculous to me.
> The rich also tend to have the power to write the rules themselves, for their own benefit.
This is correct, and the 'poor' do the same, within the limits of their abilities.
> This is not true at all. Individual businesspeople vary vastly in their ethics. I don't actually try to maximize my income...
This is the Internet and saying this is free. Even so, I don't care about you specifically, I am talking about the average behaviour at the level of the society. There is no big distinction between the 'poor' and the 'rich' in terms of their behaviour to maximize their income while bending the rules as much as possible.
Typical employees (the 'poor') have way fewer levers to do this, as well as less financial education, due to the way the system is structured, but the desire to keep more of your earnings to the detriment of everyone else is the largely the same.
> It's unfortunate that you appear to have such a limited imagination, an inability to comprehend the possibility of other people rationally disagreeing with your beliefs.
> Why do you present a false dichotomy? There could be little or no correlation, as opposed to an inverse correlation.
In retrospect, it is true that I presented a false dichotomy since I never considered that your defense might be "there is virtually 0 correlation".
I maintain that you have no decent argument to make in defence of this opinion of yours. To claim that working harder is not correlated to financial reward is completely indefensible.
> you're not necessarily even in the majority.
I'm not sure why this would be imporant. Nuanced views are rarely 'in the majority'.
> Have you considered, for example, that I don't necessarily view them as "progress"?
Yes, I did, but then you are simply wrong.
> Musk is already the wealthiest person in the world. To say "I'm sure there are better avenues" to making money just seems ridiculous to me.
You described anyone looking to be rich as simply greedy and basically mentally ill (I forget the exact term). So Musk is greedy and vain. After he got his 100+ millions from the sale of PayPal, would an electric car company, followed by a rocket company, be the obvious way to increase that wealth? Probably not.
That's the crucial distinction. Specifically, the ability to buy politicians and elections.
> This is the Internet and saying this is free.
Once again implying that I'm a liar...
You're talking to someone who spent N years, for uncomfortably large N, as a grad student in a philosophy PhD program, so it ought to be very obvious that I'm not a ruthless wealth maximizer. In fact, I still have student loan debt from that undertaking.
> There is no big distinction between the 'poor' and the 'rich' in terms of their behaviour to maximize their income while bending the rules as much as possible.
It's true that there are a lot of unethical poor and middle class people. (Also a lot of ethical poor and middle class people.) My earlier suggestion, though, is that there's a correlation between wealth and lack of ethics, because "our economic system tends to select for people who are unethical and ruthless".
> I maintain that you have no decent argument to make in defence of this opinion of yours. To claim that working harder is not correlated to financial reward is completely indefensible.
You still, after repeated prompting, resolutely refuse to explain exactly what you mean by "hard work", so how would it even be possible for me to make any argument or defense at all? It ought to be clear from how I earlier characterized hard work (e.g., manual labor) that there's no correlation. You claimed that my characterization was silly, but it's become ridiculous how you won't say anything more about it.
Perhaps what you want to say, or at least ought to say, is that some people have more natural abilities than other people, which is absolutely true, and thus some people are capable of accomplishing things that are impossible for other people, which is also true. But I wouldn't characterize that as "hard" work, at least not for the person with special abilities. To the contrary, things come easier to them. It's only hard for the people who don't have those natural abilities. I could work as "hard" as I possibly could, to the very edge of my abilities, and never become a professional guitar player or a professional tennis player (much to my dismay), because I simply don't have enough talent.
> I'm not sure why this would be imporant. Nuanced views are rarely 'in the majority'.
It's important because you seem to consider your own views as axiomatic and in need of no defense.
> You described anyone looking to be rich as simply greedy and basically mentally ill (I forget the exact term).
Pathological. But I didn't say "simply".
> would an electric car company, followed by a rocket company, be the obvious way to increase that wealth?
Why would it need to be "obvious"? There's no obvious way to become ultra-wealthy, otherwise everyone would do the obvious.
> You're talking to someone who spent N years, for uncomfortably large N, as a grad student in a philosophy PhD program, so it ought to be very obvious that I'm not a ruthless wealth maximizer. In fact, I still have student loan debt from that undertaking.
And that's great, but your specific example is not what we are discussing here. We are talking about averages, not particular examples.
> My earlier suggestion, though, is that there's a correlation between wealth and lack of ethics, because "our economic system tends to select for people who are unethical and ruthless".
Hmm, I think we can agree here, I don't think I've said anything that would suggest otherwise.
> You still, after repeated prompting, resolutely refuse to explain exactly what you mean by "hard work"
Because I'm not sure it's worth it. However, your example with the guitar is good and actually fits exactly into what I'm trying to say.
Maybe you can never get to be like Jimi Hendrix, no matter how much you practice, but generally speaking, those who practice more, ON AVERAGE, will be better than those who practice less. Yes, there are other factors like natural talent and whatever else, but OVERALL those with 2k hours of guitar will be X% better than those with 1k hours.
Now, in the example above, replace guitar with "hard work" (however you want to define it, that matters less) and "better" with "more money".
In our economic system, the thing that gets rewarded is the creation of value. All things being equal, the harder you work, the more value you create. It's obviously not perfect and there are many, many caveats, but averaged across the whole economy, this is definitely true.
> It's important because you seem to consider your own views as axiomatic and in need of no defense.
Not all of them. I'd be perfectly okay with having to explain my stance on the accomplishments of Bin Laden. However, yes, I do find it axiomatic that working harder is correlated with more wealth.
> We are talking about averages, not particular examples.
On the contrary, the submitted article is not about averages but rather about particular examples, namely, the five richest men in the world. I would say that happens on average is largely irrelevant here, because the average person will never become a billionarie or come anywhere remotely near the vicinity of affluence.
> Maybe you can never get to be like Jimi Hendrix, no matter how much you practice, but generally speaking, those who practice more, ON AVERAGE, will be better than those who practice less. Yes, there are other factors like natural talent and whatever else, but OVERALL those with 2k hours of guitar will be X% better than those with 1k hours.
> Now, in the example above, replace guitar with "hard work" (however you want to define it, that matters less) and "better" with "more money".
> In our economic system, the thing that gets rewarded is the creation of value. All things being equal, the harder you work, the more value you create. It's obviously not perfect and there are many, many caveats, but averaged across the whole economy, this is definitely true.
Now we're making progress, if we've defined "hard work" to mean "long work", i.e., hours of work. However, there's an ambiguity in your discussion above. First you talk about "on average", but then you switch over to "all things being equal". Those are two very different concepts. I actually agree that all other things being equal, people who work more hours will make more money. This is practically an axiom, if their hourly wage is among the things that are equal. On the other hand, I think the "on average" claim is dubious at best.
One major problem is that there are strict physical, temporal limitations on how many hours a human can work. There are only 24 hours per day, which you must spend not only on working but also on sleeping, eating, and other necessities not related to work. God forbid you have any free time! There's not a huge variation in the number of hours that different people can possibly work in a day, though certainly family responsibilities can take up a large chunk of hours. (Wikipedia says that Elon Musk has 11 children, but I couldn't say how much time he spends with them.) There's a somewhat broader variation in how many days per year that different people can work. It's worth noting, however, that on average (your favorite notion), poorly paid workers have the least generous vacation packages.
Another factor is the availability of work. Those who make hourly wages can't just automatically work as many hours per day and as many days per year as they desire: the money has to be in the company's budget, the hours approved by the company's management. And if the business itself runs on strict hours, opening its doors at a certain time in the morning and closing its doors at a certain time in the evening, then it may not even be possible for the employee to work more hours! Moreover, there's typically "overtime" pay, which is more costly to the employer than "regular" pay, so there's a natural reluctance to grant too much overtime. Of course it's possible to work more than one job; indeed, some people have to work more than one job, because one job doesn't pay them enough to cover their expenses. But this phenomenon calls into question the idea that hours of work are strongly correlated with higher wealth.
What I'm suggesting is that you may be reversing cause and effect. It's largely the job itself that determines how many hours per day/week/year that a person can or does work, and it's largely the job itself that determines the compensation. The "hard work", so to speak, can only vary within the confines of the job. Of course you can try to change jobs to get one that pays more — and finding a new job is itself "hard work", albeit unpaid work — but that's not quite the same thing as "working harder"; it's merely working for higher compensation. Those with a yearly salary (on average higher total compensation than hourly workers) may have more opportunities to work more hours, but it's also axiomatic that if you're working for a yearly salary, your salary for that year doesn't change no matter how many or how few hours you work. You have to hope that your bosses recognize your "hard work" (or whatever traits they happen to recognize) and reward you with bonuses and/or promotions. (I would say, by the way, that it's more important to be regarded as a hard worker than to actually be a hard worker. It doesn't hurt to brown-nose either...)
Let's go back to the wealthiest person in the world. Mr. Musk is subject to the same physical, temporal constraints as the rest of us: 24 hours per day, 365/6 days per year. Presumably, as a human, he must sleep and eat. We know that he seems to have quite a bit of time to tweet, and also quite a bit of time to read political conspiracy theories. And we've seen him photographed or recorded at parties, sporting events, interviews, podcasts, and other activities during which he's clearly not working on cars or rockets and such. So the available working hours per day are significantly less than 24. The biggest problem for Musk, though, is actually what you seem to admire most about him: his many companies. Given the strictly limited number of hours he has per day, and given that he owns so many companies, it's just numerically impossible for him to work a ton of hours per day at every company. I think it's safe to say that Musk actually works fewer hours per day at any given company than many of his much lower compensated employees at the company. Tesla engineers are working "harder" (longer) than Musk at Tesla, Twitter engineers are working "harder" than Musk at Twitter, SpaceX engineers are working "harder" than Musk at SpaceX, etc. The math just doesn't work out otherwise.
Thus, I'm extremely skeptical of the notion that "hard work", i.e., hours of work, are rewarded as much as you think they are. And they certainly don't explain the inhuman variation of wealth in the world, how one person can be worth $200 billion, while another person can be worth $0, or be in debt. The range of wealth is way out of proportion to the humanly limited range of working hours.
Incidentally, I'm in the top quartile of earners in the United States, yet I appear to have a lot of time to spend arguing with strangers on the web. ;-)
We could talk about entrepreneurs (of which am I one). But most new businesses fail, so the number of hours worked was for naught. And it's not clear that working more hours is the magical solution to making a business succeed.
As a society we should aim for everyone having this thing. The best state is for everybody to be idle because they all own enough capital not to have to work.
Besides, preventing this outcome is silly unless there is solid evidence that the alternative is more economically efficient. Jeff Bezos being rich doesn't diminish the quality of my life in any way. Same for all the other wealthy folk.
> As a society we should aim for everyone having this thing. The best state is for everybody to be idle because they all own enough capital not to have to work.
By "capital" do you mean "intelligent robots"? Because otherwise, who is going to do the work when everyone is idle?
I mean capital. You could have asked the same question in 1823 and the answer turned out to be "no". Unintelligent capital is so productive that most people were forced out of all known jobs in the 1800s.
Yeah that was probably poorly articulated. Put it this way - everyone used to be a farmer. Capitalism happened, now the number of farmers in capitalist economies rounds to 0. There was no need for intelligent robots to do that. AI is likely to have a similar effect on some knowledge workers.
At this point, arguably, very few people need to work. They persist regardless, and we are better off for it, but maybe growth in robotics and AI will some day force people to stop. And that would be a good outcome. Even now, if people don't need to work that is arguably for the best. The only concern I have is government policy encouraging productive people not to exert themselves. Either way, identifying people who are highly productive but not working and making them waste their time is stupid. We should want less people to need to work.
Capitalism happened, now the number of farmers in capitalist economies rounds to 0.
No it doesn't. There are 2 million farms in the United States, and they don't just take care of themselves.
Moreover, besides the farmers themselves, there are many people working in farming-related jobs, e.g., manufacturing farm equipment. Not to mention, how do you think the food gets from the farms to your table? The trucks don't just drive themselves yet.
> At this point, arguably, very few people need to work.
That's ridiculous. Ruthless capitalists would have gotten rid of employees already if they could.
> No it doesn't. There are 2 million farms in the United States, and they don't just take care of themselves.
I'm not abreast of the stats for the US, but it would appear those 2 million farms employ order of magnitude 2 million farmers [0]. Which averages 1 farmer per farm, and while that seems a bit low it isn't inconceivable to me when considering the productivity of farmers in this day and age.
The population of the US is 333 million people. Factor in geography, there may well be people who have literally never talked to a farmer in person. There are not a lot of farmers out there, the industry has been eaten by capital.
That leaves around 99% of the population that may literally does not need to work to sustain a lifestyle that would be considered typical through most of human history. No intelligent robots required.
> Ruthless capitalists would have gotten rid of employees already if they could.
They have. Industries have been all but wiped out for employees by capitalists. The only thing keeping people employed is they refuse to be satisfied with what they have and keep finding new jobs. Although if they were a bit more savvy they'd invest in capital and stop wasting time working. Capital wins when it comes down to it.
This insistence that people should put the foundation of their lifestyle on work instead of capital accumulation is a habit that is sorta silly. The expectation should be that the average person owns capital and policies should be aimed at enabling that. Forcing successful capitalists to work is the opposite of clever.
If you think 2 million is approximately 0, you should look at the stats from other professions. For example, there are actually more farmers than physicians.
This "conversation" is becoming ridiculous. Do you think we need no physicians? No nurses? No dentists? No hair stylists? No home builders? No plumbers? No chefs? I could go on and on and on, but I actually don't want to go on and on and on with you.
No TEACHERS. No librarians. No electricians. No sanitation workers. No engineers. No mail carriers. No maintenance or repair people. No sales people. No cashiers. No snow plowers. No architects. No SOFTWARE DEVELOPERS. No journalists. No writers. No actors. No musicians. No police. No lawyers. No airline pilots.
How in the world do you think the world works without people?
Perhpas you're putting a lot into "sustain a lifestyle that would be considered typical through most of human history", but why would we want to roll back the clock and live like it's the Dark Ages?
Historically we'd be talking about 80-90% of people being farmers [0]; even putting aside the fact that "farmers" in this day and age, by productivity, are basically just minding big machines that work hard. Tell you what, how about I say 1%. So maybe it is a 98% reduction in farming employment instead of 100%. None of my arguments change though.
Now that is a long list, but a several the jobs you're listing there might be on the verge of extinction as a practical matter. Software developers in particular; it is clear that LLMs are about to do something big to the profession. It isn't clear if the job title will survive. Engineers more broadly I'd put in the same bucket, the category is at risk as an employer. ChatGPT is already outcompeting a lot of teachers I know in terms of being able to explain & tutor concepts. Airline pilots we should probably make illegal fairly soon; I wouldn't want to trust my life to human judgement when we could automate that away. We're on the edge of self driving cars and presumably self driving planes is either the same or easier difficulty because navigating the sky is easier than a street. I haven't talked to a cashier or salesperson in a long time because my local shopping centre has self-service or I buy things online. Etc, etc.
And I don't know why you think all those jobs are so important to preserve. If we can get rid of them we should, and as far as technology goes we're in spitting distance. The software is a matter of years, so really it is a question of where the economic limits are for robotics. I don't think we will; I imagine work will be found. But in terms of should we replace these people with capital, we should. And in many cases we will. And the goal should be to remove people from the workforce altogether through capital ownership because that is a much more comfortable lifestyle.
> but I actually don't want to go on and on and on with you.
As a style point, I'd recommend putting that at the end of the list, rather than the middle. I got a bit of a chuckle out of that, so if you did it for effect I thought it was a nice touch.
Surely the goal of society would be egalitarianism? In which the entire concept of money- a vehicle of inequality- would be no longer needed. The concept of capital as you described it would not need to exist at all.
How could that even be a theoretical possibility? Nobody having to work is a possible outcome. Societal equality as far as I can see isn't. If nothing else, we could all start equal and then someone starts working because they are bored and accumulate more stuff.
It isn't a useful goal anyway. If you have all that you need, someone else having more than that isn't a problem.
It most certainly has not been bred out of us. Take away food for about a month or so and see how quickly we return to this animalistic nature.
There is no "hanging the rich" because their is no need to. The rich are getting richer, and the gap is increasing. However, the poor and middle are continuously increasing as well (Important: Assuming we stay on track after the COVID dip), there is no need to eat the rich so it doesn't happen.
Most people are doomed to live from paycheck to paycheck. There is no room for improvement or optimization.
Once you have your yearly needs on a bank account and more to come plus enough time you can invest in random ideas when they come, buy things in bulk and safe a lot of money or go for the expensive thing to safe money in long term.
Basically there is a 'point poor' where you are doomed to stay poor, where you have to little to change anything about it.
> I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...
Because one day it could be you on the other side. You’re gonna pull yerself by your bootstraps and are totally going to become one those filthy rich people. Everyone can make it in America. All you need is hard work and country music. You wouldn’t want to tax your soon-to-be fellow rich men, now would you? What are you, a commie? A socialist? Why, one day that could be yourself you’re taxing there, buddy. Take the government’s filthy hands out of your money. Yeehaw!
> Because one day it could be you on the other side.
I appreciate the sarcasm of your comment, but seriously though... if I end up with Bezos wealth, found myself on the other side, I would part with $176B if you just leave me the remaining $0.9B.
I mean I might bitch about it, but, yeah, I'll survive.
It makes more sense to not end up with Bezos wealth in the first place. Part with it as it reaches above your threshold, not after amassing some unspecified large multiplier.
I have zero doubt there are many of us who have no desire to own that much money to the detriment of our fellow human beings, but the point is there are also many people who do not think like that and want it all. They phantasise about being able to snub other people in an undetermined (and unlikely) future when they’re rich, even as they dislike being shunned now. That’s why (to the point of the original comment) there’s polarisation of opinion even thought rationally most people should be on the same side.
$500k is nowhere near enough to be 'safe'. One 'unfortunate event', a couple of bad years in the market or a few years of high inflation and you'll have eaten into your capital to a point where you'll either have to drastically change your lifestyle or watch your capital dwindle away long before you die.
Of course it would. If you had $500M instead of $500k then none of those things would affect you in the slightest. Inflation could run at 20% for a decade and you could lose 80% of your capital in a series of bad investments, and your day to day quality of life would still be just fine.
Amusingly this comment and replies are exactly the problem here.
You say 300k is the maximum anyone should have, people reply stating it's way too low. Ok, so what is the number, 600, 1M, 10M? Hint, we'll never agree and it's as clear as day to me.
Comments are also stating why 99.5% don't see why we take the "rich's" money. This thread is proof of why.
Oh! These statistics are not reliable. It depends on your asset allocation profile, time to entry, fees... Etc.
That's the claim we see online in general but that's probably not necessarily true.
Even backtesting using a moving-window average should show different figures.
> It’s around $300,000 that’s when you can get your 9% return
If you stay in good health, never have to purchase real estate or car then perhaps... but then you'll still have to live somewhere, commute somehow, and the life quality will be... of a poor person.
I imply you mean heterosexual relationship? No woman will create household with a man with comparable net worth. There is only short time span in life around secondary school and early university when it's possible and which most miss. I've never dated a woman with net worth even approaching mine. "what's mine is mine, man is the provider" - whether it's a call center lady in Romania, or a doctor lady in Switzerland. Now, how will capital gains on 300k pay for living in extreme luxury?
> I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...
Because people who think like they deserve a piece of private property of someone else, when they get to power, are never satisfied with going just after the richest. They eventually imprison the whole society in a dark, Soviet reality. Someone should introduce an economical concept for this.
Every single functional state-society there has ever been has included a "claim" on private property. Usually through taxes, tariffs, tribute, or something similar.
There is difference between expropriation and fair taxation. The problem as far as I can tell are tax loopholes that you can only abuse above some wealth threshold.
Oxfam carefully picked the dates they used to make the gain as large as possible. They used November 2023 compared to March 2020. What happened in March of 2020? The stock market dropped from 3380 (Feb 10) to 2304 (March 16). For the end date, if they had used Oct 30 instead of November, the S&P was at 4358. The Using the numbers I just gave, the gain would only be 29%, not 114%. That's a huge difference. (As you probably suspect, I also carefully picked the dates I used to minimize the gain.)
Yeah, Oxfam have been pushing a bunch of similar misleading claims using the same trick, such as arguing that people across the world lost vast amounts of pay during the pandemic even as the rich got richer by a vast amount and insinuating this was money that was somehow redistributed from one group to the other. Of course, this is just using the fact that share prices anticipate future changes in the economy to measure from close to the bottom of the pandemic-induced drop, which happened right around when the pandemic was first declared and it was just starting to affect people, and there is no actual mechanism by which money could be transferred in such a fashion. The money lost in pay was essentially destroyed; people didn't work, didn't produce things, and the real global economy of stuff available to purchase shrunk by if anything much more than that (due to furlough, unemployment, inputs other than labour, etc). The increase in wealth of the super-rich similarly was not transferred from anywhere, it was just the valuation of things they already owned going up due to the price shares were trading at increasing. This didn't mean an equal sum of money was somehow transferred into the stock market to do this.
I also see very innocuous reasons for selecting those dates: for instance if you want to show what happened "since COVID hit us" this is indeed the fully correct choice.
But irrespective of the dates chosen, even your carefully selected counter-data shows a 30% increase in wealth for the richest in about 2 1/2 years. Even those of us dabbling in stocks must find this increase mind-boggling, also as it continues a seemingly indefinite trend. The rich are getting richer, whether it's by 30% or 100% in 2 years it is damaging to our societies and means millions more continue to suffer as resources are used for private enrichment at a level that does not even bring these rich anything beyond vanity value.
> if you want to show what happened "since COVID hit us" this is indeed the fully correct choice.
It's not though. The stock market dropped 30% from Feb-March 2020, and then recovered it's Feb value by Aug 2020. The Feb-Aug "increase" is really a recovery.
One could certainly write about how the rich were not impacted nearly as much by the pandemic (and recovered faster) and many people have, but that's not the focus of this report.
Why though? Assuming the poorest in the world are getting better (Which they are) how is this damaging? Nobody clearly states this and the few studies I've found are easily rebutted.
The stock market dropped 30% from Feb-March 2020, and then recovered it's Feb value by Aug 2020. The Feb-Aug "increase" is really a recovery. Endpoints are always a little arbitrary but this was really egregious.
My own end-dates, picked for convenience rather than ideology[0]:
S&P500 Jan 2 2020 close: 3,257
S&P500 Jan 2 2024 close: 4,742
Increase: 1,485, which is 45% up from 2020, annualized that's ~9.7% (1.45^0.25). That's actually the historical norm.
There's a lot more in this report than just that one headline stat, but one does wonder about the reliability of everything else as well (and I can't fact-check everything). If we assume the worst they do is cherry-pick endpoints that means graphs could be trustworthy, but basically any numerical text statement (of which there are many) is unreliable.
[0] I guess I can't prove this but I picked the dates while only having an approximate idea of the numbers.
Correct me if I’m wrong, but they also seem to adjust for inflation when talking about the poor getting poorer “in real terms” but didn’t do the same for the rich people getting richer.
The Guardian is pretty left wing so they're not going to look too closely at the numbers if they say what they want them to say. These kind of articles always imply that it's some kind of zero sum game which irks me because that's so clearly not true.
Oxfam does PR but they are first and foremost a charity feeding and providing shelter and healthcare to millions around the world. Maybe the perspective they take is influenced.by their staff watching people suffer and die from preventable deaths each year.
I would love to hear someone sa similar thing about Coca Cola or Kellogg's "Oh they pump out all this propaganda".
Why is it not true? Sure stock value is more or less theoretical but this is not all stock. Any euro or dollar going towards Amazon or Tesla shareholders does not feed back into the local economy and cannot support roads, kindergartens and retirement homes.
It's clear that people who don't understand financial theory should not be making policy decisions. Wealth is not 0 sum. You use these words "roads, kindergartens and retirement homes" to elicit a emotional response to try and manipulate opinion. I see this often and it is frustrating, but it's what good politicians do when they can't use facts.
JUST AN EXAMPLE: Tesla is in the S&P 500. Teachers pension funds invest heavily in the market.
Yeah, the big headline claim of Forbes' billionaires list from 2023 at https://www.forbes.com/billionaires/ is that half the billionaires on the list lost wealth over the previous year and that in total they were worth less than a year ago. I don't think that's adjusted for inflation either, unlike claims about workers' pay getting worse. There was also a drop off in billionaires' wealth in 2020, which coincidentally is where a lot of claims about the rich getting richer from organisations like Oxfam and publications like the Guardian start measuring from.
Easy - just compare the size of the list from 2020-21 to 2023.
> 2,640 billionaires with a total net wealth of $12.2 trillion in 2023
> 2,668 billionaires with a total net wealth of $12.7 trillion in 2022
> 2,755 billionaires with a total net wealth of $13.1 trillion in 2021
That makes it what atleast 115 billionaires who lost wealth from 2021-23. There would be more with newer entrants.
A word about how Forbes calculate billionaires[1]. If a person is a brand and makes $100M or so a year, they are counted as a billionaire too.[2][3](from the same article).
If the stock goes up due to low interest rates, how does it makes it a wealth transfer? Snowflake was valued at 100x revenue at one point. Then market corrected and brought it down to say 10x. Whoever was holding it saw their wealth reduced by 10x. Do you think this wealth was transfered to someone else? To who?
Not quite my original point - to test that, you could do your comparision but comparing the number and total value of billionaires in 2020/2021, compared to 2019.
A lot of people will complain after reading articles like this one. It is quite hopeless to even try to get a discussion going about what could be a better system. As long as even small tweaks are out of the question, I guess it will only get worse in the future.
What do you mean, there are systems out there which effectively deal with any and all complaints common folks have against the rich, ie Switzerland and its wealth tax. Not too much to force everybody to avoid it, not too little to not matter when big sums come into play. Now why this well known approach haven't been implemented in your own country is a question for your own politicians and their donors.
Yet rich still come here to live or retire, despite lacking any serious personal tax-haven lure (in some places in some cases taxes are lower than average here, but for real tax havens just within Europe see Channel islands, Luxembourg, Malta, Cyprus, Netherland etc plus everything gets reported back to home countries in case of EU or US).
The Dutch have a wealth tax too. Actually, it is treated as an income tax: they say that all wealth will produces a typical “fictitious” gain of x% (I think 6%). So, they tax the fictitious gains at 30%. So, that leads to a 2% overall wealth tax.
So, if you have $1m in assets, they assume this money makes 6% a year (60k). On the fictitious gains of 60k, they then charge 30% tax (20k).
I haven’t checked the specific numbers above, but that’s the gist of it. It seems fair on principle, though I haven’t thought about it too much. Would that be a possibility in the states?
While living in the Netherlands I never considered the wealth tax fair.
The government is making an assumption that I am going to invest my money and that I invest it well enough to get an average return. Not everyone will went to invest their wealth in risky assets though, and not everyone who does invest it will do well.
Their justification for the tax rate is only that, a justification. In reality the wealth tax isn't directly tied to investment returns and serves only to disincentivize saving your wealth. It pushes people to invest their wealth in risky assets, meaning they effectively want all individuals to hold a pile of IOUs rather than actual wealth accrued over their lifetime.
The same can be said for a target inflation rate of 2-3%. Adding a wealth tax on top just turns the screws a bit more, more strongly pushing individuals to put most wealth they accrue right back into the slot machine.
How does this fictitious gain tax interact with the non-fictitious capital gains tax? In other words, if I were a rich man, and invested my assets gaining 5% as opposed to keeping them in a Scrooge McDuck vault, would I be taxed at 30% of fictitious 6% + 30% of real 5% i.e. effectively at 66% of my capital gains, or only at the "fictitious" income, or only at the real capital gains?
No, your actual gain in capital would not be taxed. The only thing that is being taxed is the "fictitious" gain on the monetary value of your capital at a certain date (peildatum).
Everyone agrees that this system is dumb as shit, but our tax department is too incompetent to implement a sane capital gain tax like they have in, for example. Australia.
There’s no real capital gains. You’d always be taxed the fictitious amount, whether or not you made more or less, or even lost money. But they are planning to change it because it was unfair to people who just put their wealth in their checking account and were being taxed as if they invested it.
> wealth will produces a typical “fictitious” gain of x% (I think 6%). So, they tax the fictitious gains at 30%. So, that leads to a 2% overall wealth tax.
I simply don't believe rich Dutch are paying this tax on their price bloated real estate in Netherlands, Spain, Dubai, Caribbean Islands and wherever. This would be enourmous fortunes in annual wealth tax.
First off, it seems you believe I'm from the US? I'm not, and we do have wealth tax where I live.
Secondly, taking a system - let's call it X - and add some more tax to it (X + tax) is still X. That was the whole point of my argument, which you seem to reinforce: Any talk about a different system is near impossible online. Either people start screaming obscenities or try to tweak a system with tweaks that has already been tried and failed to change the world in any meaningful way. Does it work in Switzerland? It seems you believe so, but how does it change the world for the better? In my opinion, it is a completely useless change from the big perspective. The world doesn't become measurably better because of it. Rather, it is at best at tiny tweak that help to keep a completely broken system in place.
Wealth taxes have all kinds of major issues. Many countries have attempted them, such as Sweden, then reversed them, because of adverse outcomes. Primarily, wealth flight. The wealthy can live wherever they want. They often pick Switzerland. In a perfect world we would have an international wealth tax agreement, which would enforce the same wealth tax no matter where the wealthy fled. Because we don't have that, wealth taxes usually result in adverse outcomes.
I think land value tax is much better, and solves a number of other structural economic issues at the same time.
Switzerland? "effectively deal with any and all complaints common folks have against the rich"? That's laughable. Switzerland is a known tax haven for the wealthy through legit and non-legit means. Has been for centuries.
A majority of the population thinks wealth inequality in Switzerland is too high
I'd say the way the rich in Switzerland have effectively managed it, is to keep their mouth shut. There are plenty of very wealthy people who never show up on the Forbes list because their money isn't new and it isn't public.
> There are plenty of very wealthy people who never show up on the Forbes list because their money isn't new and it isn't public.
This is a very important fact that is lost on most people. When people hate on Bezos, Gates and Musk for their wealth, it's because it is all based on stock wealth that is transparent. They don't have this cash sitting in a bank.
However, there are undoubtably people with much more money than these 3 with assets so hidden governments can barely keep tabs on their actual wealth.
One thing I’m curious about that these articles never go into: what is the eventual physical utility of all this stored wealth? As an analogy, if money is like potential energy when kept in the form of financial instruments and real estate, what is its first eventual “kinetic” form after belonging to a billionaire?
For example, if you were to trace all of Rockefeller’s fortune after his death, I would imagine most of it initially went to his heirs. But eventually, at least part of the wealth diffused out of the bloodline, and if you were to go through and account for the physical utility of that money, what would it look like? Labor to create superyachts and exotic sports cars? New buildings on college campuses? Cancer research?
It would be nice if we had a system that quantifies this somehow, because in addition to the problems created by wealth inequality, I would argue that there are sufficiently many inefficiencies in most governmental bureaucracies as to result in a similarly poor usage of money as a billionaire who spends some of their wealth to construct a mansion on a private island.
To play devil’s advocate, suppose we have a hypothetical billionaire that never spends any of their money on luxury or excess but rather devotes most of their time to figuring out how to use their wealth in a way that extracts maximum humanitarian value from it. You could argue that what constitutes “humanitarian value” is totally subjective and that decisions concerning such a large amount of money shouldn’t be left to one person. But on the flip side, would you say that most governments succeed at representing the average person’s desire for utilizing tax revenue in a way that optimally benefits society? Do they accomplish this efficiently?
I don’t know the answer and don’t really have a strong opinion either way without further research, but sometimes I wonder if despite the problems they cause, billionaires sort of represent the “exploration” part of “exploration vs exploitation” in reinforcement learning, as they slightly destabilize a societal system that might otherwise be stuck in a rut or a local optimum.
I think your hunch is correct very unequal distribution of money leads to economic inefficiency since the money is hoarded (or put into financial instruments or luxurious real estate) and does not trickle to the rest of the economy. Even if on average things are fine (they're not really), if the average citizen is getting left behind you're slowly eroding the middle class and democracy.
All 5 of the billionaires in the article have almost all their wealth in shares of companies, usually ones they run.
Is this hoarding? Like how is zuckerberg hoarding by owning shares in the company he founded and runs?
What exactly should he do? Sell all his shares? What happens then? What does Mark zuckerberg do with 100bn in cash? Do you tax it? What does the government do with 100bn in tax revenue? Would they spend it better than Zuckerberg?
Also - the people who bought the shares from Zuckerberg, what do they do? They just paid 100bn for shares in facebook, are they hoarders now? Are they more evil or less evil than zuckerberg for hoarding?
I just don't understand the conversation around these topics. What exactly should we do, apart from complaining about entepreneurs?
These 5 people have approx $1trn in wealth, do you know how long it would take the US government to spend that? 2 months. Do you think congress is actually competent in spending that money? Can they even decide how to spend it? And it's a one off, remember that!
Would that actually make a different to anything? 2 months of larger spending?
Can someone please explain to me what exactly we should be doing? Like exactly? "wealth tax" has serious consequences, how do you deal with those? Are there examples in history where this actually worked? Like actually, taking 50% of people's wealth, and redistributing it?
What happens once these 5 billionaires just leave the USA and go live in new zealand? Or Singapore, or whatever? What happens if the richest 1000 people in the USA leave?
What happens to all the 18 year old entreprneurs who are going to build the next big companies? Will they stay in the USA?
Please, someone, explain to me how this works in practice.
> I don't think they'd spend it on macadamia nuts for wagyu cows, that's for sure.
I'm not sure you want to cherrypick this way. I can think of A LOT of stupid things government spends money on, and that's over senators, congresspeople, and lots of government employees.
I don't think you should play this game. Zuckerberg and facebook's personal silly spending is most likely WAY below the stupid things government spends on.
> senators, congresspeople, and lots of government employees.
I don't think you want to cherry-pick this way either.
A government does infrastructure, military (talk about a moneysink...), space exploration, science, halthcare to some level.
Imagine you found a bug in your codebase. For the sake of the example, let's say that every 100th uploaded file gets deleted forever.
The questions you are posing are mostly the equivalent of asking "but what if someone was using this feature as their Recycling bin? How will the time spent fixing it fit within the project's budget? And what if the developer who committed that code leaves the company because he doesn't like being told he writes faulty code?"
The answer to those questions, of course, is "somehow". And maybe not all hours will be properly budgeted. But any mildly reasonable efforts towards fixing the obvious problem that's causing real harm to your users right now is better than opening a committee to discuss a framework for fixing integrity-related bugs in a proactive manner.
> What does the government do with 100bn in tax revenue? Would they spend it better than Zuckerberg?
Are you asking this seriously? As dysfunctional as you believe your government is, they still provide running water, roads, police, hospitals, public schools. Would Zuckerberg take care of all that from the goodness of his heart? Maybe and maybe not.
And as for your question yes - shares can be taxed just like other types of wealth can be taxed.
The problem is that money is power if you want to define power as "the ability to make things happen"
So the only fact of having the ability to do something alters a lot of financial and social interactions and this depends too on the public perception of the person
Think Gates and Musk, I don't think there is a way to quantify that
> You could argue that what constitutes “humanitarian value” is totally subjective and that decisions concerning such a large amount of money shouldn’t be left to one person. But on the flip side, would you say that most governments actually succeed at representing the average person’s desire for utilizing tax revenue in a way that optimally benefits society? Do they accomplish this efficiently?
Humanitarian value is also quite a broad range. Is someone a worse person for devoting themselves to world hunger while ignoring cancer research? I would say of course not.
As for the question of one person vs a nominally democratically elected government, the western liberal perspective is that government should be by the people for the people, from which it kind of follows that a government that's elected by the people is a better representation of the will of the people than one person who answers to no one but themselves (this also goes for multinational corporations which also effectively answer to no one - yes, they may get fined in certain jurisdictions, but they can navigate where they do business to carve out the fines they'll accept and those they won't).
Where I feel we got it wrong in modern society, especially in the US, is that the centralization of power in a single national government has led to an impossible problem of balancing the competing interests of a vastly diverse country (you see this a bit in the EU as well, where the interests of western and central European countries can be at odds at times, but the EU is more loosely bound than the US). Distributing more of that power to the states/counties/cities would enable decision-making better-tailored to a more comprehensible demographic. It also gives more people the opportunity to participate in governing themselves (that "by the people" part). Only so many people can sit in the Senate, but there are a -lot- of city council positions across the country.
> what is the eventual physical utility of all this stored wealth? As an analogy, if money is like potential energy when kept in the form of financial instruments and real estate, what is its first eventual “kinetic” form after belonging to a billionaire?
Money is just a proxy for power (as are things like title to real estate, equity ownership in a business, board seats, etc).
The utility is just that, the power to do something. Obviously, greatly depends on the one wielding it, but also on the environment (status of civilization, courts, relationships, orderly societies, wars, availability of resources).
Note that all of these abstractions for power mean nothing if other people do not respect them. I take that to mean “wealth”, in a way, is a measure of how orderly a society (or world) is, regardless of how unfairly distributed it is.
the equivalence between money and energy or any other physical quantity is wrong. Money can be literally destroyed in a second, without leaving any trace.
The vast majority of money goes nowhere, it loses value because of inflation, or just pumps up price of stuff that is used for living, such as housing, without "producing" absolutely nothing.
> Money can be literally destroyed in a second, without leaving any trace.
I disagree. Money (a scalar value) isn’t any more real than energy (a scalar value; see Noether’s theorem). Both money and energy are accounting devices. Money cannot disappear since it’s not physical. A specific amount of money and its corresponding form (e.g., stocks, 401k, treasury notes) represent a probability that something can be obtained in the future from someone else, conditioned on the social convention that a few numbers change across a few databases.
If you burn dollar bills or delete the private key to a Bitcoin wallet, you haven’t changed humanity’s capability to build yachts or conduct medical research; you’ve only changed who gets to influence those decisions.
It's not. Money (as in paper or digits) has "intrinsically" no value. It's a sort of game of chairs (and accounting) that society is living with because we have no alternative. It does seem that it has potential energy because society has decided so: People will recognize your money with their potential energy. In a sense, inflation is people distrust in the system. Hyper-inflation is people refusing to work with the system.
> what is the eventual physical utility of all this stored wealth?
You can't store wealth in money or bonds. If you want to store real wealth, you should try storing useful everyday things like water. But then you'll have storage costs and redistribution issues. If you store phones, they'll quickly lose value. That's why people use money despite the government continuously debasing it.
> I would argue that there are sufficiently many inefficiencies in most governmental bureaucracies as to result in a similarly poor usage of money as a billionaire who spends some of their wealth to construct a mansion on a private island.
Exactly. A billionaire that is living in a studio and cooking his food is exerting the same tax on society of a Starbucks barista. On the other hand, a millionaire with a yacht, is very taxing on society. If you have a housing shortage, it makes more sense for people to build houses for themselves and not yachts.
> I don’t know the answer and don’t really have a strong opinion either way without further research
No one does, really. No one understands this at the micro-level as the economy is an emergent phenomena. The Fed just increase/decrease supply; and is basing its model on the idea that 2% inflation is good (and deflation is bad!).
> but sometimes I wonder if despite the problems they cause, billionaires sort of represent the “exploration” part of “exploration vs exploitation” in reinforcement learning, as they slightly destabilize a societal system that might otherwise be stuck in a rut or a local optimum.
The system will swing. People having equal wealth does not mean prosperity and growth. They might just be stuck there. In this case, it makes sense to throw money at someone (or anyone) who is willing to innovate among the herd.
> To play devil’s advocate, suppose we have a hypothetical billionaire that never spends any of their money on luxury or excess but rather devotes most of their time to figuring out how to use their wealth in a way that extracts maximum humanitarian value from it. You could argue that what constitutes “humanitarian value” is totally subjective and that decisions concerning such a large amount of money shouldn’t be left to one person. But on the flip side, would you say that governments actually succeed at representing the average person’s desire for utilizing tax revenue in a way that optimally benefits society? Do they accomplish this efficiently?
This sounds like Bill Gates. He's chosen humanitarian endeavours that he wants to focus on. I believe its good to have someone who can deploy significant capital on multi-decade projects. Bill Gates doesn't seem like the person who will give up eradicating polio just because he didn't get it done in a term.
However, on the flip side you have Elon Musk buying an influential social media platform...
> This sounds like Bill Gates. He's chosen humanitarian endeavours that he wants to focus on. I believe its good to have someone who can deploy significant capital on multi-decade projects.
We could consider the counterfactual situation. If this money went to the U.S. government instead of Bill Gates, would it have accomplished more for humanity than from his efforts as an individual?
And to your point, even if this is the case for one billionaire, how does the outcome change if you aggregate the humanitarian utility of wealth across all billionaires vs the totality of that wealth going to various governments?
> If this money went to the U.S. government instead of Bill Gates, would it have accomplished more for humanity than from his efforts as an individual?
BillG has ~120B net worth and the US spends ~6.5 trillion/year (in 2022). So it would cover just under 2% of the US yearly budget. Doesn't seem very significant considering that would be a one-time payment.
Articles like these always follow a predictable script:
> Compiled using data from the research company Wealth X and Forbes, it says the combined wealth of the top five richest people in the world have increased by $464bn, or 114%. Over the same period, the total wealth of the poorest 4.77 billion people – making up 60% of the world population – has declined by 0.2% in real terms.
The keyword here is "in real terms" which is doing most of the lifting here. I know not using this term would not realistically make much of a difference, but it changes the hyperbole used in the article.
Then there is this:
> global income inequality was now comparable with that of South Africa, the country with the highest inequality in the world.
South Africa has a GINI index of 63%. It's hard to define range of comparable when Brazil had a GINI index of 53%.
Outlets like The Guardian do more harm to these causes because of such uncritical and clickbait reporting.
I don't know what the specific solution is, but it is a polarizing topic.
I've read a lot of conservative opinions on this, from scholars to your average forum users, and have spoken with people IRL about this topic - and one thing that pops up again and again, is that many conservatives don't see wealth inequality as a problem.
The main argument is that the poor today have it better than N years ago, so the system must be working. And taxing the rich just stems from jealousy. Sprinkled in with just-world hypothesis.
EDIT: My observation is that poor people have easier access to debt today, compared to 30+ year ago. When I grew up - if you were broke, you were broke. You called family or friends, went to the pawn shop, or whatever - banks wouldn't issue you a credit card.
When I went to college, banks were literally throwing credit cards at everyone and their dog. I had zero income, but still got a CC with $5k limit. Never actually used it, but they it took 2 minutes to fill out the form (at the airport), and I got one in the mail a couple of weeks later.
If it was that easy to get a CC, then I guess poor people must have managed to bankroll themselves through bad times, as long as they managed to meet the minimum payments, or get new cards to cover the old ones.
The problem with the poor surviving entirely on debt is that it creates the illusion of stability, so if a stranger looks at their life from the outside they go 'well, Bob's doing fine, he has a car and an apartment and can eat 2-3 times a day.' But then Bob gets sick just enough exactly once, and he gets fired because his employer isn't legally mandated to give him enough sick days or keep him around, and then he gets evicted because he has no savings, and then his car gets repossessed because he can't make the payments without a job, and then he can't get a new job because he needs a car to drive to work from the homeless shelter. And Bob still has 4-5 digits in credit card debt.
Even worse still if he ends up sick enough to be hospitalized. Then he's probably got 5-7 digits worth of medical debts on top of being homeless and jobless.
The problem isn't (IMO) the standard of living for america's poor, it's the precarity. At any moment even a small accident could ruin your life if you're poor in this country.
I don't see the issue with inequality in theory. As long as democracy remains robust and free of influence from the wealthy, and the poor continue to increase in wealth in aggregate. In practise I feel that the wealthy have been exerting undue influence in politics. This, however, can be addressed with targeted policies. It doesn't require restructuring society.
> many conservatives don't see wealth inequality as a problem
Conservatives have never been known for sympathy with the poor. It's basically their schtick: away with this democratic nonsense. That only gives power to the rabble. Back to the glory days of (fighting) the empire!
What I don't get is your debt/CC anecdote. If you cover old debts by getting new ones, you're enlarging your debt (I don't think there's ever been a negative interest on personal debt in the period/society you refer to). That doesn't end well, until the system, which usually involves the government, as the market doesn't give a damn, manages to change your fortunes.
Again, it was just an anecdote. If you tag on student debt, health debt, auto debt, etc. - how many people out there are living in perpetual debt - and not the good kind of debt (mortgage)?
Say you're a person that's juggling 2-3 jobs, making $30k-$40k/year in total. No job security, of course, and you lose one of those jobs. You're always living on the edge, and one month without salary would mean crisis.
Luckily you have a credit card, and can use it to cover all your bills for that month.
Next month work picks up again, and you're back to your normal salary. But now you have to pay back the CC debt, which you'll have to do over 6-12 months - because you don't have enough savings to pay it all off at once.
Now add 2-3 other sources of debt, and it is easy to see that some people are trapped in debt. Their balance stays the same, or gets paid off very, very slow. Until the next crisis rolls around.
"Off-Topic: Most stories about politics ... unless they're evidence of some interesting new phenomenon ... If they'd cover it on TV news, it's probably off-topic."
I feel like it needs an explicit rule for "non-tech articles written, propaganda-lite style, to elicit rightful indignation"
In the past this sort of trajectory has led to bloody revolution. No one should discount that possibility. The tools to prevent it are, as before in the hands of the rich. As before they will probably do nothing.
What I dislike about the current discourse in the American politics is the constant chatter about "reducing expenses". We have $1.7T deficit in 2023, so we would have to find cuts to account for that even if we just wanted to break even. It's nearly impossible.
What about substantially expanding taxation to increase the federal income and fund more socially-responsible programs such as maternal care or child care. So the question is, who is going to pay a bit more? Random Joe who makes $100k/year or someone who sits on >$50B wealth?
Looking at the top 10 list it's dominated by American tech billionaires. Weirdly Steve Ballmer is #10, even though he was "only" CEO of Microsoft, not the founder. So much for the argument that the wealth comes from innovation and risk taking that I sometimes hear.
We can dunk on Ballmer all we want, but he was an early employee and he did negotiate for 10% of equity and profits, at a time when software was not an industry. If that's not taking risks...
I hate this world. I hate that this is what all this has led up to. We've accomplished at lot of science, empowering tech, and social justice through collective effort, but it hasn't been enough.
I hope for a new destabilizing tech that happens so fast and so rapidly, that those at the top will have no idea how to corner the markets emerging from it, and that the tech is so groundbreaking that it makes the existence of these vampires wholly irrelevant.
This is not a matter of technology. Any new technology will just get coopted by the rich and powerful. That plucky little startup tasked with making the world a better place will get bought, merged, hedged, stripped, and morphed until it is just (part of) another megacorp.
This is a bizarre take. Compared to the past, the average person has more rights and more ability to increase wealth than ever before. Try being a sharecropper farmer. Or just plain not the nobility.
Odd one would "hate this world" after so much progress has been made.
Don't worry, you will grow out of it (thats not patronizing, just an observation on both me and many around me over decades). Life is complex, way more complex than you think it is and often a least-bad solution is used and stays around.
All you have to keep remembering is that whatever solution to the problem is, it has to work reliably long term on its own on real lazy and greedy folks out there, not some handwavy wishful statements without much substance and utterly unrealistic expectations.
Capitalism is fine. You just need to add a bit of inescapable wealth tax or similar solid mechanism. Which is unrealistic in US, hence the inevitable direction its heading towards.
It's a tool, not a reason. If there were no fiat money, there would be other tools. Greed is the reason. If you somehow removed all currently rich people, in 20-30 years you would have another batch of super rich.
Greed is just a proxy word for human nature. Humans are the reason.
Now you might read this and think "This isn't true, I'm not greedy". I'm guessing 99.99% of people reading this thread have more money and food than the average human on earth. Statistically if you reading this you are greedy relative to the average human.
People won't stop buying and/or using these products/services, because exactly what you said:
> They became rich because they built something valuable that a lot of people give them $$$ for. We the population made them rich.
There isn't many EV cars <$40k that can have >250mi range. There aren't many other powerful social networks as Facebook that can let people connect with their friends and families.
An average Joe doesn't care about Elon nor Zuckerberg. Sure, they probably heard about Elon and his recent shenanigans, but it isn't much of a factor when purchasing a good/service.
As a result, we can't rely on just society regulating wealth.
No, Elon is rich because he inherited $250 billion dollars from his parents who made the money off of slavery. /s
I had a friend of mine who owns two teslas tell me this at a bar last month, in complete seriousness. I guess it is the zeitgeist of the internet right now.
Just saw yesterday an episode from TV show Billions where billionaire Mike Prince asked prosecutor Chuck Rhoades if he thinks Billionaires are some rotten individuals who did very bad things to accomplish their fortunes. Chuck replays: "You've said it!"
It's kind of short sighted to blame someone's misfortune on someone else fortune.
As I stand there next to the river, atop a mountain of lifejackets so numerous I need to employ people just to count them - ten thousand lifetimes worth, I see someone floating past in the water struggling and gasping as they thrash trying to stay afloat. They scream for help, although I can't hear them that well because I'm so high up on this pile and the water keeps getting in their mouth.
I am no longer interested in them and look away. As they drift out of earshot I hear them shout at me. How rude! I have done nothing to them.
Corporations in a lot of ways are just diffusions of responsibility. They are also diffusions of culpability.
I like to think that the best way to determine culpability for crimes/misdeeds of a corporation is by pay scale, including total benefits. So the CEO earning 200x the common worker at a company bears 200x the culpability of a worker.
Billionaires have amassed an astounding quantity of wealth. I'd be very interested to see how much of that wealth was "earned" by actions, how much was grown based purely off capital investments, and how much in total that can trace its roots to dirty money (earned by underpaying, skirting regulations, negative externalities, other questionably legal activity). Do they have any responsibility for that?
> I like to think that the best way to determine culpability for crimes/misdeeds of a corporation is by pay scale, including total benefits. So the CEO earning 200x the common worker at a company bears 200x the culpability of a worker.
Then you should also argue that the CEO gets 200x the credit for all the good things companies does, and then they are clearly in the green and a massive benefit to society.
> Corporations in a lot of ways are just diffusions of responsibility. They are also diffusions of culpability.
So are governments, just that governments are way larger and therefore way better at hiding things. The biggest pro for governments is that they are less efficient, so they are better at not making things worse in fields where private corporations would try to make things worse as efficiently as possible like healthcare or education. You need some extremely hardworking and creative people to come up with the American healthcare system, a government would have a hard time inventing something like that.
We need to tackle generational wealth. Not by outright taxing it but force an action on inactive or speculative capital.
Democracy is being eroded if an actual power can be obtained through accumulating wealth.
I dont want billionaires to change the world. I want elected people to do that.
Show me 1 single truly good honest person who managed to get through all the crap of local and state politics to get into party and get elected... if you think you know some, you just don't know them well enough.
There are no nice people in politics anywhere near real power, just broken, messed up, sociopaths and so on. Why do you think these folks would do anyhow better than rich when deciding common good? Also, every successful politician has somebody powerful and rich behind them who groomed them into position they have now, its not like they get elected and decide/vote from that point on based on their own moral values, thats not how real life looks like.
> every successful politician has somebody powerful and rich behind them who groomed them into position they have now, its not like they get elected and decide/vote from that point on based on their own moral values
That sounds like an argument for public financing of political campaigns and the elimination of private contributions.
How are political campaign contributions not bribery? For some reason, we allow and have legalized bribery in this area.
All of the problems you point out are entirely related to money in politics though. The gp said "Democracy is being eroded if an actual power can be obtained through accumulating wealth" - that's the point here. Politicians are bought, elections are bought.
I dunno, I think billionaires are doing a pretty good job changing the world (thinking of the Bill & Melinda Gates Foundation and OpenPhil as the best examples).
Notice they said "a tax on net wealth".
That's just plain evil.
You can't tax paper gains!
Almost all of these billionaires have their holdings in stock. It's theoretical money, not cash.
If you own a house, and the "value" of your house goes up 5%, should you be taxed on that gain?
Clearly not. It's not money you actually have. How are you going to raise that money every year? Borrow? You're already in debt. And these fools already want to tax you on your "income" from borrowing as well.
There's a reason all moral societies only tax realized gains.
Also all these haters of wealth and capitalism are sorely lacking in math. Not even math, just arithmetic!
If you forcibly took ALL the billionaires money ( which is what these haters REALLY want), about $12.2Trillion and gave it to the poor half (4.4 Billion people) everyone gets about $2,700. That's it. And one time only!!
Woo hoo! Congrats! World poverty and lifestyle solved! NOT!
Meanwhile, for the sake of your idiot ideological revenge, all the companies and employees and economic drive and sub industries and localities driven by the Billionaire's success amd enterprises are now ruined. Millions of people have now lost their jobs. Also no one will attempt it again. Great solution. #mathlessfools!
In Britain, this fictional 22B per year over 65 Million people is a nice whopping 338 pounds per person. Again: problems solved. Not!
And the rich, who drive economies and employ millions will definitely flee somewhere that doesn't perpetrate these stupid hateful laws. This is all about people thinking it's moral and virtuous to say "Sorry, you have too much! We've got to limit your success and take from you" #handicappergeneral #Marxism #famine
It comes down to this: #killthegoose
Why exactly do we multiply made up numbers and then get our knickers in a twist?
$Current_Stock_price * #Number_of_Shares != Actual Wealth by owner of those shares.
Like take "Ol'Muskie", if we are to believe the linked article above that "His fortune rose by $6 billion during December 2023", then are we to also believe he actually lost 200 BILLION BENJAMINS at the end of 2022?
He neither lost the money then, neither gained it now. It was just paper gains and paper losses.
These are not Saudi princes or whatever, the "wealth" they have is meaningless. They are wealthy, absurdly so, but the exact number (and ranking on some list) are not worth bothering about.
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I fully understand the need to tax rich individuals, but that requires adjustment to the tax code... an adjustment that would most likely be most fiercely fought against; not only by these dunderheads, but by the far less visible but the far more populous (and powerful) group of low-billionaires and multi-millionaires.
I have long maintained[1] that the next-tier rich people have a far more secretive and negative effect per dollar; the ~10 or so tippy-top rich are just far too visible to escape the scrutiny in ways the next group does. Just my personal observation, I could be wrong.
Like most people, the "loan against shares" in lieu of salary really grates at me. I think there needs to be some sort of "deemed salary" type thing, but it needs to have a carve out for people who truly are taking a loan against their assets as collateral.
No idea what qualification for a "true loan" would be most fair, but here is an idea...
There is an growing consensus that if you are a billionaire (or whatever wealth level is considered appropriate), then any shares you take a loan against, should be considered "sold" for tax purposes, and any gains should be realised and taxed... but if they start "repaying" the "loan", then they can deduct that amount from their future taxes.
I think this might help offset some of the tax burden from the salaried class (also make things feel more fair), but I would love to hear if there are some flaws in this plan.
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but we need to stop faffing over these "paper wealth" lists, that only re-direct our energies from where they need to be, and give us false targets to focus on.
Think about the fact that in italy we still have people saying that neoliberalism is the way to go, that we need to lower taxes and workers rights because wealth will trickle down, that we need a modern economic framework to facilitate investment
I don't know why you are being downvoted, but, for what it is worth, neoliberal policies are at the core of the European Union and the West in general. Everybody is aware of their failure, at least since 2007/2008, though nobody is able to propose any alternative, except populistic fluff...
In US politics, I like also many of the proposals from Alexandria Ocasio-Cortez. There are some radical-enough but still doable proposals, but what is fashionable everywhere nowadays is to just throw the blame all problems to "the foreigner" or "the immigrant". I really don't see any way out of the current mess (climate change above all) rather than a world war. I hope I'm wrong.
Billionaires like Warren Buffet (https://thehill.com/policy/finance/99096-warren-buffett-incr...) and others have argued to raise taxes on the wealthy - he and other supporters are anyways donating most of their wealth, not leave it as inheritance, so it doesn't make much of a difference to them personally, but having a rule that applies to all the other billionaires as well would obviously bring in much more funding than their own.
> Just imagine what £22bn a year invested in public services and infrastructure could pay for
the problem is most public services are hilariously inept. the bill and melinda gates foundation did more for eradicating malaria than USAID did since it's inception...
anduril has done more for military defense per $ than northrop, lockheed, and raytheon...
private insurance is infinitely more effective and cheaper than obamacare...
its silly to say "oh they should be taxed more", because then the $$ is in the most inept institutions.
a better solution would be to enforce some kind of philanthropic organization. say elon musk needs to donate 10% of his capital gains to whichever 501c3 he wants, and it can be his own... that is affter all what vanderbilt, rockafeler and carnegie did.
If you read the first line of OP's article, it says "The world’s five richest men have more than doubled their fortunes to $869bn (£681.5bn) *since 2020*" (emphasis mine).
Last time I checked, there was something big happening globally since 2020.
You're not even looking at the right data. This is like if someone posted an article in 1960 about growth of nuclear weapons and you posted a chart showing that there were no nuclear weapons before 1945.
Inequalities are increasing, but absolute poverty is diminishing year-over-year (and not just only extreme poverty).
The article almost exclusively talks about inequalities rather than absolute poverty. If you look at page 37 of the report[1] that you can find in the sources of the report that this article uses as a source you will find that global poverty (not just extreme poverty!) has consistently declined year over year except in 2022 where the preliminary estimations show that it possibly declined by 0.9% — which is, by the way, half the 1.8% positive growth of 2021!
The article takes an unfounded alarming stance by making it seem like it has been degrading more and more and that the rich always get more rich whereas the poor always get poorer. That's incorrect, and for all I know 2022 is just an exceptionally bad year for non-rich people due to the consequent layoffs in the middle class — there is no reason as far as I see that the trend will stay in this direction.
This graph is about "extreme poverty", that is people living with less than $2.15 a day, per UN definition. It's possible to have less "extremely poor" and more "poor" people at the same time.
Never understood why inequality is a problem. At least as long as people can move geographically and/or law enforcement does a good job.
There is a problem of rich not spending enough, but it is a consequence of "fighting inequality" which results in them being shy of spending, and while it is indeed dangerous long-term, that is a purely social/psychological problem which can be solved without any "physical" economic changes.
I'm American. I've been in two economic classes: dirt poor (as in, more or less homeless, when I was a child, for a bit) and now on the low end of rich (net worth in the mid 7 figure range). I've seen both sides of this inequality, in America, personally. And new social circles that have opened up have given me something of a first-hand view of the "truly" rich as well.
I can list numerous ways that it's a problem, if you like. Here's one to start: "as long as people can move geographically" isn't applicable to those on the lower end of the economic scale. Your comment represents something generalizable about the rich, too: they are completely oblivious to just how hard and draining (physically, mentally, and emotionally) it is to be impoverished. I shudder to think what it's like for the poor in poorer countries.
> isn't applicable to those on the lower end of the economic scale.
Why not? Immigrants come here with $0. My wife came to America with $50 and didn't speak any english. Most of America was founded on poor groups and families taking all their possessions with no jobs and creating a new life.
Is it easy, hell no. But sure beats staying in the same place and complaining about other people.
There are still cities in the US that will give you land and a house if you just stay and live there. Living in NYC and SF is not a right.
> Research has generally linked economic inequality to political and social instability, including revolution, democratic breakdown and civil conflict.[5][10][11][12] Research suggests that greater inequality hinders economic growth and macroeconomic stability, and that land and human capital inequality reduce growth more than inequality of income.[5][13] Inequality is at the center stage of economic policy debate across the globe, as government tax and spending policies have significant effects on income distribution.[5] In advanced economies, taxes and transfers decrease income inequality by one-third, with most of this being achieved via public social spending (such as pensions and family benefits).[5] While the "optimum" amount of economic inequality is widely debated, there is a near-universal belief that complete economic equality (Gini of zero) would be undesirable and unachieveable.[14]: 1
Here is a simple yardstick to find out what optimal Gini index is: same as Gini index of tinder likes. Because that's an objective rating of how intrinsically unequal people really are.
Income distribution in all developed countries is far cry from Tinder distribution. Interestingly, asset distribution is somewhere close. Maybe because it has less social impact and is thus subject to much less political manipulation.
Imagine a future where it is impossible for the poor classes to purchase a home, because some trillion dollar real-estate funds have captured the entire marked.
That's a problem of regulation/NIMBYsm right? Because if someone has 'captured' entire market, it means no one is living in those houses, they are just purchased and locked up. Meaning, they don't consume any resources, don't result in water, electricity networks etc. being strained, and don't result in extra congestion. Meaning, there's no problem to just build more. Unless regulations/zoning prevent it. So fight zoning, not "inequality".
Purchase rental units, jack up the price, see what the pain threshold for your tenants is. It is expensive to relocate, especially if you're poor.
Some of these real-estate investment companies own hundreds of thousands of rental units. They purchase swaths of blocks, all over the world, and do nothing but increase the price. Usually they just purchase parts, or entire portfolios off smaller companies.
The goal is monopoly. And it has worked well of the past decades with low/zero interest rate policy.
nop, corpos acquire a lot of houses in the market and rent them. They can pay more for the houses since their scope of investment (years to break even) is longer than your average mens' lifespan. rent goes up. a smaller and smaller percentage of population can buy houses because there are fewer on the market. rent keeps everyone poor.
This is happening now, in every major developed country
Unless you live in a fortress you should be afraid of inequality worsening, no matter which side of it you're on. Rising inequality leads to societal tension and human misery.
The problem is the asset bubble and inflation eroding normal people’s savings and wages. Leading to wealth transfer. Inequality isn’t a problem in itself is zero sum thinking
Inequality decreases inflation because rich don't spend much of their earnings, unlike middle class and especially poor.
See: decade of QE -> no inflation; some modest amounts of cash given to the poor as covid checks -> massive inflation.
THAT is the only problem with inequality i can see: it reduces economic growth because it decreases spending in the economy. If we can somehow trick the rich into spending same proportion of their income as the middle class does (that is, simply explain them that there's nothing shameful about megayachts/private jets/private armies in the 3rd world/crazy longshot startups/islands full of hookers), things will get back in balance.
If somebody else has power over me-- whether it's because I'm dependent on some resource he owns or because he has political influence, it means I don't have power over myself, so his power must be destroyed.
The only problem is how to do it cleanly and in a way that doesn't unnecessarily disturb the economy.
The path I'm most interested in is by instituting mandatory savings in order to reduce competition among workers for goods.
If you throw an object towards space from Earth, it will always fall back to Earth, unless you throw it with enough speed (IIRC something close to 11km/s), with which it will eventually "escape" Earth's gravity.
I have a feeling that money follow the same rule: If you have some money but below a certain level, and don't do anything, that amount of money will be eaten by you, taxes, and inflation. But if you have enough money, current rates mean that taxes & inflation will erode your capital slower than the interest you'll earn from that capital alone, and so money is inevitably growing on itself.
As a society, we should prevent "escape capital" to be a thing.
I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...