You said Voldemort's name! Now he will surely haunt us.
In any case, your objective function dramatically changes when you own things for a living rather than work for a living. Many people would call someone with a 1MM retirement portfolio rich, but 4% returns on a 1MM portfolio is $40k/yr and probably isn't going to replace a job, not for someone who managed to amass 1MM in the first place. However, 4% returns on a 10MM portfolio is $400k/yr, and it might. 4% on $100MM is $4MM/yr, and it probably will. So the composition of incentives switches from worker-like to owner-like somewhere around $10MM net worth, and this is worth noting.
If you ever saw old timey movies from the 50s or 60s where "millionaire" was said with reverence, note that $1MM in 60s dollars is $10MM in 2024 dollars. They were aware of the class divide back then in a way that people generally are not today.
I'm a linguistic descriptivist, not a prescriptivist. This is how I think most use the term, even if there's a more useful term of art in economics or in politics.
> You said Voldemort's name! Now he will surely haunt us
One might even say that a spectre is haunting Europe… ;P
> So the composition of incentives switches from worker-like to owner-like somewhere around $10MM net worth, and this is worth noting.
In a sense, sure. This is also close to what I'm told is the actuarial value of a human life in the USA, and that's not a mere coincidence.
But also, at that level you most likely only got the money by having a very different objective function to begin with, as it comes from starting a successful business. (Other options are "inherit" and "win big on lottery" and both groups have differently bad reputations to the kind of bad reputation that successful businesses people get; I can't possibly comment how accurate any of these reputations are).
Sure, and I see the wisdom in it: everyone gains 50 IQ points when they place a bet, so private ownership of the economy means that every section of the economy is owned by a responsible skin-in-the-game party incentivized to maximize value. A few simple rules create distributed intelligence. Cool!
But I also see the dark side. The economic notion of "value" being maximized is actually "wealth weighted value," a tiny but enormously consequential difference. Creating value isn't about doing what people want, it's about doing what rich people want, and rich people mostly want to get paid for being rich. Competition is supposed to keep this in check, but we police competition with the vigor and enthusiasm of a decaffeinated sloth, because that's what the people who own the economy want. When suits brag openly about anticompetitive strategy -- network effects, platform effects, last-mile and two-sided-market dynamics -- and regulators snooze more loudly every day, it's pretty clear that the system is captured.
Not that tech is unique, in fact we are pretty good all things considered. We still provide more value for less money every year. Many sectors have been doing the opposite for decades. Real estate is probably the stinkiest sector, where the incumbents are perpetually voting for dysfunction to pump the value of their own properties. Health care has similarly been squeezing its own training pipeline for the explicit, stated-out-loud purpose of pumping salaries, and now that boomers are aging this is going to get spectacularly ripe. None of this is wise stewardship, but it follows directly from incentives and power. Anyone who wants to claim that capitalism produces systematically good incentives had better have a really good answer for this cartel shit, because it rules the economy.
It's not just the economy, though. Capital interests are in the driver's seat in government as well. The extent to which tax policy has been pushed away from the capital gains loop and towards the wage-labor loop is almost comical. We brought women into the workforce without "meeting in the middle" on aggregate hours so now the average couple isn't allowed to raise a baby which shockingly produced a fertility crisis. Our trade policy has been re-geared so heavily to pump assets and dump exports that Alexander Hamilton is spinning in his grave next to the 30 year old opioid addict who is in his own grave because said policy changes sent his job overseas so that rich people could benefit from the higher stock returns.
In terms of the capital/labor pendulum, we've actually been here before, after the industrial revolution failed to net trickle down. I don't think we need glorious *ist revolution, but I do think we need another Roosevelt.
Indeed; if there were no dark side, Marx would have had nothing to write about.
The difference between "money" and "value" can also be found in the difference between what is measurable and what is important is noted in Goodhart's law, which was originally specifically about two different measures of money and why putting pressure on them specifically for economic reasons was not having the anticipated result: https://en.wikipedia.org/wiki/Goodhart%27s_law
I hope that the successor to Smith and Marx will account both for Goodhart and for Nash equilibria/game theory, both of which were developed and formalised over a century after the Communist Manifesto and around two centuries after The Wealth of Nations.
There are better definitions.
> Karl Marx
You said Voldemort's name! Now he will surely haunt us.
In any case, your objective function dramatically changes when you own things for a living rather than work for a living. Many people would call someone with a 1MM retirement portfolio rich, but 4% returns on a 1MM portfolio is $40k/yr and probably isn't going to replace a job, not for someone who managed to amass 1MM in the first place. However, 4% returns on a 10MM portfolio is $400k/yr, and it might. 4% on $100MM is $4MM/yr, and it probably will. So the composition of incentives switches from worker-like to owner-like somewhere around $10MM net worth, and this is worth noting.
If you ever saw old timey movies from the 50s or 60s where "millionaire" was said with reverence, note that $1MM in 60s dollars is $10MM in 2024 dollars. They were aware of the class divide back then in a way that people generally are not today.