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 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.
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.
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.
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.
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 ..
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.
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.
> 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.
> 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.
>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.
"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.
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 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.
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.
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.
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.
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.
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?
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.
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.
$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.
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.
> 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 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.
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.
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?
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.
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.
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?
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.
Readit News
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...
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.
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...
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.
I too fail to understand why it's so polarizing for the 99.5% not benefitting from it.
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.
It's a political topic, so, vehemently contested.
The above comment is referring to:
https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
But still there's no better governments than democracy right now.
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.
[1] https://www.census.gov/quickfacts/fact/table/US/SEX255222
[2] I am not a lawyer or constitutional law expert. Although I'd be willing to bet that the current SCOTUS would find it unconstitutional.
Retirement is: you set aside as much as you think you need between the time you stop working and the time you die.
Escape capital is: the amount of money necessary so that interests >> what you consume
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.
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 ..
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.
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.
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.
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.
It should be impossible to survive from saved money? Wouldn't that mean that everybody has to work until they die?
>I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...
For me it's mostly the "work until you die" part. ;-)
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?
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.
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.
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.
Perhaps if you captured all of someone's wealth when they died, dole out maybe a $1M to each child/spouse.
Throw in some social accolades / parades / public acclaim for people who pay the most taxes.
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.
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.
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.
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.
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.
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.
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.
https://en.wikipedia.org/wiki/High-trust_and_low-trust_socie...
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.
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.
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.
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[1] https://www.propublica.org/article/the-secret-irs-files-trov...
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.
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'.
"Fuck everyone money" is when you can just buy Twitter.
Not a single US billionaire will ever have to lead a regiment in war.
> 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.
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.
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.
>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).
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).
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.
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.
Check this video, specially the "trading game" simulation (about 5:24 into it): https://www.youtube.com/watch?v=BZMBdRfbk6A
Because I had a good father and a good mother who taught me that stealing from someone else is not okay, even if they have more things than me.
It's a good thing when your money starts working for you instead of you working for your money.
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Escape velocity is when you can actually set some money aside to invest in a profitable venture and have the discipline to not spend what you have.
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 disagree. I think that we should not do that, as it is morally wrong."
"You fool! Don't you understand that it's not your rights that would be squandered?! It's only the rights of people who are not like us!"
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.
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.
By "capital" do you mean "intelligent robots"? Because otherwise, who is going to do the work when everyone is idle?
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.
But those are merely "temporarily embarrassed capitalists", John Steinbeck
But Jacobin.com disagrees: https://jacobin.com/2018/05/americans-class-politics-piston
Why stop at “escape”?
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!
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.
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.
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.
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.
I'm actually curious here.
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.
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.
No, those of us invested in tech stocks have also seen large double digit returns this year alone.
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.
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.
What we did over those years will be recorded as one of the single biggest wealth transfers in history.
Massive amounts of wealth were "lost"
Of course they weren't actually lost, it's just that the fed started increasing interest rates and the stock market tanked.
Did wealth transfer to the poor? No.
So did these people "transfer wealth" from the poor from 2020 to 2022?
> 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).
[1] https://www.bloomberg.com/opinion/articles/2023-11-09/adam-n... [2] https://www.bloomberg.com/opinion/articles/2023-10-30/two-si... [3] https://www.bloomberg.com/opinion/articles/2022-10-26/musk-w...
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?
paper gains paper losses
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).
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?
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.
I think land value tax is much better, and solves a number of other structural economic issues at the same time.
A majority of the population thinks wealth inequality in Switzerland is too high
https://www.swissinfo.ch/eng/society/majority-consider-inequ...
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.
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.
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.
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
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.
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 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.
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.
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...
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?
Conflicts of interest are in all areas, including journalism. They could have just stated the facts and shown different angles of view.
> 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'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.
Just an anecdote, of course.
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.
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.
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.
That sounds dangerous - did anyone get injured?