I think about this from time to time and I suppose everything is cyclical in the end. Most of us would have been some peasant in the feudal age and when it gets really bad it always ends in a revolution of some sort. It's just on a global scale and timeframe now.
As more of the population feels the effects of inequality they won't appeased by just fancy toys and shiny things, they will want change by force. My only solace is I'll probably be long dead by the time that happens.
The population might not be happy, but they don't have the means to change it. Revolutions don't happen when people are mad, they happen when the ones who can afford armies and equipment sense the possibility of coming out on top. 250 years ago George Washington could have financed the entire Revolutionary War out of his own pocket and he still would have retained two thirds of his wealth. Instead he put the losses on top of the public debt, became the leader of the new nation and enjoyed no longer having to pay taxes to the British for the economic output of his slaves. Today we can see the same thing happening again with different rich guys' names. But the poor will not benefit this time either. When things get bad for average people, it's just an opportunity for other rich guys to take the reigns.
His wealth was mainly in very illiquid land. A lot of it was near worthless unless US won the war since it was beyond the line drawn by the Royal Proclamation of 1763 and white settlers were generally banned from settling there.
Otherwise like many landholders back in the day he was semi-broke and had limited access to cash.
Of course after the war of course he was both compensated for his expenses and got “his” land in Ohio (more or less)
> George Washington could have financed the entire Revolutionary War out of his own pocket and he still would have retained two thirds of his wealth
Is that true ?
As far as I am aware, the money the French Government alone loaned to the US during the revolutionary war (at least two million dollars[0]) far exceeded the value of Washington personal wealth (estimated at $780,000 in 1799 [1], so at the time of his death, not during the war).
And this is not counting all the loans made from other foreign sources (the Spanish Government and private Dutch investors), and the money raised directly by the Continental Congress.
Also, as others have said, it would have been almost impossible to liquidate his assets (his lands and his slaves) during the war - the problem was availability of cash, not wealth.
Literally all the founding fathers stood to be wealthier by getting the colonies to work with Britain than against it. Like, this is basic fucking math. Dragging armies across the economy you do business in with the end result being you are on your own and can no longer rely on the dominant economic power for protection and trade agreements and whatnot is not how you get fabulously rich if you are already starting from "not peasant".
If you want to look at them through an economic lens the right one to choose is "the founding fathers were rich enough that they knew that even if revolution was bad on a macro level they'd still be filthy rich and wouldn't starve"
>But the poor will not benefit this time either. When things get bad for average people, it's just an opportunity for other rich guys to take the reigns.
I think you need to look at more revolutions. What tends to happen is a shuffling of the people who are already on top and the "HN class" of high end professionals, academics, media personalities, business leaders and other "peasants who are critical to the system" wind up in the gulags or losing their heads because the "fungible peasants" are pissed off at them for really squeezing out every penny until the system collapsed.
> 250 years ago George Washington could have financed the entire Revolutionary War
That was a rebellion, not a revolution. The colonial elite broke away from the mother country. They sculpted the eventual legal and political structure to protect their power and privilege without having to pay taxes.
If you're looking for a revolution, better look at the French Revolution or the October Revolution.
Cryptography, as the state department used to understand, is a munition (but of course, thank God for the First and Second Amendment). Cryptography based peer to peer currency that can replace a debt based system of inflation that provides an unfair advantage to the first spender of the new money is a particularly powerful munition in addressing this issue.
At least Bukele seems to get this. As does the IMF, as evidenced by their panicked attempt to shut him down.
No rush in any case though; the people who understand Bitcoin the best are those that need to, and rapid adoption is just a stressor on those building out the rails.
> Instead he put the losses on top of the public debt, became the leader of the new nation and enjoyed no longer having to pay taxes to the British for the economic output of his slaves.
That’s a rather skewed take. You might see what Washington himself said about becoming that leader.
George Washington wasn’t a signer of the Declaration of Independence either, so this idea that he concocted the revolution for personal gain is silly. He was appointed to lead the Continental Army by John Adams because of Washington’s military experience and his being from Virginia which was an asset in unifying the colonies.
>Revolutions don't happen when people are mad, they happen when the ones who can afford armies and equipment sense the possibility of coming out on top.
I agree. Too often 'revolutions' are framed as though common people were responsible for it - because it appeals to the modern day 'peasants' ( the 'middle' class and below) ideas of a 'fair' society. They are just pawns in a larger game and they are oblivious to it.
Washington did not have anywhere near the financial resources to fund the Revolutionary War, and the war was financed mainly through debt, foreign aid, and state contributions. While he did benefit from independence in some ways, he did not orchestrate it as a means to avoid taxes or personally enrich himself.
I think that's a very narrow and largely inaccurate view of revolutions.
A lot of revolutions were carried out by people with very little resources - Mao led his army from under-developed hills, the October Revolution didn't have much of an industrial base either, nor did the left in the Spanish civil war (although the military eventually won, but hey, they had a fighting chance).
And aside from that, many revolutions happen relatively peacefully. For example Chile or South Africa. Although the latter case did have some violence and property destruction.
And aside from that, guns in the USA (assuming we're talking about this and not Europe) are cheap and plentiful. And a large, determined, but poorly-armed opposition has often beaten the smaller, well-armed forces of decadent states in the past.
Let's hope it doesn't come to that though - even a peaceful movement can succeed if it's widespread.
> no longer having to pay taxes to the British for the economic output of his slaves.
This suggests that taxing the slaves would have better helped the poor. Was it helping them before the war? Were the poor suddenly worse off because of the revolution?
> it's just an opportunity for other rich guys to take the reigns.
Do George Washington's heirs control a significant portion of today's wealth?
Won't happen in a society where elders are more numerous than young. In the past it required a lot of young males thinking they have not much to lose, but they are becoming extinct.
Old people won't revolt, middle-aged fathers that need to think of their children and mortgage won't revolt.
Yet, my mother and my grandfather participated in the Romanian revolution, where real bullets have being shot against the people. I was almost 8 years old and I will be forever grateful for what they did. There is no other way, there is nobody else to help you if you accept what is happening. It's not on the same level, of course, but my anecdotal experience does not align with what you said. You can't fight lawless with law, but you can at least protest.
We are living in feudal system at the moment. Amazon, cloud providers and everything seems to be subscription based nowadays - as Yanis Varoufakis calls it "techno-feudalism". We have system which funnels unimaginable amounts of money to few overlords, it'll keep reinforcing itself creating more and more contrast with time. Open source everything seems to be the only answer if you ask me.
People do not understand subscriptions. I little a month looks cheap. They do not understand the technology or the economics.
If you are a landless peasant you know if you are being too heavily taxes - you can see how much the land produces. People have no idea whether they are overpaying for food at the end of a long supply chain, let alone for technology.
Another factor is when you are paying for many things, its only worth worrying about the most expensive as the others are relatively trivial. Compared to housing and utilities the rest is hardly worth thinking about.
I love open source as much as the next guy, but unless you consider mortgage or rent a subscription, then I don’t think that it’s really a primary issue for most people today.
That said, the subscriptions do keep growing. But, in fairness, most cloud services have ongoing cost to the business, so ongoing consumer costs make sense.
Global average age is higher than it has ever been and it keeps climbing. My stupid take is, we will continuously live in unprecedented territories for the foreseeable future, because needs, wants, abilities, thinking style of humans change as they age.
The peasant had to pay 20% tax and had free housing and food and worked half the amount of hours / year that we work. And they got revolutions. What does it tell about us?
> Whoever has billions does not affect me having running water in faucets and me enjoying life.
Whether or not people are in subsistence poverty is not the only measure of a functioning society. It's great that extreme poverty is going down, but let's not declare Mission Accomplished just yet. The existence of billionaires might not affect your running water, but it does distort the market and negatively affect how much everything around you costs, from housing to healthcare to groceries. The existence of billionaires also affects your share of power in democracy. A billionaire is right now, running amok, griefing workers and tearing down institutions. All because his billions bought him the power to do that.
You might change your "billionaires existing doesn't bother me" Enlightened Apathy if they one day kill a government service you rely on or decide your job must end because they need double digit stock growth again this year.
It’s different this time around. The sheer complexity of society makes it hard to ascertain exactly the true nature of the situation.
People who voted for trump aren’t even aware he’s part of the problem of wealth inequality. They aren’t even aware wealth inequality is the problem.
At worst we will get an angry mob stampeding the White House with no real direction or objective. Are rich people the problem or is it the government? They may have a feeling "something" is wrong, but they aren't sure what it is or who to blame, or they may think that nothing is wrong and life is just hard.
Not only complexity per se, I'm firmly on the camp of Byung-Chul Han's take on the lack of unifying narratives in the contemporary age. Living through the information age I do subscribe to his views of information being only additive, incapable and incomplete to form overarching narratives for us to hinge on.
Recommend the read of "Psychopolitics", "The Crisis of Narration", and "In the Swarm", those books eloquently described feelings I've had since the social media boom of mid-2010s. We are living through a data totalitarianism, missing overarching concepts in the noise of never-ending additive data that never concludes into a larger concept for us to grasp, just pure bombardment of more information without having any respite to put all of that together in a sense of deeper knowledge, to understand the world we are actually living in.
The memecoin stuff is just chefs kiss. Now he wants to impose tarrifs while not having the local production capacity. The citizens will pay for that. The rich will get the tax cuts and funding while everyone else will get austerity and be required to pull up your bootstraps.
> They aren’t even aware wealth inequality is the problem.
"Wealth inequality" in the sense that there are several billion people and the net worth of each and every one of them is not exactly the same? That can't be it.
"Wealth inequality is increasing over time" seems like it could be a bad thing, but if that's the problem then what's the cause? Let's consider how that happens:
When you buy something for $100, part of that money goes to labor (the employees who made or distributed it etc.) and part goes to capital (the investors who own the company). Employees generally spend all of their income, so that's not an issue. As it turns out, so do most investors, by population count, because most businesses are small businesses. The owner of the local salon might be getting a dividend from the place but she's using that to buy groceries.
Then there's Larry Ellison. Screw that guy, am I right? Somehow that asshole has more money than it would take to buy the entirety of Boeing with enough left over to buy General Motors and Halliburton put together. And he's not spending it fast enough to make the number go down instead of up.
But wait, how did that happen? He definitely didn't end up with $200B by investing $100 in the Dow and letting it compound for 50 years.
His company did, however, get billions of dollars in government contracts and in general makes its money by selling copyright licenses to its 50 year old database software. In fact, if you look at the list of companies minting all of these billionaires, they're almost all tech companies, relying on a government-granted copyright monopoly that originally expired after 14 years.
And if you look at the ones that aren't tech, they're drug companies (another government-granted monopoly and an industry that has thoroughly captured the regulators) and finance companies (possibly the only industry with more regulatory capture than medicine).
From this we can notice a trend. You get billionaires when the laws impair competition in their industry and the industry consolidates into megacorps. So that's the cause. That's what you need to prevent.
Because the wealth is unequal, sure, but look at how much better the human quality of life is compared to even 50 years ago.
What is wealth when everyone is fed, watered and entertained?
Only stating this as an explanation to why there has not been a civil revolution. People are still dying in poverty with no way to escape every day, and we need to address it.
> They aren’t even aware wealth inequality is the problem.
It seems like a symptom. Primarily because "wealth management" does seem to be a skill. So the expectation would be that even if you equalized all wealth tomorrow and suddenly educated everyone to the same level in it's management then in a very short time a large imbalance would again be created.
> but they aren't sure what it is or who to blame,
It's impossible to acknowledge that both of you are most likely equally wrong but just in different directions? If you worked together you'd get much further yet you can't even grant them basic personal agency. What a bummer. Inequality abounds.
I highly recommend taking a dynamical systems class, if you ever get the chance. It's shocking how many seemingly unrelated things just "make sense" when you know what a limit cycle is and how bifurcations work.
To me the question now is rather individual level related, instead of mass organization and action: what is threshold beyond which one - while having lost job, health[care], housing, social services and maybe even family member(s) - decides that s/he won't have absolutely anything else to lose, to then "pull a Luigi" on someone who s/he may feel responsible for his situation? Then iterate from 1 to n -> where would "n" make a real difference?
Not saying that the ultra-wealthy have the right to be tyrants, but "peasants" of today's age have a quality of life that is orders of magnitudes better than peasants in the feudal age. This simple truth seems to get lost so easily when talking about inequality in a vacuum.
Then we might have reached the point to discuss whether it’s enough to lift the worst-off to some minimum where they can survive or whether we’re in a position now to also enable participation on broad scale.
Right now it looks like wealth is self-enforcing. Across certain thresholds, you can get an expert or have the network to help with your taxes, legal issues, investment strategy and so on. Maybe you even inherited it all from your parents. There are certainly prominent counter examples of people who crossed these thresholds with their own hard work. The majority of people does not.
There is reason to believe this time might be different. Individuals can't revolt. It takes a critical mass which is only achieved via organisation. Why do you think privacy is forever under attack? The way we are going, future generations won't even have this option.
What is a world war- then a flaring off of revolution. Send the peasants to fight somewhere, buy another 30 years of stability aka a generation of peace from the wheel of strife for the price of sacrificing all the people popping up everywhere.
Nowadays is different from the feudal times you referred to. Because the majority of us are brainwashed by the media. When the brain is chained, there is no hope for a revolution.
>Because the majority of us are brainwashed by the media.
I disagree, people were even more brainwashed in the past since their only source of information was what the church and the king would tell them (Plato's cave allegory) while now you have a plethora of independent unbiased sources of information plus leaks and whistleblowers out in the open to thanks to the internet and social media.
Sure, you have a lot of fake news and propaganda today form the mainstream and social media, but back then it was all exclusively fake news and propaganda, as only the ruling elites had the truth and they'd never share that with the peasants, while any peasantry who dared speaking the truth that went against the official narrative would be punished for heresy. That's why Europe spent so much time in the dark ages and the advent of freedom of thought also brought in the Renaissance era.
>When the brain is chained, there is no hope for a revolution.
I disagree, people in the west today have a lot more freedom of information and freedom of speech than in the distant past. Well, unless you live in the UK or Germany where the police arrests you for posting a meme online about a politician, try to ban encrypted chat and sources of information they consider "hateful" in order to control the narrative and restrict the population to only vote for the entrenched establishment.
at no time has there been a good outcome from which this change made.
The people who applied the force merely swapped with those who had wealth. Essentially, they wanted the wealth, and co-opted the masses to enable themselves.
What we have today is relatively good. Just because you see some billionaire who have more yachts than you could ever hope to own, doesn't mean you aren't living a good life. At least the french revolution was in part about lack of food and starvation. I dont see america starving.
True, but starvation is a pretty low bar; obesity and all the related health problems due to an unhealthy diet (because garbage is the cheapest food and what the bottom 50% can afford in the US) is the modern version of starvation
> Hunger reached its highest point in the United States in nearly a decade last year, with 18 million households, or 13.5%, struggling at some point to secure enough food, a Department of Agriculture report released on Wednesday said.
Ah, the pendulum / cyclic metaphor. It gets trotted out way too often IMO.
The pendulum metaphor fails often; here are some examples where it cannot make sensible predictions: species level extinction; major technological shifts; the overall growth of economies (upward), the growth of attitudes around human rights.
Why does the pendulum metaphor fail? It has no explanatory ability to handle non-cyclic things. Mathematically, it has too few degrees of freedom and a poor functional form.
How often does the pendulum argument make a testable prediction? Is there a prediction of _when_ something will happen? Is there a scientific study (or even statistical analysis) of the underlying factors?
The pendulum argument often serves as some kind of wishful thinking; just wait, it says, and things will (somehow) “swing back” to the middle. For a while, at least, until there is some kind of overreaction.
Enough. Let’s call bullsh-t on this vague metaphor. There are better ways of thinking.
(In contrast, the statistical concept of “reversion to the mean” is a mathematical fact. Using it when observing real world data helps us assess the nature of the underlying statistical distributions.)
I'm pretty sure wealth doesn't follow an exponential distribution. Power law, log normal or stretched exponential or maybe some sort of generalized Zipf.
Just because there is a power law relationship doesn't justify having such a steep curve. Flatten the curve, the rich should pay more tax.
The alternative is returning to a feudal gilded age where there are a very very small cabal of asset owning lords, a very small class of scribes for the lords, and then a sea of serfs.
Inequalities by themselves are not really a problem. I don't care about other peoples palaces if I can live comfortably in my small house. In fact, if said palace is well maintained and tasteful, it can make for a beautiful landmark everyone can enjoy seeing.
It only becomes a problem if people are miserable, the palace stops being a beautiful landmark and becomes a symbol of oppression.
Back to stocks, I think there is absolutely nothing wrong with the top 10% owning 87% of the stocks (in the US, because apparently, the rest of the world doesn't exist...). The stock market is risky, that's really a thing for those who have all their basic needs covered and can afford to lose big. Owning stock i.e. investing in companies is also among the most best things to society the rich can do, compared to, say, building palaces for themselves.
All that to say that if some causes are worth revolting against, I just don't think inequality in stock ownership is one of them.
So a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality.
Think about young people trying to buy their 1st home now, its becoming impossible.
No, because the richer one is the more one can endure. In a market crash, the rich can just survive with their own stash of liquid money and when the time is ripe they can sweep in and buy for cheap the stocks of middle class investors trying to liquidate to make ends meet
Liquid money is only good if the bank stays solvent. Which SVB was not, and neither were many banks in 2008 until the federal govt stepped in and backstopped all deposits beyond the $250K limit.
The 2008 stock market crash famously reduced inequality. Definitely didn't increase inequality by leaving the average person (via government bailouts) holding the bag.
I'm assuming sarcasm here.
The 2008 crash was immediately offset by huge rounds of QE that most of them went to bail out financial institutions and inadvertently further inflated the prices of most assets.
It may have been necessary, I don't know, but the bottom line is the stock market (and all assets generally) was inflated with huge sums of new money.
Similarly, the great depression was not a great time to be poor. [Edit:to be clear income inequality did go down, but poor people got a lot poorer, which seems like a pretty bad outcome]
In fairness; there is an ongoing strategy of printing money and distributing it to asset owners. That may also be contributing to asset owners accounting for most spending.
> Think about young people trying to buy their 1st home now, its becoming impossible.
At least in Finland today it's much easier for young people to buy their 1st home now compared to 15 years ago. Interest rates are roughly where they were 15 years ago, but house prices in real terms have gone way down. There's also huge market asymmetry with large amount of vacant properties that nobody wants to buy, and relatively few buyers.
How did you manage that!?! It was my impression that increasing housing prices is a problem all over, and that it partially stems from the mega trend of people moving to cities. Most countries have a lot of room to build houses, just not where people want to live!
So why is it different in Finland? Is there a lot of free space around then cities? Or doesn't everyone want to live in Helsinki?
That's great to hear for young Fins - other countries, unfortunately, are not as lucky when it comes to the price developments of real estate over the last 15 years.
This is astronomically incorrect it’s basically an info hazard.
A market crash like that would result in extremely broad layoffs, major global supply chain instabilities, and a cataclysmic knock on effect of capital losses into nearly every walk of life on earth.
Not to mention, as many already have, the federal govt would undoubtedly bail out the worst actors and leave the poor to fend for themselves.
Just yesterday the Treasury Department announced they aren’t going to enforce a money laundering law. You think they’re going to New Deal a major crash’s now? No way.
Also the rich have cash flow and can continuously invest during crashes.
The top 10% aren’t losing their jobs in a crash, but the bottom 50% might.
So while the top 10% keeps investing and will maximize the recovery, the bottom 50% will cash out at the bottom and won’t return to invest for years after their emergency fund has recovered.
How young is your 'young'? House is normally by far the biggest investment in couple's lives, and if starting from 0 (ignoring common US debt from studying) it should actually take a bit of time to progress in careers and amass some money aside required for such a move.
I've never felt that I am entitled to any sort of property even when being software engineer to the core, even more a house, as a young person right after university. That was always a hard-won luxury, and I don't even mean some extremely well located place.
Some folks here often mention similar stuff and refer to some period in 50s/60s in US specifically where 1 salary could have done it in some more rural areas. Nobody mentions how rest of the population looked like, hardly whole US population was buying new houses with wife being stay-at-home mum.
When women started going to work too, suddenly such couples quickly outcompeted single earners from housing market. In Europe, this stay-at-home was never the thing in most places so we never even had such period, thus 0 such expectations. Properties, especially houses, were always a hard-won luxury.
> Hell, there are companies and families who supported the third Reich openly.
> They were rich before world war 2, they were rich after and they are still rich today.
Yes, these families exist. But there is an equal amount of them that went to the poorhouse that you don't know about. Many German Nazis that got wealthy through stealing/grafting of Jewish businesses _did_ lose their assets. Others still stayed somewhat wealthy but are now just barely millionaires.
It's very easy to get fooled by survivorship bias, since it's only the companies and people that are still wealthy that get heavily covered. I don't think a publisher would accept a book like Nazi Billionaires about all the people that are no longer relevant at all.
edit: I have to say, I also think it's terrible that so many people could just go on like nothing happened. Doubly so for the bureaucracy, diplomats and judges -- both in Germany and the Axis collaborators.
But this is how the world goes. The only people punished for the Cultural Revolution and Great Leap Forward or the Gulags were those caught up in internal purges. The new Syrian government threw a few of the worst people in Jail, but cannot dismiss everyone involved in the old system for practical reasons.
The Architects and executors of British and Dutch "counter-insurgency" strategies to keep their colonies have Barracks named after them. I could go on with American examples but I think we all know.
It’s also worth mentioning, that these people/organizations hide very well. For broad society they don’t exist and if you mention this, you get a label “crazy conspiracy theory lover”. Funny thing, even law for such constructs exist and they’re real. Look at “Familienstiftung” (English family foundation or similarly). It’s absolutely their system, they law and their game. But I also want to get there!
It has not been possible for decades in Southern Europe countries for decades, that is why most people live with their parents and only leave home when married, and then get credits that last all the way until they retire, assuming they live that long in first place.
Or eventually get the parents house from generation to generation.
And yet there's hundreds of entire villages in Mediterranean Europe that are empty apart from a few elderly people, lots of small rural towns with tracts of empty property. Usually because they're hours away from the nearest good jobs.
What's happened is a massive shift from a small-scale agricultural economy to a mix of urban and large-scale agriculture, and the building of homes/apartments hasn't kept pace.
in the great depression, the crash did reduce inequality
in the covid19, the crash increased inequality
my opinion is that nowadays, fortune is highly financialized.
during a crisis, for most(99.99%) ordinary people who are in the market, they suffer the real lose, and they have nothing to comeback, even have to sell their assets to pay their bills, all they can get from the goverment is something like food banks, or the best situation, get a job to sell their labor
but for certain people either hold enough cash or can obtain enough cash from government relief programs, putting them in a position of advantage, this enables them to quickly reap a large amount of wealth during an economic crisis.
As far as I know the stock market has winners and losers.
If you're not rich but invested whatever you could over the course of your life and now the market tanks to where you've lost half (or more) of what you had then someone else is going to win that from you.
A massively rich company can hold out a lot longer than a software developer who tucked away what they could over the years. If a real crash happens that software developer just got 30 years of their net worth mostly vaporized in a few months.
How much of the population is in that category? It's the whole middle class basically. It's a crushing blow to most folks when the market crashes for a long period of time. It's even worse for folks who are already in a position of barely scraping by while putting a little bit aside whenever they can. That person is destroyed if a majority of that disappears because they may have to sell it off on the spot just to survive because if the market really crashes, you can be sure a ton of people are going to be out of work.
In other words, if your retirement savings is $200K and you lose 50% of it, at best you're going to have to make major changes to your plans. At worst (depending on how much debt you have) you're in for some real pain.
A billionaire with $200B in wealth could lose 99% of that and still have $2B, generational wealth that will perpetually fund an entire family tree down to great great grandchildren.
The Fed has a few papers on this issue. Their conclusion is basically that the young will eventually inherit the wealth and market forces will force a redistribution. Thus it solves itself eventually.
I personally think that the Fed papers are just designed as an excuse to print money, but my point is the Fed is very far from seeing this as a problem and will never act to remedy it.
Not really. Stock value is just paper. Stocks going down just means they are valued less now relative to other stuff.
Imagine if everyones socks were suddenly valued a million bucks, except yours. Would you "stay in the same place" or would you suddenly be too poor to afford to buy the labor of all the newly minted millionaires? I'd bet on the latter.
A stock market crash mostly transfers wealth from the bottom rung of those who own stocks, who are forced to sell, to the top rung of stock owners, who have enough to be able to wait it out and then buy up the assets at low prices (and make a fortune when it goes back up).
It also causes a lot of companies to go out of business or reduce their workforce because of reduced consumer spending, hurting the working class more.
Theoretically sure it could help. Realistically we know governments, who are largely controlled by the wealthy, will immediately start dumping money around when stock markets dip and doing everything possible to insulate the investor class from losing everything. But if something only hurts the lower classes, they will usually ignore it as much as possible.
> So a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality.
This would assume rich people have all their money in stocks, which is not correct.
Nope. In a crash the poor get thrown out of their houses, have to sell their land, etc. The rich can endure more, buy that stuff and after the crisis it is even worse.
You guys are so obsessed with inequality because you're always looking in the other guy's cup. I don't care about inequality at all - only absolute living standards. The US has been an unequal place all its history and it's a tremendous country to live in.
Here's a recipe for happiness: stop comparing yourself to others and stop trying to keep up with the Joneses. It's old advice, but it's clearly been forgotten.
> The US has been an unequal place all its history and it's a tremendous country to live in.
Have you.. lived in other countries? I came here from southeast Asia and yes, my BigTech salary affords me a comfortable life, but I simply don't understand why the bottom 90% aren't up in arms over here.
Well the idea is that (correctly or incorrectly) lower inequality would result in significantly higher absolute living standards.
Arguably they had been going up at the pace they have over the last several decades almost entirely due to technological progress (and more arguably globalization/free trade).
Average productivity has been in increasing at a much faster rate than median or below median absolute living standards. Growing inequality is possibly the main culprit.
> looking in the other guy's cup
Well hard not to do that when the other guy has turned off the tap after filling his cup..
> The US has been an unequal place all its history and it's a tremendous country to live in.
It could be way worse but it could also be better.
There are people in the U.S without good health care or access to dignified jobs (or at least - a livable salary). These are issues that can be improved by a lot, it's not a law of nature.
Living standards are important, sure. So are democratic standards, and rich people often subvert them. There has been a long, long tradition of that in the US too, and everywhere else. Sponsoring their chosen politicians, being newspaper proprietors, often also being patrons of the arts and deciding what gets made and by whom.
That amounts to cultural and political hegemony. Telling people to accept that is a little like telling them to know their place.
The type of inequality being discussed is very different from 'keeping up with the Jones' that you are discussing.
Historically, one of the major turning points in the cycles of society/governments is when there is massive inequitable distribution of wealth such that the masses are left to divvy up a tiny piece of the pie while the top .05% hoard 80+% of the wealth. IMO we are currently seeing the wealthiest people on earth taking over the levers of the US government and it is unlikely we will ever return to the constitutional democracy we used to have. Moving forward Elon Musk and the other members of his Gothic MAGA will decide how much the government can spend each year and on what and for whose benefit.
A very, very different scenario than being envious of the sports car in your neighbor's driveway.
In any kind of non-uniform distribution of any good, the top x % will always own a disproportionate (wrt to headcount) amount of it (In economic systems, this mathematical fact is further amplified by other factors such as financial literacy and leverage).
What's always missing to me in these types of discussions is what this value should be at, and what the distribution should look like qualitatively (i.e. what should the ideal Lorenz curve look like).
Is there any discussion/research/case study analysis where this is explored? I.e. overall citizen satisfaction/economic productivity and how it relates to wealth distribution?
I personally think we should resist the temptation to separate out values from the discussion. Like, even if it was the case that some extremely high-level of inequality turned out to be "optimal" in some GDP-maximizing way, the question still ought to hinge on some notion of fairness or justice (in my view).
(Although, I guess if your metric is "citizen satisfaction" maybe that's not as terrible).
In any case, there are lots of case studies showing what happens at the extreme inequality end of the spectrum. As I mentioned in another comment, my favorites come from Piketty "Capital in the 21st Century" and Acemoglu & Robinson "Why Nations Fail".
In the latter, the case study on the rise and fall of Venice is particularly fascinating - huge economic growth due to inclusive economic institutions that promoted social mobility, followed by a downturn once the aristocracy moved to entrench their own interests at society's expense. This seems to be the central thesis of the book, although I'm only a few chapters in.
The parallels with modern US politics are pretty hard to ignore though.
I haven't read the examples you mentioned, do they point toward the source of the instability being extreme inequality, or the lower (economic) classes being unable to survive in dignified conditions? (read: can we tolerate great inequality if it comes with increased standards of living for everyone?)
>In any kind of non-uniform distribution of any good
Not in any kind. It is absolutely the case, if there's mostly untaxed generational wealth transfer.
Imagine this - you are born in this world with nothing. And every parcel of land and property is owned by somebody - somebody who with high likelihood inherited it or hundreds of millions or billions of assets on spawn.
Now obviously, you can inherit all sorts of other factors too - like very valuable social networks and a set of trade skills carefully passed down and tought. But even neglecting those, the largely untaxed generational wealth transfer would naturally lead to massive inequalities and disproportionate amounts of wealth concentrated in few families.
That statement had nothing to do with taxes or inheritance (or any specific financial process in fact). It was simply a (admittedly rather reductive) mathematical statement, which remains true independently of the nature of the underlying good.
My point was that pointing out "Top x% own Top x+y% of good z" doesn't say anything meaningful without contextualizing why (if) this is a bad thing, and what x and y should be for a given z.
The most in-depth historical and empirical analysis of wealth inequality that I know of was done by Picketty et al. He is quite famous, so you can easily google his main research findings.
The upshot is that wealth inequality is above or close to historical high points and that it has actual and severe real world negative consequences.
I think we can start with the work of Gary Stevenson. He made a few points on why inequality is bad.
When there’s massive inequality in the system, the super rich will compete with you for resources. Resources can include:
- Housing, of which fewer and fewer people could afford owning at the median income level
- Education, think buying access to spots at top schools and the ability to afford the fees/debt
- Political power, think Elon Musk in the western world
- Media/consensus, think Jeff Bezos, and think blaming of immigrants for house prices
- In the current tax system, the super rich could inherit wealth while paying very little tax, and they can borrow money at very low rates collaterized with the massive amounts of assets their own: meanwhile some of us pay a 30-50% tax on our income and are struggling to save for a downpayment or retirement.
With the massive financial power of the super rich, it’s not so much that this is bad in an “evil” way. Rather, it’s bad for the rest of us because the super rich are indifferent to us in pursuit of their own agendas in the “cosmic indifference” kind of way. Just as how we humans destroy anthills with an indifference if they get in the way of road constructions, the super rich would “run over” us if it benefits them.
> What's always missing to me in these types of discussions is what this value should be at, and what the distribution should look like qualitatively (i.e. what should the ideal Lorenz curve look like).
Just looking "more uniform" would be a great starting point. The optimal distribution is left as an open question for future research.
Not having the perfect solution upfront should not block incremental improvements, which is more or less what is happening ATM. E.g. people argue we cannot have free healthcare because the proverbial "welfare queen" will also receive it.
> The optimal distribution is left as an open question for future research.
What makes you think the optimal distribution is "more uniform" rather than less?
I'm not taking sides in this question, simply pointing out that the headline is rather meaningless without context
I doubt you can put a number on what the optimal distribution should look like without making some overly simplified model that necessarily ignores something important.
At the same time, one could imagine a situation where wealth is so abundant that even the lowest 1% could afford any modern luxury. In that case it probably wouldn't be so bad if the top few wealthiest individuals had enough money to buy and own whole planets. They would likely use their wealth to make life worse for others, as they tend to, but that's out of the scope of this model.
The title uses the stock stat because it's so unbalanced. But to me the scariest statistic is the other one mentioned in the article: "the top 10% also accounts for 50% of all consumer spending". This seems extremely fragile. Small changes in the behavior of the well-off can have big negative consequences for the entire country.
Also when scaling tech/platforms this is a big factor in how many people can actually pay.
Every scaled up platforms then gets trapped into collecting/selling personal data and flooding the field with Ads (and obviously in these ad auctions the 10% can outbid the majority so Ad prices keep rising).
In the US you need to earn only $178,611 as a HOUSEHOLD to be in the top 10%. That's less than $90K per person.
Comparatively, you need to earn $663,164 to be in the top 1%, and more than $3M to be in the top 0.1%.
I just want to highlight this to remind that the top 10% is by far not made up exclusively of ultra-rich individuals like people on internet like to believe.
Median personal has to be close to zero before redistribution payments, for all ages.
It paints a pretty poor picture of what is possible. I met many uneducated immigrants on a fish processing boat in the Bering Sea making 10k a month, a job usually begging for people. They would show me pictures of their wives and children living well.
The proportion of people who will be in the top 1% of annual income for at least one year of their lives is quite high. I am too lazy to look it up now but I think it's about 20%.
The majority of people who earn a top 1% income only manage to do so for a short period.
As a consequence the overlap between top 1% by income and by wealth is small. They are (broadly speaking) different groups.
Anyway, if anything the distribution based on wealth would even more starkly be hyper-focused at the top, the people in the 10-9% range aren't exactly sitting on mountains of gold.
Money is relative though. If we stopped printing money today, the dynamics of wealth can still exist so long as we keep the delta between "Kinda well off" and "well off" relatively fixed. I have to be careful here, because I'm not arguing against Capitalism. I'm merely pointing out the infinite nature of this thing we call a "wealth gap".
There's two ways to stay the richest man in the world:
a) Get more money.
b) Stop people from getting more money than you.
And I suppose c) Do both. If that's what you are about.
A lot of people characterize corporations as a sociopath because it expresses a lot of clinical markers. I think if you frame the economy as war, you'll find similar markers. People are exhausted, shell shocked, constantly insecure, attrition or the feeling of attrition (feeling of no progress). PTSD from this everlasting war.
I was very surprised by the holiday budget. Less than 2500$ for 80% of the population? Does that mean that no one from these 80% stays in a Hotel or AirBnB for longer than a week with their family? No one travels overseas, or if so, only every 5 years or so? 2000$ is what you can easily spend on plane tickets for a family of 4.
I think this is a pretty good example of the vast disconnect between reasonably high wealth and low wealth families. If you're in the bottom bracket, it's very likely you don't even have a vacation in any meaningful way, at best you have time off. The lower you are in the division, the starker the difference.
Yes? How long has it been since you checked what income percentile you are in? I would expect most of the posters here to be in the top 5%, with a short tail of unemployed and retirees.
The number of Americans with passports is at an all time high of 48%, and some of that is simply for convenience ID for internal flights.
My partner and I are in the top 20-25% of Germany (looking at combined household income, we earn about the same). Not poor, but not (very) rich as well.
Well yeah, European here so things might be a little different, but our family's budget for holydays was usually around 1500-2500$. As a result I've never travelled outside Europe. I've only flown to the Canary Islands twice and otherwise travelled by car. Big money saver. And also camping is cheaper compared to AirBnB and hotels. Though you can usually squeeze two weeks out of that budget.
I'm European too, and I also usually don't spend more than 2000€ on holidays per year, but when I compare myself to friends and colleagues, I always had the impression that how we go on holidays (camping, traveling by bicycle/train) was relatively uncommon. Therefore I didn't think that 80% of the population went on holidays like that.
It's possible to stay in an Airbnb for longer than a week on that budget. But yes I think you have broadly understood what that means. I'm not an expert myself but it sounds about right to me. I would guess the fact it's shocking to you is an indication of how segregated society can be.
Those numbers exclude airfare and other transportation costs.
And you need both time and money for a vacation. The average American family probably can't take 2-3 weeks off to travel every year, which makes their vacations shorter and cheaper.
In the Netherlands, a financial advisory board (NIBUD) advises people to save 10% of their income. The average yearly income being around € 45K comes to a € 4.5K yearly saving. Deduct unexpected costs + that you want to spend part of this on actual savings _and_ realizing that many people don't manage to save that much due to increasing prices + senseless spending (subscriptions, fast fashion, etc.) makes it much less surprising.
Also, Hotels and Airbnb's are incredibly expensive (even for me, working a decent job with a good income) for families. That's why i chose campings over hotels and bought a decent tent.
You can rent the 2 bedroom house across the street from me as a foreigner for $200 per month on the local platform. It is 200 meters from a nice empty beach. If you speak the local language and are willing to compromise (alley and 700 meters from the beach) then half that may be achievable.
Perhaps you see things differently because people here and in tech are generally near the top working class pay. The median individual pay in the US is 40K, and even that is a jump from just a few years ago. I don't know anyone that works in tech for $40K or less. Not to mention the other benefits that people making $40K don't get.
Sounds like my holiday budget. My primary school kid has never flown an airplane, nor been in a hotel, but a few airbnb's, road trips. I would say it's for climate reasons, but really it's the money.
I’ll refrain from piling on to signal that I, too, can travel on the cheap. But I did get a kick out of the shock and dismay that wealthy people might be good at managing their money.
If you’re not rich, but spend more than rich people do on stuff, you’re going to have a hard time getting rich.
Road trips for families is how you stay on a budget. It’s easy to get hotels for around $100 a night that include breakfast if you stay out of world-renowned destinations.
A lot of vacations also involve crashing at another family member or friends spare bedroom/fold out couch.
I grew up with family vacations like this (inflation adjusted) and I had a great time. It’s hard to wrap your mind around when you think vacations require significant travel.
100$ for four beds including breakfast? I live in Europe, perhaps that's why the prices feel off. I pay around 100$ per night without breakfast here in most places, for 2 people.
There are also people who just don't ever travel, we lower that average holiday budget. I don't travel, and I think it's a bit weird how "normalized" it is. Not that it is wrong to travel, but people always ask me where did I go to this year, and are baffled when I tell them I didn't go anywhere.
I am taking a deep dive into inequality thanks to Gary Stevenson. He has a lot of educational videos on his channel. Highly recommended.
Here's how I would sum up his main argument: Ordinary people have less money and can no longer afford to buy property. Governments have less money, infrastructure everywhere is eroding. So where does all the wealth go? The only possible answer is to the very rich, who are doing better than ever, while everyone else is down financially.
To be clear, this is not about the entrepreneur who made a couple million bucks and has three houses. It's about the top 0.1 % who are sucking everyone else dry, permanently: The poor, the middle class, and the government.
We need to do something to reverse this trend. And soon.
I really enjoy Gary Stevenson - both his YouTube channel and his book - but his very convincing message that wealth inequality is a problem isn't really accompanied by any particularly good solutions. Tax the wealthy yes, but how do you do it exactly? How much does it raise? How should the revenue be spent?
He actually provides the solution quite explicitly in several of his videos: Tax non-moveable assets of the ultra-rich, i.e. real estate.
His theory (which sounds plausible to me) is that a lot of the wealth of the ultra rich is actually bound up or linked to immovable assets. At the same time, investments in these assets is what makes them unaffordable for everyone else (i.e. your kids won't be able to buy a house anywhere in the country, despite them earning more after adjusting for consumer goods inflation).
By taxing large real estate wealth accumulation (think personal wealth in the tens or hundreds of millions and up), you get the best of both worlds: The (ultra) rich who want to stay invested have to pay your taxes (they can't move real estate to a tax haven) and thus transfer part of their wealth back to society. And if they divest from real estate, it puts downward pressure on real estate prices, thus making it more affordable for the rest of us. Win-win, from a society's perspective.
You have to raise taxes on the wealthy so heavily that they begin to sell their assets. This brings asset prices down. Meanwhile, lower taxes on normal people, who will have more money and be able to buy those assets. This reverses the wealth transfer. It doesn’t matter how much tax you raise. It just matters that it is enough to reverse the transfer of wealth back to the working class.
How specifically doesn’t matter as long as it’s enough. The way I see it, the best ideas, other than all out socialism, is to have progressive taxes that start low and have extremely steep curves.
Just one example, we could have a progressive property tax. For people who own a single reasonably sized home that they actually live in, the property tax would be very low and reasonable. However, if people own multiple properties, properties they don’t live in, or extremely large properties, the tax rate would increase and then skyrocket to the point where a wealthy person has no choice but to sell those properties or lose money. All that selling will bring down the price of real estate. At the same time, nobody will be in a position to buy that real estate except for those who don’t already have much, because for anyone else the tax will be too high for it to work out. If they don’t sell, they pay enormous tax, which is also acceptable. Either way we reverse the transfer of wealth.
Apply this same progressive scale to capital gains tax and estate tax. Also income tax, but less so. Effectively this puts a cap on wealth. If a person tries to own more than their fair share of things, they won’t make more money. Of course you still allow people to be quite rich. There will be multi-millionaires with fancy cars and mansions. There will still be movie stars, sports team owners, and bankers. They will still live lives of luxury and want for nothing. They just won’t control our entire society.
How do you spend it? You spend it on anything that benefits labor and makes everyone’s lives better. You don’t use it on a fossil fuel subsidy. You don’t use it on defense contracts. You use it on universal health care, social security, education, FEMA, infrastructure. Pretty much you do the exact opposite of whatever DOGE is doing.
When I was at uni I read Thomas Piketty's "Capital in the 21st Century", and parts of his newer "Capital and Ideology" (although I never quite got through that one).
The big takeaway for me was that wealth inequality never improves without some major catastrophe (war, revolution, plague etc). The proposed model is really intuitive and compelling (tldr; return on capital has historically always been higher than real growth, which guarantees indefinite concentration of wealth until there's a crisis).
Last year's Nobel Economics Prize winners, Acemoglu and Robinson, tell a similar story in "Why Nations Fail", which I am working through at the moment. Although in their case, they seem be suggesting a more causal link between erosion of political and economic institutions and the collapse of empires.
I wish these ideas were more broadly accessible and understood. The real risk of total societal collapse should transcend any partisan fighting about ideal tax rates, government inflation/unemployment targets etc. Everyone has a common interest in there not being a violent upheaval (arguably the rich most of all).
Last I checked the numbers, current wealth inequality seems about as bad as it was before the great depression. And its not enough to just say "well, absolute wealth is more important". As others have pointed out, its not stable to have such huge relative wealth disparities. And that's before you even consider corruption.
The book "The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century" by Walter Scheidel makes a similar argument:
> Are mass violence and catastrophes the only forces that can seriously decrease economic inequality? To judge by thousands of years of history, the answer is yes. Tracing the global history of inequality from the Stone Age to today, Walter Scheidel shows that inequality never dies peacefully. Inequality declines when carnage and disaster strike and increases when peace and stability return. The Great Leveler is the first book to chart the crucial role of violent shocks in reducing inequality over the full sweep of human history around the world.
I would also recommend "The Dawn of Everything" by David Graeber and David Wengrow. It explores "the roots" of inequality. A lot of interesting insights there.
Readit News
As more of the population feels the effects of inequality they won't appeased by just fancy toys and shiny things, they will want change by force. My only solace is I'll probably be long dead by the time that happens.
His wealth was mainly in very illiquid land. A lot of it was near worthless unless US won the war since it was beyond the line drawn by the Royal Proclamation of 1763 and white settlers were generally banned from settling there.
Otherwise like many landholders back in the day he was semi-broke and had limited access to cash.
Of course after the war of course he was both compensated for his expenses and got “his” land in Ohio (more or less)
Is that true ?
As far as I am aware, the money the French Government alone loaned to the US during the revolutionary war (at least two million dollars[0]) far exceeded the value of Washington personal wealth (estimated at $780,000 in 1799 [1], so at the time of his death, not during the war).
And this is not counting all the loans made from other foreign sources (the Spanish Government and private Dutch investors), and the money raised directly by the Continental Congress.
Also, as others have said, it would have been almost impossible to liquidate his assets (his lands and his slaves) during the war - the problem was availability of cash, not wealth.
[0] https://history.state.gov/milestones/1784-1800/loans [1] https://en.wikipedia.org/wiki/Finances_of_George_Washington#...
Smaller groups you can outright kill in daylight, but better to get to them first to torture and kill them out of sight.
Once you need to kill 500.000 who are protesting and if violence to quell the hoards wakes up more people who want to see the regime fail.
Literally all the founding fathers stood to be wealthier by getting the colonies to work with Britain than against it. Like, this is basic fucking math. Dragging armies across the economy you do business in with the end result being you are on your own and can no longer rely on the dominant economic power for protection and trade agreements and whatnot is not how you get fabulously rich if you are already starting from "not peasant".
If you want to look at them through an economic lens the right one to choose is "the founding fathers were rich enough that they knew that even if revolution was bad on a macro level they'd still be filthy rich and wouldn't starve"
>But the poor will not benefit this time either. When things get bad for average people, it's just an opportunity for other rich guys to take the reigns.
I think you need to look at more revolutions. What tends to happen is a shuffling of the people who are already on top and the "HN class" of high end professionals, academics, media personalities, business leaders and other "peasants who are critical to the system" wind up in the gulags or losing their heads because the "fungible peasants" are pissed off at them for really squeezing out every penny until the system collapsed.
That was a rebellion, not a revolution. The colonial elite broke away from the mother country. They sculpted the eventual legal and political structure to protect their power and privilege without having to pay taxes.
If you're looking for a revolution, better look at the French Revolution or the October Revolution.
At least Bukele seems to get this. As does the IMF, as evidenced by their panicked attempt to shut him down.
No rush in any case though; the people who understand Bitcoin the best are those that need to, and rapid adoption is just a stressor on those building out the rails.
That’s a rather skewed take. You might see what Washington himself said about becoming that leader.
https://www.gilderlehrman.org/history-resources/spotlight-pr...
George Washington wasn’t a signer of the Declaration of Independence either, so this idea that he concocted the revolution for personal gain is silly. He was appointed to lead the Continental Army by John Adams because of Washington’s military experience and his being from Virginia which was an asset in unifying the colonies.
I agree. Too often 'revolutions' are framed as though common people were responsible for it - because it appeals to the modern day 'peasants' ( the 'middle' class and below) ideas of a 'fair' society. They are just pawns in a larger game and they are oblivious to it.
They could vote for lefties like Corbyn or Bernie but they don't because things aren't that bad.
> 250 years ago George Washington could have financed the entire Revolutionary War
Could you provide some support for this claim?
I believe it will help me deal with the current doomsday news (and be more stoic in general).
A lot of revolutions were carried out by people with very little resources - Mao led his army from under-developed hills, the October Revolution didn't have much of an industrial base either, nor did the left in the Spanish civil war (although the military eventually won, but hey, they had a fighting chance).
And aside from that, many revolutions happen relatively peacefully. For example Chile or South Africa. Although the latter case did have some violence and property destruction.
And aside from that, guns in the USA (assuming we're talking about this and not Europe) are cheap and plentiful. And a large, determined, but poorly-armed opposition has often beaten the smaller, well-armed forces of decadent states in the past.
Let's hope it doesn't come to that though - even a peaceful movement can succeed if it's widespread.
The feds are bleeding us dry to line they and their corrupt friends pockets and their public debt.
This suggests that taxing the slaves would have better helped the poor. Was it helping them before the war? Were the poor suddenly worse off because of the revolution?
> it's just an opportunity for other rich guys to take the reigns.
Do George Washington's heirs control a significant portion of today's wealth?
Won't happen in a society where elders are more numerous than young. In the past it required a lot of young males thinking they have not much to lose, but they are becoming extinct.
Old people won't revolt, middle-aged fathers that need to think of their children and mortgage won't revolt.
If you are a landless peasant you know if you are being too heavily taxes - you can see how much the land produces. People have no idea whether they are overpaying for food at the end of a long supply chain, let alone for technology.
Another factor is when you are paying for many things, its only worth worrying about the most expensive as the others are relatively trivial. Compared to housing and utilities the rest is hardly worth thinking about.
That said, the subscriptions do keep growing. But, in fairness, most cloud services have ongoing cost to the business, so ongoing consumer costs make sense.
It's not so much "inequality is evil" (tho he surely think so), but rather "inequality breeds catastrophic revolutions".
Source? I have some doubts about this claim. Are you sure this doesn't simply measure one form of labor while ignoring another?
Inequality doesn’t matter really nowadays. There will be no revolution as most of people are out of poverty despite what narration on the internet is.
Living conditions as today day poor person are immensely better than 18 or 19th century peasants.
Whoever has billions does not affect me having running water in faucets and me enjoying life.
Warm water is not all there is to life but it is a lot.
Whether or not people are in subsistence poverty is not the only measure of a functioning society. It's great that extreme poverty is going down, but let's not declare Mission Accomplished just yet. The existence of billionaires might not affect your running water, but it does distort the market and negatively affect how much everything around you costs, from housing to healthcare to groceries. The existence of billionaires also affects your share of power in democracy. A billionaire is right now, running amok, griefing workers and tearing down institutions. All because his billions bought him the power to do that.
You might change your "billionaires existing doesn't bother me" Enlightened Apathy if they one day kill a government service you rely on or decide your job must end because they need double digit stock growth again this year.
People who voted for trump aren’t even aware he’s part of the problem of wealth inequality. They aren’t even aware wealth inequality is the problem.
At worst we will get an angry mob stampeding the White House with no real direction or objective. Are rich people the problem or is it the government? They may have a feeling "something" is wrong, but they aren't sure what it is or who to blame, or they may think that nothing is wrong and life is just hard.
Recommend the read of "Psychopolitics", "The Crisis of Narration", and "In the Swarm", those books eloquently described feelings I've had since the social media boom of mid-2010s. We are living through a data totalitarianism, missing overarching concepts in the noise of never-ending additive data that never concludes into a larger concept for us to grasp, just pure bombardment of more information without having any respite to put all of that together in a sense of deeper knowledge, to understand the world we are actually living in.
Its just amazing as an outsider to see the other side calling Trump voters they don't understand what they voted for.
"Wealth inequality" in the sense that there are several billion people and the net worth of each and every one of them is not exactly the same? That can't be it.
"Wealth inequality is increasing over time" seems like it could be a bad thing, but if that's the problem then what's the cause? Let's consider how that happens:
When you buy something for $100, part of that money goes to labor (the employees who made or distributed it etc.) and part goes to capital (the investors who own the company). Employees generally spend all of their income, so that's not an issue. As it turns out, so do most investors, by population count, because most businesses are small businesses. The owner of the local salon might be getting a dividend from the place but she's using that to buy groceries.
Then there's Larry Ellison. Screw that guy, am I right? Somehow that asshole has more money than it would take to buy the entirety of Boeing with enough left over to buy General Motors and Halliburton put together. And he's not spending it fast enough to make the number go down instead of up.
But wait, how did that happen? He definitely didn't end up with $200B by investing $100 in the Dow and letting it compound for 50 years.
His company did, however, get billions of dollars in government contracts and in general makes its money by selling copyright licenses to its 50 year old database software. In fact, if you look at the list of companies minting all of these billionaires, they're almost all tech companies, relying on a government-granted copyright monopoly that originally expired after 14 years.
And if you look at the ones that aren't tech, they're drug companies (another government-granted monopoly and an industry that has thoroughly captured the regulators) and finance companies (possibly the only industry with more regulatory capture than medicine).
From this we can notice a trend. You get billionaires when the laws impair competition in their industry and the industry consolidates into megacorps. So that's the cause. That's what you need to prevent.
What is wealth when everyone is fed, watered and entertained?
Only stating this as an explanation to why there has not been a civil revolution. People are still dying in poverty with no way to escape every day, and we need to address it.
It seems like a symptom. Primarily because "wealth management" does seem to be a skill. So the expectation would be that even if you equalized all wealth tomorrow and suddenly educated everyone to the same level in it's management then in a very short time a large imbalance would again be created.
> but they aren't sure what it is or who to blame,
It's impossible to acknowledge that both of you are most likely equally wrong but just in different directions? If you worked together you'd get much further yet you can't even grant them basic personal agency. What a bummer. Inequality abounds.
People's wealth were more geographically locked and tied to land back then.
And nuclear. We have yet to see our first nuclear civil war.
_very_ slightly edited from its original.
Right now it looks like wealth is self-enforcing. Across certain thresholds, you can get an expert or have the network to help with your taxes, legal issues, investment strategy and so on. Maybe you even inherited it all from your parents. There are certainly prominent counter examples of people who crossed these thresholds with their own hard work. The majority of people does not.
For a more snappier version, see this video by a former professor of history, university of Wisconsin: https://www.youtube.com/watch?v=uqsBx58GxYY
And in the case of the US, you have people who willingly vote against their interest by demonizing other groups.
I disagree, people were even more brainwashed in the past since their only source of information was what the church and the king would tell them (Plato's cave allegory) while now you have a plethora of independent unbiased sources of information plus leaks and whistleblowers out in the open to thanks to the internet and social media.
Sure, you have a lot of fake news and propaganda today form the mainstream and social media, but back then it was all exclusively fake news and propaganda, as only the ruling elites had the truth and they'd never share that with the peasants, while any peasantry who dared speaking the truth that went against the official narrative would be punished for heresy. That's why Europe spent so much time in the dark ages and the advent of freedom of thought also brought in the Renaissance era.
>When the brain is chained, there is no hope for a revolution.
I disagree, people in the west today have a lot more freedom of information and freedom of speech than in the distant past. Well, unless you live in the UK or Germany where the police arrests you for posting a meme online about a politician, try to ban encrypted chat and sources of information they consider "hateful" in order to control the narrative and restrict the population to only vote for the entrenched establishment.
at no time has there been a good outcome from which this change made.
The people who applied the force merely swapped with those who had wealth. Essentially, they wanted the wealth, and co-opted the masses to enable themselves.
What we have today is relatively good. Just because you see some billionaire who have more yachts than you could ever hope to own, doesn't mean you aren't living a good life. At least the french revolution was in part about lack of food and starvation. I dont see america starving.
unless you're in the bottom 50%
> I dont see america starving.
True, but starvation is a pretty low bar; obesity and all the related health problems due to an unhealthy diet (because garbage is the cheapest food and what the bottom 50% can afford in the US) is the modern version of starvation
https://www.reuters.com/world/us/hunger-us-continued-multi-y...
> Hunger reached its highest point in the United States in nearly a decade last year, with 18 million households, or 13.5%, struggling at some point to secure enough food, a Department of Agriculture report released on Wednesday said.
https://www.ers.usda.gov/topics/food-nutrition-assistance/fo...
https://www.feedingamerica.org/hunger-in-america
I mean, sure, they are not "staring", it's only hunger...
The pendulum metaphor fails often; here are some examples where it cannot make sensible predictions: species level extinction; major technological shifts; the overall growth of economies (upward), the growth of attitudes around human rights.
Why does the pendulum metaphor fail? It has no explanatory ability to handle non-cyclic things. Mathematically, it has too few degrees of freedom and a poor functional form.
How often does the pendulum argument make a testable prediction? Is there a prediction of _when_ something will happen? Is there a scientific study (or even statistical analysis) of the underlying factors?
The pendulum argument often serves as some kind of wishful thinking; just wait, it says, and things will (somehow) “swing back” to the middle. For a while, at least, until there is some kind of overreaction.
Enough. Let’s call bullsh-t on this vague metaphor. There are better ways of thinking.
(In contrast, the statistical concept of “reversion to the mean” is a mathematical fact. Using it when observing real world data helps us assess the nature of the underlying statistical distributions.)
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The alternative is returning to a feudal gilded age where there are a very very small cabal of asset owning lords, a very small class of scribes for the lords, and then a sea of serfs.
The whole concept of wealth accumulation is entirely human-made, and influenced by what the society is willing to tolerate.
It only becomes a problem if people are miserable, the palace stops being a beautiful landmark and becomes a symbol of oppression.
Back to stocks, I think there is absolutely nothing wrong with the top 10% owning 87% of the stocks (in the US, because apparently, the rest of the world doesn't exist...). The stock market is risky, that's really a thing for those who have all their basic needs covered and can afford to lose big. Owning stock i.e. investing in companies is also among the most best things to society the rich can do, compared to, say, building palaces for themselves.
All that to say that if some causes are worth revolting against, I just don't think inequality in stock ownership is one of them.
Think about young people trying to buy their 1st home now, its becoming impossible.
Absolutely enormous amounts of money.
I’m still “waiting” for the GFC to correct the Australian housing market…
QE was not, but, you know, everyone who owns assets or had a job turned out to be a beneficiary of it.
At least in Finland today it's much easier for young people to buy their 1st home now compared to 15 years ago. Interest rates are roughly where they were 15 years ago, but house prices in real terms have gone way down. There's also huge market asymmetry with large amount of vacant properties that nobody wants to buy, and relatively few buyers.
So why is it different in Finland? Is there a lot of free space around then cities? Or doesn't everyone want to live in Helsinki?
A market crash like that would result in extremely broad layoffs, major global supply chain instabilities, and a cataclysmic knock on effect of capital losses into nearly every walk of life on earth.
Not to mention, as many already have, the federal govt would undoubtedly bail out the worst actors and leave the poor to fend for themselves.
Just yesterday the Treasury Department announced they aren’t going to enforce a money laundering law. You think they’re going to New Deal a major crash’s now? No way.
The top 10% aren’t losing their jobs in a crash, but the bottom 50% might.
So while the top 10% keeps investing and will maximize the recovery, the bottom 50% will cash out at the bottom and won’t return to invest for years after their emergency fund has recovered.
I've never felt that I am entitled to any sort of property even when being software engineer to the core, even more a house, as a young person right after university. That was always a hard-won luxury, and I don't even mean some extremely well located place.
Some folks here often mention similar stuff and refer to some period in 50s/60s in US specifically where 1 salary could have done it in some more rural areas. Nobody mentions how rest of the population looked like, hardly whole US population was buying new houses with wife being stay-at-home mum.
When women started going to work too, suddenly such couples quickly outcompeted single earners from housing market. In Europe, this stay-at-home was never the thing in most places so we never even had such period, thus 0 such expectations. Properties, especially houses, were always a hard-won luxury.
Hell, there are companies and families who supported the third Reich openly.
They were rich before world war 2, they were rich after and they are still rich today.
Not to mention none of them had to go to the Nuremberg trials...
It's their system, it's their game.
> They were rich before world war 2, they were rich after and they are still rich today.
Yes, these families exist. But there is an equal amount of them that went to the poorhouse that you don't know about. Many German Nazis that got wealthy through stealing/grafting of Jewish businesses _did_ lose their assets. Others still stayed somewhat wealthy but are now just barely millionaires.
It's very easy to get fooled by survivorship bias, since it's only the companies and people that are still wealthy that get heavily covered. I don't think a publisher would accept a book like Nazi Billionaires about all the people that are no longer relevant at all.
edit: I have to say, I also think it's terrible that so many people could just go on like nothing happened. Doubly so for the bureaucracy, diplomats and judges -- both in Germany and the Axis collaborators.
But this is how the world goes. The only people punished for the Cultural Revolution and Great Leap Forward or the Gulags were those caught up in internal purges. The new Syrian government threw a few of the worst people in Jail, but cannot dismiss everyone involved in the old system for practical reasons. The Architects and executors of British and Dutch "counter-insurgency" strategies to keep their colonies have Barracks named after them. I could go on with American examples but I think we all know.
Or eventually get the parents house from generation to generation.
What's happened is a massive shift from a small-scale agricultural economy to a mix of urban and large-scale agriculture, and the building of homes/apartments hasn't kept pace.
in the great depression, the crash did reduce inequality
in the covid19, the crash increased inequality
my opinion is that nowadays, fortune is highly financialized.
during a crisis, for most(99.99%) ordinary people who are in the market, they suffer the real lose, and they have nothing to comeback, even have to sell their assets to pay their bills, all they can get from the goverment is something like food banks, or the best situation, get a job to sell their labor
but for certain people either hold enough cash or can obtain enough cash from government relief programs, putting them in a position of advantage, this enables them to quickly reap a large amount of wealth during an economic crisis.
If you're not rich but invested whatever you could over the course of your life and now the market tanks to where you've lost half (or more) of what you had then someone else is going to win that from you.
A massively rich company can hold out a lot longer than a software developer who tucked away what they could over the years. If a real crash happens that software developer just got 30 years of their net worth mostly vaporized in a few months.
How much of the population is in that category? It's the whole middle class basically. It's a crushing blow to most folks when the market crashes for a long period of time. It's even worse for folks who are already in a position of barely scraping by while putting a little bit aside whenever they can. That person is destroyed if a majority of that disappears because they may have to sell it off on the spot just to survive because if the market really crashes, you can be sure a ton of people are going to be out of work.
A billionaire with $200B in wealth could lose 99% of that and still have $2B, generational wealth that will perpetually fund an entire family tree down to great great grandchildren.
I personally think that the Fed papers are just designed as an excuse to print money, but my point is the Fed is very far from seeing this as a problem and will never act to remedy it.
It would probably make it harder if it were anything like 2008.
The issue with housing is that throughout the Western world we've made it incredibly difficult to get new housing built.
Imagine if everyones socks were suddenly valued a million bucks, except yours. Would you "stay in the same place" or would you suddenly be too poor to afford to buy the labor of all the newly minted millionaires? I'd bet on the latter.
It also causes a lot of companies to go out of business or reduce their workforce because of reduced consumer spending, hurting the working class more.
They are only scared of one thing.
This would assume rich people have all their money in stocks, which is not correct.
Lina Khan types need solid support and fire power to make a dent.
Congress will not let the stock market crash because they are #1 insider traders.
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Here's a recipe for happiness: stop comparing yourself to others and stop trying to keep up with the Joneses. It's old advice, but it's clearly been forgotten.
cheap products from 3rd world
cheap nature resources from 3rd world
cheap labor from 3rd world
that's why many of the free citizens of the Empire don't need to care about inequality at all
when these things change, you will care
Have you.. lived in other countries? I came here from southeast Asia and yes, my BigTech salary affords me a comfortable life, but I simply don't understand why the bottom 90% aren't up in arms over here.
Instead we should be looking at the cups below us who can barely get by their salary
Well the idea is that (correctly or incorrectly) lower inequality would result in significantly higher absolute living standards.
Arguably they had been going up at the pace they have over the last several decades almost entirely due to technological progress (and more arguably globalization/free trade).
Average productivity has been in increasing at a much faster rate than median or below median absolute living standards. Growing inequality is possibly the main culprit.
> looking in the other guy's cup
Well hard not to do that when the other guy has turned off the tap after filling his cup..
It could be way worse but it could also be better. There are people in the U.S without good health care or access to dignified jobs (or at least - a livable salary). These are issues that can be improved by a lot, it's not a law of nature.
That amounts to cultural and political hegemony. Telling people to accept that is a little like telling them to know their place.
Historically, one of the major turning points in the cycles of society/governments is when there is massive inequitable distribution of wealth such that the masses are left to divvy up a tiny piece of the pie while the top .05% hoard 80+% of the wealth. IMO we are currently seeing the wealthiest people on earth taking over the levers of the US government and it is unlikely we will ever return to the constitutional democracy we used to have. Moving forward Elon Musk and the other members of his Gothic MAGA will decide how much the government can spend each year and on what and for whose benefit.
A very, very different scenario than being envious of the sports car in your neighbor's driveway.
Is there any discussion/research/case study analysis where this is explored? I.e. overall citizen satisfaction/economic productivity and how it relates to wealth distribution?
(Although, I guess if your metric is "citizen satisfaction" maybe that's not as terrible).
In any case, there are lots of case studies showing what happens at the extreme inequality end of the spectrum. As I mentioned in another comment, my favorites come from Piketty "Capital in the 21st Century" and Acemoglu & Robinson "Why Nations Fail".
In the latter, the case study on the rise and fall of Venice is particularly fascinating - huge economic growth due to inclusive economic institutions that promoted social mobility, followed by a downturn once the aristocracy moved to entrench their own interests at society's expense. This seems to be the central thesis of the book, although I'm only a few chapters in.
The parallels with modern US politics are pretty hard to ignore though.
Not in any kind. It is absolutely the case, if there's mostly untaxed generational wealth transfer. Imagine this - you are born in this world with nothing. And every parcel of land and property is owned by somebody - somebody who with high likelihood inherited it or hundreds of millions or billions of assets on spawn.
Now obviously, you can inherit all sorts of other factors too - like very valuable social networks and a set of trade skills carefully passed down and tought. But even neglecting those, the largely untaxed generational wealth transfer would naturally lead to massive inequalities and disproportionate amounts of wealth concentrated in few families.
My point was that pointing out "Top x% own Top x+y% of good z" doesn't say anything meaningful without contextualizing why (if) this is a bad thing, and what x and y should be for a given z.
The upshot is that wealth inequality is above or close to historical high points and that it has actual and severe real world negative consequences.
When there’s massive inequality in the system, the super rich will compete with you for resources. Resources can include:
- Housing, of which fewer and fewer people could afford owning at the median income level
- Education, think buying access to spots at top schools and the ability to afford the fees/debt
- Political power, think Elon Musk in the western world
- Media/consensus, think Jeff Bezos, and think blaming of immigrants for house prices
- In the current tax system, the super rich could inherit wealth while paying very little tax, and they can borrow money at very low rates collaterized with the massive amounts of assets their own: meanwhile some of us pay a 30-50% tax on our income and are struggling to save for a downpayment or retirement.
With the massive financial power of the super rich, it’s not so much that this is bad in an “evil” way. Rather, it’s bad for the rest of us because the super rich are indifferent to us in pursuit of their own agendas in the “cosmic indifference” kind of way. Just as how we humans destroy anthills with an indifference if they get in the way of road constructions, the super rich would “run over” us if it benefits them.
Just looking "more uniform" would be a great starting point. The optimal distribution is left as an open question for future research.
Not having the perfect solution upfront should not block incremental improvements, which is more or less what is happening ATM. E.g. people argue we cannot have free healthcare because the proverbial "welfare queen" will also receive it.
What makes you think the optimal distribution is "more uniform" rather than less? I'm not taking sides in this question, simply pointing out that the headline is rather meaningless without context
At the same time, one could imagine a situation where wealth is so abundant that even the lowest 1% could afford any modern luxury. In that case it probably wouldn't be so bad if the top few wealthiest individuals had enough money to buy and own whole planets. They would likely use their wealth to make life worse for others, as they tend to, but that's out of the scope of this model.
Every scaled up platforms then gets trapped into collecting/selling personal data and flooding the field with Ads (and obviously in these ad auctions the 10% can outbid the majority so Ad prices keep rising).
Comparatively, you need to earn $663,164 to be in the top 1%, and more than $3M to be in the top 0.1%.
I just want to highlight this to remind that the top 10% is by far not made up exclusively of ultra-rich individuals like people on internet like to believe.
https://www.census.gov/library/publications/2024/demo/p60-28...
It paints a pretty poor picture of what is possible. I met many uneducated immigrants on a fish processing boat in the Bering Sea making 10k a month, a job usually begging for people. They would show me pictures of their wives and children living well.
The former is less meaningful as it ignores your cost of living.
The majority of people who earn a top 1% income only manage to do so for a short period.
As a consequence the overlap between top 1% by income and by wealth is small. They are (broadly speaking) different groups.
It's VERY effective.
Anyway, if anything the distribution based on wealth would even more starkly be hyper-focused at the top, the people in the 10-9% range aren't exactly sitting on mountains of gold.
There's two ways to stay the richest man in the world:
a) Get more money.
b) Stop people from getting more money than you.
And I suppose c) Do both. If that's what you are about.
A lot of people characterize corporations as a sociopath because it expresses a lot of clinical markers. I think if you frame the economy as war, you'll find similar markers. People are exhausted, shell shocked, constantly insecure, attrition or the feeling of attrition (feeling of no progress). PTSD from this everlasting war.
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The number of Americans with passports is at an all time high of 48%, and some of that is simply for convenience ID for internal flights.
https://dqydj.com/income-percentile-calculator/
And you need both time and money for a vacation. The average American family probably can't take 2-3 weeks off to travel every year, which makes their vacations shorter and cheaper.
Also, Hotels and Airbnb's are incredibly expensive (even for me, working a decent job with a good income) for families. That's why i chose campings over hotels and bought a decent tent.
Yes, the vast majority of the US population has never traveled overseas. Many of those who do, do so once in a lifetime.
If you’re not rich, but spend more than rich people do on stuff, you’re going to have a hard time getting rich.
A lot of vacations also involve crashing at another family member or friends spare bedroom/fold out couch.
I grew up with family vacations like this (inflation adjusted) and I had a great time. It’s hard to wrap your mind around when you think vacations require significant travel.
https://m.youtube.com/garyseconomics
Here's how I would sum up his main argument: Ordinary people have less money and can no longer afford to buy property. Governments have less money, infrastructure everywhere is eroding. So where does all the wealth go? The only possible answer is to the very rich, who are doing better than ever, while everyone else is down financially.
To be clear, this is not about the entrepreneur who made a couple million bucks and has three houses. It's about the top 0.1 % who are sucking everyone else dry, permanently: The poor, the middle class, and the government.
We need to do something to reverse this trend. And soon.
His theory (which sounds plausible to me) is that a lot of the wealth of the ultra rich is actually bound up or linked to immovable assets. At the same time, investments in these assets is what makes them unaffordable for everyone else (i.e. your kids won't be able to buy a house anywhere in the country, despite them earning more after adjusting for consumer goods inflation).
By taxing large real estate wealth accumulation (think personal wealth in the tens or hundreds of millions and up), you get the best of both worlds: The (ultra) rich who want to stay invested have to pay your taxes (they can't move real estate to a tax haven) and thus transfer part of their wealth back to society. And if they divest from real estate, it puts downward pressure on real estate prices, thus making it more affordable for the rest of us. Win-win, from a society's perspective.
How specifically doesn’t matter as long as it’s enough. The way I see it, the best ideas, other than all out socialism, is to have progressive taxes that start low and have extremely steep curves.
Just one example, we could have a progressive property tax. For people who own a single reasonably sized home that they actually live in, the property tax would be very low and reasonable. However, if people own multiple properties, properties they don’t live in, or extremely large properties, the tax rate would increase and then skyrocket to the point where a wealthy person has no choice but to sell those properties or lose money. All that selling will bring down the price of real estate. At the same time, nobody will be in a position to buy that real estate except for those who don’t already have much, because for anyone else the tax will be too high for it to work out. If they don’t sell, they pay enormous tax, which is also acceptable. Either way we reverse the transfer of wealth.
Apply this same progressive scale to capital gains tax and estate tax. Also income tax, but less so. Effectively this puts a cap on wealth. If a person tries to own more than their fair share of things, they won’t make more money. Of course you still allow people to be quite rich. There will be multi-millionaires with fancy cars and mansions. There will still be movie stars, sports team owners, and bankers. They will still live lives of luxury and want for nothing. They just won’t control our entire society.
How do you spend it? You spend it on anything that benefits labor and makes everyone’s lives better. You don’t use it on a fossil fuel subsidy. You don’t use it on defense contracts. You use it on universal health care, social security, education, FEMA, infrastructure. Pretty much you do the exact opposite of whatever DOGE is doing.
The big takeaway for me was that wealth inequality never improves without some major catastrophe (war, revolution, plague etc). The proposed model is really intuitive and compelling (tldr; return on capital has historically always been higher than real growth, which guarantees indefinite concentration of wealth until there's a crisis).
Last year's Nobel Economics Prize winners, Acemoglu and Robinson, tell a similar story in "Why Nations Fail", which I am working through at the moment. Although in their case, they seem be suggesting a more causal link between erosion of political and economic institutions and the collapse of empires.
I wish these ideas were more broadly accessible and understood. The real risk of total societal collapse should transcend any partisan fighting about ideal tax rates, government inflation/unemployment targets etc. Everyone has a common interest in there not being a violent upheaval (arguably the rich most of all).
Last I checked the numbers, current wealth inequality seems about as bad as it was before the great depression. And its not enough to just say "well, absolute wealth is more important". As others have pointed out, its not stable to have such huge relative wealth disparities. And that's before you even consider corruption.
> Are mass violence and catastrophes the only forces that can seriously decrease economic inequality? To judge by thousands of years of history, the answer is yes. Tracing the global history of inequality from the Stone Age to today, Walter Scheidel shows that inequality never dies peacefully. Inequality declines when carnage and disaster strike and increases when peace and stability return. The Great Leveler is the first book to chart the crucial role of violent shocks in reducing inequality over the full sweep of human history around the world.
[1] https://press.princeton.edu/books/paperback/9780691183251/th...
I didn't know Acemoglu got the Nobel Economics Prize.