We're less than 100 years from one of the richest people of all time, JD Rockefeller (net worth ~$300+bn). His family is essentially dedicated to giving that money away at this point, and I believe the family's net worth at this point is in the $15bn range--not peanuts, but hardly growing.
Money doesn't last, but there are always rich people. Paris Hilton, trust fund baby, has made more money from her own businesses than she'd ever inherit from her grandfather. Same with Julia Louis-Dreyfus. But after a couple of generations, the old money is usually gone. As much as people like to complain about "the rich", there really aren't as many generationally-rich people as some make it seem.
[1] http://www.forbes.com/sites/kerryadolan/2015/03/02/inside-th...
But that is a question of who belongs to the 0.01% and who belongs to the 1%. It's not a very interesting social mobility study and I agree with you that the "rich get richer" argument makes no sense for the super rich outliers.
Unfortunately, things do get a lot more predictable at the lower percentiles.
William Henry Gates the Third had a trust fund before he was born. His downside risks for anything he chose to do in life were completely nonexistent. Same with Zuck. Same with Spiegel. Same with 99% of the entrepreneurs HN idolizes.
Here's some light reading:
http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-...
http://philip.greenspun.com/bg/
EDIT: Removed potentially inflammatory line, which went as follows: "Just a bunch of rich kids trying to prove a point to their parents".
This is definitely a personal opinion, but one that has merit if you examine the evolutionary psychology of parent-child relationships. The conversation is a bit in depth, but please understand that I was not trying to simply fire off an ad hominem. I was instead trying to hint at the incentives which drive an already rich child to strive for more wealth. For the vast majority of us who have to work for a living, such behaviors seem confusing. Only upon deeper analysis do the pyschological incentives for such individuals begin to make sense.
You appear to be refuting a claim that was not made in the GP post or in the Forbes article they cited.
Grandparent only said that Gates is among the top 3 riches and is not going to pass on his wealth, they did NOT claim that Gates was born poor or otherwise among the self-made millionaires.
Similarly Forbes lists Gates as the richest person, but makes no claims whatsoever about how he made his fortune. There are two independent claims there and at no time does either source claim that Gates is in the self-made group.
Your QZ article is more responsive, but it boils down to saying that one needs access to capital to start a business. This is not really surprising and ensuring that any capable person can get funding is why we have things like YC. If there's any group out there with good ideas that's being systematically ignored or denied funding, you and anyone else could make big money by investing in them. All you need to do is prove there's an opportunity being ignored and people will jump on it, chasing the money.
You had me until there. Why question their motives? Is it really so hard to believe that Gates really loved computers?
If he was just thinking in terms of outstripping his parents, there were lots of other more-credible avenues available to him. The very idea of a personal computer was scoffed at. Not just by non-techies, but people like DEC founder Ken Olsen.
Did Gates' love of computers motivate Microsoft's anticompetitive moves in the 1990s?
One may as well doubt that Hitler actually liked being a vegetarian.
I very much doubt that cheating athletes love the sport. They may love the fame and benefits that come with the sport, but if they loved the sport, they would work hard to become better at it rather than cheating.
I love my job. I read up on research, volunteer at conferences, tinker/hack on my own time, and provide lots of free consulting. Heck, the only reason I don't provide more free consulting is, well, because I have bills to pay. I certainly can't imaging expressing my love for the field by engaging in unethical, immoral or illegal activities. I suppose if it was the money I loved foremost, it might be different.
One may as well think that Hitler eating meat remains a vegetarian.
Uber and AirBnB are subverting rules and breaking laws in hundreds of municipalities. Do you think they don't care about what they're building over there? Is it just money-money-money and no serious interest in technology? Does that mean, by proxy, that Paul Graham only cares about money?
Is it really so hard to believe that people can have more than one thing that motivates them? Why did Ray Ozzie join such an evil beast? Surely he's just motivated by greed!
Black and white thinking will be the death of us all.
Uber and AirBnB? Do they love the work they do? Maybe. But they love themselves more. They love the idea of being "disruptors" or "innovators" or "rich" more than they care about transportation, housing, or their customers.
And those guys who love sports? Maybe they love winning more.
It's easy to feign passion, after all. Especially when you're already committed to investors.
People go on about Bill Gates and antitrust, but do they really think Steve Jobs or Scott McNealy or even Page & Brin would behave differently?
Bill Gates' biggest fear was not losing the OS monopoly. His fear was of Microsoft turning into IBM -- always having to run everything you do by lawyers.
MS-DOS wouldn't even exist if IBM hadn't had the justice department watching their every move.
It may well be that Gates was driven to purposeful action from a love of computers. That he has had no notable productivity since Altair BASIC (other than third-party accounts of him doing code reviews early at Microsoft), nor any research, would nevertheless make his contributions to the field quite little.
http://www.joelonsoftware.com/items/2006/06/16.html
"Bill Gates was amazingly technical. He understood Variants, and COM objects, and IDispatch and why Automation is different than vtables and why this might lead to dual interfaces. He worried about date functions. He didn't meddle in software if he trusted the people who were working on it, but you couldn't bullshit him for a minute because he was a programmer. A real, actual, programmer."
Edit: My point is, one can love computers and be very good at them without making significant contributions to the field. That describes me and probably most of the people on HN.
I agree, it doesn't matter what his motivation was, but he wasn't solely motivated by "computers".
I love computers, but I don't start companies just to say I start companies. I expect a financial return.
@Natsu, my point of contention is the very liberal definition of "self-made" and "made their money themselves". If you give every reader on HN a trust fund, and a few start successful companies, would these individuals be considered "self-made"?
I don't think so. Self made means start with zero net worth. That means no trust funds, no loans at 0% from parents with infinite payback periods, and no parent board members making absurdly lucrative deals that you'd never get otherwise. Just money you've made from your own labor, and loans you've received without nepotism. You'd be surprised how few entrepreneurs fall under this category.
If you don't restrict your definition in this way, then every rich person is self made, because the interest accruing in their trust fund happened during their lifetimes.
Frankly, I'd be surprised if anyone fits under that category. Pretty hard to survive as an infant completely on your own.
I mean, obviously that doesn't count. But where exactly are you drawing the line? It's less black and white than you are implying; it seems like there's enough fuzziness here that you can put anyone in the "not self-made" category, so of course group X has very few members outside that category. Because, you know, Mr. CEO over here was driven to college by his parents once, so he's out, and Ms. Entrepreneur there inherited a few hundred dollars from her grandfather, so that's no good either.
Most rags to riches stories we have these days, are really a relatively well off to riches stories when you look at them. The only exceptions are people who won the celebrity lottery.
It's surprisingly hard to accumulate wealth when you're struggling to keep the lights on.
Someone who has more discretionary income can take on more risk than someone who can't keep their lights on, and a failed venture doesn't have the same consequences.
Just by virtue of taking more risk, those in the middle class are expanding their chance of success by orders of magnitude more.
I'd dare say it's impossible for the middle class to not to become "mega rich" at a greater incidence than poor becoming middle class.
I'm just saying that a lot of the people who normally discuss these "But it's not that hard or impossible to become rich, what are you talking about?" stories, are the kind of people who somehow magically were able to go to an ivy league school or similar.
They say they became rich on their own, and that most of the mega rich also became rich on their own, but forget that compared to the vast majority of the population, even confined to the US, they were already born rich and have a massive leg-up in the world from day 1.
edit: As Donald Trump would say "I made all my own money. My dad only gave me a small 1 million dollar loan, and with that I was able to make my own fortune."
The assumption is that the dad will be less stringent on due diligence, more forgiving in what he gets in return, and most importantly, will have brought you up all your life in such a way that you are primed for handling those kinds of money.
The wider point is that someone who grew up in a trailer park, doesn't even have access to investors in the first place. For example: how are you going to get an investment, if you can't afford to to schmooze with investors? What if a $50 dinner is completely out of your price range? What if buying someone a $5 coffee is a big deal financially?
And then there's the issue of safety net. There's a big difference between your venture failing meaning you end up living on the streets, or in your parents' garage.
1. My great grandmother was a homeless woman after getting kicked out of the household because she was the second wife of a husband who had passed, leaving my grandmother in orphanage during WWII when the Japanese invaded China.
2. A couple of years later, her family came back for her. My grandmother worked odd jobs here and there, and my great grandmother gambles it away. My grandmother, fed up, left her to go live in Hong Kong with an uncle.
3. My grandmother's uncle was only employed from time to time. They lived on one meal a day, some rice, flavoured with a few drops of pig fat. My grandmother wanted a better life. She signed up as a labourer to carry tens of kilograms of dirt everyday on her shoulders[1], as part of a project to clear a mountain. Her uncle said she wouldn't last 3 days. It was such painful work she almost went home on the first day. But with such a stark challenge from her uncle and she didn't want to lose face, she stayed for 3 months. She was 14. She went on to work as a servant, but more or less treated as a slave, getting yelled at and beaten, and then finally someone taught her the business of picking up factory fabric scraps, weaving them into clothes to sell them. And that's the business she was in, even until the time I was following her around when I was 5 or 6. She bought factory scraps in bulk, using her sewing machine, made shirts and pants, and in 1995 or so, sold them for HK$10 each. It put my mother through school and nursing school. [2]
4. My mother was a nurse, and it was a well paid profession. However, my parents lost almost everything from their real estate investments in the 1997 Asian financial crisis. Debt can ruin you like that. They sold everything, my mother left her position as chief nurse in a hospital, and using a skilled migration visa, we moved to Australia, starting from zero.
5. Today I'm working as a software engineer in Australia. When I was tempted to slacken for my university exams, when I was tempted to lower my ambitions and stay in an unskilled job, when I was tempted to take an employer's low ball salary offer based on my living expenses, I remember what my grandmother had gone through, to put me here. And I will follow her example, and do the same for my family.
"Stay hungry, stay young, stay foolish, stay curious, and above all, stay humble."
[1] A carrying pole. https://en.wikipedia.org/wiki/Carrying_pole [2] My grandfather had an accident while fixing a lift, and lose control of his legs. Unable to provide for the family, he killed himself. My uncle, my mum's brother, grew up mentally ill. My mother also had a sister. My grandmother brought up three children and supported my great-grandmother, on her own.
> There’s no doubt that entrepreneurship is thriving globally. Fully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth. Another 405 inherited at least a portion but are still working to increase their fortunes.
Not sure how "at least a portion" is defined, but I imagine less than half had significant inheritance. That's not to say the self-made billionaires were born middle class, but it does suggest that wealth does not necessarily beget wealth.
But even if 1190 of them had gone "rich from zero" and only 1 had inherited his wealth, it wouldn't be that comforting by itself.
What you generally want in a society is: lots of poor people to be able to get out of poverty (into middle class), middle class to have a decent chance to become upper middle class, etc -- and of course most middle class to be stable and not fall into poverty.
That is, things that affect the majority of the population.
A society with a middle class that shrinks and worse prospects for 99% of kids compared to their parents is not absolved if it has 1000 billionaires emerge out of poverty (or middle class). A society with just 10 billionaires but far better social mobility (e.g. like in the 50's) would be much better to live in.
That's just relevant as an opportunity to a mere .0002857% of the population.
I know it's pretty minor, but it's actually 1,826 in total, so it's 35%.
>A society with a middle class that shrinks and worse prospects for 99% of kids compared to their parents is not absolved if it has 1000 billionaires emerge out of poverty (or middle class). A society with just 10 billionaires but far better social mobility (e.g. like in the 50's) would be much better to live in.
I don't follow this logic at all. Does number of billionaires created affect anything else? They seem somewhat unrelated to me, especially in light of what I said before about the rich constantly turning over.
A, thanks. Missed that, thought 1191 was the total given.
I think the rest of the argument remains unaffected though, so wont change it.
>I don't follow this logic at all. Does number of billionaires created affect anything else?
Yes, I don't see the two things as "unrelated" events, but as the difference between a society set up to sustain and grow a strong middle class, and one that caters to a tiny majority of rich (regardless how they got there, by inheritance or bootstrapping) to the detriment of the middle class.
That is, this outcome is not just the effect of random people going about their life more or less independently and succeeding or not, but of a society (laws, education, etc) that has been rigged towards sustaining and growing (but always to a negligible percentage of the total) the upper classes, and milking the middle class and the poor to oblivion.
If upward mobility to achieve great wealth is your concern, surely this means we're heading in the right direction. I don't think the system is rigged towards benefiting those with already great wealth, but markets have expanded and entrepreneurship has a bigger upside than it has in the past. You don't have to take the analysis I quoted at face value, but just take a look at the richest Americans. No Vanderbilts, Rockefellers or Carnegies.
My opinion may not be popular, but I find it encouraging to think that so few can create such great wealth in today's society, even if the odds are against me creating such wealth. In many cases, that means that a product or service one person creates can benefit a large number of people and make you very wealthy. And I personally benefit from many of the products and services that were created by this generation of the wealthy individuals.
[0] http://www.forbes.com/sites/afontevecchia/2014/10/02/the-new...
No, "upward mobility to achieve great wealth" is not my concern -- I think I made that clear in the comment.
Upward mobility to middle class, middle class stability (to going back to poverty), and upward mobility from middle class to upper middle class are my concerns.
To which "upward mobility to achieve great wealth" could even be working against -- while itself concerning a very tiny majority.
>I don't think the system is rigged towards benefiting those with already great wealth, but markets have expanded and entrepreneurship has a bigger upside than it has in the past. You don't have to take the analysis I quoted at face value, but just take a look at the richest Americans. No Vanderbilts, Rockefellers or Carnegies.
What I'm trying to get at is that there's a difference though between:
"we could only make 10 non-rich people ultra-rich in 1950, whereas we have 1000 non-rich made ultra-rich today".
Which might be all well and good, but this "upward mobility" only concerns a tiny minority, and having a healthy "upward mobility" and social stability for the large masses.
I hear this a lot but I really don't understand the logic. Because the middle class is a subjective and proportionate categorization, your target is always going to be moving. Who cares about joining the middle class if most of their needs already being met.
If, for instance, a replicator was invented that provided food and shelter to anyone who wanted it for free, a hell of a lot of people could live quite happily and comfortably without being middle class. So the goal should be to get to that sort of scenario as fast as possible. That is, a world in which the cost of covering our basic human needs is so small that nobody needs to be middle-class or higher to be happy.
Of course the target its moving. That means society is progressing in the aggregate. So why keep "desired standards of living" stuck in the past? In 1840 having no electricity and running water was considered acceptable. Today we think even internet is a kind of necessary good.
So, with progress the definition of rich / middle class / poverty etc should move too. Who said poverty is some absolute measurable state? Obviously you shouldn't consider yourself "rich" or even middle class, if you live in a trailer park with $100/month, just because you have housing, electricity and lots of available food in Walmart, whereas 1200 A.D peasants and 10000 B.C cavemen had neither...
What was the case "in the past" doesn't come into play when people compare their status to other contemporaries -- and the level of the society they live in.
So then it's all about envying those who have more, no matter how comfortable a life you happen to have.
You could use the moralistic conception of "envy", and make it sound bad, like telling kids "you should not envy your brother other".
Or you could:
1) see that envy and egoism is considered a primary motivator for advancement (if you like free market theories, e.g. Adam Smith and the "egoism of the butcher", etc.)
2) accept that humanity should progress in tandem, not just let some people get the majority of the benefits of today, just because the vast majority is also "better off compared to people in the past" (if you prefer socialist theories).
If they take away your internet access, will you be fine with that because people in 1850 lived in log cabins without internet, electricity or running water and you still have it so much better than them?
I agree it's a primary motivator for advancement, but if the government redistributes wealth it destroys that motivation and the benefits that come along with people having it (new businesses, higher productivity, increased education, etc).
> 2) accept that humanity should progress in tandem, not just let some people get the majority of the benefits of today, just because the vast majority is also "better off compared to people in the past" (if you prefer socialist theories).
I think at some point there's little point to everyone increasing their standard of living. We're already reaching a point here in the US where people are simply bored. Would we all be better off as a society if everyone had an extra 500 sq. ft. added to their homes, or a Tesla in their garage, or designer clothes? We are reaching the point of diminishing returns when it comes to material possessions, unless it's all about envy like I suggested in my previous reply.
> If they take away your internet access, will you be fine with that because people in 1850 lived in log cabins without internet, electricity or running water and you still have it so much better than them?
Well, I'm not being "given" my internet access, I pay for it. But yes, if I could no longer afford to pay for my internet access I would still thank my lucky stars I have electricity and running water. Duh?
I guess what I'm saying is they all want the world to think they made their own money. All are modern day Horiatio Algiers?
So, I don't buy Forbes figures; "There’s no doubt that entrepreneurship is thriving globally. Fully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth. Another 405 inherited at least a portion but are still working to increase their fortunes."
Exactly how did Forbes come up with these numbers? I quickly looked at the list, and I buy the athletes didn't have much help, but the rest; I wouldn't bet on it. They had a lot of unseen help. Yea, you can always find a few exceptions, but I bet it's less than 10 individuals.
http://www.pewtrusts.org/en/research-and-analysis/reports/20...
Calling the US a 'feudal' state is obviously hyperbolic, but it's most definitely a classist society.
The risks for dating your assistant or a nurse are higher compared to what it was 30-60 years ago for example. Now it's safer to date someone at the same income level. Or someone in the same social group but outside of work, which will tend to be the same income level again compared to a workplace.
The other part is probably driven by how there are more dual income families competing for the same limited resources, such as housing, making the income of your spouse more relevant.
Additionally, I think you are conflating education with social standing, when they are somewhat different, and there have been different levels of social pressure against doing either at different times in history.
http://www.nber.org/papers/w19829
I agree that females who would have become nurses and secretaries in the past are now becoming physicians and executives, and without doubt this a good thing. My observation is just that by solving one problem (limited opportunities for women to become professionals) we inadvertently encouraged another (assortive mating on the rise which reinforces inequality).
It's also interesting you mention social pressure at different times in history. I am working my way through Downtown Abbey at the moment and it reminds me that throughout history there have been strong pressures for people to marry within their own class/caste systems. Probably for many reasons, but one of them is certainly the maintenance of wealth and power, which has typically been far less equal throughout those historical periods than the US is today. The post WW1 period in the US has been the exception not the norm.
If the nurse or secretary of 20 or more years ago was "from a good family", what change was really spurred by the union?
That's the uncontroversial perspective, yes. The more controversial, but far better-supported-by-evidence perspective is that the estimated 40-80% contribution that genes make to people's intelligence, conscientiousness, and work ethic is much more likely to be at play, here.
I don't think you really need to get into genetics to explain anything here. Some people get lucky, their children inherit their wealth and maybe squander it after a few generations, or maybe they don't. Neither the parents nor the children need to be particularly smart; they just need to get lucky.
Using money as a measure of intelligence is very risky. On the one hand, sure, everyone wants to be filthy rich (presumably) so there's a lot of competition. On the other hand, there are large swaths of the whole world population that will find it impossible to be the next Zuckerberg or the next Bill Gates- say, a daughter of a Bangladeshi weaver is probably not going to travel to Silicon Valley and fund the next unicorn startup, sell it for billions and bequeath some of them to her children.
That's not because of a difference in intelligence with someone who will follow that path. It's because we can't fit 7 billion people in Silicon Valley, and a few tens of thousands of jobs in tech.
I guess you can argue that the people who are already in Silicon Valley have some sort of genetic advantage but unfortunately that way lies a whole bunch of very gnarly racial bias that is going to be extremely fiddly to untangle. Therefore, see above: using money as a measure of intelligence is very risky.
hah, ok, go ahead and make that claim with zero links to back it up. Please, tell me more about eugenics.
https://www.youtube.com/watch?v=62jZENi1ed8
Four studies cited on this handy chart:
https://jaymans.files.wordpress.com/2014/04/iq-heritability-...
It's very well-established science that you could have easily googled, but downvoting unpopular research, pointing and shrieking "eugenics!" is a better argumentation technique, I suppose.
From the abstract: "Intelligence is one of the most heritable behavioural traits."
(However, it is true that saying that genes contribute to intelligence isn't eugenics. Eugenics is a methodology where you attempt to selectively breed humankind by broader intent, rather than by emergent properties of human tendencies. A proposed trait to optimize is often intelligence, but similarly frequently it's attractiveness and things like that. Genetic influence on intelligence is simply a hypothesis whose testing would have consequences on the practice of eugenics.)
------- edit ------- I see your reply to the other comment. I think a quote from the article that makes your point far better is "[...] studies have consistently shown that genetic influence on individual differences in intelligence is substantial." I negligently assumed you were specifically talking about heritability.
From wikipedia (https://en.wikipedia.org/wiki/Heritability): "Heritability is a statistic used in breeding and genetics works that estimates how much variation in a phenotypic trait in a population is due to genetic variation among individuals in that population."
The section titled "Intelligence brings (some) genetics to ‘social’ epidemiology" addresses your concerns about environmental factors.
I don't think it's very controversial to say genes contribute to intelligence. Genes contribute to everything, how could they not affect intelligence? This isn't eugenics, nobody is saying we should (or could) use this information to selectively breed humans, and nobody is saying intelligence can be correlated to race.
We know that selection happens at the level of genes, not individuals. You can't measure the fitness of genes by evaluating their effects solely on individuals because their effects may involve ensembles of individuals. Since humans are highly social beings, I'd expect our genes to be selected for intelligence at the level of cooperating brains as well as individual brains. There doesn't seem to be much research on measuring this aspect of intelligence.
Society vilifies motherhood? Then all the dads who want to put the borked society back together again can take up the mantle of the caring parent. Be my guests, eh.
Because the wife won't allow it; it's extremely unattractive to women to be a stay-at-home-husband, or so I've been told (by women).
Women have mad inroads in the workplace. Women don't necessarily look to 'marry up' and stay home, they can be the executive now.
The secretary still gets married, she's just the second wife.
Take 5 minutes to read this, it articulates what the author failed to (and as a result reached a conclusion of little use):
http://www.socred.org/index.php/blogs/view/it-s-time-for-an-...
Think of the banks everywhere. They are today's churches. Big spacious lobbies. Stand in awe not at the creativity but at the sheer amount of high value real-estate they can waste.
The guy writing this article doesn't understand the wider dynamics at all. It's about money creation and the use of that to ramp land prices in order to compel everyone to hand over part of their labour.
As you note if you have money you can get more of it because you can leverage it. But that's only part of the picture.
I'd encourage everyone to read the above link and also Henry George "progress and poverty"
http://www.amazon.com/Progress-Poverty-Industrial-Depression...
If you could point me to a single bank president who says his goal is to "compel everyone to hand over part of their labour," I might find this believable. Otherwise it reads like an Us vs. Them Marxist diatribe. Red meat for the proletariat, no different than the Tea Party.
I agree that there are systemic forces at work, and that they should be changed, but it's silly to impute dark intentions.
(By esoteric motivation, I mean either an "underlying" motivation or an "epiphenomenon" that feeds back onto itself.)
It is not necessary to acknowledge or even to know that you are behaving as part of some esoteric motivation, for it to be either a true or at least useful model. For example, think of "selfish gene" type explanation of reproductive / behavioral biology. That is a useful model for thinking about behavior even if the parties themselves talk about courtly love, religious morality, etc.
Particularly in the case of a highly developed financial economy, there are lots of decisions that have effects, which effects tend to reinforce making those decisions, without anyone explicitly talking about those effects.
For example, the political decision to create and maintain the tax-deferral advantages of e.g. 401k accounts, is bipartisan and widely touted as helping to advance the cause of retirement security and broad prosperity. However, in a very real way, it's also about shunting vast quantities of "dumb money" into a relatively high-fee intermediary industry of 401k administration, mutual fund management, and etc. In turn, those intermediaries employ vast numbers of well paid personnel, as well as enjoy concentrated financial returns to their ownership -- and the owners and workers of the intermediaries lend massive poltiical support to perpetuating and extending those types of program (see e.g. the successive creation of more and more favored account types: Roth IRAs, 529s, Coverdell ESAs, HSAs, FSAs, etc. etc.). This means that Congress is compelling the nation at large to turn over a higher % of GDP to financial intermediaries.
It would be disingenuous to claim to disbelieve this unless a Senator stood up and said his goal is to "turn over a higher % of GDP to financial intermediaries." That is certainly not his exoteric goal and probably not even something that he thinks about. But it is a very real consequence, and the feedback loop from the beneficiaries (lobbying, jobs, contributions) most certainly influences him and makes it "about" that.
Very good point.
To give an example- oil companies advocate for the continued use of fossil fuels, because it is in their financial interest to do so. At the same time the employees of those companies have an interest to not screw up the planet completely for their own children and grandchildren. It's not as if those people are part of some dark conspiracy to destroy the environment, but they do seem to be trapped by the forces of the economy into which they have to participate.
Basically, you don't really need an "esoteric motivation" to have totally evil behaviour. You just need to be at the wrong position in the wrong organisation.
And if you actually want to change things, yelling "evil!" at the people you want to change is a terrible strategy.
Who said it has to be explicitly stated publicly? There are thousands of lawsuits every year and millions of pages of testimony. That's why you can point to Jeffrey Skilling or Bernie Ebbers or George Madoff and say "those guys are frauds." But you can't just point at bankers and CEOs as a class, and with no evidence, claim to know what they believe in their hearts.
I'd go further: it's plain daft.
Why do you think they would say what their true goals are to you? People in positions of power are extremely judicious and strategic about what they say and to whom. They get daily exercise in this and only the best survive. The most effective are excellent at pursuing their goals while maintaining a socially credible exterior. The less effective use coded language (corpspeak or political rhetoric) to try to hedge through via indirection.
My solution - nationalise the mortgage lenders and cap the mortgage to a 3 * multiplier of annual earnings.
An alternative would be for wages to not lag production, and for the ultra-rich to make less money.
I agree I'd like to see far less inequality BTW.
Would be interested to hear your thoughts on the Positive Money campaign, I believe you'll be interested in it.
Their description of the problems with debt is particularly confusing because it's not clear how they intend to avoid any of those things. There seems to be a lot of concern about numbers shown in bank accounts and no concern for what happens to production of and access to goods and services, which is what's really important. The comments there are more interesting than the main article: http://positivemoney.org/issues/debt/
Thank you for the feedback about the website. I've been attending Positive Money meetings close to where I live, I'll be sure to raise those points at the next meeting I attend.
With regards to the plan, I'll try to give a short summary. I would say there are three central ideas, the rest of the details follow on from these ideas:
1. Control over how much money is created would be moved away from those with the power to spend it.
2. The group in charge of creating money would base their decisions on how much new money to make on economic data, for example keeping unemployment low.
3. The money that was created would be debt-free. Interest would not need to be paid back to the creators of new money.
I can go into some of the implications, but before then do you have any questions about the three points above?
2) I believe that's already a goal, though there are certainly perverse incentives. How does this plan correct those incentives, specifically? I'm looking less for goals and more for action plans.
3) This sounds like bitcoin, but I don't see how you can abolish the idea of debt entirely or even why that's desirable. Say I don't have enough money for food (or whatever). If I don't even have the option of going into debt, I starve?
I could see more use for something like debt horizons or forgiveness (i.e. debt expires after a time), but we more or less have this already with bankruptcy, though obviously there are plenty of flaws in that. And then it's hard to get anyone to give you more money because, well, you've already shown that you probably won't be able to pay it back.
I do find some fundamental disconnects on what money is, though. It seems like the idea conveyed there is a simple number in a bank account, but in actuality it's far more complex than that. Ultimately the numbers on your account aren't what's important: access to goods and services is. There are also issues with the idea of trying to rate limit everyone from becoming "too rich." You might prevent future Rockafellers, but you'll also get rid of future Elon Musks.
It seems more useful to prevent people from falling off the bottom than trying to shave off the peaks at the top.
"The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates.[10] The first two objectives are sometimes referred to as the Federal Reserve's dual mandate."
Given that it seems you want to recreate something like the Federal Reserve for the UK, I'm curious about which parts of the system you want to reuse vs. change.
There are similar monetary reform movements in the US, the one I linked to just happened to be driving for change in the UK.
With regards to recreating the Federal Reserve, you could argue that any central bank has a similar role to play, and the UK already has a central bank (the Bank of England). In some ways, you're right, that is similar to what is being proposed, but there are some key differences. Let's use the US system as an example again.
The money in the new system would be debt-free. This is a very important part of the system. Central banks like the Federal Reserve would not be accruing more debt just to do their job (for those that may be thinking having that debt is good, a decent chunk of US taxes goes into servicing that debt, effectively paying off the interest on a loan you didn't need to take out in the first place).
Not only does it take the debt burden away, it also allows greater flexibility with economic strategy. For example, in the current global economic system we go through cycles of activity. When the economy is booming, more money is created, facilitating easier trades. However, in times of recession, the money supply shrinks (or rather the flow of available currency shrinks), making trades harder just at the time when more money would be useful to help the economy recover. Instead what you want is a money supply that can expand even during a recession, and that's easier to arrange by using debt-free money guided by a central authority.
Transparency is another key difference. It should be possible to follow most/all of the debates shaping monetary policy. Correct me of I'm wrong, but we don't seem to have this level of insight into the inner workings of the Federal Reserve.
* I can never promise to pay someone back in the future?
* I can never draw on more resources than I have?
* I can borrow money and never pay it back?
[Edits: better formatting]
Please note that although there are a couple of subtle hints in the video about returning to the gold standard, the video can still be of use as a general introduction into the US money system even if you don't think that's a good idea (I don't think it's a good idea to go back to the gold standard).
Hope the video can be useful for you, I know I found it useful. Feel free to ask me any questions about debt-free money (and how it could be implemented) after watching the video.
Let's look at this in more detail, as it's clear I haven't explained the plan well enough yet.
First, I should clarify the Positive Money campaign I linked to is about money reform in the UK banking sector, but the general ideas can apply equally to the US, even if the implementation details would be different.
Okay, so let's look at the situation in the US. Money in the US is generated in two different ways:
1. Federal Reserve generates money for the US government to spend through the sale of government bonds.
2. Banking system generates money through making loans.
I'm going to leave the problems with the current systems for the time being, so let's skip to what we would change if we wanted to have a single central body in charge of new money.
Firstly, you would take the power to create money away from the banks. Banks could only lend money they had available to lend. This could work through lending out the savings of other bank customers, with customers able to choose how much or little of their money they wanted to invest, and what risk/reward ratio they wanted to have with their investments.
Secondly, you would want to change how money reached into the economy. If banks couldn't create new money, who can? Should government take on this role? The risk with giving governments this power is they might end up printing more money than is needed in order to fund extravagant government projects. How do you get around this?
If the Positive Money ideas were applied in the US, you wouldn't have the Fed selling bonds. In some sense the Fed wouldn't exist. What you'd have instead is one central, transparently-run group controlling how much new money was created, which sets the budget for the government to spend. All new money would be spent into the economy through government programs. There would be no need to sell bonds, the money would be created without debt (i.e. without the need to pay interest to groups willing to buy government bonds), it would simply be new units of exchange available for use in the economy.
Any questions on the above?
What is the incentive structure and how does it penalize gamesmanship? How is the group ruled and why can't 51% of it say that we want to create all of the money for ourselves?
Aren't people already paid for using their money as loans in the form of interest rates and being able to structure how and when the money can be withdrawn (money market vs. savings, etc.)? What advantages are there to this? How do you get banks to offer that and what does the average guy like me even know about trying to control the money supply?
And even in that case, don't you still run contrary to the goal in that those with larger amounts of money still manipulate the money supply by choosing investments?
The group may be appointed in a number of different ways, though I suspect it'd be mostly down to standard job hiring, with some key positions appointed by government. If it helps, I imagine it'd be similar process to how judges are appointed.
However, it's important that the money creation group not be part of government. Furthermore, they do not dictate the flow of money, but rather the amount of new money. Any attempt for a non-elected body to control how money is spent opens up a whole host of potential problems. Instead, it is the government that would decide how new money would flow into the economy, i.e. what that new money was spent on.
In terms of gaming the system, there's always a risk of gaming any system, but it's important to be clear that the decisions on how much new money is available and how that money is spent are being made by two different groups of people. Let's put it like this, if you wanted to game this particular system, how would you do it?
Isn't that more or less how we get the membership of the US Federal Reserve? https://en.wikipedia.org/wiki/Federal_Reserve_System
Also, it's not clear what "not being part of the government" means if some positions are politically appointed. I suppose you're saying new ones can be appointed but old ones cannot be removed, but then that either makes it a lifelong post (which sounds worrisome as they'd be a prime target of corruption) or someone else decides their removal (based on what?).
> Any attempt for a non-elected body to control how money is spent opens up a whole host of potential problems. Instead, it is the government that would decide how new money would flow into the economy, i.e. what that new money was spent on.
I'm having trouble understanding this because the sentences appear to contradict each other in part.
> Let's put it like this, if you wanted to game this particular system, how would you do it?
I'd have to understand it better, first. But in general, a corrupt person would divert the supply of money to flow to them or people who would give them kickbacks (buy their stuff, hire their friends, etc.). They'd divert money away from whatever groups they did not like (political, religious/atheist, minorities, you name it). They'd use control of supply to direct flow to favored media outlets and away from those critical of them. I'm sure there are plenty more evil things to do that I haven't thought of, as well.
Are judges in the US legal system part of the US government?
[1] http://www.archives.gov/exhibits/charters/constitution_trans...
Redistribution through tax can be seen as "baling the water back out of the boat" in this context: it pulls money away from the rich, but doesn't prevent it continuing to rush back to them. It's a thankless never-ending job and politically motivated interruptions in "baling" will immediately result in inequality growing again.
I'm with the Zeitgeist Movement on this: money as a Thing needs to go away. It's intrinsically harmful.
You run the scutwork of the economy with automation, robots, etc, which provides a basic living for nothing, and let people pursue their vocations.
The process for handling large allocations of resources is left as an exercise, but I'd favour direct democracy via recursive vote delegation ("liquid democracy"), at the most local possible scope (following the principle of subsidiarity).
Being free to do what you want is great, but most people don't know what they want, yet they have a natural disposition/desire/urge to lead or follow, and most definitely interact.
Unless you fundamentally alter the way trust funds shelter wealth and income across generations, then all raising the inheritance tax does is widen the gap between the 1% (who you will tax) and the .1% (who will remain out of reach and become relatively more entrenched).
Second is the fact that we live in a global economy now and taxes that are not applied globally will encourage human and capital flight. If, for example, you gutted trust funds or raised inheritance taxes to 75% in the US, you would likely find many wealthy families relocating (and expatriating if necessary) to more favorable jurisdictions. For a few generations now the US enjoyed unrivaled status as the best/safest/most desirable place in the world to live (for most people), but this is already lessening as the world becomes smaller and more connected. It's already much easier for me to imagine raising my kids in London or Singapore (especially if I'm worth tens of millions) than it was for my parents.
Personally I would be in favor of a globally applied inheritance tax set at a high level but the devil is in the details and I don't think we'll get there in our lifetimes.
19 billion tells me nothing.
19 billion / 5200 = an mean of ~3.65 million per taxed estate. That's all I know off the top of my head.
In general I've found the trope of "the rich don't pay taxes because of their fancy lawyers and accountants" generally turns out to be false.
It's not that they don't pay taxes at all, but they definitely pay less than they should. http://money.cnn.com/2013/03/04/news/economy/buffett-secreta...
There's no way you can believe otherwise, a millionaire can afford all kinds of financial experts to work 40hrs/week to move money all over the place to avoid taxes. It's unreasonable to think they don't (ab)use that ability.
We can certainly debate whether that is good policy or not, but it has absolutely nothing to do with any sort of fancy tricks.
I'd consider that a fancy trick :)
EDIT: To answer harryh: Yes and it has been steadily decreasing [1]. And your point is? I think we can agree this mainly benefits the rich; I don't see someone in the middle class would have the discretionary income (not 401k, I'm talking about leftover income after expenses) to put his/her money in massive amounts stocks.
[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
Also, the rise of finance means a lot of Wall Street hedge fund managers who should be paying ordinary income tax are paying cap gains rates through the carried interest exception. Venture capitalists too.
http://avc.com/2010/05/why-taxing-carried-interest-as-ordina...
A similar point holds for the carried interest rule. Those taking advantage of it aren't doing so because they've hired amazing accountants to file their taxes. They're just following relatively straight forward tax law.
Adjacently, while I generally agree with you on the topic of carried interest I did find this column thought provoking. You might enjoy it.
http://www.nytimes.com/2012/03/04/business/capital-gains-vs-...
My feeling is, if you don't have actual capital at risk, you shouldn't get a break. Or put another way, if it's not possible for you to experience a capital loss, then it's not possible to experience a capital gain. Most VCs and hedge funds also invest a substantial amount of their own capital in the funds they manage, so it's not like it would be a radical change.
A few years ago I went to the Aspen Ideas Festival. One of the speakers was David Rubinstein of the Carlyle Group. Someone cheekily asked him what the tax on carried interest should be. He said "It should be zero. But politicians 'earn' so much money in donations by by threatening to repeal it, I predict it will always come up as an issue every three or four years, and will always stay about what it is now."
Incidentally, since this is HN, one might ask if startup employees are doing the same thing to which I would generally nod and agree with you.
http://www.bloomberg.com/news/articles/2014-12-15/berkshire-...
This isn't productive work on any scale except tax optimization and is only available to massive companies and their teams of lawyers.
What you're really getting at is tax incidence. Ultimately corporate taxes are still taxes on people. It's a complicated question to figure out which people. Sometimes it's shareholders like buffet, but it's also often employees or customers.
I do generally agree with you though that corporate taxes probably fall disproportionately on rich shareholders so to whatever degree there are shenanigans it's probably benefiting those rich shareholders.
Personally this makes me question the value of corporate taxes entirely. Just get rid of them and tax people directly. It would save a lot of paperwork and be easier for everyone to understand. Most people disagree with me on this point (though I would say that's because they don't think about tax incidence!).
Just think how much money goes into the economy to preserve income...if we simplified the tax code in any way, so many people would be out of work in both the private and public sectors.
This is an excellent demonstration of the broken window fallacy.
The issue isn't that the mega-wealthy pay no taxes, but that the value of the taxable income of a handful of people vastly supersedes that of most of that of the rest of the population. In essence, lower tax rates didn't fix anything about the economy unless you thought taxes were the problem and provided no overall boost to the economic security or general prosperity of the public.
So when GE Capital pays no corporate taxes and someone points that out, you're likely to hear that they pay those taxes through the number of people they employ. This is deceptive, since a legitimate small business would be paying both taxes. That entities like GE Capital exist is the trope that you need to dispel. Or did those estate taxes not come from the earnings of mom and pop shop owners and people who put in their 40 quarters with a little wise investing?
https://en.wikipedia.org/wiki/Grantor_retained_annuity_trust
So why does Buffett keep on saying that he pays low taxes compared to his secretary?
"...rigged the market, made a cool forty million, payed off the Lord Mayor, and put the lot into diesel-powered nuns."
"Which is where he went wrong, eh?"
"Exactly"
"When's the funeral?"
"Oh, he hasn't killed himself yet."
"He hasn't?"
"No, waiting 'til April the fifth. Some sort of tax dodge."
It seems reasonable to assume that some portion of it will accumulate among the wealthiest class and be inherited. Probably much more than ~0.1%.
Let's assume that all inheritance taxes are paid by the top 1%. They own about a third of total assets. So that's about 290 billion being passed on.
19 / 290 = 6.5% being paid in inheritance taxes. To high? To low? I dunno, but that's my best guess back of the envelope math.
https://en.wikipedia.org/wiki/Grantor_retained_annuity_trust
Figure your year's revenue. Find out how many times the poverty level that is, for your family size. (Twice the poverty level, 10x the poverty level, etc.) Take the log base 10. Multiply that by some constant that is the same for every tax payer in the nation (both people and businesses). Currently, that "flat" constant would be about 9. The resultant number is your tax rate.
(Hint: this would be a massive tax cut for pretty much everyone short of billionaires.)
If people can't even keep their own money earned for themselves, you are just killing the incentive to even earn it at the first place. You seem to suggesting we must periodically make the rich, poor. This kind of equality is more dangerous than inequality. Look up the failure of socialist/communist set ups in past century that will tell you why this is such a bad idea.
The whole scheme over time feels like punishing people for working hard and generating wealth, while remainder free loads on the assumption they are entitled to free money.
What follow next is exodus of smart, hard working people to better countries.
For a long time the rent-seeking was done by unions, but these days its more commonly done by corporations.
I think that when people say "It's impossible for the powerless to become powerful", they really mean "It's very unlikely for me to become powerful", which is statistically true. Powerful people are rare - that's what it means to be powerful - and so no matter how much mobility there is at the top, the odds of any one person making it there are quite slim.
Then there's the controversial question of whether a monarchy's efficacy may in fact be greater than that of a republic, a topic that authors such as Erik von Kuehnelt-Leddihn and Hans-Hermann Hoppe have explored.
I think a lot of the confusion is because power operates as a hierarchy (or oftentimes, a graph), and each layer of the hierarchy tends to oppress the layer below it while itself being oppressed by the layer above. Hence you had poor blacks in Reconstruction being oppressed by the KKK (largely composed of poor white sharecroppers), who were being oppressed by the Northern bourgeoisie, who were being oppressed by Gilded Age industrialists who were being oppressed by populist politicians who were allied with the poor white sharecroppers. That's why you may have a monarchy with strong support from the common people: the monarchy keeps wealthy business owners in line, which keeps them from oppressing ordinary citizens. It also explains the current political situation in the U.S, where the Republican party is an uneasy coalition of wealthy plutocrats, small business owners, and poor rural religious whites, while the Democratic party is an uneasy coalition of academics, white Yuppies, unionized black factory workers, and immigrant Hispanics. The plutocrats oppress the yuppies, who offend the small business owners, who oppress the immigrants, who take jobs away from the rural poor, who discriminate against blacks.
It was an enormous risk for Thomas Jefferson, Ben Franklin & company, but the upside was huge. The average worker not so much. Non-landowners weren't even allowed to vote!
There are certainly examples of individual sharecroppers who attained power as a result of revolution, eg. William Few. [1]
"Capitalism" emphasizes (take this as a principle, or principal -- regardless of truth) the primacy of capital in production -- and, by extension, ownership. Labor, et al. are not capital. Land, factories, machinery: Those are capital.
What happens when capitalism becomes unmitigated and ownership concentrated? Only those who have the capital, can produce. And the more capital they control, the more production they control -- the more power they have.
And for some, that power, and being at the pinnacle of the hierarchy, are more important than the absolute progress of the community.
(Understand, too, that this is not simply some cartoon-esque "power for power's sake" quest. It leads, overall, to better life, greater health, and better outcomes for one's offspring and friends.)
There are many people with much potential and many good ideas, who are not allowed the resources with which to pursue them.
This is where that community needs to curtail unbridled capitalism.
(The "rising tide that lifts all boats" may lead to a better collective outcome. To greater absolute progress. But also, perhaps, to less control, advantage, and security at the top.)
And this is why you never want all of your resources, production, and knowledge to reside under the control of a single authority, nor anything overly approaching such.
We aren't all equivalent (i.e. the same, as opposed to some qualitative assessment of "equal"). And we do enhance our abilities by forming organized structures. But no absolute hierarchy has demonstrated the ability to maximize potential -- neither in us nor in biology.
Piketty's book describes this phenomenon as well - his book is fundamentally about the world moving from a situation of having a $1M factory producing $100k in income to a situation of a $2M factory producing $150k in income. (I.e., r=2, g=1.5.)
Elon is one of the very few people who put their money to excellent use.
But for every Elon Musk out there, there are hundreds of Paris Hiltons.
Had she kept her inherited wealth it would be mostly in the form of hotels rather than money.
The people to look at are, say, Peter Oppenheimer, former CFO of Apple (picked at random). I'm sure his net worth is in the hundreds of millions and he has a few very nice houses -- but what's the likelihood that a significant portion of his wealth is reintroduced into the economy? I really know nothing about him, so maybe I'm being unfair and he spends lavishly on yachts and mansions, or is an angel investor in 100s of startups, but I think the prototypical Fortune 500 C-level is probably someone who lives very well, but not lavishly and not up to their very generous means.
I should also note I'm excluding passive investment in mutual or hedge funds for the sake of argument, but I'm not sure whether they produce sufficient results to count as "reintroducing" money into the market.
As an owner of shares of SPY, he then owns small percentages of factories, airplanes, hotels, logistics and similar things. Virtually no one is actually sitting on money because that's a really dumb thing to do. Investing in productive capacity just provides a lot more money.
Beyond a certain limit, ownership is bullshit. It's really stewardship, but it's forgotten its true limits and purpose.
When you're touching so many people and resources, you're a steward, not an owner, period. What's lacking now is a mechanism for the bad stewards to undergo corrective action.
If you believe Piketty that the wealthy are better investors than the rest of us then the wealthy are actually doing useful work: directing resources towards their most productive use.
I think the problem pointed out by the original article is that they don't like this because it tends to produce oligopolies (i.e., "chains"). Unfortunately, I think that's just because non-colluding oligopolies are efficient.
So the market is "working," some just don't like the outcome.
If one happens to invest into the inefficient company in a long term it is going to be bust along with investor.
How comes this is not productive?
I own shares of SPY, if I sell them to you what exactly changes?
Take away the market and the company wouldn't get any money.
And so it goes with Marx, the first volume certainly is hugely prescient and correctly predicts much of the economic progress that has come since. Workers as stakeholders in a business is considered fairly mainstream in many modern economies as is the role of the state.
But as with Freud it was the later stuff particularly in Volume 2 that got him his reputation as a looney. Sadly he formulated the manifesto as a precursor to writing the book and this bound him to a particular conclusion even if his research in the meantime didn't match up. Volume 2 was never finished and what was eventually published was the unfinished manuscript as well as some notes, post humous.
It is unfortunate that Marx couldn't have just left it at Volume 1, and put aside the fanatical fervour of his younger years. Had he done so it could have formed the basis of a more humane society and he would not have been associated with some of the more attrocious implementations of communism, and a reputation which he doesn't wholly deserve.
Specifically land leads to Ricardian rents, and historical examples of taxing land rents abound. Japan went from medeviel backwater to industrial giant in ... decades through the use of land taxation.
At some point, they decided the classical Japanese values were more important and that is when the industrialists took over as an update to the Samurai and the rest is history. I don't blame them - classical/medieval Japanese culture is extraordinarily beautiful. But the Bushido Code does not mix with machine guns.
Generally, capitalism if practiced by ... Vulcans or robots would not result in most of what we attribute to it as ills. But humans love to cheat, and the cost of prosecuting all that cheating is probably too high.
We also seem unable to develop a media culture that does not fawn all over the rich and powerful.
Actual Capitalist ethics emphasize consumer surplus most of all. Whether the externalities are what we think they are is a much richer discussion. Quite difficult. It is important to realistically believe you are serving your fellow man in this way.
They get the opposite as well. I've seen so much sheer, unreasoned hatred of the rich, simply for being rich. Almost as if it is assumed that they only got that way by some illegal/immoral means.
Then, you get the other half of that side of the coin. That even if the rich did earn their money using legal/ethical means, they don't deserve it (or to keep/use it). It's inherent in all discussions of wealth inequality. Really, it's not enough to just let it be, but everyone wants to play social-engineer with progressively richer individuals.
One additional thing, that you can see running in this discussion. That legality is not somehow an indicator of fairness/justice. A few commentators here have noted that rich people use tax "holes" and legal financial constructs to "evade" tax, as if it's a bad thing, and as if it's not something that was put in place by legal, democratic means. At this point, I'm inclined to believe that these individuals are content with circular reasoning because none of these points can be proven by themselves, and rather always rely on some other piece of the landscape to deflect critique.
And depending on which sort of rich person they are, different media will take totally different angles.
I suspect this maps well to an ingroup/outgroup divide.
I know HN is US-centric and all its criticisms centered on the US, but its asinine to use the US as an example of "feudalism" when we're seeing much, much worse elswhere. With a 5.5% unemployment rate and median household income of $55k, there's a lot of opportunity.
France, and other Euro states, has twice the unemployment rate and almost half the household income. Yet it always gets a free pass in these discussions.
In Russia 111 people control 19 percent of all wealth. This is a country with a $1.5T GDP and 145m people! One fifth of it controlled by a mere 111 men? Yes somehow Russia also gets a free pass during these discussions. Hell, in Brazil the bottom 10% of the population lives on about $1 a day and the top 10% owns almost half of the wealth!
Yeah, a lot of countries have fallen into near feudalism, but the US isn't one of them. At least its not the best example for breathless exposes of wealth inequility.
Your parent's educational and economic background is a huge factor in your personal success. We should strive to make it so that intelligent people with interest can succeed (educationally and personally), and strive to make it so that people see this is an opportunity not preserved for the rich. We should not (as someone suggested) make it society work such that wealth is randomly moved between people, as then there would be no benefit to learning and trying to better the world; somehow this has to be balanced with a good and decent life for everyone, people shouldn't just die if they don't happen to have health care (or their parents are poor).
We didn't go to good schools, but they were good enough and student loans go us into decent state colleges (and later private school via the same loan system). So yeah, your hypothetical hopeless sob story kinda pisses on the many people who rose above economic hardships. Many immigrants rise ahead in the US due to all the opportunity here. Ironically, the minorities we coddle with welfare, political correctness, and never-ending social programs that do next to nothing but drain tax dollars tend to be the ones who don't thrive and degenerate into multi-generation poverty. Maybe the white liberal mid/upper class political thought should focus on jobs and incentives and not-hand wringing about how hopeless everything is.
>wealth is randomly moved between people,
Everyone I know has a job/wealth via some level of meritocracy. I don't know anyone who randomly ran into money. If money was this easy to get then we wouldn't be having this conversation.
The anti-US bias on sites like Reddit and HN is just ignorant. I don't think people appreciate what they have and the praise of places like Russia or China as being better or more free or more economically viable is hilariously ignorant. Or the masive ignorance of how bad Europe's finances and employment situation is in many of its countries, especially places like Italy, Spain, France, and of course Greece. Life is a lot more complex than "omg the US is the worst country ever." Seriously, if you guys want a conversation about oligarchies and inequality then Russia or Brazil are probably the best examples around. The US is very far from those levels of inequality. Pointing this out, sadly, gets you mega downvotes here. I'm curious why this forum needs to have this hysterical and furious anti-US bias all the time? Why are you being socially rewarded by this narrative? Have you ever questioned this narrative the types of people who are constantly selling it to you? Or their motivations?
I'm skeptical as to your characterization of Italy, Spain and France. It sounds like you're just observing some macroeconomic forecasts without taking into account societal microfoundations like mobility, legislation and culture. These can make immense differences in ensuring a greater subjective feeling of freedom or a greater real resilience against cyclical factors.
Upper class: 95% probability of child going to college Middle class: 65% probability of child going to college Lower Class: 30% probability of child going to college
This is just one example but I believe the same concept can be used for myriad situations. This is going to create a huge cycle of inequality that will widen as the economy grows and those with money can exert power and influence to maintain their power and influence, create a feedback cycle.
From reading other comments it sounds like the new "Capital" book is some interesting reading on this subject.
On the bright side, I grew up just before the internet got big and kids today seem much sharper, so I hold out hope for the next generation.
So I suppose your conclusion is we're doing it right? Well alrighty then.
Judgement on inequality has to be relative to the here and now.
I've usually tried to compare myself vs. who I was 10 years ago, not to the people around me, and I suspect I've ended up significantly happier (and quite possibly wealthier) because of it.
As a counter example, it's incredible to compare the abject poverty of, e.g. Asian immigrants to the US with the relative wealth of their first-generation American children. That's happening alongside rising inequality, but it's definitely not "the rich getting richer."
Let's call it "super-critical" and "sub-critical". Super-critical is always-positive wealth growth rates, no matter quantity of wealth. This will then always occur (or, according to theory, should always occur).
If it's always sub-critical, then you don't have wealth growth, because it never makes sense. I think maybe.
So what you want is a transition point at which in order to "grow personal wealth" what you actually have to do is grow /other/ people's wealth (who are below that point)... but then it becomes growing power (social connections and allegiances) rather than monetary power (wealth).
And because monetary wealth is actually possible to quantify and thus measure, account for, examine, track, etc - it's arguably better, as we call use of that power "corruption".
In which case the only known solution is the periodic upheaval.
Yes, but not to an absolute degree. Go back and look at a list of the "Fortune 500" (or something equivalent) from, say, 1900. I believe you'll find that most of those companies no longer even exist at all. Likewise if you enumerate a list of the richest people in the world from that era, their grand-children (or great grand children, whatever) aren't necessarily in corresponding positions in the modern "richest people in the world" list.
One thing that the discussions often seem to neglect to consider, is the impact of disruptive (sorry, it's the only word that made sense here) technological change. New technologies come along and create a sort of "upheaval" (something like Schumpeterian "creative destruction") that "resets" things periodically.
There are also "dis-economies" of scale where size works against a firm's ability to grow larger and more profitable.
Families are interesting because you have the generational laziness issue - All you need is one person in the chain to lose the wealth, and it's gone.
Disruptive technologies, social changes, and legal changes could be considered forms of "periodic, non-violent revolution".
Dis-economies would then be built-in inflection points where you don't need an out-of-context solution (aka, laws) to create a sub-critical point for wealth growth. Interesting, didn't know that happened. Can you point me at some examples?
Re: Disruptive - It may have become startup corporate jargon, but it still makes sense. Look up something called the OODA loop, and note that according to it, a "good maneuver" doesn't have to be one that's successful or further your goals, it can just be one that changes the playing field faster than your opponents can react.
The idea of a "dis-economy of scale as inflection point" is probably valid, but I'm not actually sure that I know of a specific example. It's also muddled up with the technological change issue, as a new technology comes along, and a smaller, nimbler company is more able to adopt and commercialize that technology than a larger, more bureaucracy bound company.
Look up something called the OODA loop, and note that according to it, a "good maneuver" doesn't have to be one that's successful or further your goals, it can just be one that changes the playing field faster than your opponents can react.
Yep, I'm a big fan of that concept myself.
But, wasn't that part of the point of the US system - getting closer to a periodic / on-going non-violent revolution?
For example I would love to be a poor person in today's American which rich are richer than a poor person 30 years ago. The fact that rich people get rich basically suggest accelerated pace of development that brings down cost of living for everyone including the poor. Even though the average income of a poor family in United states might not have grown substantially in last 30 years, what they can afford for that money has changed a lot.
Money <=> Power is not true unless government interferes too much in Economy. In USA however that is happening in the name of helping poor.
power => more power
Phrased in this way, it's unsurprising that most societies have this property.