1) https://en.m.wikipedia.org/wiki/Stock_and_flow

2) https://en.m.wikipedia.org/wiki/Compound_interest

Low interest rate policy might 'create jobs' (inefficient ones), but another direct consequence is that anyone holding ownership of cash flows watches their net worth go up while wage earners get priced out of meaningful ownership of the economy. We've been doing this for more than a decade.

I'm not super-well educated on this topic (just a BA) but so far no one has helped my understanding out with a refutation.

1) the bottom 90%, 2) the next 9.9%, 3) the top 0.1%

This thinking was informed by: https://amp.theatlantic.com/amp/article/559130/

1. Bottom 90%

2. Next 9%

3. Next 0.9%

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The same is not true of the 9.9%. These aren't household names with ungodly amounts of wealth. However the article tries to spin it:

> So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1 percent. We’re a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque job titles, and assorted other professionals.

Presumably the inclusion of 'investment bankers' and 'M.B.A's with opaque job titles' is an attempt to convince you that these people don't actually work. The actual data say the most common jobs in the top 10% are Managers, Software Developers, Salespeople, Lawyers, Execs, Sales Managers, IT Professionals, Marketing professionals, Accountants, and physicians.[0] These folks aren't mysterious people doing god-knows-what for unseemly amounts of money. Their your neighbors. If you want to know what they make, you can google it. You'll find that it's not unreasonable. I sure as hell don't want to be a manager or a doctor.

So how do they get so much richer than the 90%? It's so easily explained that it's almost tautological. They trade their labor for money, then invest it. People who make more money have more disposable income and, importantly, disposable income doesn't scale linearly. A guy who makes 100K might see 25% of his income (25K!) in disposable income. A guy who makes 50K is unlikely to have 25% of his income (12.5K) in disposable income, and someone earning the average minimum wage of ~25K is VERY unlikely to have 25% of his income (6.5K) in disposable income. Why would it be surprising that our high earner was worth much more than the others?

And while these folks are undoubtedly rich, they're far from obscenely rich. The median member of the 10% is worth $2.4 Million. Let's think about that number in terms of a retirement nest-egg. Assuming that's all in liquid assets (it's not), that gives them a safe withdrawal rate (4% per year), which would mean ~230K per year in retirement income. These people are planning for reasonable retirements with comfortable but relatable lifestyles.

There's nothing nefarious going on, but (as is clear in the article) it's important that you think there is. It's hard to convince you to tax your Software Developer friend, Tim, or the Doctor that you've known your whole life. The trick is to mention them without making you think about them by intentionally conflating normal white-collar folks with mysterious sounding "mid-level investment bankers" and "M.B.A.s with opaque job titles". Once we're talking about an abstract group of 'others', it's easy to convince you that they're bad. Just mention some stats about racial disparities and allude to institutional racism. They're only rich because of their White privilege! It's also helpful to pretend that not taxing someone is somehow a government handout. Isn't that just unfair? Now Tim and Dr. Philbert are far from your mind. You're angry at these cheaters, these bad people in the 9% who got their money in dubious ways! Having been lulled into a state of moral hypnosis (in which poor Tim's retirement savings has somehow been transmuted into ill-gotten gains) you're happy to vote his money out of his pockets. If you buy in hard enough, you can even do so while enjoying a sense of moral superiority!

[0]https://taxfoundation.org/most-common-jobs-income-bracket/

Morally speaking, it is nobler to be in the position of a Mr. Bezos who actually risked his life to prepare more food on the table for people than those who are in effect riding on the coattails of previous generations. They are all "obscenely rich" compared to where the average human mortal resides right now. Given all of their advantages, what do they do with it? What work do they do that will stand the test of time, let alone 25 years?

Hopefully a "moral" argument for the independent decision making of individuals and how they create honest wealth is demonstratively absurd.

I suspect that the wealthy contribute a much lower portion of their total wealth to taxes than most people in the middle class, but I’m not even sure if there are statistics on this (I will try and look later).

If you are in favor of wealth confiscation, I mean wealth tax, come out and say that, and lobby and vote for it. Don't try to wrangle the income tax into something it isn't.

Of course, in the interim, you could try and cancel the two most popular tax deductions, mortgage interest and charitable donations, which benefit rich, wealthy people far more than everyone else. Let me know how that goes.

This is true (I guess estate taxes could be considered a sort of wealth tax, although there is a lot of Republican support for removing them, so we'll see how long they remain when they get back into power).

> If you are in favor of wealth confiscation, I mean wealth tax, come out and say that

I mean, I would support it. I wasn't trying to hide it; I was just commenting on the parent's metric. All taxes are a kind of confiscation, given that they are mandatory. However, my sense is that you see this as a sort of robbery rather than a redistribution to the community (i.e. poor people, old people, necessary public services that enable your business to function, your wealth to continuously accumulate, your employees living costs when your business lays them off, etc.). I see no problem in redistributing a chunk of it when social problems such as poverty continue to exist.

> Of course, in the interim, you could try and cancel the two most popular tax deductions, mortgage interest and charitable donations, which benefit rich, wealthy people far more than everyone else. Let me know how that goes.

I'm not sure where you are getting this from. I don't really have an opinion on these specific taxes. I think encouraging charity is good, but oftentimes I think wealthy people choose to donate to causes that do not really need the money (e.g. school districts in wealthy areas). Instead, redistributing that money using taxes and sending it to places individual wealthy people/private charities can't/won't adequately support (e.g. poorer school districts, large social services, etc.) seems sensible to me. There are a lot of ways to do that. Maybe removing deductions for wealthy people would be a way.

The U.S. does not tax wealthy people nearly as much as other developed countries, which also have many wealthy people who get along just fine. Of course, all of these proposals are DOA in the U.S. due to the political influence of the rich who have a class interest in reducing their tax burden, so I don't think this is a very meaningful hypothetical anyways. We are just randos on the Internet with no real say in any of this.

https://www.populationpyramid.net/united-states-of-america/1...

https://www.populationpyramid.net/united-states-of-america/1...

Government needs to step in and fix that!

Yay, free market!

Bill Gates put a computer in every home

Steve Jobs put a smartphone in every hand (for better or worse)

Bezos revolutionized online shopping AND cloud computing.

Why wouldn't these people be billionaires?

Governments could never achieve this kind of progress, they are too bureaucratic, corrupt and incompetent. Take away the billionaires' money now, and you will stop the next big innovation.

Smartphones were built by Nokia and Microsoft in the 2000s. Computers were thing way before MS, but still it needed Bill Gates' genius to make them ubiquitous. EVs were along for 100+ years...Modern EVs were just ridiculous: ugly and small, nobody wanted to buy them. Musk made the EVs sexy and desirable, and mainstream now.

There were many many people with money and connections, yet only some changed the world and became billionaires in the process, don't you think that deserves the recognition? I personally don't like either of the people I talked about, but you must give credit where credit is due.

Smartphones failed for a bunch of reasons in the 2000s, recognizing the convergence of touch screens, and mobile broadband was pretty smart. It likely would have happened within 6-12 months of when it did, if an engineer/pm failed to convince Steve jobs that the iPhone was a good idea.

In the case of Elon, no. The technology foundation for SpaceX had been around for decades, with no traction.

I'm less familiar with Tesla and EVs, but several people seem to think Tesla advanced the EV industry 5-10 years relative to where it would be in a world without Musk

And even if he did do something great, plenty of us don't think it is right for people to own that much wealth. Would Musk have really stopped if he knew that he couldn't possess more than a billion dollars? Is "I want to be a megabillionaire" really the only thing pushing innovation?

Tesla is not an engineering marvel, it's not about that. All the tech already existed, the batteries were Panasonic, "self drive" was researched way before them by Mercedes, BMW etc.

It's an interesting idea to limit people's wealth a 1 billion. Would you include stock in there? I assume most of these billionaires don't own more than 1 billion in cash anyway.

If you cap them at 1 billion, I assume it would be by the government forcibly confiscating their money? That means they will not have funds to further invest in their dreams. Amazon, Microsoft, Apple, Google, Facebook all really took off way after exceeding 1 billion for their founders. Would you have preferred to not have these large companies succeed just for the purpose to achieve a slightly less unequal world?(that is also significantly poorer too). The bull market of the past decade was mainly driven by the large tech companies, without them you would have had a stagnating US economy.

But that doesn't mean it's reasonable that he collects 10000 times more of the value. There is so functional difference between having 1 or 10 billion, except the amount of undue influence you can have on politics.

Why is this of course? If it weren't for the followers the leader would have nothing except hot air.

The real value is in the followers, it's just distributed over larger numbers. Maybe I'm missing something, but someone actually has to do the work and it's not normally the "leaders"...

There are a lot of small businesses getting a really hard education in this right now.

....How does this level of 4chanism even fly on HN..

Some points off the top of my head

1) People live essentially as long as billionaires

2) You can hop on a 430M dollar plane which is the same as Biden's (actually there's good chance it's newer than Air Force One) for as low as 500$ with the only cavet that you have to share it with 400 other people

3) You can enter in a building costing 5-10 billions of dollars (think the big Vegas hotels) for free, again only cavet is that you have to share it with 2500-5000 people

4) You can drive cars costing a million dollars and it would only cost you a tiny fraction of that, hopping once a year in a Ferrari or a Lamborghini for the weekend is not far fetched

5) You have basically every means and financial product tailored to achieve your goals including all the above, ranging from lease to rent to financing purchases of electronics and vacations.

Of course hedonic treadmill never stops so nothwistanding all the above the huge source of worry nowdays is the result of the following subtraction: Bill Gates' number - people's own number. It's an ego thing essentially

I agree that people who are perceived as winners taking all such as Gates, Bezos and quack Musk should not say these things because it would exacerbate the above sentiments instead of disengaging it as it comes off as patronizing winners telling the population how they should feel.

But regular people should go through the process on their own , when this process of self discovery happens you both start to ignore the billionaires and also those who hope to socially elevate themselves by promising to "eat the rich" such as Sanders , AOC and the like.

Infrastructure is crumbling. Wages are not keeping up with inflation. Employers have treated employees as their property. A hell of a lot of people can barely afford medical care.

And yet you're talking about how great it is we can rent a sports car for the weekend? And therefore we don't need to question the rich, who not only hoard resources but have a massive amount of influence over how our society is run? What?

Infrastructure is crumbling partly because we think of nothing with starting new highway projects and sprawling suburbia.

We have created a car dependent society in which we need to use cars to do anything useful around town. That required people to borrow money to buy cars as opposed to using quality and excellent public transit to get to work, or just walk.

And yet you're talking about how great it is we can rent a sports car for the weekend? And therefore we don't need to question the rich, who not only hoard resources but have a massive amount of influence over how our society is run? What?

Hoard what kind of resources? Share in productive capital? I would be more concerned about housing, which by the way is usually one of the greatest expense a household could have and it is one of the greatest driver of inequality in wealth.

We need to have a serious and painful conversation about housing, and how exclusionary policies are driving inequality, and we need to push through reforms that will anger a lot of upper and middle class voters and create winners and losers on a large scale in order to create a more egalitarian and wealthier society.

China might look like it’s light years ahead on infrastructure, but infrastructure starts to be a pain in 50 years when suddenly you gotta spend on replacement and maintenance.

They’re thinking that they just want a day off and that it would be great if their multi multi billionaire employer would give up some of his obscene and ultimately pointless wealth and pay them a decent wage.

As much as people don't want to hear it money is meant to be spent, only the perverse hedonic treadmill effect brought us in this scenario where it's used to keep the score

> They’re thinking that they just want a day off and that it would be great if their multi multi billionaire employer would give up some of his obscene and ultimately pointless wealth and pay them a decent wage.

Again, the gap has never been smaller. People rage would be justified if the process were to be in reverse or even slowing down, but it's only accelerating, we have just witnessed it.

A person in the same age cohort as Bill Gates, received the COVID vaccine at the same time as him or maybe a couple of days earlier or later than him.

It's unheard of in the history of the human specie

Well, in theory it just means that owning money is a leisure activity for these people. People like spending money on leisure. According to Austrian economists interest rates simply represent people's time preferences. For some strange reason they believe that interest must be positive because time preference is always positive (people want things now instead of later).

They clearly ignored that people might want money/capital (not things) now and things later. If that were the case, then their time preference would be negative and it would also mean interest rates must be negative. So even by the weird Austrian economics logic interest rates must become negative as more billionaires accumulate capital for the sake of accumulating it, rather than for the sake of production.

> Must become negative

If everybody likes to accumulate money instead of spending and thus have the preference you mentioned then there is no way interest rates would become negative (and I mean really negative not the couple of tenth of a percent).

Money is a human abstraction, and thus it's inherently political, the most unpopular thing out there is inflation and negative interest rates. You have 100% people against it. Inflation is possibly more unpoular than a recession because it raises alarm bells in the populace even in absence of a recession.

At least with taxation it's something like 80-20 and the only thing which is a matter of discussion is how much taxation needs to be imposed and how to spend tax money (Republicans want to direct them towards the military and defense, whereas democrats want to direct them towards social spending and welafare)

It's a cultural thing, but even old people with few years left are all about accumulation, you'd need some sort of common shock such as young people and adults in their 40s collectively have a close call that would force them to evaluate their mortality and prompt them to structure their finances to "die with zero or negative net worth)

But you are ignoring the horrible inequality, the deprevation and lack of resources at the bottom. You are ignoring the pay for play politics, the influence the ultra rich buy at the cost of ordinary tax payers. Your argument reflects the recursive idea that because one has more money they deserve for rights to representation. This ends with up with a poor quality of life for people who should have a fair shot at the American dream.

A socialized process where the government decided that it would literally free for everybody even if they didn't have health insurance led to more equal medical outcomes than is the norm in our system. You are right. Now imagine if we used taxes to fund equivalent systems for other forms of healthcare.

That's a concern for animals.

Human cocerns about wealth have always been comparative and relative, not absolute.

no matter a person's wealth society won't allow them to convert into personal pet projects which don't benefit or at least have the potential to benefit others.

You won't be seeing billionaires building pyramids

I mean yeah, if I had $5 million and got 5% returns on that per year I wouldn't be mad at the billionaires because the yields that I pay them are below the yields I get from the rest of society.

Meanwhile the rest of society knows in the back of their head that they are net payers of capital returns. If you have $10k of savings and get paid 5% interest you get like $500 back, while having to pay 5% interest on anything you buy, lets say from your $30k salary which is at least $1500 in interest (I'm too lazy to calculate the real number which is much higher).

The only real problem is that the marxists and socialists only know how to criticize capitalism, not how to fix it.

Fixing it would be surprisingly trivial. If one models cash as a 0% perpetual bond it shouldn't be very surprising that $1 at 0% interest is worth more than $1 at lets say -3% interest. It may make sense to consider cash a foreign currency. You are pegging your exchange rate to something with 0% interest which means interest rates must follow the peg. The obvious solution would be to have floating exchange rates between bank deposits and cash the same way we have floating exchange rates vs treasury bonds.

Keep your stocks and real estate. However, that perpetual exclusive land ownership right you have? Clearly just as unsustainable as lifelong dictatorships. Either periodically rotate through land owners like democracy rotates through politicians or just let them pay a fee for the privilege of having a monopoly on that location. Why? Because steel rusts, power decays in democracy. Just let exclusive ownership on land and money decay as well.