The fact that you're even asking that is a reason we shouldn't have billionaires -- world power relationships shouldn't be based on the wealth of individual citizens.
For example, what did Musk really talk about when he met with the president of Brazil? Did he represent American interests, Amazon Inc's interests, or Elon Musk's interests?
This is a very idealistic and impossible to ever implement take
I get that "wealth gets power" is not ideal, but the alternatives we can see around don't seem to be much better. Somebody will have the power, and we as a society would need some proxy to use so that it won't lead to a disaster. Being able to create and run successful businesses (yes, I know not all rich people are self-made, etc. - it's an imperfect proxy, but to a large measure a working one) doesn't look that bad, compared to "being born with right last name" or "being born with the correct facial features"...
FWIW, most wealthy people are wealthy because of inherited holdings and 60% of all wealth in the US is inherited.
[0] https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-...
The median dollar of wealth is inherited by the wealthiest top 5% of families, not earned as income - which your statistic doesn't even address.
Banging your drum even more loudly doesn't change the fact that you are off beat.
Source? This fails the sniff test, as the amount of wealth has grown at such a rapid rate this seems almost impossible.
What do you mean? It counts ownership stakes & stocks as well.
> I imagine we could arrive at 60%. But it doesn't mean what you think it means.
It means exactly what I think it means - if you get bequeathed $1 million dollars and get 8% returns from investing this, it doesn't mean you "self-made" $3.66 million more 20 years later.
What pointless designation.
Are you sure? Please tell me the top 10 names on the Epstein client list. I'll wait.
> most wealthy people are wealthy because of inherited holdings and 60% of all wealth in the US is inherited.
I'd like to see your sources. They probably counts by dollars, which is pointless, since one hyper-rich individual completely skews the picture - you can have a million self-made millionaires and one Elon Musk's son - and claim that the majority of millionaires is created by being Elon Musk's son. That's an obvious nonsense. It's like calculating average income of a people in a bar where Bill Gates just walked in, and making conclusions that everybody is rich. You need to count people, not raw dollars.
Mine say:
One measure of the percentage of the wealthy who are self-made is Forbes' own Forbes 400 list. In 1984, less than half the people on The Forbes 400 list of richest Americans were self-made. By 2018, in stark contrast, this same figure had risen to 67%.
https://www.forbes.com/sites/rainerzitelmann/2019/06/24/amaz...
Around 41.4 percent of the wealthiest one percent say they have inherited some money.
https://www.peoplespolicyproject.org/2017/10/10/the-wealthie...
The market research firm analyzed the state of the world’s ultra-wealthy population — or those with a net worth of $30 million or more. The report, which is based on 2018 data, “showed muted growth” in the number of ultra-wealthy people that year, “rising by 0.8% to 265,490 individuals,” says Wealth-X. Of those folks, 67.7% were self-made, while 23.7% had a combination of inherited and self-created wealth. Only 8.5% of global high-net-worth individuals were categorized as having completely inherited their wealth.
https://www.cnbc.com/2019/09/26/majority-of-the-worlds-riche...
Counting people is not the important bit because I am concerned about the distributional equity of wealth not wealthy people.
> I am concerned about the distributional equity of wealth not wealthy people
If you exclude people, I am not sure I understand what you're talking about at all.
I'd reverse the skill and luck relationship. Success at that magnitude is almost entirely luck (and probably a little skill).
[1] https://mobile.twitter.com/nntaleb/status/153417277358051328...
What the tweet is saying, and it seems right, is that looking at a probability graph the only way to get the billionaire-like outcome/outlier is to dramatically increase volatility, i.e. bet on long odds. If everyone went to work, maxed out their 401k, bought blue-chip stocks, and called it a day, basically nobody would have outlier net worth. But some people choose to increase the volatility of their money (buying crypto, starting a company, options trading, whatever) and as you'd expect 99.9999% of them don't get rich and the rest of them get uber-rich.
I think these activities are quite different however. Saying starting a company is the same nature of activity as betting on an extremely volatile asset ignores all the work that goes into successfully creating a working company. Surely, there's no guarantee this work will bring result - but it's still not the same as just betting on random high-volatility assets. Even options trading is not (always) just betting, and for more successful traders probably involves certain amount of knowledge in addition to luck. But I don't think describing creating a company as completely probabilistic activity makes any sense.
The tweet is saying that founders becoming massively rich is a natural outcome of probability distribution -- huge payoffs require either huge bets at a smaller win multiplier (less "risky") or comparatively smaller bets at a huge win multiplier (more "risky").
Someone like Elon Musk having political influence is a bad thing because he's raging capitalist that can, will, and does exploit those below him. It's why he has such a love for his Chinese labour force. They have less rights and they will work 16 hour days in his factory making the cars that make him money.
Elon Musk is great as a wealthy private businessman, that's where capitalism firmly belongs. But he has no place in any sort of politics. Countries aren't run like businesses.
You are indoctrinated into believing that democracy cannot work and good government is impossible.
At the scale of continental countries like US (or any BRIC country), it is. The decision makers are simply too far removed from the people who get to live with the policies.
Optimal decisions for themselves, not for the country.
In theoretically egalitarian systems like communism, a committee makes decisions about how to allocate resources. Then whoever holds most sway over the committee holds sway over resource allocation. If you do it by direct democracy, then whoever owns the news media & ad platforms (or has money to do massive PR campaigns and ad buys) holds sway over resource allocation. You can't escape this: somebody is going to make the decisions, unless you just run the world by computers and have humans slot in for menial tasks.
1) The fact that it's necessary to "hold sway" is a result of the power not actually being held by that person, but being loaned to that person by the rest of the committee in a way that can be withdrawn at any time.
2) The committee members are all subject to the process that chooses them. That's the power center, and the character of that process defines the legitimacy of what the committee does. If a billionaire chooses them, the committee is a mask. If the people being governed choose them, that's the basis of popular sovereignty, and the justification for post-Enlightenment government in general.
> whoever owns the news media & ad platforms (or has money to do massive PR campaigns and ad buys) holds sway over resource allocation.
You're talking about other billionaires. The conversation is about not having billionaire.
So this boils down to if billionaires choose a committee, billionaires will run things, and if people vote for a committee and billionaires control all of the information that those people get, billionaires will run things. You can escape this if you don't have billionaires.
The rest of your post is largely true, but also applies to billionaires. They derive their power from people being willing to trade money for the goods and services produced by the assets they own. When people cease to make that trade, their money and their power evaporate. Just look what's happened to the shareholders of Kodak, Xerox, Pan-Am, GM, Sun Microsystems, Lehman Bros, etc.
Note also that systems without billionaires have existed, and have often been worse in terms of distributing power to many people. See eg. Soviet Communism, where power rests in the Politburo, and the local party apparatchik holds outsize sway over everything regardless of competence. Or even post-WW2 U.S, when the top marginal tax rate was 90% and executive compensation was far lower because there was no point in paying a lot when the government got 90% of it. Corporations instead compensated their top execs in-kind: usage of private jets, corner offices, ability to influence what every American thought through advertising and mass culture, influence on policy makers. Orwell's 1984 and Chomsky's Manufacturing Consent were about the 1945-1980 period, not the post-Internet era. Power was significantly more centralized during that time period than it is now.
BOFH: I've upped my priority, so up yours.
This is a really good question.
I believe the answer is that the USA will be better able to outcompete those countries that do have them. History has shown time and again that massive inequality is a huge barrier to maximizing the productivity of all of a society's members.
It leads to cynism and corruption and breaks down cooperation. It forces a society to spend valuable resources on policing in order to keep the poor taking from the rich. It's just economically incredibly inefficient. You need some level of inequality to incentivize people but once you go beyond that, it's a net harm.
Based on what? The US already outcompetes these other countries in business success and average citizen income. What countries don’t have billionaires that are competitive?
> History has shown time and again that massive inequality is a huge barrier to maximizing the productivity of all of a society's members.
History has literally never shown this. This is the first time we’ve had massive inequality while still having a solid middle class. The jury is still out on whether the instability of the past was just because of excessive poverty and no upward mobility or because wealthy people were there.
Empirically, this is actually beyond doubt by now. Piketty et al. were in the news 10 years ago with this very topic, showing that inequality is detrimental to growth, for many countries and over very large periods of time. And there has been a bunch of additional studies after that publication that support these findings.
There is no evidence about it stifling growth in the US in his work nor any follow-up work.
There are countless examples of rich or powerful and connected people buying officer posts, for example, and meritocracies (= equality of chances) stomping all over these corruped systems.
There's little reason to believe rich people willingly or not, do not distort every market they're in. That's why they become rich, to be powerful.
Has it? Restricting what opportunities individual people are permitted to follow would I assume both reduce productivity and increase inequality, but that doesn't have the inequality being the cause of the lower than theoretically possible productivity.
Now, the money could sit in the bank, sure. But even then, the vast majority of the money "in the bank" is actually being lent out to other people, who spend it.
So unless the money is literally sitting in a vault, it's not "parked" anywhere.
I'm very open to being corrected here, so feel free to do so. My understanding of economics is decidedly limited.
This is a YC-affiliated/run discussion forum. I think I speak for many entrepreneurs (former or current) that: investing is really, really important.
Investments from VCs (and form their wealthy LPs) makes entrepreneurship something that normal people can do (as opposed to only something rich people can afford to do.)
Either directly as VC capital or indirectly via public ownership. If billionaires suddenly couldn't own public companies, stock prices would drop and we'd likely see layoffs.
Let's macrosize the perspective: why do you think Unity moved HQ from DK to the USA? Could it be the crushing taxes here?
This is the issue. You really can't have it both ways. Yet many Americans love to fetishize a hatred for few very specific individuals without thinking through the whole causal chain that girds their economy.
Denmark consistently ranks in the top 5 of countries with the best quality of life. A year of parental leave, great social welfare, universal healthcare and retirement benefits, etc.
Including federal/state/local taxes, healthcare premiums, retirement contributions, disability insurance, etc, I pay close to 50% of my salary in the USA
And I'd still worry about how I'll pay the bills if I lost my job.
why do I want to pay half of my salary until I am enfeebled and the state lets me enjoy my enfeeblement?
Because that's how the state pays for the enfeebled today? Are you really suggesting you want to leave Denmark to go somewhere with lower tax rates, then when you need social healthcare, you'll move back to Denmark and take advantage of the healthcare system that you didn't pay for?
Isn’t that the point of their healthcare/retirement system? It’s socialist, not user pays. That it covers everyone irrespective of their tax contributions. Otherwise it would exclude the unemployed, students, disabled, low income (untaxed) people (esp housewife/househusbands) etc.
I don't think "Encourage people to move out of the country during the working years and move back to the country when they are old and need expensive healthcare coverage" is the point.
It may be the result of their system, but it's not the point. But if it became a problem, they could require that you buy back into the system after an extended absence out of the country.
And if you can’t buy back in? Won and lost your fortune overseas (or never won at all and remained poor all your life) and returned “home” destitute? What then?
There are two common ripostes to this. One is that these are wasteful vanity projects, which just proves the point that there is value to this sort of decentralized system of capital allocation where some small percentage of total available capital is in the hands of quixotic individuals who can pursue aims that a majority of the population doesn’t (yet) see the value of. The second objection is that these things should all be handled by the state. It’s fine for people to want space exploration to be entirely handled by NASA for instance, but the record is pretty clear that US (and by extension humanity’s) pace of space exploration has been absolutely transformed by the ability for private actors with substantial resources to make moves outside of an existing bureaucracy.
The US government spends upwards of $4T dollars a year, and the media class has a much larger influence on politics than and group of billionaires could buy. Because most billionaires are entrepreneurs they also typically look at ways they can deploy capital that are underserved and where the state would be an inappropriate actor in terms of required risk and innovation. A group of talented weirdos that have the resources to move the needle on neglected projects is a feature not a bug.
Since the charity is run by a board and bound to abide by its charter, it's not the same thing as the person controlling the wealth himself. The Gates Foundation is not going to buy Bill Gates a private island with a $100M super yacht to get there.
I would expect this to be a "distinction without a difference" if the billionaire is careful/competent about how he staffs the board and how he writes the charter.
You haven't yet figured out that all institutions and corporations are merely instruments of the monied classes?
Billionaires are the state. They would not exist if the state didn't specifically provide them with the mechanisms to amass such wealth at the expense of the rest of us.
Lobbying is a thing. In the US those people can pretty much legally buy any politician they want.
Wait... That didn't actually work.
"if you look at the long-run evolution, we’ve seen less concentration of wealth. So the top 10 percent of the wealth distribution today would have 60 percent in Europe, 70 percent in the U.S., as compared to 90 percent before World War I in Europe. This did not destroy the economy. If anything, this decline in the share of total wealth going to top 10 percent and the corresponding increase in the share going to the next 40 percent has contributed to a much faster economic growth in the 20th century than in previous centuries.
"I think partly because it allowed more people to participate, to the economy. And also partly because it came also with the rise of education. And this was the true source of productivity in the long run, rather than the enormous level of inequality that we had before World War I. This theoretical discourse that more inequality, more concentration of wealth is always better for economic growth was made, of course, throughout history by people who had large concentration of wealth, certainly in Europe before World War I.
"And this is a discourse that, in the 1980s, Ronald Reagan tried to tell Americans, basically tried to tell them, look we’ve gone too far with the New Deal, with Roosevelt, in terms of progressive taxation or wealth redistribution. We are going to cut top tax rate by two, where they’re going to go down to 28 percent or 30 percent, as compared to the 80 percent, 90 percent top tax rate under Roosevelt. So the promise that was made by Reagan during the 1980s was that cutting top tax rate might lead to more inequality, but will also lead to so much more innovation, more economic growth. And the incomes of average Americans are going to grow much faster than they used to grow.
"Except that this is not what we’ve seen at all. So if you look at the three decades after Reagan, 1990 to 2020, the growth rate of national income per capita in the U.S. was only 1.1 — 1.2 percent as compared to 2 percent, 2.5 percent in the period of 1950 to 1980, or 1950 to 1990, which itself was not particularly exceptional. It was the same — 1910 to 1950, it was about 2 —2.5 percent. 1870 to 1910, around 2 percent. So in fact, the post-Reagan period, 1990-2020 has been particularly bad in terms of growth rate of national income per capita, which at the end of the day is the best economic measure we have of the increase in productivity and this should reflect innovation, et cetera."
https://www.nytimes.com/2022/06/07/opinion/ezra-klein-podcas...
The most productive decades in the US also correspond with a period when the US was essentially the only industrial power not absolutely shattered by World War 2. In global economic terms, the post-war period was a huge anomaly, and I would be hesitant to tie too many conclusions/correlative effects to something as singular as domestic tax policy.
The other question I have has to do with feudalism. If we let "our" billionaires exist, does that mean that we keep feudalistic pressures at bay? Or do we enhance those pressures? Is that even the right question?