But one person did not create all the value.

And it's not even all the employees of this single company who created it. The entire structure of society, technology, law and order, transport infrastructure, etc, etc, enabled such a concentration of wealth.

It's good to see when beneficiaries realise it's not really 'their' money at all.

You speak as if almost all these societal benefits are not paid for by willful trading, and by taxes.

Did this particular billionaire evade taxes? used tons of governmental subsidies, or government-granted monopolies? Does this company look like it did not pay its fair share back?

Isn't that the point? The current rules allow, even encourage such individual wealth. That is the policy failure.

Outcomes for the median person in places where rules do not allow or encourage such individual wealth are almost universally poorer than places that do. The very system that allows billionaires to exist also incentivizes the creation of wealth that benefits everyone.

Source please.

The research I've seen on this shows the opposite, eg the scandinavian model.

Once you get past a certain level, the money itself no longer has any meaning, it's more about keeping score. We should look for ways to satisfy that drive without sucking wealth out of the rest of society.

All Scandinavian countries have billionaires. Sweden and Norway even have more billionaires per capita than the US. Scandinavian countries don't treat billionaires as policy failures. They merely have higher taxes across the board. In fact, the US tax system is actually more progressive because we don't have a VAT and much lower low and middle income tax brackets.

Moreover, the Scandinavian system locks in economic stratification much more than the American one

Hæ? How is that? Kind regards, bewildered Norwegian.

I tried "gini coefficient vs per capita GDP" and "gini coefficient vs per capita GDP" in wolfram alpha, but it just looks like a random scattering (other than the notable absence of high gini coefficient, high per capita income countries).

Clearly I've missed something, would you mind elaborating?

Taking a look at the raw data on Wolfram Alpha, it seems like a lot of the super low income countries are muddying the data. There are many low income countries with Gini coefficients all across the spectrum. I don't have the time to do it now, but you might find a pattern in the data if you filter out countries with GDP/capita <$5000 or <$10000.

For some reason, the plot defaulted to log for me. If you put it in linear mode, you can probably eyeball it. I mean we're looking for an obvious trend and it appears to just be completely random.

The socio-legal conditions that permit the building of wealth, like strong property rights and free markets, are necessary but not sufficient; so you wouldn't expect to see a correlation between them.

There are only a few countries that have a low Gini coefficient (more income equality) along with a high per capita GDP (more overall wealth) in north or western Europe such as Finland, Norway, or Belgium, which are very much the exceptions; for the most part, they all have a strong cultural background of being industrious, and in the case of Norway have a lot of oil.

According to the Wikipedia page on the Gini coefficient, the top 20 lowest Gini (highest income equality) countries are: Slovenia, Czech Republic, Slovakia, Belarus, Moldova, Ukraine, Iceland, Norway, Belgium, Finland, Kazakhstan, Algeria, Kyrgyzstan, the Netherlands, Denmark, East Timor, Sweden, Kosova, Malta, and Iraq. You'll notice that besides the northwestern European exceptions, they largely fall more on the "everyone is equally poor" side of the spectrum.

The US is in the bottom half of income equality, yet has one of the highest GDP per capita and the highest median household disposable income, which many agree is a very good way of measuring how wealthy ordinary people are.

To summarize, obviously having high income inequality does not cause a wealthy nation; but instead (going back to my original thesis) the factors that permit the building of a wealthy nation can cause high income inequality, which isn't a problem as long as the rising tide is lifting all boats. The few countries that are both wealthy and have low income inequality are virtually exclusively monoethnic societies that have a strong cultural emphasis on both the factors that are conducive to wealth-creation (like education and delayed gratification) as well as factors that forbid egregious displays of income inequality (like the Scandinavian Law of Jante).

I may go one step further and theorize that the same global factors that led to the rapid increase in wealth around the world in the past half-century or so did much to hide the failings of more egalitarian, "socialist" economic policies, much like the period of very low real interest rates of the last twenty years hid the failings of unprofitable VC-backed startups; and now that it looks like we are entering a more turbulent period with geopolitical instability and energy shortages, we may very well end up seeing a sharp reduction in the standard of living in countries like France or Spain as the ever-increasing redistribution of wealth in response to one crisis after another make it harder and harder to actually produce wealth.

Are you representing that conclusion as based on your set of axioms (which is fine and I can’t argue against) or suggesting that those axioms are universal?

I don't think there's much to assume here.

Governments around the world have rules about companies, salaries, taxes and so on.

There exist a large number of billionaires.

Therefore, assuming most of them follow the rules, the rules allow such a concentration of individual wealth.

I'm not against innovators getting relatively rich, that's often the incentive to innovate, or at least to push through the 'perspiration' part of that activity, but there should be balance.

Sorry, I was unclear. I was referring only to the last point (that that amount of individual wealth is a policy failure) when asking about axioms.

I completely agree that the current rules at least allow such wealth accumulation, which if applied across 8 billion people means that many will choose that path.

Well of course we can disagree whether or not billionaires are good or bad. I realize people at one extreme subscribe to the 'red in tooth and claw' natural law view of how society should be organized, and others to the opposite 'we're all in this together' view.

Personally I think the existence of billionaires is a systemic failure, is morally suspect to say the least, and that such extreme inequality is bad for society and slows progress, ultimately.

Indeed, they did not create all that value alone. They also provided stable jobs for many thousands of employees along the way. We should also celebrate that and I was remiss to not mention it originally.

Are you sure it's not rather thousands of workers who provided stable labor that enabled the owners to realize their goals?

And in the context

Created a billion dollar company that people buy from to enjoy the outdoors (at least some of the time for a large portion of the customers)(or at least signal)

I dont believe Patagonia uses slave labor in their factories

Exactly.

Hey, since I played a roll in your success, can you please send me 10% of your paycheck every month? No doubt you won't protest since "the entire structure of society enabled" you to gain such wealth.

We call that “taxes” and people who are not billionaires pay more than 10% of their income a month

Billionaires also pay more than 10% of their income in taxes.

The failure is that we think Chouinard wholly created this value and deserves this extreme concentration of the wealth created by the Patagonia company instead of the many, many, many people that gave their lifetimes and labour toward furthering the goals of the Patagonia company.

So this boils down to us lacking a fair and effective valuation methodology for leadership, which includes psychological aspects that possibly can't be objectively quantified.

p.s. Possibly a feedback mechanism where each contributor votes a fraction back to the person/team in charge and valuation (compensation) emerges that way.

We have a system for this already. You vote using money.

That's kind of a funny take considering it was Chouinard's own choices that made him a billionaire, no?

He very easily could have given equity away to the employees and spread it around. Or had exceedingly generous profit sharing.

But he didn't. He ended up with all the equity at the end, and thus the billionaire.

> many, many, many people that gave their lifetimes and labour toward furthering the goals of the Patagonia company

And they could leave at any point, they are paid for their work within 30 days. They take 0 risk.

As an entrepreneur for 20 years, I used to believe employees believe in companies and missions, but they don't, 99% of the time. They get paid for 30 days work, on time, and if they get a better offer they leave.

I'm sorry but that is 0 risk compared to what an entrepreneur does. People like yourself clearly have no idea how much responsibility and risk, and emotional strain an entrepreneur takes on, while employing people and paying them monthly. There is no comparison.

Don't expect people who take 0 risk to become millionaires. It's a ridiculous proposition. If that were the case "everyone" would be a millionaire, or a professional sports person, or an influencers, or whatever.

Taking risk, and building things yourself is much much harder. People who have never done it don't understand.

> As an entrepreneur for 20 years, I used to believe employees believe in companies and missions, but they don't, 99% of the time. They get paid for 30 days work, on time, and if they get a better offer they leave.

Did you offer those employees a chance to have a stake, to take a risk and share in the bigger reward than just their salary? I mean, in a meaningful way that had the potential to change their quality of life if it paid off? Were you willing to share the reward?

If you didn't offer such an opportunity, you can't complain that the staff didn't contribute to the level you hoped.

That's probably true, but it's not the point. People choose to become employees, and are taken care of in an extremely risk free way.

Just ask any freelancer how different it is to being an entrepreneur, even that change is a massive difference, you have to actually invoice and chase clients for payments, you have to take risk in whether you will actually be paid for work, etc.

Now just take it a step further for someone who is risking their capital, reputation, and time on creating something new, that might only make any revenue in 12-16 months, or never. And it might bankrupt them, lose their reputation etc. At a minimum that's 12-16x more risk than even a freelancer.

Oh and if insane people like myself didn't take this risk, the world would probably still be a foraging bunch of tribes. And you get hated for it for getting rich by exploiting people...

You have no idea about life, to be honest.

> You have no idea about life, to be honest.

And you do? Everyone only has a small slice of what life is like. That is the life that you yourself lead. FYI I was a freelancer, chasing clients and invoices sucked, and was a waste of my time and skills.

You obviously have very strong opinions on how great entrepreneurs are, it is also coming across as "employees are lesser" as well which is not right.

There is nothing wrong (and a hell of a lot good) with not wanting to be a person that doesn't chase up invoices and worry about payroll, it lets you focus on doing a good job. Specialisation is a great thing, and would not be possible if everyone was busy marketing their own business/self.

> At a minimum that's 12-16x more risk than even a freelancer.

So they should get 12x the reward as the average? The average US wage is about $55k, so that would be, for a successful entrepreneur, 660k (and $0 for an unsuccessful one). I don't think anyone has a problem with this I certainly don't. I do have an issue with the ultra rich, like Bezos who have made 7.5 Billion a year since Amazon was founded, or 278,406 times the average wage from 1994 (26,939). Did he take 278,406 times the risk that an employee did. No. No he did not.

> Oh and if insane people like myself didn't take this risk, the world would probably still be a foraging bunch of tribes. And you get hated for it for getting rich by exploiting people...

And if everyone wanted to be an entrepreneur we would also still be like this. People need to actually do the day in day out grind work that is building things. 99% of this is done by employeed people. If everyone tried to do their own thing that would severely limit what can be done. You really need to stop looking down on your (and all) employees.

edit: fixed maths - Bezos has too much money for my math skills.

> There is nothing wrong (and a hell of a lot good) with not wanting to be a person that doesn't chase up invoices and worry about payroll, it lets you focus on doing a good job.

It has everything to do with this. Not wanting to be that person is fine. But then don't complain about people willing to take a lot more shit earning more than you. Generally, the stuff less people want to do (but is valuable to society), is better paid.

> like Bezos who have made 7.5 Billion a year since Amazon was founded, or 278,406 times the average wage from 1994

The guy created 400,000 jobs during the covid crisis, when most other businesses were either shut or going bankrupt. That's 1% of the US population. Going by your $7.5bn a year, that's $18 per new employee that year. You think he doesn't deserve that?

> The guy created 400,000 jobs during the covid crisis,

No he didn't. The business he founded did, the investors that invested in this business did, the customers that paid for services did. The people that made all of that happen were employees. He is not solely responsible for anything. For a long while he was responsible than many others in the organisation, but ever since he hired another person he was never responsible for anything on his own.

The idea that one person solely, directly lead to 400,000 people being employed is farcical. Did he really create a job spec, position, interview and do the paper work for 500 people each calendar day for two years?

No he does not deserve the money he has.

> Going by your $7.5bn a year, that's $18 per new employee that year

400,000 * 18 = 7.2 million, not 7.2 billion.

Damnit. Fair point. Doesn't quite make the same point as before :) But still. 400k jobs is insane for 1 company.

:) It's not just the 400K jobs; I think that Amazon's logistics capabilities helped make the practicalities of soft lockdowns and limiting your outside trips substantially more bearable in the early part of the pandemic.

Amazon's deliveries avoided literally billions of in-person interactions during the peak uncertainties of C19. Bezos didn't start Amazon with that in mind, but it sure did help when called upon.

Then, people had the unmitigated gall to complain that Amazon made a lot of money during that time period. Well no shit; they provided a ton of value to hundreds of millions of people...

> So they should get 12x the reward as the average? The average US wage is about $55k, so that would be, for a successful entrepreneur, 660k (and $0 for an unsuccessful one). I don't think anyone has a problem with this I certainly don't.

That's not how averages work. If 1 in 10 of entrepreneurs succeed at all and 1 in a million succeed notably, all of those millions of $0 outcomes flow to the 1 in a million (or 1 in 50 million?) success cases to make the average come out to whatever it is.

If it worked like you suggest and 10% succeed, you'd have 10 @ $660K and 90 at $0K for an average of $66K.

Yes you're quite right.

I don't think it takes away from my point, that some people have far outsized rewards for the risks they take.

The failure that is being talked about is the fact the we reward risk-taking much more than we reward effort. No one is saying there was no risk involved, rather what we're saying is the proportion of how much we reward risk vs. how much we reward effort is skewed in favor of risk. And the magnitude of this skew is unhealthy to society and leads to results that I (and others, clearly) don't consider fair.

To that I would add that the only risk we're rewarding in this way is the risk to capital. While we do pay more for jobs that are more risky in terms of safety, it's close to impossible to become a multi-millionaire by risking your life in your job. I would say that kind of risk is higher than the one taken by entrepreneurs, but entrepreneurs and investor have an easier (though not easy) path to getting outsized rewards for their risk.

It's OK to reward risk, and it's OK to reward effort, and it might even be OK to reward risk more than effort. But by how much more?

I like how you've laid this argument out. Really useful perspective. Copied for further thought. Thanks.

> You have no idea about life, to be honest.

Fuck you buddy. You have no idea what I've done, what I've staked, what I won or lost, who I protect or what any of this means to me.

You're trying to justify keeping people out of your successes whilst complaining that they don't support you (and your business). How could they possibly deliver at the level you're expecting without the reward? Why bother?

Your narrative is as old as time and it’s always the same, and every time society listens to people like you seriously it ends up optimistically as zero innovation over regulated society, pessimistically genocide against anyone who’s ever accumulated anything (google kulaks).

So no, you have no idea of life or history.

> Your narrative is as old as time

So's yours. You're arguing that only might is right and that only greed works. You're simultaneously complaining that the people you're explicitly locking out of your chosen success path don't support you. Show me how you support them and I'll accept some of the rest of your argument.

> and it’s always the same.

Let me correct that for you: previous attempts to systematise broader opportunity have been corrupted by power. The bigger the attempt to make things fair, the further it's been corrupted. Those who don't care about fairness have abused the system for their own ends.

I still live in hope we can develop a system that decouples power from leadership, enables more people to have greater power over their own development, and better rewards collaboration and co-ownership. I acknowledge the failures from the past but I refuse to accept this is the only way life can be.

> So no, you have no idea of life or history.

I'm fairly interested in history and I have _a lot_ of ideas about life.

> People choose to become employees

People really don't have the sort of freedom to make choices that you're assigning to them. There's a thousand mitigating circumstances that limit peoples' options and can preclude the sort of risk taking that you're valorizing and shaming employees for not taking.

I don't think it's fair to shame them, but I think it is fair to observe that they, factually, did not take those risks.

I can't comment on how much harder it is for a person to be a bussiness owner as problably we don't live in the same country and we don't live under the same laws/regulation, otherwise I'd challenge that.

> They take 0 risk.

For wealthy worker problably, but for labor worker is not risky free.

> building things yourself is much much harder

Unless you work alone you don't build things yourself.

> People like yourself clearly have no idea how much responsibility and risk, and emotional strain an entrepreneur takes on

It seems like you don't have idea how hard it is to be in the bottom layer of the wealth distribution.

> Don't expect people who take 0 risk to become millionaires.

I don't think no one in this thread meant that. They are just advocating for better wealth distribution.

The argument is against billionaires, not millionaires. There's a huge difference between the two.

No one is arguing that there shouldn't be any millionaires.

A billionaire is usually just someone who's done something like me but 1000x better. Where is your line? What's ok? 100m? 432m? Above that people are "too rich"? What if there's 10% inflation? Do you add that on?

Also - yes, there are rent seeking evil billionaires. The 2008 banking crises showed that. There are also rent seeking evil slum lords who own $50k worth of real estate.

The problem isn't wealth. It's rent seeking with no value add, with government lobbying sprinkled in.

> Where is your line? What's ok? 100m? 432m? Above that people are "too rich"? What if there's 10% inflation? Do you add that on?

Surprisingly, this is an answerable question. It's not that we directly take away money from current existing billionaires — rather, we create policies that make SMB owners and working class the beneficiaries of the policies we implement.

For example:

1) Be more labor favored rather than rent favored in terms of tax policy. Like you rightly said, rent seeking is currently too strong compared to wages, tax policy should penalize rent seeking. This is only contentious because rent seekers are already too large of a population and would not support this.

2) Business environments that favor small business over large business. Large business is a choice, not an inevitability. I would much prefer a dynamic city with many small businesses (maybe higher prices overall) than the current cookie cutter walmart landscape. This is doable by policy, specifically creating policy that subsidizes small businesses and make them easier to start and run and penalizing large corporations.

3) Labor protection instead of risk and asset protection. For example, the wallstreet bailout is a policy environment that favors risk and asset protection over labor protection.

It's not that I'm pro-labor - trust me, when labor laws become too strong to the point that business suffer, I'm pro-business. But right now the working class is powerless to the point of suffering, while large businesses are at a historic level of return, even through multiple recessions.

Speaking of large businesses vs small businesses, I want to state again that there's a huge difference between billionaires and millionaires. Repeating again - large businesses are a byproduct of economic policy and not an inevitability.

Economic policy is not about optimizing for GDP or growth, it's about the preference of how you want your economy to run. Do you want cities where walmarts eat all the local businesses? That's a economic policy choice. Do you want billionaires? That's also an economic policy choice.

And the policy decisions are not "oh, you have a billion dollars, now we tax you." It's instead "oh, you have 6 buildings? maybe your 7th building will impose additional taxes." Oh, you are a giant multi-national shopping chain? Maybe we'll force minimum wage and benefits on your workers so that you can't expand everywhere recklessly. Oh, that rises the price of bread by .50$? Sure, we can live with that tradeoff.

This is what is meant by billionaires are a policy issue. It's not limiting your ability to be an entrepreneur - actually, a environment that is good for large businesses is usually bad for small businesses and entrepreneurship (because it favors the incumbents).

I’m actually in agreement with you up to a point, but these policies won’t stop Elon or bezos becoming billionaires. They’ve built businesses that actually put a lot of value into society. They own shares in those businesses, that’s why they’re wealthy. Unless you tax their capital gains, yearly, you can’t stop them.

And that opens a massive can of worms. How does a paper billionaire pay taxes on paper wealth? Do you force them to take out loans? What if there’s a stock market crash. And they lose net worth? Do you refund their taxes?

It’s a really bad policy.

> I'm sorry but that is 0 risk compared to what an entrepreneur does.

Most employees loan the company 45 days of labour. This is an "at risk" investment. If the company goes under, they may lose all of it. When multiplied by a large staff, this can be a very significant investment which would, if borrowed from a venture capitalist, be quite expensive equity. Yet, no equity is given.

Moreover, unlike founders and other investors, the employees are typically left in the dark about finances. When a company is in dire straits, venture asks for a large multiplier as return. Employees, that grant a "free" 45 day rolling line of credit do not enjoy this risk premium.

Where's the 45 days coming from? Very few employers in the US pay less frequently than monthly, and in 30 years, I've never had a W-2 job that paid other than every-2-weeks.

I receive a two-week paycheck with a one-week delay, plus five business days (a week) for the bank to verify my employer actually has the funds to cover it. So that's four weeks already. I'm not sure where the other 17 days come from, but it's important to note that most people would not quit on the spot if their paycheck doesn't clear; there's too much risk in that. This is how employees end up weeks to months behind on paychecks with employers stringing them along.

> Where's the 45 days coming from?

First, many employers pay bi-weekly, but deposit is delayed one cycle. You work, then at 2 week mark timesheets are submitted & approved, and then following week the auto payment happens.

Second, there is vacation time, which can be as much as 4-6 weeks accrued but not paid out. The average employee probably carries at least a week or three.

I hope this explains. Even though paychecks may be first in line, there is significant amount of the company's risk borne by employees.

That's wild, in Europe you get paid before the 28th of every month for that month's labour. Payment is by EFT direct to your bank account and arrives before the end of the month every month.

> a million different people each having a $1000 stake or 1 family having a $1B stake

Money is power. Do you see no difference in a million people have a little power vs one family having enormous power?

If you want to reduce the influence of money on politics, you're not going to achieve that by punishing billionaires, or by destroying the incentive structure that allows them to exist. If you want to reduce the influence of money in politics, you'll have to understand the specific mechanisms that create said influence, and address them by law.

Wealth is good. People acquire wealth by adding value. We want to incentivize people to add value. Of course, the "billionaires shouldn't exist" crowd understand little and less, and would happily have us destroy this system of incentives without even achieving their stated goals, because they, much like the "defund police" crowd, are more interested in appearing virtuous than in actually solving problems.

  "People acquire wealth by adding value"

This incorrect view comes from objectivist thought. Namely, the trader theory of value. But it's false ideology.

Some wealth implies value add. SpaceX.

Other wealth was partly figuratively stolen due to incomplete laws that prevent market failure. Purdue Pharma, slave trader, hitman, oil company (global warming), sex trafficker, social media company (societal fragmentation), fast food company (costs on public healthcare), landowners (regulatory capture), porn company (victims of revenge porn), car company (health effects of tire dust).

I'd say it's more the norm nowadays that wealth is partly stolen, figuratively speaking. The distortions and market failures have become so large.

You seem to be suggesting that the mere existence of externalities somehow negates the fact that value was added, which is silly.

The existence of externalities doesn't negate the adding of value. Would we be better off without oil companies? Obviously not (just ask a European!) Hence it's impossible to say that they're not adding value, or that the people who create them aren't adding value.

> Wealth is good. People acquire wealth by adding value.

Those are axioms presented without evidence. It’s trivial to find counter examples.

I’m no radical redistributionist but the idea that wealth in and of itself shows added value is clearly wrong.

I suppose it depends on how you define wealth, but I can't think of many people who became really fabulously wealthy without creating value for other people, except when government was involved in a monopolistic or rent-seeking way.

It's trivial to steal somebody's lunch money. It's much harder to become a multi-billionaire without making something that a lot of other people wanted to spend money on. (If those other people were forced to spend money on it by the power of the government, it's a different matter.)

Regulatory capture is just the beginning.

Just because two people agreed to trade doesn't mean value was created.

First there's externalities. Global warming caused by oil companies. Stochastic terrorism and fragmentation of our polity caused by social media and news companies. Healthcare crisis caused by fast food companies.

Second the notion of voluntary trade is a fairy tail that's ignorant of the underlying neuro and psychological processes that go into decision making. The dopamine system is stupidly easy to game. It's like if we got a bunch of moths to kill themselves by flying into a bright light somewhere and we call that voluntary, as if we weren't merely hacking ancient circuitry. That's what's happening now with opioids, fast food, social media and more.

>Just because two people agreed to trade doesn't mean value was created.

Reminds me of that adage: "Economics is the idea that if I pay you a dollar to step on shit and you in turn pay me the same dollar to step on shit, that makes for a better world"

Money is just an arbitrary mean of distributing production. In a capitalist society (and at a lesser extent in a mercantile one too), having a lot of "things", in this case money and capital: we can call wealth, is power (this has implication for anarchist beliefs).

Democracy and in a limited way, socialism (pensions for the elderly, healthcare, subsidized public transportation, i know this is not the original meaning, but for this its good enough) counterbalance the power gap between wealthy people and non-wealthy people, but clearly in the western world (at least in my country), the counterbalance is weaker and weaker.

I don't think a random millionaire like Eric Finman should have more power than a random citizen, and yet he have.

I don't think the "billionaire shouldn't exist" crowd actually exist. But i'm part of the "billionaires shouldn't have this much power" crowd, since it feels like in my country, they own the press, the executive and 40% of the legislative power. The judiciary power is the only one that might be a bit free from influence, but i'm not certain.

Billionaires existing is ipso facto evidence of extreme inequality in allocation of generated wealth - so extreme that there is no feasible justification for it. Therefore, billionaires should not exist. A more verbose way to say the same thing is that society should be structured in ways that make it impossible to collect so much wealth produced by other people as economic rent.

Ok, i agree with the later point. I don't know yet if I agree with the first.

There are commenters on this very page who count themselves among the “billionaires should not exist” crowd.

Let me rephrase this: i don't think people saying 'billionaires shouldn't exist' are against their existence, but against the disproportionate amount of power they have.

Of course I see a difference between those two; I just don’t think it’s a problem. Over many decades, many millions of people transferred some of their power to Patagonia as a result of their belief that they’d rather have the Patagonia product than the amount of power that money represented. Millions were made better off, by their own value function.

This is actually a great way of looking at it.

Patagonia here is the exception, that's why we're all here talking about it!

I didn't want to give my bit of power to my health insurer, but guess what, I have to have healthcare to live and there's effectively one local hospital I can choose.

I didn't want to give my ~~~bit~~~ hefty chunk of power to the company that gatekeeps the patent on insulin, but I really didn't have much choice on that one.

I didn't want to give my bit of power to the telecom conglomerate, but did I have a choice? I need to be online to participate in today's society.

I didn't want to give my bit of power to Google, but... uhh actually I didn't give it to them, they stole it by spying on me.

The reality is that concentrations of power that are inherent to our system of free exchange inevitably congeal into something that looks a lot less free. All of these examples (and there are so many, most of our economy is like this!) don't really represent individual value functions, because when power gets concentrated enough, it becomes possible to take choice away.

Health insurance and medical care are all highly regulated industries with exceptionally high cost of entry; one could call it a broken market. It's not competitive at all. I always marvel at how much better the whole experience is when I take my dog to the vet than when I myself go see a doctor, and can't help but wonder if there wasn't so much state intervention (or even just wiser intervention) in medicine, my experience would be different.

Forms of insulin for which the patent has expired are affordable. The stuff under patent is expensive but objectively better at its job. One could argue that the forms in between (patent recently expired but not widely available as generics in the market) are again due to the result of onerous regulations keeping competition out of that market.

Telecommunications, at least the hardwired kind, is a natural monopoly and I wish some smarter incentive-structuring would take place in that market; maybe public ownership of the infrastructure with competitive private service providers operating on top of it. Wireless is generally more competitive and you can actually be online for less money than you think.

I'm not sure what your point was about Google? You certainly don't have to use their services.

I didn't want to seem long winded, but the market structures you describe are common to many if not most markets we have for goods and services, at least here in the US.

For example:

Food, agriculture, energy, media (print/radio/movies/home video), most commodities, productive inputs... there is little that you can buy that is not part of what I would loosely call a "conglomerate" -- that is, a concentration of capital so large and intense that it tends to influence the markets in which it operates. In fact, markets are today less competitive than they have ever been.

Those things that are (I would argue, seem) "competitive" here, like fashion, consumer products, and the like, are frequently as or more exploitative and influence markets (specifically, labor markets) abroad, up to and including slavery. Just because we don't feel that pain doesn't mean others are free of it.

This is because we have done nearly nothing, culturally, politically, economically, or psychologically, to stop the movement of power -- just as you described -- out of the hands of the many people and into the hands of the few entities that control such markets.

The free market, where each individual has the power of their dollar, is delicate indeed. Much more delicate than we have appreciated in the last several decades.

OTOH concentration of capital makes companies like Tesla and SpaceX possible. It also makes large, self-sustaining charities possible.

It’s a convenience for rich people to find their own ventures, but it’s not the only way for ventures to be funded. If the wealth was distributed among thousands more then those folks would still be looking to invest it, many in EV or space tech, and some might just pool their money into venture capital coops that perform the same function as individual rich folks etc. (allowing individual entities to be pitched to instead of each of thousands of investors.)

> Why shouldn’t creating that much value in the world result in the owners collectively benefiting?

It's an inefficient allocation of resources, since wealth brings marginally decreasing utility.

>wealth brings marginally decreasing utility.

If it is consumed, then sure.

If it is invested by a wise rich person who can manage and grow businesses, then his employees/customers/investors/partners (and perhaps even their own trade partners) may well reach much more utility from the fruits of that wealth than the utility realized if the wealth ended up in less productive hands.

The problem is concentration of wealth to the point there are negative impacts elsewhere in society.

Bezos didn’t get rich in a vacuum. He did it by pushing warehouse workers to the brink of sanity and physical collapse. By making drivers per in bottles instead of taking bathroom breaks. Etc.

And then there’s Zuck. Does FB/Meta really provide value to society that warrants his wealth? Sire, within the confines of the rules we have in place it does. But that doesn’t mean we can’t question those rules.

> Does FB/Meta really provide value to society that warrants his wealth?

Do basketball players deserve to make 10x the salary of CEOs? (Average, from top Google result).

A market where by individuals have the freedom to allocate their dollars towards things they need and/or want (among plenty of options) has determined so.

No one gets rich in a vacuum. Slave labor is illegal. Hundreds of thousands of people are paid along the way - inside Amazon, outside, the government.

> Do basketball players deserve to make 10x the salary of CEOs? (Average, from top Google result).

The short answer: no, they don't, basketball has its own wealth distribution problem, but that's a problem within basketball rather than for society at large. (Non-superstar players are severely undercompensated, particularly when it comes to development leagues, college, and even high school.)

The shorter answer: we're not talking about CEOs, we're talking about owners and shareholders, so why even bring up CEOs?

There is a power imbalance between employers and employees, which is particularly severe in case of large corporations. Slavery is not the only way to economically exploit people, just the most direct one.

> Why shouldn’t creating that much value in the world result in the owners collectively benefiting?

One can benefit without being a billionaire.

Should we cap the benefit at some particular monetary value? Wouldn't that disincentivize building companies past a certain point of success? Is that really what we want?

Looking at many of the big companies, that doesn’t seem like a particularly bad idea.

To answer the last two questions, yes. The expectation for companies to continue to grow no matter what, even when they're already massively profitable, is one of the biggest issues with modern capitalism. It's how you get the world's most profitable (non-financial) company switching its focus to nickel-and-diming its customers for services because it's run out of new human beings to sell iPhones to, and how you get every video game company switching to scummy fomo and gambling to maximize shareholder revenue instead of mindshare, and how you get every company jumping over themselves to sell your data even if you're already paying for the product. Companies should be able to get to the point where leaving money on the table for the good of their customers, and society, is a valid move.

Okay, but this would disincentivize individuals from building multiple successful companies after a certain point of personal success.

No it wouldn't. It would cease to further incentivize them. Once you have enough money to live comfortably for the rest of your life, maybe you don't need external incentives for your behavior? Maybe you should be encouraged to simply do whatever you find most fulfilling, without financial reward?

> dis·in·cen·tiv·ize

> verb

> discourage (a person or course of action) by removing an incentive.

Regardless, though, how exactly would your proposal not prevent someone from building future companies? If stock is considered monetary wealth (the only viewpoint from which we have billionaires), they would be forced to... What? Give away their existing stock in order start a new successful company?

I think we should scale income tax based on wealth personally

That will just lead people to outsource their wealth by whatever means, so that it doesn’t formally count as their wealth anymore, but they effectively still control it.

Then I hope we can couple it with a well funded IRS.

In theory this would be difficult to do unlike the games that occur now because you don't merely need to suggest that you're not earning the income. You can't give it to a family member or it gets it with a hefty gift tax. You can't stuff it into a shell corp because you still own the shell corp. You could donate it to a charity which you control which is a thing that happens now.

Or maybe you don’t receive it in the form of whatever formally counts as wealth in the first place.

Our tax law definitions of fair market value are sufficient that I think this is a non critical issue.

You don’t think that before the Constitutional Amendment to allow taxation of wealth is ratified that there will be 1000s of CPAs and attorneys looking for loopholes?

GRATs and IDGTs will look like quaint children’s toys compared to the schemes invented to receive the benefit without formally having $10^9 of net worth.

> You don’t think that before the Constitutional Amendment to allow taxation of wealth is ratified that there will be 1000s of CPAs and attorneys looking for loopholes?

Sure

> GRATs and IDGTs will look like quaint children’s toys compared to the schemes invented to receive the benefit without formally having $10^9 of net worth.

Well good luck then.

What do you think "being a billionaire" means?

If you start and retain ownership of a company that is one worth day a billion dollars, you're a billionaire.

That doesn't mean you have a billion dollars in cash. It doesn't mean you have a billion dollars in hard assets. It means you built a functioning organization that is performing some valuable service in society, and some accountant has associated some value to that entire organization of more than $1,000,000,000.

At what point do you think founders should be punished for that accomplishment by having some of their ownership stake taken away from them?

The problem is that at the moment a billionaire can leverage their paper wealth into incredible loans and power without actually selling their ownership stake and realizing their billion in cash.

> At what point do you think founders should be punished for that accomplishment by having some of their ownership stake taken away from them?

When they sell it for a billion dollars.

Sure, that would be a reasonable position, but most people the media characterizes as "billionaires" have not actually sold their company for a billion dollars. This is a fundamental misconception.

These listings of "net worth", etc. all include the nominal market value of their remaining ownership of whatever company they founded.

Jeff Bezos has a "net worth" of $160B. That's not because he sold Amazon for $160B. It's because Amazon is worth $2T and he still owns 8% of it.

At what point would you suggest the government should have taken away that 8% ownership so he would not become a billionaire?

Those billionaires don’t sell their shares but they do take extremely low interest loans that are non-taxed against those shares kicking their tax obligations into future generations while using liquidity to live as if they’ve sold the shares.

So I’d suggest the tax code be amended to account for that.

That's also a reasonable suggestion. It wouldn't stop them from becoming billionaires. The GP suggested "every billionaire is a policy failure". What's the policy success that prevents this failure?

"No one is allowed to start a company by themselves"?

"No one is allowed to join a startup unless they get more than X% equity"?

"Startup founders must give more than X% equity to their first N employees and/or investors"?

"Bootstrapped startups are not allowed"?

"Once a startup becomes more successful than X, the founder must sell"?

But eventually the tax liability is paid. If after death, they get hit with the estate tax which is even worse than just eating the income tax.

Taking out loans defers tax. It does not avoid or lower it.

Ah but you see, once you are ready for your estate to take the money you set up a granter retained annuity trust.

So long as you don’t die, and your trust earns more than the IRS theoretical rate you can pass on the money almost tax free. While still getting loans against it.

If you put assets in a GRAT you can't borrow money against it

This is correct; GP mis-typed the income angle. Instead of taking loans as typed, the grantor retains the right to receive an annuity stream over the trust's term.

Right. What I meant is you can get the loans against the balance before putting it into the trust and after the trust itself provides the income.

> At what point would you suggest the government should have taken away that 8% ownership so he would not become a billionaire?

I'm not suggesting that.

It's ok if people are billionaires, if defined by having large holdings that, if liquidated, would shrink to non billionaire scales to give back to society.

It should not be possible for a single person to own 8% of the company the size of Amazon.

If you're starting from scratch, there are many ways to do so. For example, make issuing corporate charters contingent on being employee-owned - so if the company grows, so does the number of owners.

If you're starting with an economy with extreme concentration of capital to begin with, gradually ratcheting up progressive taxation on such concentrated capital seems like a straightforward way to force the owners to spread it around.

Or you can offer substantial tax incentives for founders to cash out by selling to their own employees; e.g., the ESOP system in the US.

They don't sell it now they borrow money against the value of shares and get to keep the stock, not pay taxes because it is not income. Your plan would not work. No plan like this could work...

The economic system that creates billionares is the problem, not the billionaires themselves. But because the issue is that wealth suppresses wages, the easiest visualization and embodiment of wealth is billionaires.

> Why shouldn’t creating that much value in the world result in the owners collectively benefiting?

Billionaires make money from both value creation and value capture, but it can be argued pretty convincingly that value capture is how billionaires make their money rather than value creation. In fact, there's plenty of examples where value is created but not captured (open source being one of them) that lead you to realize that massive value creation isn't possible with just one person, but massive value capture is. Even superstar value creators like Einstein or Beethoven were ultimately just contributors to a larger scientific or musical community.

When considering economic policy, you have to think of it as value capture, value creation, and value distribution. And while it's nice to think of value capture as "the capture of the value you create", the reality is that value capture can be any systemic transfer of wealth. Gambling is a prime example of a transfer of value without any creation of it.

Billionaires are actually not the problem; the problem is that wealth captures too much value compared to wages, which then produces economic conditions of slavery.