Just as one can't judge a person who's on the streets - one can't judge a wealthy person with such lenses.
Do you have any evidence for this?
[edit] Of course, you'll likely be able to find a single case and that's any evidence. So how about is there sufficient evidence to support your conclusion that "old money" is getting all the VC funding?
https://techcrunch.com/2021/08/29/diversifying-startups-and-...
Maybe it is just a confusion over the definition of "multi generational wealth".
Many if not most people consider getting a house, inheretence, or small business "multi generational wealth", especially in economic literature.
You dont need an 8+ figure inheretence to be upper class in the US.
Anyone else is taking on risk of becoming destitute if they repeatedly try to start businesses. Even a small business can drain a million dollars very quickly.
> You dont need an 8+ figure inheretence to be upper class in the US.
I think you do since that's about the level where you don't have to work anymore, especially if you're talking about passing that money down to multiple children and keeping them in the upper class.
That said, I agree eight figures is about the right number for when a family would not have to work assuming that the capital assets are managed appropriately.
I think high value labor is the main path between lower class and middle class. High value labor plus smart investment of surplus capital gets families from middle class to high class. The path from high class to Capital class, as you call it is, primarily return on Capital management.
To get from Capital class to Kennedy class requires a significant windfall or luck, as you would expect for tail end of a Pareto distribution.
A family house is generational wealth. Most people who at age 65-75 are worth over $1 million dollars didn't get there by using the power of law to stay on top or profiteering from slavery or genocide. That's insane.
NIMBYism is the power of law. Mortgage interest deduction is the power of law. Without either, that million dollars of wealth, much of it in the home, would be a lot less.
I think there's a basic misunderstanding here. If I say that you are in the 80th percentile, that doesn't mean anything other than you are, right at this moment, in the 80th percentile. It doesn't say anything about your position in the future, and even if it says that the 80th percentile will still be there in the future you may not be in it. You can't use the fact that I have described your position to maintain your position.
Did you not read what you linked? It deals with the causes of power laws in economics, it does not by any means say that power laws cause stagnancy among the relevant population. It does not say this because that would make no sense.
Power laws when applied to economics are an indicator that there are underlying processes (effective barriers with capital may be one) that cause the distribution to look this way. They are an illustration, not a cause.
https://www.forbes.com/sites/eriksherman/2023/03/26/financia...
> The reason most people don’t get the mortgage interest benefit is because claiming it requires itemizing tax deductions rather than using the standard deduction. But to itemize, you need enough deductions. In 2019, the Tax Foundation estimated how many people itemized after those big tax changes in 2017 that made it harder for most taxpayers to do so. It was 13.7%, or more than 17 percentage points lower than before the 2017 law.
> Desmond pointed to a National Bureau of Economic Research study from 2015. Even at that point, about $195 billion of the $270 billion the federal government spent on housing was in the form of these tax code-based deductions. The remaining $75 billion is spent on the poor, or less than a third as much.
> That $195 billion now is for the people who can claim it on their taxes, or less than 14% of the tax paying population.
This was actually the point I was trying to make. It depends on how you look at it, but by one measure, taxes on net are slowing the wealth accumulation of everyone who pays more than the national average tax. Those who pay less than the average are typically living hand to mouth and not accumulating wealth. When you look at where tax revenue comes from, it is mostly the high earners that are paying for everything, offsetting the their wealth accumulation. Even despite factors like itemized tax deductions, your high earner will still be paying far more than your low earner. For example, the federal rate of 37% on income over 500k will still be far more than 12% on less than 41k, even with tax deductions.
There are of course some factors that offset this, like maintaining the rule of law, education, and property rights which help lift all boats, rich and poor.
The mortgage interest deduction in particular now helps the top 20% or so afford their homes. And afford to continue paying more for homes in their range. Thus boosting property values and prices. While the lack of mortgage interest deduction for additional homes increases the cost of homes which are let out as rentals, which directly impacts the cost of renters, and indirectly boosts the costs of renters through the rise in property values.
I haven't studied this, and lack the ability to do an economic analysis of the yoyoing of increasing home prices versus new construction. But there's probably a regressive effect on wealth even for some of those who aren't living hand-to-mouth.
It looks like the mortgage interest tax deduction did decrease from interest on up to $1 million in loans to interest on up to $750 thousand with the 2017 tax change. This should help reduce the effect on house prices a little bit on the margin.
> it is mostly the high earners that are paying for everything, offsetting the their wealth accumulation.
To an extent this is true. But this argument is also used to say that renters don't pay property taxes. Maybe not, but property taxes have a direct, proportionate effect on the rent that they pay.
>To an extent this is true. But this argument is also used to say that renters don't pay property taxes. Maybe not, but property taxes have a direct, proportionate effect on the rent that they pay.
When you have makets with a gap between production cost and the market price, there is the possiblity that the seller simply eats the cost.
Imagine wallmart selling widgets with a profit. If the price of the widget is already set where the marginal profit for increasing the sticker price is zero, This holds true even if production costs go up. i.e., raising the price still results in fewer sales and less profit, independent of production cost.
In terms of housing, if nobody can afford higher rent, landlords cant raise it without more vacancies. In that case, tax might come out of their profit and not be passed on.
Yes, this is true. Some landlords merely use rent to offset the cost of the house, not to cover it entirely. But over enough years, the majority of rental property has to be paying its way, or it gets sold off.