Your point 2 is suspiciously close to the trickle down economy hypothesis which doesn’t work - I mean yes they spend that money but they spend both absolutely and relatively much more on point 1.

Also, I have serious doubts that buying assets fights inflation. It’s only true if the money ends up locked in some central bank account, otherwise someone else gets it and can spend it on goods or services instead of different financial assets.

So you're arguing you can allocate capital inefficiently and it's not a problem. I disagree. Capital should be allocated fairly so those who are doing the work stay motivated and those who are not doing anything aren't disproportionately rewarded.

Do you manage your own money this way? Do spend 10 grands on a running shoe because, well, it will eventually make the whole society wealthier and improve standards of living for everyone including you?

Isn't point 2 a summarized version of trickle-down economics, which, by the way, has been repeatedly proven not to be effective? https://www.lse.ac.uk/research/research-for-the-world/econom...

This is "trickle down economics" you're repeating. That theory has failed to provide any empirical evidence.

1. Inflation is good, deflation is bad and out of order high inflation is bad. Unless you literally store cash, you're not taking money out of the system. It's either invested or lended. Your point #1 is completely false.

2. Rich people don't create the middle class, and create only a very small set of people wealthier... if any at all.

There are diminishing returns for society of having exceptionally rich people.

As an example: mathematically having a few people in a town earn more than 100x the rest will not boost the economy as much, as having a distributed rise in compensation.

In our current world what you pay for services and products is not at all dependent on your income. Which means that an average American software engineer earning 150k will still pay $1k for an iPhone, $200 for gardening services and so on. That is the same price anyone else is paying... This leads to diminishing wealth redistribution, as the denominator is how often a service or product is purchased.

Our household income is within the range of 500k, we consume the same products and services as our teacher neighbors at less than half that income.(they probably consume more, given that they have 3 kids)

If our household income goes to $1mil - we will not need to call the gardener more often, we will not eat more, we'll not need more haircuts, we will increase our expenses but not double them.

If our household income goes from $1mil to $10mil, there will be even lower increase in spending that would distribute the income...

Now if every house in our neighborhood got a $100k annual raise, the demand for services and products would go up 100 fold.

3. It's not a zero sum-game. It's a case of diminishing returns. It's interesting that you present a mass market product as an example, where wealth is produced by mass market, instead of an example of rich people making other people wealthy.

I’d say there are many examples of higher salaries being zero sum or negative sum.

I’ve noticed from people I’ve visited in the US with large salaries that there’s many who buy homes with swimming pools they don’t necessarily use much. It’s kind of something you just have to have, especially if you plan to sell the home one day.

The European model might involve smaller homes, higher taxes, and thus lower salary. But the taxes will often go to public infrastructure, and since housing is denser, that infrastructure is potentially in walking/biking distance. So you get public pools with more amenities (even a big slide if you’re lucky) for less money.

I was struck by a side comment in Linus from Linus Tech Tips that he felt his family needed to spend some of the summer at home to justify the huge investment in the swimming pool in their new home. Seems kinda crazy to me.

The mega yachts that seem popular with the ultra wealthy also seem to me like such a huge waste. So many people employed building those big money sinks who could have been building infrastructure.

In the case where the gains on capital or large salaries is used as new capital for new ventures, I agree it’s not zero sum. But if that’s what we want more of, there can be ways to encourage that money is managed that way more often. Doesn’t feel like there’s enough effort on those kinds of policies.

I mostly agree with point 1 in the sense that the rich and powerful's money doesn't directly contribute to inflation of basic goods, i.e. Bill Gates can only eat so much rice personally so he's probably not affecting global rice prices.

However, per point 2, the issue is paying people to do useless things. If Bill Gates buys a superyacht staffed by 30 people just paid to operate the yacht, well that's a whole lot of man-hours and natural resources (fuel, raw material) being pumped into a useless object that could otherwise be spent improving the world. And yes, downstream from that (people paid to grow the food that feeds the yacht workers) are now doing mostly useless work.

>If you pay someone a lot of money they will, essentially, spend it on other people.

This touches on the concept of trickle down economics and it is generally regarded as not doing what you think it does (or at least, not very effectively).

Trickle-down economics. It sounds like a good idea, but in practice, the system is much less about dollars and cents and more about intangible deals and than goods and services. So the vast majority of wealth in the system never actually is seen by the less wealthy. It just endlessly circulates amongst the very wealthy.

Trickle down economics don't seem to work and while the broader economy isn't a zero sum game an individual company's decision to pay executives more money is a decision not to spend that money elsewhere.

I think it makes more sense to look at it through the lens of labor distribution. Money is abstract and cyclical and can be inflated and deflated by policy, which makes it complicated to draw conclusions about. But money is ultimately used to influence the distribution of labor, which we as a species have a finite capacity for, and which has concrete impacts.

As a person becomes wealthier, each marginal dollar is less likely to be used to support critical infrastructure like food distribution and more likely to support the construction of mega-yachts. And because the labor pool is finite and subject to competition, increasing the leverage of the mega-yacht industry can have a negative effect on other sectors' abilities to meet people's basic needs. This is why I hold income inequality to _generally_ be a negative thing under capitalism: not because of any moral judgment on rich people, but because a certain level of competitiveness among individuals in the labor market is a requirement for survival.

edit: whoops, everyone else already made this point while I was typing. Sorry for the pile-on.

Number 1 is a terrible point as well. Fighting inflation is an entirely contextual problem.

The neat part about it is that if my friend's buddy, Bubba (Yeah. He's an electrician.) goes to see a congressman, governor, or the president and says he wants something done, he'll get a big shit-eating grin and a "Sure, buddy, we'll work on that!" with a hearty handshake.

If I go to them, I'll get offered a cup of coffee and possibly a few minutes to make my case.

If the guy making $50,000,000 per year does it, then, well, his wish is your command.

Money is power.

So we should mint a few more billionaires to improve our democracy? That cannot be what you're saying, right?

If the result is a small number of trillionaires, it probably won't help.

> if my friend's buddy, Bubba (Yeah. He's an electrician.) goes to see a congressman, governor, or the president and says he wants something done, he'll get a big shit-eating grin and a "Sure, buddy, we'll work on that!" with a hearty handshake

When did you last call your elected’s office?

The main problem here, in my opinion,is that we have artifically capped the number of congress critters at an absurdly low amount. We should have almost twice the number of representatives. You should basically be able to walk to your reps house assuming you live in a somewhat dense city or small town. You should know what church they go to. Where they go to the gym, etc. By limiting the supply of congress people we've given disproportionate weight to the richest in their district. If every neighborhood had a congressperson, there would be less of this, because they'd have to compete with votes for the (likely average) people who live there.

That being said, for me personally, I've had great luck calling my state congresspeople, because like what I said above, I do know where they live and their habits, because they're a known neighbor. Note, I completely disagree with her politics, but in terms of constituent services and getting things done, I can't criticize at all.