[HN Gopher] America's 1% Has Taken $50T From the Bottom 90%
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America's 1% Has Taken $50T From the Bottom 90%
Author : paulpauper
Score : 382 points
Date : 2021-02-11 15:41 UTC (7 hours ago)
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| LatteLazy wrote:
| Taken sounds bad until you look into it and discover the 99% all
| but forced it on them...
| Grustaf wrote:
| No doubt the rich have been getting richer, at the expense of the
| rest of society, and this is getting worse as they accrue ever
| more power to control the government decisions that really count.
|
| But you can't really calculate this transfer of wealth in the way
| they do it in this article. You can't simply change one parameter
| and pretend that the only thing that would have happened is that
| wages would be radically higher, for example.
|
| Radically higher wages would have numerous effects. Many
| companies wouldn't have been able to remain profitable. Other
| would have been more profitable because they would have more
| customers. It's impossible to say exactly what the net effect
| would be.
| shireboy wrote:
| I'm definitely not 1%, and sympathize with/understand somewhat
| some of these claims. Bail-outs and unchecked government spending
| or borrowing from future generations worry me. However I'm also
| pretty aggressive at investing. I feel like in general my
| retirement and taxable investing has benefitted me financially,
| though I'm solidly middle class. I feel (with data to back me up)
| like I'm upwardly mobile, though still not "financially
| independent". I have had limited success in "side projects" and
| feel like it's been pretty easy to start a side business.
|
| In general, my attitude has been "yes, we should work to better
| help those in poverty move up, but I don't begrudge the Musks,
| Gates and Bezos of the world as long as I am free to start my own
| businesses and cheaply invest in index funds to share in the
| profit." In other words, I am not rich, but see a path available
| to me and don't see the barriers as being significant. The main
| barriers to me personally are not billionares, but myself and my
| goals.
|
| I understand those below the poverty line may not have the luxury
| of opening a IRA, stock account, etc. or immediately starting
| their own online business. Certain people may feel additional
| barriers based on culture, education, etc. and those situations
| should be addressed. But for the majority of middle-class
| Americans, isn't greater access to markets and small/online
| business creation a big factor missing from this conversation? At
| no time in history has it been easier or cheaper for an "average
| joe" to start or invest in a business. For that matter, while
| getting a degree is expensive, self-education has never been
| easier.
|
| I guess what I'm curious from the HN crowd: Make this article
| relevant to a middle-class person on track to retire in their
| 60s, who tinkers on weekends with a few startup ideas, and
| generally thinks their kids will be better off if they continue
| to have the same access to education, business and investing. Why
| should that person be personally concerned about income
| inequality? I'm genuinely asking here. (Again, assume some level
| of care for poor/underprivileged- we can agree some baseline
| should be assisted more.)
| mafuyu wrote:
| I'm more or less in the same situation as you, although
| relatively early in my career. I would urge you to try and look
| a little broader at what situations people even just below
| "middle class" are facing nowadays.
|
| From a personal finance perspective, I'm aligned with you. I
| shovel my money into my 401k and index funds, and still have
| plenty left over to survive and buy things I want and need. By
| doing so, I can participate just a tiny bit on the finance side
| of capital and take in a bit of the upside.
|
| >I understand those below the poverty line may not have the
| luxury of opening a IRA, stock account, etc. or immediately
| starting their own online business.
|
| It's not just people below the poverty line. The vast majority
| of Americans, especially younger ones, are not making enough to
| substantially invest or feel secure financially. If someone
| does start their own business (an incredibly difficult
| venture), it will be at their own risk, with much to lose.
| Dabbling in side projects is a luxury, and I don't think it's
| reasonable to expect people who are more overworked and less
| financially stable than you or I to realistically use that as a
| way to lift themselves up. It's also not really a solution that
| scales, in my opinion. You can't expect everyone to start their
| own side hustle. Most businesses fail. Some lose money for
| years until eventually breaking even. Obviously, more
| opportunity is good, and I want to see people succeeding in
| starting their own businesses and innovating, but isn't having
| financial and social safety the biggest factor in encouraging
| that?
|
| >Make this article relevant to a middle-class person on track
| to retire in their 60s, who tinkers on weekends with a few
| startup ideas, and generally thinks their kids will be better
| off if they continue to have the same access to education,
| business and investing. Why should that person be personally
| concerned about income inequality?
|
| I'll take a stab at this from a couple angles. First off, you
| either care or you don't. Like you said, you're doing fine. I'm
| doing fine. I don't think anyone really owes you an explanation
| to make you care, because you don't have to. But I have friends
| who graduated at the same time as me who aren't doing great.
| They're working way harder at whatever blue collar job they
| could find than I ever did, for less money. Mental health isn't
| great. I'm not particularly different from them, other than I
| happened to like computer science as a kid, and my brain is
| sufficiently configured to churn out some code for an employer
| for 8 hours a day. I don't think I could look them in the eye
| and suggest that they just invest more, or consider starting
| their own business, or try online learning, when they're
| already down. I never did any of that.
|
| The other side of it is that the middle class is still
| significantly more aligned politically and financially in their
| interests with the rest of the population than the 1%. I'm
| making a lot of money, but one bad trip to the hospital would
| still bankrupt me. I still worry about rent. How about everyone
| else who is worse off than me? The truly wealthy are playing a
| fundamentally different game than the rest of us, however you
| feel about that. One interesting aspect of the recent push for
| more progressive policies is that much of it is being driven by
| middle class white collar workers, and not blue collar. I see
| it as a sign of the increasing income/wealth inequality
| trending over the last several decades. The middle class has
| typically been 'placated' by being able to live a decent
| living, but even they're feeling the squeeze now.
|
| I hope that was somewhat coherent and didn't come off as too
| combative. I really just want to convey my personal experience
| and how it's different from yours.
| jay_kyburz wrote:
| I don't feel like "inequality" is a problem in and of itself. I
| don't care that there are a lot of people with a lot more money
| than me.
|
| I would get upset if they don't make a fair contribution to
| running and maintaining our society.
|
| I get upset when I read that there are some very large
| organizations that don't pay tax.
|
| I get upset when our government hands out bailouts.
|
| I get upset when polluters don't pay to clean up their own
| mess.
|
| I get upset when wealthy people use their wealth to exercise
| power and manipulate public opinion, so that my opinions are in
| the minority. :)
| mempko wrote:
| >The main barriers to me personally are not billionares, but
| myself and my goals.
|
| I believe this feeling is misguided and here is why. You would
| be richer today if there was more equality. But instead you are
| held back by the same forces that those at the bottom 50% are.
|
| Even the rich managerial and technocratic class that you and I
| are part of (upper middle class) are poorer than we would be if
| it was more equal.
|
| So in other words, you have been screwed too by the system. But
| because you don't feel screwed (despite evidence that you have
| been) is why it continues to keep going.
| matz1 wrote:
| Maybe they are trying to screw you but it still on you to
| fight that.
| arrosenberg wrote:
| Your freedom is pretty narrow in scope though. Amazon has so
| much market power, and regulators are so weakened that instead
| of the government setting the boundaries, billionaires and PE
| are with financial weapons. Yeah, you can go pop a Shopify
| store open whenever you want, but if you want to succeed you
| are going to see a lot of Bezos-built barriers to climb.
|
| Further, do we have "greater access to markets" and is that
| desirable, when those markets are largely selling the same
| things, and what variety exists usually also comes with
| questionable reliability/quality? How does that greater market
| access affect the ability of average Americans to start and
| successfully operate a small business when products are so
| easily copied and drop shipped from Asia?
|
| The best chance at a reliable retirement and an equal or better
| life for your kids goes through a stable, broadly wealthy
| country. Inequality and corruption have toppled more ancient
| regimes than the US Republic, and all of your money exists in
| the form of "the full faith and credit" of the Republic. Your
| interests are aligned with the article.
| biffstallion wrote:
| ...and now you know why a certain party is looking to legalize
| all drugs.
|
| A high voter... is a compliant voter.
| brandonr49 wrote:
| The problem of inequality in general needs to be framed as one of
| power asymmetry. There are a handful of people that have managed
| to garner, through their wealth, similar power to states with
| millions of people. The solutions to this involve either making
| money less able to purchase power, or taking some of this money
| away. I suspect the latter is more likely to happen but I'll
| happily support either method.
| ItsMonkk wrote:
| This is exactly how I take it. We thought it was Capitalism vs
| Communism, but what we learned is you can have Centralized
| Communism(Cold War Russia) and Decentralized Capitalism(Cold
| War USA) but it is just as much possible to have Decentralized
| Communism(Any examples?) and Centralized Capitalism(Current
| USA).
|
| As it turns out it's the Decentralized that's the important
| part. You need many people making decisions for productivity to
| flourish. Rich and powerful making few large decisions simply
| loses every time.
| lcc wrote:
| > Decentralized Communism(Any examples?)
|
| Nordic countries? Canada/UK? Though they are socialist, not
| communist.
| the_gastropod wrote:
| > ...making money less able to purchase power
|
| I'm not sure this is possible without breaking the entire
| concept of money. So long as money is a thing humans trade
| their time for to pay for living expenses and beyond, it can be
| used to bribe, coerce, etc.
| r00fus wrote:
| You may be misinterpreting what brandonr is saying. It's
| about increasing transparency for influencing elections and
| restricting (overtly) how much influence money has in
| elections.
|
| Reducing the powers of money is tough (and kind of a game of
| whack a mole) but that doesn't mean we shouldn't try.
| throwaway2245 wrote:
| > making money less able to purchase power
|
| you could achieve this by: giving everyone a basic amount of
| money, so they are on a more equal footing to benefit from
| opportunities.
| mattmaroon wrote:
| Well it's not possible to do it 100%, but I think the problem
| is less the illegal trade of money for power and more the
| legal one. Campaign finance laws (which at this point
| probably require an amendment to the constitution) could help
| a lot.
| throwawaysea wrote:
| "Taken" is a misleading and false. They aren't taking wealth.
| Others are giving them money in return for something they value.
| If I am selling a product, or my services, or a share of stock,
| I'm not "taking" anything from anyone. It's incredible to me that
| these casual editorialized titles are acceptable so broadly in
| the journalism industry, and yet labels like "fake news" are
| reserved for only right-leaning news media.
| AlexandrB wrote:
| If you want to get into the nitty gritty, the 1% rich generally
| don't sell products _or_ services. They own companies who
| employ workers who do these tasks. Some surplus portion of the
| value generated by those workers is then captured by the
| organization (and its owners) as profit. Whether you want to
| call that "taking" or not is a question of ideology, not of
| fact. Arguably, omitting the word "taken" from the headline
| would be editorializing as well.
| LanceH wrote:
| The use of "taken" panders to the view of wealth being a zero
| sum game, which is decidedly false.
| throwawaysea wrote:
| If you want to get into the nitty gritty, consider that the
| 1% generally don't "own companies". That is a vague trope
| from the Occupy Wall Street types. A significant portion of
| the 1% are skilled professionals (programmers, doctors,
| lawyers, etc.) or rare talents (actors, musicians, athletes).
| Many are small business owners who are taking significant
| risks and typically work incredibly hard to be successful
| (and most fail). Many may be "owners" of companies in the
| sense that they are shareholders, but that fractional
| ownership is also available to you or I. Very few are in a
| position of outright ownership or even majority ownership of
| a company that is bigger than a small business. If your
| intention was to claim that the 1% get income passively, I
| think you may be drawing your percentiles at the wrong
| threshold.
|
| But I still disagree with your framing of the definition of
| "taking" as an ideological question and not a factual one.
| People have choice on where they live, what work they do,
| what they spend their money on, how they manage their free
| time, and so forth. If one person saves up, takes a risk,
| starts a small business, and offers employment at a certain
| exchange of money for time, that's not "taking" because
| "taking" implies an involuntary action or theft. The employer
| is offering a trade, and the employee is accepting it
| voluntarily, _giving_ their time and labor in exchange for
| pay. That simply doesn 't fit the definition of "taking".
| kpsnow wrote:
| In 1980 the top tax bracket was 70%. By 1988 it had been lowered
| to 28%.
| adolph wrote:
| How is this different from any random conspiracy theory? The term
| "counterfactual" is used instead of "I made a strawman?"
|
| Edit: the reliance on "taxable income" instead of gross is
| interesting. Wouldn't a progressive tax policy look similar to
| the paper's stats since more income would be taxable for folks
| with lower income?
|
| https://www.rand.org/pubs/working_papers/WRA516-1.html
| mdoms wrote:
| > the reliance on "taxable income" instead of gross is
| interesting
|
| Taxable income is gross income when you're pulling a wage. Even
| in a progressive tax system where, for example, your first
| $10,000 untaxed, it's still taxable income because even if you
| make $12,000 then the full amount is used to determine your tax
| bill.
|
| > Wouldn't a progressive tax policy look similar to the paper's
| stats since more income would be taxable for folks with lower
| income?
|
| I'm not even sure what you're trying to say here. Be specific.
| adolph wrote:
| I think the usage of taxable income _might_ skew the numbers
| in a way that looks more income inequitable than in the past
| but reflects better accounting of income tax-wise. An example
| is the alternative minimum tax which makes more non-wage
| income such as options to purchase stock below market value
| count as taxable income.
|
| I lost my place in the PDF but it looks like they calculated
| based on wages etc. and not a specific tax form line item.
| The source data is "Integrated Public Use Microdata Series,
| Current Population Survey"
|
| https://www.irs.gov/publications/p525
|
| https://en.wikipedia.org/wiki/Alternative_minimum_tax
|
| https://ipums.org/projects/ipums-cps/d030.v6.0
|
| A progressive tax policy might count more and additional
| income sources for high wage earners and reduce taxable
| income for low wage earners. The authors are more
| sophisticated than that though.
| 0xfaded wrote:
| https://wtfhappenedin1971.com/
|
| This is a huge collection of charted data which shows that
| there may indeed be something going on that is a little harder
| to explain away than the average conspiracy theory.
|
| The study of how wealth accumulates to capital holders has been
| reinvigorated by Thomas Piketty's "Capital in the Twenty-First
| Century".
|
| Since then, a huge amount of research has been done on the
| driving forces behind wealth inequality. Skimming the surface,
| I'll throw out https://angrynomics.com/ and
| https://www.amazon.co.uk/Rentier-Capitalism-Owns-Economy-
| Pay....
| m3kw9 wrote:
| This sort of keeps inflation in check. What you really want is to
| break above the 50%. The extreme case of it being evenly
| distributed is likely hyper inflation.
| rapsey wrote:
| Indeed. FED money printing works by keeping the money in the
| top 1%. By design the rich get richer and the poor get poorer.
| It is the only way for the system to continue to function.
|
| Eventually something not-so-pretty is going to happen and it's
| going to happen quickly. Just look at what and how fast things
| happened around George Floyd. The anger and mistrust just
| continues to grow.
| Pfhreak wrote:
| This is almost a natural law of wealth. When you have significant
| capital, you can do things like loan it out with interest,
| leverage it into getting loans to build more capital, etc.
|
| If one assumes that the wealthy are using their money to buy
| commodities and selling those commodities with the expectation of
| getting their initial money back plus some delta, then it becomes
| fairly trivial to demonstrate that the more money you start with
| the more money gets concentrated around you.
|
| For example, I could leverage my current house to purchase a
| rental property in my city and rent it at a profit. Over time I'd
| pay down my loans and the value of my two homes would increase. I
| could then leverage _two_ properties to purchase more or larger
| rental properties. My wealth would increase because I had
| sufficient wealth to begin with.
| hungryhobo wrote:
| sure, but i think the focus is on the magnitude and speed at
| which the wealth gap is widening. And its impact might be
| something we haven't encountered before
| edoceo wrote:
| Last few times were "solved" by revolution. I'm expecting
| something similar.
| throwawaysea wrote:
| Your example is contrived. Assets don't have to go up in value.
| You could also end up holding the bag in a place like Detroit.
| You may not end up being able to rent out your second property
| at a profit. You may end up with a deadbeat tenant, unforeseen
| expenses, or simply falling rents. These decisions involve risk
| and they have accordingly, an associated reward. Claiming that
| there's a "natural law of wealth" doesn't seem as obvious as
| you're making it out to be.
| Pfhreak wrote:
| My example is not contrived, it represents an understanding
| of the market over the long term. Are there bubbles? Yes. Are
| there dips? Yes.
|
| You are making the inverse mistake of someone who looks at a
| large jackpot win in Vegas and thinks it's a good investment,
| when in reality the expected value of a bet is negative.
|
| The rate of return on capital has held relatively steady at
| ~4% for hundreds of years. Stop thinking about individual
| winners and losers, and look at the broader picture. If you
| have sufficient capital, you can expect to return capital +
| n% over time, where n is approximately 4%.
| throwawaysea wrote:
| No it hasn't remained "steady". You're quoting an average
| and claiming it is steady but there are periods where your
| savings would have not seen that growth and even seen
| negative return. Example analysis: http://archive.nytimes.c
| om/www.nytimes.com/interactive/2011/...
|
| I'm also not sure what you mean by "sufficient capital".
| You can by shares one at a time. You don't have to be
| wealthy to have access to growth in assets.
| Pfhreak wrote:
| > You don't have to be wealthy to have access to growth
| in assets
|
| You have to be wealthy to see an appreciable growth in
| assets. Both the absolute and percentage amounts matter.
| Yes, anyone can get a 3% return on their investments over
| time, but that doesn't really matter when you can only
| invest $1.
|
| Living has a certain minimum set of fixed costs, those
| with sufficient capital can pay for those fixed costs
| through the growth of their capital and still see a net
| increase in wealth . Someone making $30k a year in wages
| will never achieve that, even if they see some growth in
| assets.
|
| > You're quoting an average and claiming it is steady but
| there are periods where your savings would have not seen
| that growth and even seen negative return.
|
| You are making a pedantic semantic argument. I
| acknowledged the presence of dips and bubbles. But on
| "average" you will see a return on capital, especially a
| diversified market.
|
| That analysis only looked at the S&P 500, which is a tiny
| share of the economy and not at all representative of the
| growth of capital over time. What about housing, bonds,
| precious metals, commodities, short positions,
| international funds, etc.
|
| Move up one level of abstraction and look at the forest,
| not the trees.
| chordalkeyboard wrote:
| > You have to be wealthy to see an appreciable growth in
| assets. Both the absolute and percentage amounts matter.
| Yes, anyone can get a 3% return on their investments over
| time, but that doesn't really matter when you can only
| invest $1.
|
| This is an excellent example of how low interest rates
| prevent anyone but the wealthy from making money on
| investments.
| gzer0 wrote:
| https://www.federalreserve.gov/monetarypolicy/bst_recenttren.
| ..
|
| > "These decisions involve risk"
|
| The Federal Reserve increased its balance sheet by about 6
| trillion USD since March 2020.
|
| There is no risk when you have the US Gov't backing you!
|
| Edit: https://www.cnbc.com/2020/06/15/the-fed-says-it-is-
| going-to-...
|
| Federal Reserve literally backing individual corporations at
| this point. Where's the risk?
| ffggvv wrote:
| yeah but eventually home prices/rent can go down and you can
| get wiped out (see 2008)
|
| but the fed and treasury wont allow that to happen i guess
| because they prefer inequality as long as it produces a wealth
| effect
| lapcatsoftware wrote:
| > This is almost a natural law of wealth.
|
| The article is about how the post-1975 period differs from the
| pre-1975 period. So it's demonstrably not a natural law.
| Natural laws don't change over time.
| Pfhreak wrote:
| The law might be the same, but the environment can change
| around the law. From tax rates and economic conditions to the
| power of labor can all shift how we respond to that natural
| law.
|
| Wealth can continue to generate wealth, which we can then tax
| and redistribute. The natural law hasn't changed, but how we
| work around it has.
| dan_quixote wrote:
| I interpret Pfhreak's comment to mean un-checked capitalism
| will naturally result in wealth consolidation. The article
| describes how we loosened our management of this natural law
| and witnessed a more rapid wealth shift as a result.
| koboll wrote:
| From 1960 to 1985 the top marginal tax rate crashed from 90%
| to 30%. And then of course there's the demise of private
| sector unions, the effects of computerization, etc.
|
| Arguably, it was always a natural law, but the 1970s were an
| inflection point after which capital was allowed to accrue
| advantages at a much faster rate.
| JumpCrisscross wrote:
| > _From 1960 to 1985 the top marginal tax rate crashed from
| 90% to 30%_
|
| Nobody paid 90%. The tax rate reduction was countered with
| the closing of loopholes. (There are still a lot.)
|
| Evidence for this is the nearly constant fraction of GDP
| collected in taxes. The other points are correct. Also,
| real incomes have both increased at the top end and shifted
| up for the population.
| samstave wrote:
| Don't forget things like the Panama Papers and how
| companies/super-rich figured out how to create thousands of
| shell companies to hide wealth, and that the journalist who
| revealed all of this was then murdered.
| ChrisLomont wrote:
| Marginal rate is not effective rate. In fact, when Reagan
| cut the top marginal rate multiple times while also
| changing loopholes the effective tax rate on the top
| increased after some of those changes [1].
|
| [1] https://www.cbo.gov/sites/default/files/110th-
| congress-2007-...
| readams wrote:
| It's mostly a myth that there was a 90% marginal tax rate.
| It's technically true, but when the top tax rate was
| removed they also removed all the loopholes and deductions
| that were being used to reduce the effect tax rate on top
| earners to below 45%. All the while the proportion of tax
| receipts as a percentage of GDP has remained constant.
|
| Meanwhile, the proportion of taxes paid by the top quintile
| earners has increased from 55% in 1980 to 70% by 2013.
|
| In 2017 the top 1% of income earners paid 38.5% of all
| taxes, vs the bottom 90% who paid 29.9% of all taxes. The
| top 50% of taxpayers paid 97% of all taxes in 2017.
|
| But all this ignores the main fact, which is that actual
| rich people make most of their money not as income, but as
| unrealized capital gains. High marginal rates on income
| taxes affects high-earning professionals. Not the private
| jet crowd.
| ska wrote:
| I wouldn't call it a myth. High income earners both then
| and now have a lot of ways to avoid paying tax, so they
| don't pay nearly as much as the top marginal rate. It's
| also true that the top marginal rate used to be much
| higher.
|
| > Meanwhile, the proportion of taxes paid by the top
| quintile earners has increased from 55% in 1980 to 70% by
| 2013.
|
| Isn't this exactly what you would expect with growing
| income & wealth inequality, so long as your tax system
| maintains some aspect of progressive taxation.
| randomdata wrote:
| _> actual rich people make most of their money not as
| income, but as unrealized capital gains._
|
| Technically, they make most of their wealth as as
| unrealized capital gains. It doesn't become money until
| they realize the gains, at which point it is taxable
| income.
| SigmundA wrote:
| Then typically only taxed long term cap gains rates of
| 20% or less...
| chris11 wrote:
| What's the average effective tax rate for high-net-worth+
| individuals if unrealized capital gains are included as
| income? It seems like people get an increasing level of
| control over their taxes as their networth increases.
| Choosing when to exercise options means you have some
| control over AMT. If you invest in indices, it looks like
| direct indexing has a lot of tax benefits over an index
| fund. You can get variable and fixed rate loans against
| your investment accounts.
|
| It's not a good idea for tax minimization to be the main
| goal of your investment strategy, but it seems like
| people can get access to a large portion of their
| investments without actually realizing capital gains.
| thelean12 wrote:
| > What's the average effective tax rate for high-net-
| worth+ individuals if unrealized capital gains are
| included as income?
|
| That's a completely pointless question. If I own 50% of
| GameStop, my net worth will have gone from $650 million
| to $12.2 billion to $1.8 billion in like 45 days. Sure,
| this is an extreme example, but it happens over longer
| stretches of time to a ton of the richest people.
|
| How exactly do you expect to tax that movement of those
| unrealized gains?
|
| > You can get variable and fixed rate loans against your
| investment accounts.
|
| That you eventually have to pay off. The money you pay it
| off with will be taxed.
| robrenaud wrote:
| Did the effective tax rate change on the top quantile
| from 1980 to 2013, or did they just earn a lot larger
| fraction of income?
| readams wrote:
| In 1980 the top quintile earned 44% of the income and in
| 2013 51%. So the tax structure became much more
| progressive over that time.
|
| In 2019 it was 52% of the income.
| SpicyLemonZest wrote:
| It changed a lot. The marginal rate for someone earning
| $100,000 in 2020 dollars (so $31,837 in 1980) was 44%
| then and 24% now.
| [deleted]
| calebm wrote:
| It's called the power law
| (https://en.wikipedia.org/wiki/Power_law)
| Railsify wrote:
| The return on capital is always greater than the return on
| labor. Piketty does a great data driven analysis on this in his
| book Capital in the 21st century. This phenomenon was occurring
| long before the US was even a glimmer.
| md_ wrote:
| Your intuition here is basically what's formalized by Piketty
| in "Capital in the 21st Century": that the rate of growth of
| capital exceeds the rate of economic growth.
|
| What's interesting is that while intuitively this makes sense
| (for the reasons you gave), the implication (that the rich get
| richer and inequality grows) is the opposite of what was
| hypothized by Kuznets
| (https://en.wikipedia.org/wiki/Kuznets_curve); the latter
| hypothesis, to my limited understanding (as a non-economist),
| is fairly mainstream, and has influenced plenty of politics and
| public policy.
| Pfhreak wrote:
| I'm halfway through reading Piketty right now, amusingly.
| supercanuck wrote:
| Watch the Netflix documentary. Basically cuts to the chase.
| [deleted]
| User23 wrote:
| > This is almost a natural law of wealth. When you have
| significant capital, you can do things like loan it out with
| interest
|
| It is a natural law of usury, which is what you describe. This
| is why we used to ban usury as unjust.
| throwaway123x2 wrote:
| Again, what's the alternative?
| tehjoker wrote:
| Democratic control of the economy.
| RIMR wrote:
| Sounds like a great system for everyone with generational
| wealth, and a terrible system for literally everyone else.
| jellicle wrote:
| This proposition, discussed and shown by Piketty in his 2013
| book, was not at all obvious before that and even today many
| people would argue (wrongly) that it isn't true. So if it's a
| natural law of wealth, it is a very recently proven one.
|
| https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
| Pfhreak wrote:
| Marx presented this idea back in the 1860s. He phrased it a
| little differently and built the idea up from the idea of
| exchanging commodities.
|
| In Marx's text, he discusses the history of commodity
| exchange, how people usually exchanged Commodities for Money
| which they exchanged back into other Commodities they needed.
| (E.g. I'll sell you my wool for coin, which I can use to buy
| food.) He called this CMC exchange. (Commodity-Money-
| Commodity).
|
| This gave rise to people who had hoards of money, and could
| invert the exchange -- Money into Commodities into Money +
| delta Money. He called this MCM exchange (Money-Commodity-
| Money), and posited that it could only exist if the second M
| was larger than the first -- why turn your money into
| commodities and back into money if you weren't going to get
| more money as a result? So it _must_ be that if MCM exchange
| exists, then it must be MC(M+[?]M). Once sufficient hoards
| are accumulated, they will continue to accumulate.
|
| Marx, of course, carries on with his own opinions about what
| to do with this and how society should be structured. He also
| bases his ideas not on data like Piketty, but on building up
| a model of a Capitalist economy from principles.
|
| I think it's interesting to see this line of argument
| presented historically and compare/contrast that with the
| more data driven analysis we see in Piketty. (No matter how
| you feel about the rest of Marx's work.)
|
| Edit: Downvotes? I feel like I'm presenting a factual
| response to the parent poster. I know it contains the word
| 'Marx', but I'm not diving into socialism/communism elements
| of his work, but rather the analytical dialectic of his
| critique of capitalism as a system.
| chordalkeyboard wrote:
| I don't think this should be downvoted.
|
| Did Marx address the notion that collection of rents on
| capital create an incentive for the creation of more
| capital?
|
| How did Marx address the case of MCM transactions where the
| capitalist has erred and lost money?
| Pfhreak wrote:
| Marx tended to focus on roles more than persons or
| transactions. Buyers and sellers, capitalists and
| workers, etc. Any individual might play any particular
| role at any given time. (For instance, I personally fill
| the role of worker with my day job and capitalist with my
| 401k.)
|
| The reason I mention that is because his thesis was that,
| in aggregate, the role of capitalist must expect a
| positive return on MCM transactions, or they wouldn't
| occur. Individuals may suffer losses, but as a role it
| just be positive.
|
| He's less data driven than Piketty, and he builds this
| notion on top of the idea that there is a desire to hold
| wealth. Or, put another way, it is natural in an economy
| of commodities and money to prefer holding money over any
| given commodity. Eg, having a hoard of money is more
| useful than having a hoard of wool, as it is generally
| easier to convert money into a commodity you need than to
| convert between two commodities.
|
| So the natural inclination is to try and increase wealth,
| and MCM exists commonly, so therefore MCM must be a net
| engine for increasing wealth. (Even if individual cases
| are losses.)
|
| I'm less confident in answering your first question. It
| hasn't come up in my reading, but I'm not a scholar. It
| could be in there. (One of the things Marx often does is
| open windows to look at something and then move on
| without diving deep on them. For instance he acknowledges
| inflation, and moves on rather quickly.)
| chordalkeyboard wrote:
| Thanks for the reply and that makes sense.
| Pfhreak wrote:
| No problem! Again, I'm just some internet person who
| happened to listen to some lectures and did some reading,
| so my take might be a bit off. But I find this stuff
| fascinating. Doubly so for something like Marx who
| everyone has an opinion on, but I feel very few folks
| have actually spent much time diving into.
| biffstallion wrote:
| ...and now you know why a certain party is looking to legalize
| drugs completely.
|
| A High Voter is a Compliant (and dumb) Voter.
|
| How else will the elite party members protect their wealth.
| deeeeplearning wrote:
| Inb4 the Bootlickers lick the boot.
| splaytreemap wrote:
| Flagged. The original poster has a long history of posting
| content with the goal of starting political flamewars.
| [deleted]
| almost_usual wrote:
| So we censor and remove content from HN because we don't like
| who is posting it now? This is a Time article not some random
| blog.
| exabrial wrote:
| Correction: The Government has seized 38% of my wealth by force.
| The top 1% I gave my money to willingly.
|
| One is extortion under the threat of cops wielding violence and
| jail time. The other is a free choice.
| Sebguer wrote:
| You single-handedly gave up 25 years of the entire population's
| wage increases???
| syops wrote:
| Every government has taxes. Running the government isn't free.
| The cost of living in a given society are the taxes and abiding
| by the system of laws it has. In the U.S. you have the option
| of leaving if you find the cost too high. You willingly stay
| here and as such you ought to willingly pay the cost for doing
| so. Besides, are you certain the amount you pay in tax really
| ought to be considered yours? It's strange perspective from my
| point of view. You appear to want all the benefits of living in
| the U.S. while not acknowledging that perhaps not all of your
| income ought to really be considered your money. This is the
| system we have developed for people to pay for the privilege of
| earning in this society.
| chordalkeyboard wrote:
| > Every government has taxes.
|
| > In the U.S. you have the option of leaving if you find the
| cost too high.
|
| So you acknowledge that there's no alternative, but you still
| act like people have the choice of an alternative.
|
| > This is the system we have developed for people to pay for
| the privilege of earning in this society.
|
| Some people believe that the freedom to earn a living is a
| right, not a privilege.
| syops wrote:
| There is an alternative. Go somewhere else if the cost of
| living in this society is too high.
|
| Earning a tax free living clearly isn't a right according
| to the U.S. Constitution. Go elsewhere if the cost is too
| high or advocate for lowering the cost. It's a strange
| position to take that the benefits of the society you live
| in ought to be free to you when those benefits have costs.
| chordalkeyboard wrote:
| > There is an alternative. Go somewhere else if the cost
| of living in this society is too high.
|
| What if the cost of living is high somewhere else as
| well?
|
| > Earning a tax free living clearly isn't a right
| according to the U.S. Constitution.
|
| The US Constitution recognizes rights, it doesn't confer
| them or exhaustively catalog them.
|
| > Go elsewhere if the cost is too high or advocate for
| lowering the cost.
|
| This discussion could be an example.
|
| > It's a strange position to take that the benefits of
| the society you live ought to be free to you when those
| benefits have costs.
|
| Its a strange position to be accused of wanting things
| for free when one identifies unnecessary waste.
| Apocryphon wrote:
| There's a difference between pointing out government
| waste, wanting to lower taxes, wanting a smaller
| government, etc. and claiming that taxes are inherently
| violence, as the original post did.
| syops wrote:
| If the cost of living in a different country is too high
| then I suppose you are destined to feel oppressed for the
| rest of your life. It's a strange position to take. Given
| that very few people feel your way perhaps it is
| worthwhile to consider that your position is an extreme
| one and causing you unnecessary distress.
|
| The Constitution gives government the power to tax.
| Therefore in this society earning a tax free income is
| not a right as far as this society is concerned. I
| apologize for not making that clearer.
|
| The person I responded to did not claim there was
| unnecessary waste and thus taxes ought to be lower. Their
| position appears to be that the act of taxation is theft
| (since it's done through violent means). Then you chimed
| in without stating that your position differs. You didn't
| give any indication to having a different position to the
| person I responded to.
|
| Thank you for the discussion. I will read and contemplate
| your response but will not respond further. It appears to
| me that we have irreconcilable differences of opinion on
| the matter.
| Apocryphon wrote:
| The right of exit, as they say, is still there.
|
| > Some people believe that the freedom to earn a living is
| a right, not a privilege.
|
| There is also freedom in the security of living in a
| content and happy society that isn't setting up guillotines
| because massive underclasses have been pushed to their
| breaking points. The price you pay for civilization, and so
| on.
| chordalkeyboard wrote:
| > The right of exit, as they say, is still there.
|
| The existence of rights does not obviate the possibility
| that they will be infringed upon.
|
| > There is also freedom in the security of living in a
| content and happy society that isn't setting up
| guillotines because massive underclasses have been pushed
| to their breaking points. The price you pay for
| civilization, and so on.
|
| So I'd really like these leaders to quit pushing us to
| the breaking point but they keep doing things that
| benefit themselves and their cronies and telling me its
| for my own good. So I'm not really sympathetic to the
| idea that civilization requires central banks run by
| oligarchs or tax laws (written for the benefit of
| oligarchs) that punish productivity and reward sloth.
| Apocryphon wrote:
| It does not require endorsement of the current leaders
| nor their system to recognize the very basic and banal
| fact that taxation is a valid mechanism that a society
| uses to sustain itself. This doesn't even require one to
| be in favor of specific current taxes, it's simply
| acknowledging that taxation _as a principle_ is not some
| sort of ludicrously unjust abomination. Taxation predates
| central banks.
| chordalkeyboard wrote:
| > very basic and banal fact that taxation is a valid
| mechanism that a society uses to sustain itself.
|
| Validity in this case _is not a fact_ it is an opinion or
| value judgment that implies that it is moral /ethical to
| use coercion to extract money from citizens.
|
| You may agree with this. You may not claim it as a fact.
|
| > taxation as a principle is not some sort of ludicrously
| unjust abomination
|
| Thats your opinion and the oligarchs who decide how tax
| money is spent appreciate your conformity.
| Apocryphon wrote:
| > it is an opinion or value judgment that implies that it
| is moral/ethical to use coercion to extract money from
| citizens.
|
| Sure, and it is an opinion or value judgment supported by
| millennia of social contract even before Enlightenment
| era thinkers came up with the concept of the social
| contract. If you're going against one of the basic
| mechanisms or tools for how society works, you might as
| well label yourself an anarchist. Which is fine, plenty
| of mutualist ideologies exist, but you should at least
| identify yourself so people will understand the very
| different ideological framework you're arguing from.
|
| > Thats your opinion and the oligarchs who decide how tax
| money is spent appreciate your conformity.
|
| And the puritans who dictate popular morality appreciate
| your conformity in wearing clothing. Again, people can
| oppose oppressive taxes and unjust tax systems, but to
| argue that taxes are unnecessary is seemingly arguing
| against all of human society since the development of
| agriculture. Unless you are a believer in Modern Monetary
| Theory? Good of you to realize the possibilities of fiat
| currency.
| chordalkeyboard wrote:
| > Sure, and it is an opinion or value judgment supported
| by millennia of social contract even before Enlightenment
| era thinkers came up with the concept of the social
| contract.
|
| Yeah, so is slavery. So is monarchism. So is marital
| rape.
|
| > If you're going against one of the basic mechanisms or
| tools for how society works, you might as well label
| yourself an anarchist. Which is fine, plenty of mutualist
| ideologies exist, but you should at least identify
| yourself so people will understand the very different
| ideological framework you're arguing from.
|
| I'll identify myself as an anarchist for being opposed to
| violent coercion of resources if you will identify
| yourself as a criminal for being in support. Sound fair?
|
| > And the puritans who dictate popular morality
| appreciate your conformity in wearing clothing.
|
| Norms of wearing clothing are not dictated by puritans
| but arise and are maintained by repeated intentional
| participation.
|
| > Again, people can oppose oppressive taxes and unjust
| tax systems,
|
| We do. In fact we invite you to explain how any tax is
| just.
|
| > but to argue that taxes are unnecessary is seemingly
| arguing against all of human society since the
| development of agriculture.
|
| Not at all, one may as well say that arguing that slavery
| is immoral is arguing against all of human society since
| agriculture.
| Apocryphon wrote:
| > Yeah, so is slavery. So is monarchism. So is marital
| rape.
|
| So is property. So is language. So is symbolic thought.
|
| > I'll identify myself as an anarchist for being opposed
| to violent coercion of resources if you will identify
| yourself as a criminal for being in support. Sound fair?
|
| Anarchism is an existing ideology with many school of
| thoughts within it. You seem to be an anarcho-capitalist,
| to be precise. I, of course proudly admit to being a
| criminal
| (https://www.youtube.com/watch?v=EEXTt9OmJis&t=1m18s)
| insofar living in modern society makes criminals of us
| all, yourself included, even under duress.
|
| > Norms of wearing clothing are not dictated by puritans
| but arise and are maintained by repeated intentional
| participation.
|
| As is tax law.
|
| > In fact we invite you to explain how any tax is just.
|
| Because it's cheaper to provide social programs than to
| deal with rolling peasant revolts.
|
| > Not at all, one may as well say that arguing that
| slavery is immoral is arguing against all of human
| society since agriculture.
|
| And indeed so. So are you then an anarcho-primitivist? Or
| anti-propertarian?
| exabrial wrote:
| I think it's absurd to defend the violent nature in which
| these funds are acquired, regardless of the outcome. The end
| does not justify the means.
| syops wrote:
| It's absurd, in my opinion, to think that the society that
| created the opportunities you have to earn money ought to
| be enjoyed by you at no cost. We can't all be free loaders
| and leeches. Acting as if taxes are immoral is nonsensical.
| exabrial wrote:
| It came at such a great cost in fact. The vast majority
| of your taxes are simply wasted. If the US Government
| were on Charity Navigator they would have a 0-star
| rating.
|
| It'a absurd to defend such a position, especially one
| rooted in a traditional of violence via arguments that
| were used to justify the enslavement of entire races.
| Apocryphon wrote:
| It's also incredibly ahistorical.
| [deleted]
| Temasik wrote:
| buy $gme
| [deleted]
| pjkundert wrote:
| It is a moral imperative to destroy the banking system, and
| replace it with direct monetization value-stable
| cryptocurrencies.
|
| In my opinion ;)
| Wolfenstein98k wrote:
| No they haven't.
|
| The premise is "had growth rates among the quintiles remained as
| they were post-war, then..."
|
| That is nothing like "one quintile has taken from the others".
|
| Growth rates change all the time, and the transition from a
| labour economy to a knowledge economy has the effect of reducing
| the pool of "winners" as the returns to knowledge form a greater
| share of total returns.
|
| This same transition is visible in most developed countries. Some
| have welfare systems designed to prevent it, and their overall
| growth is lower for it. They contribute less of the global
| groundbreaking progress (like new cancer treatments, Covid
| vaccines, etc) commensurate to that fact.
|
| This is a false premise. Do not fall for it.
|
| Just because you are in a group whose growth rate has been higher
| than the other group, doesn't mean you "took" something from
| them.
| mensetmanusman wrote:
| Good thing our Fed leadership is protected from protection.
|
| They don't give $100,000 40 minute talks
|
| Oh wait...
| ellyagg wrote:
| This is not how economics works, not even a little bit.
| A12-B wrote:
| How does it work?
| tengbretson wrote:
| In my lifetime some sort of switch has flipped, where the people
| advocating for more taxes no longer do so with an explicit
| intention to pay for something greater or something new, but
| simply on the assumption that the act of taxing people will
| inherently make them more equal. Is there a coherent
| philosophical basis for this train of thought? Is there any
| historical precedent that increased taxes is what we need to
| become equal?
| mempko wrote:
| Well, historically when people were most equal in the US the
| taxes were very high for the upper class, something like 90%.
| Look at post world war taxes.
| sum_numpty wrote:
| Equality is a myth. There are good and shitty people across all
| races, genders, sexualities, etc. What we need to be focused on
| is equality of opportunity. Taxes are just not enough. We need
| far more actual health and education resources allocated to
| those systemically under-represented in social power. That
| needs to be represented in a transparent manner to all
| citizens. Then it's a matter of letting the chips fall where
| they may.
| jimbokun wrote:
| That didn't happen in your lifetime, progressive taxation goes
| back farther than that.
| dghlsakjg wrote:
| The theory behind it has always been that taxes serve as a
| transfer of wealth. You tax the wealthy more and reduce taxes
| on the less wealthy, and/or spend that money on programs and
| projects that benefit the poor disproportionately.
|
| Don't confuse how politicians sell something with the
| mechanism. The rhetoric changed with the rise of celebrity
| through wealth. 'Soak the rich' is a sales slogan since it's
| easy to punch up, and no one has any sympathy for a guy like
| Bezos. The same sort of rhetoric is going on right now with
| lines like 'billionaires made $2t during the pandemic', or the
| headline for this article. the implication is that they
| actively made moves that increased the amount of dollars in
| their bank account by literally taking money from the poor. The
| reality is that they continued running their businesses
| according to the rules of the game and the value of their
| business holdings is up.
|
| In that context 'soak the rich' should really just be seen as a
| proposed rule change to the game.
| standardUser wrote:
| "...people advocating for more taxes no longer do so with an
| explicit intention to pay for something..."
|
| You should perhaps listen more closely. There are a wide array
| of programs proposed by people who are advocating for greater
| taxes on the wealthy. Universal healthcare, free education, a
| larger social safety net and investments in green energy are a
| few of the big line items being constantly and loudly
| discussed. Those programs are intended to improve the majority
| of people's lives. You can interpret that as "more equal" if
| you want.
| curiousllama wrote:
| Tax the rich is a response to "how are you going to pay for
| that program?"
|
| That we hear "tax the rich" in isolation these days speaks
| more to the lack of the prompting question than progressives'
| dedication to the response.
| tengbretson wrote:
| > Those programs are intended to improve the majority of
| people's lives. You can interpret that as "more equal" if you
| want.
|
| If tomorrow everyone was given all of those programs, but the
| income distribution stayed the same as it were today, would
| everyone go home satisfied or would they discover new things
| that needed providing?
| lovegoblin wrote:
| > would they discover new things that needed providing?
|
| ...of course? These programs would (imo) make a better
| world, but not a _perfect_ one.
|
| Just because you accomplish Goal #1 doesn't mean that you
| can't continue on to strive for Goal #2.
| kgin wrote:
| It's hard to be sure 100%, but I feel like whatever the
| outcome, this thought experiment doesn't really yield
| useful information unless you're hoping for the outcome be
| "they don't really want healthcare, they're just faking
| their desire for healthcare because they want to take
| things away from wealthy people". I'm pretty sure the
| desire for healthcare isn't just a ruse.
|
| After everyone has healthcare, will there be people who
| desire a more-flattened society? Possibly. There are a lot
| of different people in the world with a lot of different
| ideas. But that's a separate conversation.
| patwolfe wrote:
| I'd say the current biggest problem is that the highest earners
| simply do not pay much in taxes through loopholes and
| avoidance, not that taxes need to be increased across the
| board.
|
| EDIT: the_gastropod's comment also under this parent is a great
| short summary of this issue. I second their recommendation of
| "Capital in the 21st Century"
| fat_pikachu wrote:
| The "loopholes" are there for a reason. They allow the
| government to indirectly further their policy goals without
| much effort e.g. tax avoidance programs for real estate
| investors to encourage the building of more housing, tax
| credits for parents to encourage people to have more
| children, credits for electric vehicles to encourage the
| development of renewables, etc.
| DamnYuppie wrote:
| Are you talking about on a percentage of their income or as a
| percentage of the total amount of taxes paid? I believe the
| top 10% pay essentially 90% of all non sales taxes in US.
| thoughtstheseus wrote:
| By percentage of wealth.
| tengbretson wrote:
| What do you want to do with their money though?
| starpilot wrote:
| Use it to live? Money lets you afford healthcare. Without
| that, you die. Dying is not equal to living.
| almost_usual wrote:
| What are you suggesting? That poor people don't need
| anything right now? Literally half the country can't afford
| rent or housing?
| tengbretson wrote:
| What does that have to do with taxing the wealthy though?
| Do you think the $3.5 trillion spent on covid relief has
| any relationship whatsoever with tax revenue?
| tick_tock_tick wrote:
| Total billionaire net-worth in the USA is $4 trillion so
| 1 covid relief would fully tap them out. People are
| horrible at reasoning about large numbers they think
| these people have real money compared to the government.
| staticman2 wrote:
| Politicians are cheap to bribe with campaign
| contributions and political adds and that money is enough
| to ensure the government will do a poor job of serving
| the people.
| shadowgovt wrote:
| It would cost approximately $216 million to do full lead
| remediation in Flint, Michigan.
|
| That's about 1.1% of the net worth of Jeff Bezos.
|
| I indicate this not to imply that Jeff Bezos should be
| solely responsible for fixing the Flint water supply, but
| rather to indicate that the resources are there, the
| problems are there, and what we lack is the will to move
| resources to fix public problems (be that via taxation or
| charity). Even problems we know will carry a larger cost
| moving forward... Flint is a town with a population of
| nearly 100,000, and a high-lead environment can basically
| guarantee higher costs in education, health problem
| remediation, and possibly crime.
| tick_tock_tick wrote:
| It also points out how little money Bezos really has
| compared to the cost of running the country. Assuming he
| could get the current market price for all his Amazon
| shares (impossible) he could fix 100 decently sized
| problems in the country and be completely broke after.
| There are way more than 100 decently sized problem.
| SpicyLemonZest wrote:
| I think it's just a corrolary of Congress's extreme slowdown in
| passing bills. When new programs are always part of a massive
| omnibus touching a thousand things, it becomes pretty hard to
| draw links between specific programs and specific tax
| increases.
| the_gastropod wrote:
| Highly recommend reading Pikkety's "Capital in the 21st
| Century". The gist is this:
|
| - Historically, capital grows faster than the economy at large
| (generally around 5% annually)
|
| - Steep marginal tax rates help disincentivize high pay (e.g.,
| if the top marginal rate was 90% like it was during the
| Eisenhower administration, a corporation would see much more of
| its money go to employees if it gave its lower income workers
| raises vs giving its exec team bonuses. The purpose of raising
| taxes on the uber-rich isn't necessarily to generate revenue,
| it's to set up incentives to narrow income disparity, by
| forcing corporations to distribute money efficiently.
|
| - High top marginal income taxes coupled with a steeply
| progressive wealth tax would also disincentivize hoarding of
| capital, and would further "squeeze" the wealth distribution to
| less problematic levels.
| dorchadas wrote:
| Another key takeaway I think is that we're just returning to
| the norm. The middle to late 20th century was an outlier
| thanks to the World Wars and all the destruction in Europe
| that happened because of them.
| naveen99 wrote:
| The 1% allocate capital that are best at allocating capital. If
| they aren't good at it, they rapidly lose capital
| findthewords wrote:
| Only because the government has provided poor alternatives. Is
| Uber a better allocation of capital than infrastructure
| projects?
| vorpalhex wrote:
| The Government doesn't build the economy, it constrains it
| (ideally in helpful ways and not harmful ways). You can't
| lego yourself an economy - or at least nobody has
| successfully done so yet.
| A12-B wrote:
| Is that why farms need subsidies to survive? Because the farm
| owners are really good at allocating capital?
| naveen99 wrote:
| People need food to survive, especially during war. That's
| the reason for the subsidies.
| lumberingjack wrote:
| Everybody in here looking for an answer to inequality that
| doesn't exist I'm just sitting here waiting for Star trek
| replicators to eradicate our current monetary system
| h3rsko wrote:
| Inequality seems to be a completely pointless buzzword to me. The
| only thing that matters is if there are more or less poor people,
| and how poor are those people compared to similar percentiles in
| the past.
|
| It shouldn't matter how rich the richest people on earth are. I
| really love seeing people on the Internet try to convince
| themselves that because Bezos or Musk are worth $100B, they must
| be stealing it from poor people.
| findthewords wrote:
| Is social mobility also meaningless? The two are linked.
| Arc_Angel wrote:
| "It shouldn't matter how rich the richest people on earth are."
|
| It does. Bezos and Musk can influence Policy. They can
| influence for their own ends. Also, it depends on HOW they make
| their money too. Do they create things? or do they buy up
| everything such as Real Estate and then jack up the price.
| There's different kinds of "Capitalism". Rent-seeking is the
| worst kind. Producing goods that people can use is much better.
| Why are most people using Windows computers? Is it because it
| was so much better than other operating systems? Did Bill Gates
| make his $Billions because his operating system was so good? or
| did he use other "techniques?
| iso1631 wrote:
| Do Bezos and Musk have significant investments outside of
| Amazon/Muskinc?
|
| If Amazon suddenly was nationalised with no compensation for
| shareholders, what would Bezos' assets be? I'm sure he
| wouldn't be destitute, but it's not like someone who's become
| wealthy by shuffling money around (like wall street
| billionaires).
| Arc_Angel wrote:
| Koch Bros didn't use their money to influence govt Policy?
| zirkonit wrote:
| You are absolutely right! Everyone, from the most hardcore
| Marxist-Leninist leftists, to "don't tread on me"-style
| libertarians, would agree there is absolutely no difference how
| rich rich people are if there is less poverty.
|
| This is precisely the reason why Dengist reforms happened in
| China -- to foster getting a billion people out of poverty by
| market reforms that yes, would make a few hundred billionaires.
|
| The thing is, America _is_ getting poorer. And as poor America
| gets poorer, rich America gets richer -- and, coincidentally,
| everywhere in the world, rising inequality means higher
| societal instability, less cohesion, less happiness and,
| absolutely, more poverty for poor people.
|
| So the question we need to ask ourselves -- is it a
| _coincidence_ that rich people getting richer and poor people
| getting poorer go hand in hand? Or is it a law of nature? I 'm
| not sure either way. But you shouldn't so quickly dismiss
| people that actually do think these are correlated.
| AnimalMuppet wrote:
| The poor in America are getting poorer. The poor in much of
| the world are getting richer. This seems to be the
| consequence of globalization. So, no, it's not a law of
| nature that rich people getting richer and poor people
| getting poorer go together.
| 1_2__4 wrote:
| It has always mattered how rich the richest people in the world
| are, for good reason. Now knowing or understanding that isn't
| some unique or fresh perspective.
| [deleted]
| hrktb wrote:
| For the comparison part:
|
| > Adjusted for inflation using the CPI, the numbers are even
| worse: half of all full-time workers (those at or below the
| median income of $50,000 a year) now earn less than half what
| they would have had incomes across the distribution continued
| to keep pace with economic growth.
|
| Another aspect is the power that comes with money. People
| aren't focusing on inequality in a pure "that's unfair" view,
| there are also issues on how these ultra-rich people are
| completely outside of the reach of most rules and can sway
| whole economies basically at will.
|
| Bezos' fortune is equivalent to whole PIBs, that's a lot of
| power concentrated in a single man.
| findthewords wrote:
| Therein lies the rub - The United States seems happy that
| Bezos, spending capital on whatever he likes, is a better
| resource allocator than the government itself.
| tryptophan wrote:
| Yeah seriously. This constant pressure to care about inequality
| is like gaslighting or some sort of cult indoctrination.
|
| Take a look at the list of countries with the highest wealth
| inequality:
|
| https://en.wikipedia.org/wiki/List_of_countries_by_wealth_eq...
|
| I would _want_ to live in 4-6 of the top 10 most UN-equal
| countries. I would want to live in 3-4 of the most equal
| countries. The fact that my answer isn 't 10/10 for one list
| and 0/10 for the other makes you think that wealth inequality
| may not be that much of an issue after all. Perhaps there are
| more important factors?
|
| Honestly, I think the large focus on inequality is because it
| riles up the proles and get left wing politicians lots of
| votes.
| [deleted]
| findthewords wrote:
| The fact that "proles" even exists in the modern vocabulary
| should indicate something. Bin the population into wealth
| centiles and observe the curves. The Gini coefficient is not
| a magic arbiter of inequality. See the Great Gatsby curve for
| a better example:
| https://en.wikipedia.org/wiki/Social_mobility#Housing
| yepthatsreality wrote:
| If Bezos continues paying people at minimum wage, hires union
| busting lawyers, and hires more lawyers to actively lobby to
| keep minimum wage low for 20+ years while he makes more money.
| Is he stealing from poor people or is that just people on the
| Internet trying to convince themselves he is stealing from poor
| people?
| whatok wrote:
| Amazon has been paying significantly above minimum wage for
| several years now:
|
| https://www.npr.org/2018/10/02/653597466/amazon-
| sets-15-mini...
| yepthatsreality wrote:
| Oh good, a few years will rebalance everything. Honestly
| the point I was making was that the wealthy will continue
| to pursue ways to maintain a larger and larger wealth gap
| as a matter of self-interest.
| zepto wrote:
| Bezos wealth isn't cash he paid himself that he could have
| been distributing to the workers.
|
| It's a number based on the value of his ownership stake of
| the business itself.
| chris11 wrote:
| If significantly raising the pay of Amazon's low-paid
| workers would negatively impact it's value then part of
| Bezo's wealth comes from keeping Amazon's cost of labor
| low.
| zepto wrote:
| Is it? Or is it part of the reason those workers have
| jobs that pay more than minimum wage, rather than no job,
| or a minimum wage job.
|
| It's not a zero sum game. A successful Amazon creates
| jobs. Presumably if there were better jobs elsewhere,
| people would not work for Amazon.
|
| It's also part of the reason that low paid workers can
| shop at Amazon themselves.
| Aunche wrote:
| Significantly raising the pay of Amazon workers would
| hurt Bezos because it translates to less reinvestment to
| the company. This would also hurt the million new
| employees that Amazon hired last year as well as the
| consumers who increasingly relied on Amazon for goods
| during quarantine.
| b3kart wrote:
| I think this would be a valid argument if significant money
| wouldn't also come with significant power in the modern day and
| age. As soon as there is significant wealth inequality, there
| is also a significant power inequality, with a small number of
| people determining the fate of the rest of the world. Surely
| this isn't good?
| ryanmercer wrote:
| > Surely this isn't good?
|
| Certainly not. We're semi-returning to fiefdom where the
| wealthy make the decisions for the masses, who they also
| happen to employ and market their goods to.
|
| Sure, some good things can come of this, look at what Bill
| Gates has done for vaccines in the past decade or so, which
| is now making an actual difference when it comes to covid
| vaccination development and deployment.
|
| You also have questionable things though, look at the Nevada
| bill would allow tech companies to create governments. We've
| seen company towns before, it generlaly didn't work out very
| well for the masses... I mean, look at the Battle of Blair
| Mountain where mining interests went as far as to hire
| private planes and drop bombs on miners in the United States
| in retalliatin to a labor uprising
| https://www.wikiwand.com/en/Battle_of_Blair_Mountain
|
| I love what extreme wealth can do for a given cause, but do I
| really want a handful of individuals making the decisions?
| Ehhhh probably not.
| Tarq0n wrote:
| Poverty is not the only metric we should care about when it
| comes to inequality. For instance there's also financial
| resilience, what percentage of people will be strongly affected
| if they suffer an adverse event i.e. a surprise medical bill or
| an appliance breaking. Another one is the distribution of
| wealth between people that spend most of their income vs income
| that is held in investment accounts or savings. Having
| sufficient spending is essential to a healthy economy.
|
| A third, though this is much more an ideological standpoint and
| I don't expect everyone to agree with it, is the marginal value
| of money. If an increase in income has a greater marginal
| effect on the health/wellbeing/happiness of people who have
| less of it, isn't it better to prioritize growing their incomes
| rather than people who already have their entire hierarchy of
| needs met?
| cjblomqvist wrote:
| But isn't wealth to a large degree relative? Like, if I'm
| richer than I value my time higher, meaning it's more expensive
| to buy my time (human services). Same with other resources such
| as land, gold or bitcoin. There's only so much of it thus the
| value rises.
|
| Of course the world can become more productive and thus make
| everyone (in average) more "wealthy", but only for certain
| things.
| throwaway0a5e wrote:
| >But isn't wealth to a large degree relative
|
| Yes it is, but a few hundred billionaires with mansions and
| yachts don't really matter in the context of the broader
| economy.
|
| It's the upper middle class yuppies with substantial amounts
| of discretionary income driving up the prices on things that
| makes people poorer in the relative sense. There simply
| aren't enough billionaires to move the needle on the goods
| and services people living paycheck to paycheck spend on.
|
| We didn't have a toilet paper shortage because Warren Buffet
| stocked up. The used car market isn't all jacked because of
| Bill Gate's insatiable desire for compact pickup trucks.
|
| The gulf between the "I can afford to care about what school
| district a house is in" class and everyone below them is the
| important one.
| pydry wrote:
| >Yes it is, but a few hundred billionares don't really
| matter in the context of the broader economy.
|
| Billionaires buying up "stores of wealth" housing in the
| city I live in has driven up the price of property
| inordinately and almost priced me out. What you are saying
| here is not "they don't matter" but "I don't matter".
|
| Then they tell people who grew up in these cities to _just
| leave_ if they can 't afford it.
|
| Political power is also zero sum and they're buying up that
| too. This is the most terrifying part. I don't particularly
| want my country to become like Ukraine with two sets of
| oligarchs battling it out with their propaganda arms. That
| is what is happening.
|
| They are not buying up toilet paper but then again toilet
| paper shortages only happened for about a week, didnt it?
| username90 wrote:
| > Billionaires buying up "stores of wealth" housing in
| the city I live in has driven up the price of property
| inordinately and almost priced me out. What you are
| saying here is not "they don't matter" but "I don't
| matter".
|
| Are you sure they are billionaires and not just
| millionaires? There are millions of people in USA with
| millions of wealth, they are what matters, and they can
| each buy up a large chunk of real estate in mid cost
| neighbourhoods.
| pydry wrote:
| It's a ripple effect. Billionaires end up pricing out
| hundred-millionaires, who price out millionaires and so
| on.
|
| All of the above also buy up rental property. And wealthy
| foreign criminals andtax evaders get in on the act by
| buying up property sight unseen as a foreign bolthole.
|
| This is how we end up with cleaners and baristas having
| to share a room and commute 1 hour each wayway and
| property prices that are, like, 17x the average wage.
|
| It's weird how so many people are apparently in denial
| about this.
| Jochim wrote:
| > It's weird how so many people are apparently in denial
| about this.
|
| It's worrying how many people think it's the way things
| should be.
| tick_tock_tick wrote:
| The USA has 630 billionaires and the world has 2,825. I
| think you are vastly overestimating the impact they have
| on any housing market. The poster above is 100% correct
| it is the millionaires that inflates prices of normal
| goods. There simply isn't enough people at the top end to
| matter.
| Grustaf wrote:
| > mansions and yachts
|
| I don't mind that at all. (Well OK I wish that rich people
| today would have more taste, and build Sistine Chapels
| instead of Mar-a-lagos) The problem is that when some
| people control more assets than entire countries, they will
| end up controlling government policies.
| Grustaf wrote:
| > The only thing that matters is if there are more or less poor
| people
|
| Up to a point I definitely agree with this, but the issue with
| some people being billionaires is not that they can drive
| around in Cadillacs made of gold, it's that they can and do
| control government policies, and use that power to the
| detriment of common people.
| AlexandrB wrote:
| > Inequality seems to be a completely pointless buzzword to me.
|
| It seems pointless right up to the moment that those on the
| losing side of the equation start baying for blood. High
| inequality is often correlated with violent revolution[1].
|
| [1] https://www.jstor.org/stable/10.1086/426881?seq=1
| nemothekid wrote:
| > _The only thing that matters is if there are more or less
| poor people, and how poor are those people compared to similar
| percentiles in the past._
|
| People who are beating the drum about inequality are arguing
| this; isn't this what the elephant chart shows? For the
| American middle and working class they are as poor, if not
| poorer than their contemporaries in the 60s.
|
| The plain argument is that productivity growth has exploded
| since the 70s, but wage growth has stagnated. People are
| _producing_ more but being paid less; that might not be
| outright theft but I think people are beginning to understand
| that something isn 't right.
| tehjoker wrote:
| Rich people can exert leverage over less wealthy people. This
| is about whether you want a democratic society or some kind of
| feudalism.
| toiletfuneral wrote:
| They're literally stealing their employees surplus labor.
| yuriko_boyko wrote:
| A lot of those "net worth" numbers don't translate to cold,
| hard cash either.
| [deleted]
| bedhead wrote:
| "Taken" lol. Is there any journalist who can write about this
| with some intellectual honesty?
| saint_abroad wrote:
| Well yes, taken.
|
| The 2008 crisis was caused by irresponsible lending by the 1%
| with the effect of inflating costs for the 99%.
|
| A bailout and a decade later we now see irresponsible lending
| by the Fed having the effect of inflating assets for the 1%.
|
| Tails you lose, heads I win.
| ryanmercer wrote:
| Around the same time this was shared to HN I Tweeted/FB/LinkedIn
| variations of the following
|
| >If I earned $10,000 a day it would take me 273.97 years to have
| earned 1 billion dollars. Meanwhile, Elon was worth about 20
| billion a year ago, last month he was worth an estimated $185bn.
| Oof. In reality, I make a little over $17 an hour
|
| His net worth increased an estimated 4.66 million times my annual
| gross income in the past year. I've been at my job 15 years.
|
| When you stop and think about it, it can quickly approach the
| territory of crippling. I'll probably _have_ to work until the
| day I die, or until I physically can 't, whichever comes first.
|
| My wife does a little bit better than me as a public school
| teacher, but she also probably logs 70-80 hours a week of work
| once you factor in grading/lesson plan/meetings/coaching track
| for an extra $1500 a year/Friday detention/etc.
|
| If someone gave me 100,000 USD, my stress level would freefall.
| My quality of life would drastically improve. My financial
| security would be able to weather any realistic event sans
| aggressive cancer treatment. Mr. Musk had his net worth increase
| 1.6 million times that amount last year. (Edit: This is an
| example, I'm not begging for money, so stop using it as a means
| of attacking my entire post)
|
| Some days I just "can't even". With my faith, my wife, my
| friends, I try to be upbeat and positive when it comes to the
| future but when I see people like Musk, Bezos, even Gates and
| then I start worrying about replacing the roof/well
| pump/affording a mower come spring/why does one spot of the
| kitchen floor dip a bit when I stand on it and how much is that
| going to cost me/how long is my wife's car going to last/how long
| is my car going to last/is it going to warm up anytime soon
| because we've already filled the propane tank twice since
| November/etc and I just start to want to fully disconnect from
| reality and wish catatonia upon myself to escape it.
|
| Then if I think about how fortunate I actually do have it, then I
| start getting depressed that there are people out there making
| 2.5x less than me in my own state, that there are homeless
| populations here in the U.S., and then I think but what about the
| people in 'third world countries', our minimum wage and homeless
| have it even better than many of them, then that catatonia starts
| sounding really nice again. If I can't even seem to improve my
| own situation to have even a fraction of a percent of the
| financial security that even some people I personally know have
| (people that have posted on this very forum) then how the heck am
| I ever going to be able to help enough even less fortunate than
| me to not feel like crap when I remember they exist and have it
| worse than me?
| bequanna wrote:
| > If someone gave me 100,000 USD...
|
| The language you use here is concerning and not empowering. Why
| would someone 'give' you $100k? Despite some arguable edge
| cases (hft, etc.) money is only earned by creating value.
|
| > Some days I just "can't even". With my faith, my wife, my
| friends, I try to be upbeat and positive when it comes to the
| future but when I see people like Musk, Bezos, even Gates ...
|
| Comparison is the thief of joy. My (unsolicited) advise is to
| narrow your focus to doing whatever you can to make you and
| your family's life better.
| ryanmercer wrote:
| >Why would someone 'give' you $100k?
|
| It's an easily divisible example of what 1/1,600,000 of his
| net worth increase in the past year could do for a given
| individual.
| bequanna wrote:
| > If someone gave me 100,000 USD...
|
| The language you use here is concerning and not empowering. Why
| would someone 'give' you $100k? Despite some arguable edge
| cases (hft, etc.) money is only earned by creating value.
|
| > Some days I just "can't even". With my faith, my wife, my
| friends, I try to be upbeat and positive when it comes to the
| future but when I see people like Musk, Bezos, even Gates ...
|
| Comparison is the thief of joy. My (unsolicited) advise is to
| narrow your focus to doing whatever you can to make you and
| your family's life better. Leave Reddit/Twitter/whatever, stop
| consuming media and focus exclusively on what is right in front
| of you.
| PeterStuer wrote:
| "The language you use here is concerning and not empowering.
| Why would someone 'give' you $100k? Despite some arguable
| edge cases (hft, etc.) money is only earned by creating
| value."
|
| Where are you looking away each time they pour another few
| trillion into the stock market?
| raiyu wrote:
| By the same token, Elon Musk is someone who succeeded, while
| thousands upon thousands of entrepreneurs fail, end up with
| debt, and don't have much to show for their work.
|
| So using survivorship bias to compare yourself to Elon Musk
| which is an atypical result when it comes to business formation
| doesn't make sense.
|
| You should probably compare yourself to the average business
| creator and see how you fare compared to them.
|
| It's like saying I'm not that great at Basketball, but let me
| compare myself to Michael Jordan.
| ryanmercer wrote:
| No, not remotely.
|
| It's like pointing out the absurdity of 1 man, over the past
| year, having his net worth increase 2.32 million times the
| annual median household income (of the U.S.) of $68,703
| (2019, per census.gov).
|
| While something like 20% of the planet doesn't even have
| access to reliably safe drinking water and something like 800
| million lack the amount of food require for an active life.
| raiyu wrote:
| Well the original post was someone who had access to
| reliable safe drinking water, so I'm not sure where that is
| coming from.
|
| Also if you look historically over the past 100 years
| overall rates of poverty have declined everywhere.
|
| If you look even further back in time the amount of rights
| that global citizens enjoy today is fundamentally a million
| times better than it was 100, 200, 300, 400 years ago.
|
| Humans were ruled by kings and queens, where land was
| inherited, there was no upward social mobility, slavery of
| peoples was much more rampant than it is today.
|
| Humanity was never equal, in it's history, but today if you
| ignore the top 1% we as a people actually enjoy
| fundamentally more equality than our predecessors who
| weren't part of the 1%.
|
| Also, while the inequality exists between the 1% and the
| 99% today, today actually have upward social mobility to
| become part of the 1%, where 400 years ago that wasn't
| really all that possible.
|
| I'm not saying the world is perfect, but if you look at it
| has actually gotten better overall.
|
| I'm also pretty sure that the implied worth of Rockefeller
| and some of those old guard monopolists on a inflation
| adjusted and power adjusted basis was probably many times
| higher than even Elon Musk's net worth today.
| ryanmercer wrote:
| >Well the original post was someone who had access to
| reliable safe drinking water
|
| That someone was me, in the same text I also mentioned
| homeless persons and individuals living in "third world"
| nations.
|
| And I only have access to reasonably safe drinking water
| because I added filtration equipment totaling about 2.5%
| of my annual gross to reduce the nearly 'unacceptable'
| lead levels in my well for my drinking water and have to,
| with some regularity, test that water on an ongoing basis
| to make sure the well hasn't been contaminated by any
| number of natural and man-made pollutants (chemical
| spills, chemical fertilizers from neighboring farms,
| etc). I don't have the luxury of turning on the tap and
| knowing that an entire industry is testing and chemically
| treating my water on a daily basis but I still have it a
| lot better than at _least_ 1 /5 of the world.
| saint_abroad wrote:
| Progress over the last 400 years is being undone by
| regressions of the last 40 years.
|
| > individuals born in 1980 have only a 45% chance of
| outearning their parents at age 30, compared to 93% for
| those born in 1940.
| https://www.weforum.org/agenda/2020/09/social-mobility-
| upwar...
| username90 wrote:
| Sounds like progress stopped, not that it reversed. When
| things are stable you'd expect that a bit less than 50%
| are richer than their parents.
| Jochim wrote:
| It hasn't though, the rate of gain for the wealthy has
| increased.
| carapace wrote:
| Just yesterday I was reading a book called "Stones to Schools"
| about a small NGO that builds schools in remote regions of
| Afghanistan and Pakistan. I found it very uplifting.
|
| It breaks my heart (out of its cold iron shell) to read about
| regular people busting out the checkbook for schools for kids
| halfway around the world (and typically of a different
| religion!) who have pretty much nothing.
|
| "Don't let the turkeys get you down!" :)
| rendall wrote:
| The downvotes on this are heartless.
|
| My man, do what you can to improve your situation and if/when
| you can help out, do so. You will help the less fortunate by
| relentlessly improving your life. When you catch a breathe and
| life becomes fun, then spread some joy to others, but until
| then you are not in a position to feel guilty about it.
| andrewljohnson wrote:
| The top 1% changes a lot. Most people don't stay in the top 1%
| for many years in a row. Many people below the 90th percentile
| benefit from the growth of the top levels when they have their
| brief time in the top 1%.
| emit_time wrote:
| The reality is it's not the 1% it's the 0.1% and 0.01%..
| [deleted]
| [deleted]
| nine_zeros wrote:
| Here's the problem. When the little guy fails, there is no
| bailout. No 100% restoration of income/wealth.
|
| When the 1% fails, there is immediate push to bail them out with
| > 100% of their losses.
|
| If the reckless investors are allowed to fail equitably, there
| would be far fewer billionaires and far more people without $100k
| of debt.
| natenthe wrote:
| Correction: The Fed's policies have taken $50T of wealth from the
| Bottom 90%.
|
| When you bail out irresponsibly over-leveraged and nearly
| bankrupted banks and corporations, and pay for those bailouts
| with tax-payer money, you steal from the poor and give to the
| rich.
|
| Most importantly, when the Fed decides to print money ad nauseam,
| they create massive asset inflation, which steals from the poor
| and gives to the rich. This is because those dollars that are
| printed go directly into bonds, equities, and assets that only a
| small amount of the population owns a significant amount of. When
| money is "printed" the Fed actually injects money into financial
| markets through buying assets. This asset inflation caused by
| money printing gives more money to the rich to buy more assets,
| thus driving up the prices of financial products, real estate,
| and all other valued assets in society. Thus, cost of living
| skyrockets, but only the rich are actually increasing their net
| worth (which is increasing exponentially). All of this happens
| while minimum wage, and most wages, are stagnant.
|
| Wealth inequality and social unrest in America is DIRECTLY
| related to corrupt and/or incompetent (you choose) Fed policies.
| It amazes me why most people do not grasp this. I think it is
| lack of education.
| stjohnswarts wrote:
| Correction: The 1% have manipulated the government to have
| obviously unfair political policies. They control advertising,
| media, and the government. I do blaim the rich, and it's from
| first principles. The only thing that ever puts a dent in it is
| grass roots efforts like BLM, unions, etc. We tried the gold
| standard, it is also a failure.
| Dma54rhs wrote:
| BLM was far from grassroots, Mueller investigation revealed
| us how it was propped up by Russian trolls. Heck they ran
| their biggest social media pages.
| loudmax wrote:
| Who do you think appoints the people who run fed Fed?
|
| If you're looking to cast blame on bad policies, then blame
| those ultimately responsible: the politicians and the voters
| who put them there.
|
| Ideally, the United States would have a mechanism that would
| allow voters to choose politicians with the best policies. What
| we have instead is a system where voters have to chose between
| the least worst of two possible options. Both parties are
| beholden to the top 1%, but the are not _equally_ so.
|
| What I find amazing is the lengths people will go to to blame
| government bureaucrats while reelecting the people who
| appointed them in the first place.
| mywittyname wrote:
| > reelecting the people who appointed them in the first
| place.
|
| Everyone loves their Congresspeople. It's the other 433 who
| are screwing everything up.
| bryanrasmussen wrote:
| I'm pretty sure everyone hates their congresspeople, if
| they are of the opposing party.
| tt433 wrote:
| Not really, ticket splitting is a thing for many
| americans -- it's decreasing though
| tastyfreeze wrote:
| > What we have instead is a system where voters have to chose
| between the least worst of two possible options.
|
| Its worse than that. We have a system where people vote for
| their team color regardless of changes to the team's
| positions.
|
| 2020 seemed to be a year that more people realized that the
| party they had been faithful to no longer represented them.
| The number of "why I'm leaving (republican|democrat) party"
| posts and videos last year was something I had never seen
| before. I'm hoping this is a trend that continues. Red or
| Blue, they don't work for you.
| draw_down wrote:
| Come on, who do you think runs the Fed? Plumbers?
| burntbridge wrote:
| The Fed just implements the monetary policy of the Government
| in power. The board of governors are appointed by the
| president. The problem lies with Government and the failed
| economic policies they stick with through thick and thin i.e.
| Neo-liberalism.
| hn_asker wrote:
| So this must be why Bitcoin has no inflation.
| lm28469 wrote:
| > It amazes me why most people do not grasp this. I think it is
| lack of education.
|
| We should be careful about wording here. The lack of education
| is a direct consequence of the top "1%" politics and very well
| thought decisions. They have everything to gain from us
| plebeians not thinking about these issues.
|
| > (you choose)
|
| It's much more complex than that, especially in America. If you
| can choose between A and B but the right answer is C you have
| everything but a choice. Even worse than that, if the entire
| culture and education of your country is built on making you
| think only A and B exists, C being the right answer will never
| even materialise.
|
| We're past the time of blaming "the people", when the entire
| system is corrupt to the bone we should stop blaming eachother
| and look up, when all the parties converge to the same point
| you know you're being played
| pmiller2 wrote:
| Potato, potatoe. Who do you think controls "the Fed?" _Cui
| bono_?
|
| Your comment would also imply that before there was such a
| thing as a Federal Reserve, income and wealth inequality didn't
| exist. This is false.
| swiley wrote:
| I wish more people noticed this. A lot of the what both the
| left and right are asking for is really identical.
| miltondts wrote:
| To add a bit more to this, from [1]: "economic elites and
| organized groups representing business interests have
| substantial independent impacts on U.S. government policy,
| while mass-based interest groups and average citizens have
| little or no independent influence."
|
| And "The bigger spender wins congressional races 91 percent
| of the time" [2].
|
| Talking about policies without even mentioning who makes
| them, kind of misses the point. Big money controls
| everything. It's no wonder that people come out to defend
| them, when they control much of mass media and shape the
| narratives to such an extent.
|
| [1] - https://www.washingtonpost.com/news/monkey-
| cage/wp/2014/04/0...
|
| [2] - https://www.vox.com/2014/10/27/7077647/midterms-
| spending-mon...
| stickyricky wrote:
| It does not imply "wealth inequality is the result of federal
| policies". It implies that the current transfer of wealth is
| a result of federal policy.
| pmiller2 wrote:
| Well, considering how the comment literally says "Wealth
| inequality and social unrest in America is DIRECTLY related
| to corrupt and/or incompetent (you choose) Fed policies,"
| you'll forgive me for disagreeing.
| mixmastamyk wrote:
| Federal != Fed, the reserve bank. Close, but not
| identical.
| pmiller2 wrote:
| You are arguing a minor, irrelevant, and largely
| incorrect point of semantics.
|
| > Who owns the Federal Reserve?
|
| > The Federal Reserve System is not "owned" by anyone.
| The Federal Reserve was created in 1913 by the Federal
| Reserve Act to serve as the nation's central bank. _The
| Board of Governors in Washington, D.C., is an agency of
| the federal government and reports to and is directly
| accountable to the Congress._
|
| (emphasis added)
|
| https://www.federalreserve.gov/faqs/about_14986.htm
| mixmastamyk wrote:
| You are the only one in the thread who doesn't appear to
| understand it.
| seppin wrote:
| All they do is regulate the flow of new money, they aren't
| responsible for tax codes that ensure a widening gap of
| wealth via the return on capital vs the return on labor.
|
| https://en.wikipedia.org/wiki/Capital_in_the_Twenty-
| First_Ce...
| TearsInTheRain wrote:
| They affect the inflation rate and inflation should be
| thought of as a tax. And its a tax that primarily affects
| middle class people that keep their wealth in cash rather
| than assets.
|
| They also implicitly affect asset prices which is
| probably one of the primary causes of wealth inequality.
| bmlpl wrote:
| The comment implies no such thing. It says that post Alan
| Greenspan, who started printing money in an unprecedented
| manner, the Fed saw that it could get away with it and
| continued the bubble.
|
| Ironically Greenspan also spoke about irrational enthusiasm.
| Words are cheap.
| pmiller2 wrote:
| Then, what does "Wealth inequality and social unrest in
| America is DIRECTLY related to corrupt and/or incompetent
| (you choose) Fed policies," mean?
| JamesLeonis wrote:
| Except this wasn't the federal bailouts. Those are an entirely
| different beast. It's talking strictly about income stagnation.
|
| The study shows that if wages kept up with productivity (as was
| the case in the immediate post-WW2 era) the bottom 90% would
| earn $2.5 trillion _per year_ more.
|
| > We document the cumulative effect of four decades of income
| growth below the growth of per capita gross national income and
| estimate that aggregate income for the population below the
| 90th percentile over this time period would have been $2.5
| trillion (67 percent) higher in 2018 had income growth since
| 1975 remained as equitable as it was in the first two post-War
| decades. From 1975 to 2018, the difference between the
| aggregate taxable income for those below the 90th percentile
| and the equitable growth counterfactual totals $47 trillion.
|
| https://www.rand.org/pubs/working_papers/WRA516-1.html
| nostrademons wrote:
| Why do you think wages haven't kept up with productivity?
|
| The decoupling of wages from productivity started around
| 1971-1973, which is suspiciously close to the Nixon Shock and
| beginning of the 1970s inflation. In periods of inflation,
| firms with high bargaining power (notably monopolistic
| corporations, corporate executives, and right now, software
| engineers & quants) can extract the excess money floating
| around. Firms in highly competitive industries (notably
| restaurants, family farms, and ordinary workers) get undercut
| every time they try to raise prices. Therefore all the gains
| go to the rich.
| sjy wrote:
| I'd say it probably has something to do with the collapse
| in union membership, deregulation and growth of the finance
| sector, and capture of the political system by those who
| can afford billions of dollars worth of advertising, but
| it's a complicated story. Are you suggesting that wages
| haven't kept up with productivity because inflation has
| been consistently high since the US abolished the gold
| standard?
| kazen44 wrote:
| Also, the massive rise in economic power of the rest of
| (western) world around that time.
|
| the US was the only major world power left standing after
| world war 2 without colossal damage, and rebuilding
| (western) europe took the better part of 25 years to
| fully complete.
| nostrademons wrote:
| Yes, mostly. I'd say that high inflation, declining union
| membership, and growth of the financial system are all
| consequences of the U.S. dollar's status as a fiat
| reserve currency.
|
| The causality for the decline in union membership runs
| [collapse of Bretton Woods system] -> [U.S. dollar
| becomes global reserve currency] -> [U.S. manufacturing
| becomes uncompetitive abroad] -> [American manufacturing
| firms go bankrupt, allowing them to renegotiate or renege
| on union contracts] -> [decline in union membership].
| Step 3 had a lot of help, between poor corporate
| governance and quality control at American corporations,
| the rest of the world rebuilding from the ashes of WW2,
| the collapse of communist systems in China and the
| eastern bloc, and globalist policies from Washington. But
| probably the most significant factor is that the dollar
| is overvalued, which makes American exports overpriced,
| which makes all but our highest-productivity industries
| uncompetitive.
|
| The causality for inflation-lowered wages is [U.S. dollar
| is global reserve currency] -> [U.S. must "print" an
| excess amount of dollars to satisfy foreign demand - here
| really referring to interest rates, since physical
| currency is a minority of foreign trade] -> [excess
| dollars flood financial markets, causing asset inflation]
| -> [ordinary workers lack the bargaining power to divert
| some of these excess dollars to themselves, falling
| behind in purchasing power]. Note that when ordinary
| workers _do_ have this bargaining power - like when they
| work for Goldman Sachs, or when they 're paid in
| Google/Apple/Facebook stock - they actually _have_ shared
| in this inflated prosperity.
|
| The causality for growth of the financial industry is
| [U.S. dollar is global reserve currency] -> [a
| significant number of foreign transactions require trade
| in dollar-denominated assets] -> [more jobs are needed to
| manage these money flows] + [manufacturing careers in the
| U.S. suck, per second paragraph] -> [smart, ambitious
| people go into finance because it's where the money is,
| literally].
| treis wrote:
| >Except this wasn't the federal bailouts. Those are an
| entirely different beast. It's talking strictly about income
| stagnation.
|
| Which rests on the fundamentally incorrect assumption that a
| dollar a rich person gets means that a poor person is a
| dollar poorer.
| Seanambers wrote:
| Some nice graphs to go along; https://wtfhappenedin1971.com/
| tylerhou wrote:
| A bunch of these graphs are misleading, especially the ones
| from the EPI. /r/badecon can explain better than I can: htt
| ps://www.reddit.com/r/badeconomics/comments/6rtoh4/produc..
| .
|
| TL;DR:
|
| 1. The pay line is for the bottom ~80% of workers, while
| the productivity line is for all workers. If you graph all
| workers wages vs all workers productivity, then the gap
| shrinks quite a bit. (Of course, maybe we should
| redistribute wealth from top workers to all workers, but
| that's another discussion.)
|
| 2. Average hourly wages doesn't take into account workers'
| increase in benefits.
|
| 3. The lines aren't adjusted for inflation in the same way,
| which makes the gap look worse.
| mindslight wrote:
| Even with income remaining stagnant, the prices for goods and
| services should have been continually going down due to
| technology and outsourcing. Price optimization is the
| fundamental mechanic of any market! For example, when most
| manufacturing was moving to China the promise was that it
| would benefit consumers via lower prices. However the Fed's
| overt policy is to erase these gains by printing money via
| low interest rates, and injecting it into the nonproductive
| financial sector. This made sure that the cost of living
| continued to march upwards, while all those manufacturing
| jobs still went away.
| danans wrote:
| > Even with income remaining stagnant, the prices for goods
| and services should have been continually going down due to
| technology and outsourcing.
|
| The price for goods did go down. Everything from food to
| toys to tools got much cheaper than it was before.
|
| However, the price for cornerstone needs that govern access
| to opportunity - i.e. healthcare, housing, education,
| physical security - and the percentage of income and
| average net worth that these consume went up dramatically.
|
| Furthermore, these things became ever more correlated with
| each other, meaning that if you have bad access to one, you
| are likely to have bad access to the others, and if you
| have great access to one, you likely have great access to
| the others.
|
| But sure, it's never been cheaper to buy random widget X at
| a big box store.
| mindslight wrote:
| > _The price for some cornerstone needs that govern
| access to opportunity - i.e. healthcare, housing,
| education_
|
| First, I wholeheartedly agree that this is the major
| stakes. I mentioned consumer goods prices because they're
| immediately tangible. The differences in the others are
| all too easy to handwave away as improvements.
|
| > _Everything from food to toys to tools got much cheaper
| than it was before_
|
| I don't know about toys, and they seem hard to compare.
| Food has gone up over the past few decades (groceries
| that used to cost $2 now cost $3, $3->$4, etc). From one
| of the first hits for historical milk price
| (https://www.in2013dollars.com/Milk/price-inflation): "
| _Between 1997 and 2020: Milk experienced an average
| inflation rate of 1.73% per year_ ". Note that I'm
| talking about sticker prices here, not any "but they
| actually went down with inflation", as the original
| argument was referencing stationary wages.
|
| Tools are being made much more flimsy and disposable - eg
| real high speed steel has been replaced by inferior
| foreign steel with gimmicky coatings to "prolong" its
| poor wear characteristics. If you look at good quality
| tool brands today, the prices are higher than what tools
| cost several decades ago. This goes for appliances as
| well - take a look at "commercial" offerings that are
| built to be maintained.
| renewiltord wrote:
| The price for goods is dramatically down. You can buy a 70"
| flat panel display for $500 today.
|
| And there's a lot of pseudo-productivity here that is
| mostly just rising healthcare spending (without
| commensurate changes in outcomes) and land value. This sort
| of makes sense since these sectors have massive capture
| problems.
| mindslight wrote:
| > _The price for goods is dramatically down. You can buy
| a 70 " flat panel display for $500 today._
|
| Tech itself is the exception that proves the rule. Its
| effect is so powerful that it's the only gain that
| inflationary policy is not erasing.
| ClumsyPilot wrote:
| Oh cool, can you eat it?
|
| How about 95% of economy: education, houses, food,
| heating, electricity, fuel? What about industrial goods:
| Bricks, steel?
|
| But oh, you can now live in poverty unable to afford
| cancer treatment with a TV.
| credit_guy wrote:
| > The study shows that if wages kept up with productivity (as
| was the case in the immediate post-WW2 era) the bottom 90%
| would earn $2.5 trillion per year more.
|
| The productivity growth is not a constant number. The
| productivity of a Machine Learning engineer has increased
| much more than the productivity of a gas station attendant.
| adam_arthur wrote:
| Especially when coupled with the excessive fiscal stimulus.
|
| We should absolutely help those most impacted by the pandemic,
| but the amount of money being injected amounts to gross
| negligence.
|
| Why were people who made 6 figures and still employed being
| given checks, for example? The stock market is on fire, and
| many businesses are smashing earnings expectations, yet we
| inject another $2 trillion?
|
| I've got a sizable portfolio, but the government response
| frankly saddens me. The green we see every day just represents
| inflation (of assets). Big gains in stonks, but now we have to
| pay 2 million dollars for a house in a nice part of town.
|
| Really unfortunate for those without significant assets that
| ever hoped to own a home.
| adamcstephens wrote:
| Because it's impossible to tell who lost their job this year
| even though they made six figures in 2019. If we don't like
| accidentally giving people who don't need it money, claw it
| back at tax time.
|
| edit: the stock market is on fire while small businesses
| collapse. The market isn't attached to reality.
| adam_arthur wrote:
| Exactly, send the money out today, claw it back from those
| who earned too much in 2020.
|
| Small businesses collapse, but government efforts haven't
| been towards helping them, largely more towards sending out
| helicopter money to the people.
|
| Handing money to people will help all businesses of course,
| but I'd venture to guess it helped large corporations and
| brokerages the most.
|
| The loan forgiveness program for small businesses was a
| good step, but it seemed that a lot of smaller businesses
| chose not to make use of it.
|
| I'd guess that in the long run, the traditional small
| business (retail) will become non-viable anyway though.
| There are too many economies of scale to be gained by
| operating under the umbrella of a larger corporation. e.g.
| Amazon can only justify its massive distribution network
| and same day delivery due to its size.
| mindslight wrote:
| > _Why were people who made 6 figures and still employed
| being given checks, for example?_
|
| Because it's easier to do this than to gauge need, and with
| the paltry amounts handed out it doesn't add up to much
| compared to the big picture. The real question is why this
| has become a political talking point, and the answer is to
| distract from that much larger _rapidly-implemented_ scam of
| bailing out the bond market that you rightly point out is "
| _Really unfortunate for those without significant assets that
| ever hoped to own a home_ ". Hiding the large scale theft is
| much easier when you can distract people into bickering about
| their financial neighbors.
| adam_arthur wrote:
| It doesn't have to be one or the other.
|
| 100% agreed that fed action via bond buying has been
| excessive as well. In a healthy economic system, there need
| to be "down" cycles where overleveraged or poorly run
| businesses fail.
|
| If the government will backstop all investments, then why
| not leverage up as much as possible and take on excessive
| risk? Those that have been financially prudent have been
| punished consistently. I wonder how much of the
| fiscal/monetary response is really driven by personal bias
| towards protecting their own portfolios.
|
| Helicopter money is certainly good optics in the short-
| term, but terrible governance on a longer timescale.
| [deleted]
| snarf21 wrote:
| I agree that the FED is a major contributor, but the SEC and
| FTC have failed us in the 21st century. Also, given the way
| PACs and lobbying work, people don't truly grasp that we live
| in an ever increasing plutocracy. The greatest trick the elite
| have pulled is to convince the common man that the enemy is
| your neighbor who isn't red/blue like you. They rob us blind
| while we stream Netflix and chill. However, our life is still
| _way_ too good to care. Only people with nothing to lose rise
| up.
| eznzt wrote:
| With so many mentions of the Fed, I find this comment to be
| extremely antisemitic.
| [deleted]
| OscarCunningham wrote:
| Do you think the Fed should have not done this and allowed
| inflation to run below their 2% target (perhaps negative)? Or
| do you have an alternative suggestion for how to keep inflation
| steady without printing money?
| adam_arthur wrote:
| The fed should use a more comprehensive bundle of goods to
| measure inflation. Home prices, is a good example.
|
| Once they do that, inflation numbers will read much higher.
| By some accounts, home prices have increased by over 10%
| since this time last year.
|
| A healthy society needs room for social/fiscal mobility,
| which becomes increasingly difficult when asset prices are
| inflated relative to median income.
| pessimizer wrote:
| A lot of magic is happening in your second paragraph.
|
| Inflation reduces debt and wealth at the same time. Wages at
| the low end rise with the cost of living. Debt and wealth are
| denominated nominally. The cost of a new car may go up, but the
| cost of the car you're currently driving (and haven't paid off)
| is going down.
|
| Printing money doesn't steal from the poor. Printing money and
| giving it to the rich steals from the poor. Speculation on
| assets comes with low inflation, not high inflation, because
| with low inflation comes low interest rates. The only reason
| this is bad is because when this speculation crashes the
| economy, the rich will be saved by direct payments from the
| government.
|
| Nominal asset appreciation due to a rise in the money supply
| isn't a rise in value, and the poor aren't competing with the
| rich for assets. It seems like that in housing because it is an
| extraordinarily safe asset to drive up in value (when interest
| rates are low) based of the history of the US government
| bailing out losses in real estate.
|
| Wealth inequality in America is due to direct payments to the
| wealthy, and the government consistently stepping in as the
| silent guarantor of last resort behind every asset bubble. If
| the government were instead the asset buyer of last resort (not
| _at par_ like after the mortgage crisis, but at market value),
| crashes of asset bubbles would be a boon for the public, not a
| boon for the people who participated most in the bubble.
|
| edit: The problem with the Fed is that it focuses on a goal of
| holding down inflation while not considering employment in
| enough detail. The quality of jobs, whether jobs are in bubble
| (or fragile) industries, rate of rise in wages, and the quit
| rate are ignored in favor of a simple percentage of unemployed,
| and administrations even narrow that down to the proportion of
| people currently collecting unemployment instead of the prime-
| age (25-54) employment rate as would make sense.
| lazerpants wrote:
| Great points! I disagree with you on this: Wages at the low
| end rise with the cost of living.
|
| I think this is really an elasticity issue and that we have
| far too much low skill labor available in the USA (in part
| because we can import it easily). This means that low end
| wages have no reason to rise.
| downut wrote:
| Yeah I agree with this more, but let's ignore the US for a
| moment and observe that inflation has been steady and low for
| decades now in most wealthy countries. And then we observe
| the same is true in the US.
|
| So whatever the causes of the (I certainly agree) massive
| transfer of relative wealth to the 1%, I don't see much
| evidence that it's US government financial institutions that
| are to blame. As for fixing the problem, in the simplest,
| most effective way: highly progressive real income and wealth
| taxation and whatever Picketty thinks the fraction the
| inheritance tax should be.
| mixmastamyk wrote:
| When you own things, i.e. assets, inflation is not really an
| issue. Of the rich, only lenders are affected by inflation.
|
| Also wages have not been rising enough to counter trends.
| cromwellian wrote:
| Blaming the fed is a common libertarian tactic to avoid blaming
| the capitalists. Oh yes, in a pure anarchocapitalist Austrian
| utopia, you'd never have capitalists paying workers shit wages,
| employing child labor, forcing workers into unsafe firetrap
| buildings, etc
|
| It's a way of averting ye eyes from the real problems with the
| negative externalities and market failures, and the hard work
| to come up with policy solutions that patch the holes in
| capitalism.
|
| The analysis of the OP also ignores the decreasing returns to
| labor investment and increasing returns to capex because of
| automation which almost guarantee that the bulk of ROI will
| accrue to capitalists in the future.
|
| Hire some (temporary) middle class workers to build your robot
| factory or automated logistics warehouse, fire most of the
| workers in your old factories/warehouses, and watch as more net
| income is transferred.
| hedora wrote:
| There's a hole in your argument:
|
| It takes $500 to build a well-diversified portfolio with a
| roboadvisor, and that portfolio will behave comparably to a
| larger one (it'll be a bit worse, but also taxed at a lower
| rate). So, if everyone invested their savings rationally, then
| when the Fed propped up stock prices, it wouldn't change the
| distribution of savings across the population.
|
| The real issue is that a larger percentage of the poor's assets
| are in items that depreciate.
|
| In the '08 crash, a the percentage of people in the US that
| owned a home dropped from 69% to 63.5%, and is only starting to
| recover:
|
| https://www.statista.com/statistics/184902/homeownership-rat...
|
| The Fed has been keeping mortgage rates low, and that has
| certainly helped home ownership rebound. So, it's more nuanced
| than "the fed steals poor people's money".
|
| (Don't get me wrong; the system is rigged to transfer wealth to
| the rich. I'm just saying there is more than one mechanism at
| play.)
| socialist_coder wrote:
| Most Americans don't have disposable income to invest in the
| stock market.... there is no amount of investing that will
| turn their "barely making ends meet" wages into a living
| wage.
| adam_arthur wrote:
| Except high income earners can choose to invest a much higher
| percentage of their income.
|
| I can invest 80% or more of my take home pay if I choose to
| live frugally. Somebody close to minimum wage can probably
| get somewhere closer to 10%, which would come at greater
| personal sacrifice.
|
| Agreed that more people should participate in investing and
| there's an educational/behavioral component, but recent
| government interventions have been excessive and basically
| amount to inflation of asset prices.
|
| Dropping interest rates helps people purchase a home "today",
| but home prices quickly appreciate such that the carrying
| cost of the home is exactly the same as before, just priced
| higher and weighted more towards principal payments.
| gwbas1c wrote:
| The reason for the bailouts was to avoid mass unemployment and
| mass foreclosures. These would have happened had major
| automakers or major banks went bankrupt.
| gowld wrote:
| Giving the money to the employees in a much cheaper way to
| avoid unemployment. Temporarily banning foreclosure is an
| easier way to avoid foreclosures.
| BlueTie wrote:
| In David Graeber's book on money, one detail that I always
| remember when I read a comment like this is how coinage was
| created so many times throughout history as a way to support an
| Army.
|
| King makes money -> gives it to the army -> collects money as a
| tax from all citizens.
|
| It creates a system where all the people in the kingdom have to
| contribute to the army in some way.
|
| Now The Fed creates money -> gives it to bankers -> gov't
| collects taxes in that coin.
|
| So we've created a system where your ability to buy things is a
| derivative of how much you support banking. It's no wonder why
| everyone is overleveraged and fragile and needs bailouts all
| the time.
| RIMR wrote:
| Lack of education is the #1 issue here. America's education
| system emphasizes nationalism and obedience. It doesn't
| encourage critical thinking or alternative worldviews.
|
| We're so deeply entrenched in the "American Dream" (Capitalism
| & Trickle Down Economics) that we're unable to challenge the
| current status quo.
|
| Worse yet, this is driving us towards the defunding of public
| education, and the further worsening of our problems.
|
| Our collective ignorance manifests itself in a number of ways,
| from wealthy mainstream journalists blaming economic problems
| on the poor to their audience of middle-class Americans, to
| mass-delusions regarding conspiracy theories intended to divide
| people.
| ksec wrote:
| >It doesn't encourage critical thinking...
|
| Critical Thinking requires some dose of cynicism. Which in
| itself is against the main stream thought of American
| Optimism.
| DamnYuppie wrote:
| I agree with your assessment of our education system. I would
| go further and say we intentionally do not teach money
| management skills as it makes people harder to fleece. We
| have indoctrinated a whole country that debt is good, rampant
| consumerism is good, all of which leads to really bad money
| management.
|
| I am of the opinion that these habits and the ideology that
| supports it is the biggest reason people who are in the lower
| income brackets continually stay there. The best path to
| wealth is to convert your work into capital. If you spend
| everything you make and more there is no excess to re-invest.
| jmcqk6 wrote:
| >intentionally do not teach money management skills as it
| makes people harder to fleece.
|
| Yeah, this is a perfect example of "don't attribute to
| malice what is equally explainable by incompetence."
|
| I'm not talking about the incompetence of teachers. I'm
| talking about the incompetence of the system, and it's
| inflexibility towards change. This is not caused by malice.
| It's caused by is being completely unable to effectively
| handle the millions of different perspectives of "what
| education should be."
|
| You talk about indoctrination of a country, but I don't
| think it's indoctrination at all. It's people clinging to
| their views and being completely hostile to the idea that
| they might not understand important parts of the system.
| It's people turning to ideology instead of engaging with
| the actual complexity of the world.
| tick_tock_tick wrote:
| Look at USA spending on education the money isn't the issue
| at all.
| ceejayoz wrote:
| I think the argument is less "we don't spend enough" and
| more "we spend a lot on the wrong sort of education".
| tick_tock_tick wrote:
| Most of the time the argument is "if we spend less on
| military and more on education it would solve X". So I
| disagree. The people I get into a discussion with on
| education funding always seems to think the USA spends
| less than other first world countries.
| coliveira wrote:
| You're trying to convict a gun for the murder, instead of the
| person who pulled the trigger. The Fed is just a tool in the
| hands of the <1% who control the economy. If it was against
| their interests, the Fed would not even exist in the first
| place. The Fed policies are directed at stealing from the
| poor/middle class and syphoning the profits to the very upper
| echelons of capital owners.
| john_moscow wrote:
| >It amazes me why most people do not grasp this.
|
| Because the people who figured that out also figured out the
| divide-and-conquer strategy. So first you quietly take X% out
| of everyone's pocket, and then you do massive PR campaign
| splitting them into identity groups and forcing them to fight
| over who should be more entitled to a 0.1X% bonus in the name
| of equity and justice. And you turn a blind eye, and even
| somewhat encourage people burning each other's businesses and
| getting each other fired over made-up differences.
|
| And it works, it just works. All the recent equity activism is
| about raiding the upper middle class and giving to those who
| openly oppose economic independence and self-reliance.
| Completely ignoring the fact that it's the corporations and the
| people controlling them, who are actually behind the economic
| degradation of the rank-and-file stratum.
|
| So, endless equity fights for the bottom 99% and an
| unprecedented increase of power for the top 1%.
| Congratulations, people.
| tobmlt wrote:
| Yep. The fed is an engine, whose purpose is to move wealth
| silently from the masses to the powerful monied few, via time-
| asymmetric inflation. (Mostly Inflation of assets presently)
| The resulting data looks like corporations have used their
| power to directly disenfranchise/disempower workers, and so the
| mass clamber for protective laws. More laws will be enacted by
| those in power. The time is certainly right for it. The laws
| will be constructed such that they will entrench the existing
| power structures, and meanwhile the fed will motor on,
| unaffected. Nothing changes for the good while this engine
| continues to run. And it will run at ever increasing rates,
| because it has to, in order to continue to do its work of
| supercharging the economy from the top down. Get on the train
| (Ride the coat-tails of the great and powerful as best you can
| by investing) or be left behind in a wake of generally stagnant
| wages (stagnant for lots of reasons), and mildly rising prices.
| Meanwhile housing prices (housing costs to you) and stocks are
| off on a rocket-ship to the stars.
| tylerhou wrote:
| The Fed is stabilizing the price of the USD because of the
| coronavirus pandemic. If it were not printing money, then
| there would likely be a deflationary spiral that would cause
| a depression.
|
| That's one of the reasons why the Great Depression was so
| bad: the US was on the gold standard at the beginning. The US
| can't create gold out of thin air, so the USD started
| deflating, people stopped spending, and capital stopped
| flowing. Companies went bankrupt, people lost jobs -- all
| because much needed dollars were stuffed in people's
| mattresses instead of being spent.
|
| The Fed is increasing the money supply by purchasing bonds
| because corporations need cheaper capital to pay their
| workers and their bills. When the pandemic is over, it will
| sell back these bonds the banks it bought them from. Without
| the Fed's intervention, this recession and pandemic would
| have been far, far worse.
|
| Of course, helping corporations also helps the people who own
| the corporations: the rich. That's a distributional issue,
| and the main solution is tax policy. We need to raise income
| and estate taxes on the rich, increase the tax on capital
| gains, and institute a wealth tax.
|
| The Fed _is_ like an engine. But engines are a tool. Tools
| can cause good things and bad things. Right now, the Fed is
| causing good things by providing liquidity, which has the
| side effect of causing bad things because it lets the rich
| accumulate wealth.
|
| If the Fed is like an engine, then it serves to move a train
| -- the economy. If the train is runaway -- if the economy
| benefits the rich far more than normal people -- that doesn't
| mean engines are bad. It means we need to stop the train, fix
| it, and start the engine again.
|
| If we restructure our economy, the Fed will still continue to
| do good things, with fewer negative side effects. That would
| be, on net, good. So the problem isn't with the Fed, it's
| with the economy. And claiming that the Fed is the root of
| all our problems misses the bigger picture.
| matwood wrote:
| > The Fed is stabilizing the price of the USD because of
| the coronavirus pandemic.
|
| The pandemic is a case of exactly when the gov. should step
| in. Unfortunately the gov. is slow and takes so much time
| to do anything.
|
| > That's a distributional issue, and the main solution is
| tax policy.
|
| Exactly. I think a better argument could have been made by
| looking at the tax cuts a couple of years ago. Companies
| didn't go on hiring sprees or even keep any money in the
| bank. They did stock buy backs, paid bonuses, etc...so that
| when the pandemic did hit they had nothing to fall back on
| (see the airlines).
| tylerhou wrote:
| CEO bonuses, not always a good thing. Buybacks are not
| always good (because stock-compensated corporate managers
| sometimes abuse them to increase the stock price), but
| for airlines, buying stock was the right choice. You can
| read Matt Levine's argument, but basically:
|
| If airlines didn't spend money on buying back stock, they
| could have:
|
| 1. Invested it in growth. But if they had invested it in
| all the normal things an airline might invest in, they
| would still suffering because of the pandemic.
|
| 2. Saved it for a rainy day.
|
| You're arguing (2) should have happened. But an important
| thing to remember is that companies' savings are not like
| your savings -- companies have far more reliable future
| cash flow, which means that they can borrow at much lower
| rates than you can through the equity markets.
|
| If airlines had saved their earnings, maybe they would
| have grown at bond rates (investing the company's savings
| in the stock market is too risky and unorthodox for
| corporate finance officers). That's not good for
| investors who are looking for 1) return on capital and 2)
| higher exposure to travel. By returning the capital to
| investors, airlines increased their exposure to airline-
| adjacent things and their return on capital. That's a
| good thing for investors because it gives them more
| choice! If an investor wants a safer investment, they can
| create their own basket of bonds and airline stonks.
|
| Similarly, now that the coronavirus has hit, investors
| _know_ that airlines ' fundamentals haven't changed --
| they're just hitting temporary turbulence. So, to raise
| capital, airlines can issue stocks and bonds to
| temporarily get them through 12-24 months. And that's
| exactly what they did last May:
| https://www.wsj.com/articles/aviation-industry-races-for-
| cas...
|
| Basically: corporate finance is not like personal
| finance, and it's a mistake to think that companies
| _need_ "rainy day funds." They don't: that's what the
| equity markets are for.
| anchpop wrote:
| Can you link to Matt Levine's argument? (I googled a
| little but didn't see what you were talking about)
| tylerhou wrote:
| https://www.bloomberg.com/opinion/articles/2020-03-17/the
| -go...
| tobmlt wrote:
| I appreciate your counter argument and am familiar with it.
| I disagree about the Great Depression and pretty much
| everything else you've said, but I mean no disrespect, only
| contend that there is a whole body of economic thought that
| agrees with me, and that mainstream Econ (recognizing the
| plurality of schools of thought here) has swept under the
| rug, because it's inconvenient. I know "my side" is
| unpopular and "discredited". I think it happens to mainly
| be right, simpler, and generally disabling to the status
| quo, which I'd characterize as built to enable active
| interventions. I've said nothing about what to Actually do
| to fix this all, because that is more complex, and not
| addressed properly, in the main, by anybody. I think one
| has to recognize the pain that unwinding all of this must
| cause, and not just "switch it all out". Heck of a mess!
|
| I'll be happy to get my (Of course discredited) books out
| and recite the counter case about the Great Depression if
| anybody really wants me to later. Basically the fed and
| various policies caused what should have been a short sharp
| correction/stock-crash (at the end of a runaway fed built
| stock market streak) to extend into a long drawn out mess.
| Forgetting innumerable details I am sure. But yeah, I know
| you don't agree. I do not find your case compelling.
|
| While I have a chance, here is a good book on the Austrian
| case against the status quo narrative on the great
| depression:
|
| https://cdn.mises.org/Americas%20Great%20Depression_3.pdf
|
| This is, in the main, what I allude to on that one point
| (caveat, I am not a gold bug and of course Rothbard is. I
| think focusing on specific instances of "the way to
| implement an idea" allows people to laugh at the specific
| to forget/discredit the greater idea itself. Similar issues
| arise with Austrian rejection of stats and involved
| mathematical analysis.). I do not subscribe to those ideas,
| but find the bulk of the economic analysis itself
| compelling.
| learc83 wrote:
| If you're talking Austrian economists, who are the
| primary proponent of the "fed is the bad buy, bring back
| the gold standard" argument, they explicitly reject any
| attempt at modeling or mathematical analysis. They are
| only interested in arguments based on "self evident"
| axioms.
|
| I've read many of the books you're talking about, and
| there's a reason they are "unpopular" and "discredited".
| tobmlt wrote:
| There is no need to throw out the baby with the bathwater
| here.
|
| Who cares about gold? Who cares about avoiding math? Not
| me. I guess I am no Austrian for those reasons. I do
| care, however, about restraining the inflationary
| tendencies of governments because I believe they are an
| engine of wealth redistribution from the poor to the rich
| and powerful. And sure, I suppose I do care about
| avoiding mathematical naval gazing, or statistical
| hackery. But those are side-issues.
| brobdingnagians wrote:
| There are differences of opinion on what is the cause and
| the effect [1]. There were deeper reasons for the deflation
| and by cutting production and preventing deflation, it made
| it much more difficult for small businesses and individuals
| to buy food or continue business. That benefited large
| corporations at the expense of the smaller ones. The
| government taxed the poor, then subsidized farmers to stop
| producing, which made the food more expensive which further
| hobbled the poor.
|
| The Fed benefits banks and the wealthy. Inflation and
| increasing money supply makes labor cheaper for businesses
| and hurts those on fixed salary or wage by decreasing the
| real value of wages over time.
|
| [1] https://mises.org/library/how-fdr-made-depression-worse
| artificialLimbs wrote:
| > ...increase the tax on capital gains...
|
| How about proportionally? Stock trading apps now make it
| easy enough for Joe 6 pack to invest in the market at any
| income level. I could see a x% higher tax if you're buying
| 10,000 shares of Amazon, but it seems to me like putting <
| $1,000 in the market a month should be somewhat painless.
| quickthrowman wrote:
| > When the pandemic is over, it will sell back these bonds
| the banks it bought them from.
|
| This remains to be seen, the market had an absolute fit
| when they said QE was tapering in 2013, and also had an
| absolute fit when Powell was raising rates in 2018,
| particularly in December.
|
| The Fed may have painted themselves into a corner here,
| nothing is certain with regards to unwinding QE or raising
| rates.
| nostrademons wrote:
| I've heard (from finance professionals) that big elephant
| in the room is corporate debt. Corporations need to roll
| over their debt when it comes due, and a fair amount of
| it is short-term paper. If interest rates rise, that debt
| will become _a lot_ more expensive, which will make many
| of the more marginal companies insolvent. Not software
| companies, which are sitting on hoards of cash, but all
| of the ordinary manufacturing /retail/service/financial
| companies that employ millions of Americans. If they go
| bankrupt we'll see unemployment worse than the COVID
| lockdown, but moving up the income ladder into what's
| left of the middle class. This was why the Fed flinched
| in 2018.
|
| To me (and this is a minority viewpoint - my finance
| industry friends disagreed), the way this plays out is
| both obvious and terrible. The Fed knows that if they
| raise interest rates, very large American institutions
| are going to go bankrupt and millions of Americans will
| be thrown out of work. The Fed's primary mandate is full
| employment (adjusted last year from a dual mandate of
| "full employment _and_ low inflation "). Therefore, the
| Fed is not going to raise interest rates. We'll see this
| first as a massive asset bubble during the early 2020s,
| and then as rising inflation in the later 2020s, and then
| finally as hyperinflation. When it gets to the
| hyperinflation stage the Fed will take notice and raise
| rates, but it's too late by then. Hyperinflation is
| characterized as a sharp increase in the velocity of
| money, which makes traditional monetary policy tools
| ineffective for curbing it. You have to ditch the
| currency and start over with a new one.
| NortySpock wrote:
| So, we need to see loan-forgiveness for businesses then?
|
| Trying to figure out how you unwind it slowly when
| apparently "slowing raising rates" still destroys many
| businesses with a lot of debt...
| jaycroft wrote:
| I'm starting to think that it's time to let the
| unproductive businesses that have blossomed over the last
| 12 years go bankrupt and be removed from the system.
| Unfortunately a lot of productive businesses that are
| _temporarily unproductive_ had been using their cash for
| stock buybacks and using easy corp debt to run
| operations, and so with the pandemic, those wold get
| washed out too. Maybe the laws banning stock buybacks
| prior to Reagan weren 't such a bad idea?
|
| On the other hand how can the fed buy bonds from the
| "good" companies worth saving, and not from the "bad"
| companies that can freeride until "eventual"
| profitability?
|
| I suppose you let the market decide - let the bonds
| float, and anything worth saving should be bought back up
| by the people enriched by the buybacks, right? Isn't that
| what efficient markets and capitalism are all about?
| brobdingnagians wrote:
| The issue with loan forgiveness is that it is a massive
| wealth transfer from creditors to debtors. People who
| made bad bets by getting deeply in debt are rewarded,
| while people who saved and loaned money get shafted. That
| unbalances the economy and misallocates resources. Which
| could do even more damage. There isn't really a clean way
| out. If businesses started preparing & managed their
| money better while paying off their debts, that would
| probably be the safest way out.
| kazen44 wrote:
| which is highly dangerous to the general stability of
| society. When economic policy results in massive
| finanicial instability for the common worker (thanks to
| hyperinflation and insane asset prices) it creates a
| power vacuum which can be filled by those promising to
| fix the problem quickly and swiftly.
| nostrademons wrote:
| No shit. That's the future I see, I don't like it.
| Historically when societies get to this point they tend
| to come apart and disintegrate, and you get all sorts of
| nasty stuff - civil war, revolution, dictatorships,
| famine, invasion, purges, organized crime, etc.
|
| I'm reading the Bitcoin threads on the front page today
| and seeing all these people wondering about why Tesla &
| Twitter are considering putting their capital reserves
| into Bitcoin, and thinking "Isn't it obvious? Musk and
| Dorsey no longer consider the U.S. to be a going concern,
| and are preparing for a future feudal corporatocracy."
| (Also squares with some of the other shit Twitter has
| done like banning a sitting U.S. President for life.)
| quickthrowman wrote:
| Yeah, interest rate risk and increased debt service costs
| bankrupting companies is a bigger issue than slowing or
| stopping QE. I hope the Fed can figure a way out of this
| without hyperinflation, but it's a distinct possibility.
| I agree that they'll wait to raise rates until inflation
| really starts cooking above 3%.
| glsdfgkjsklfj wrote:
| > by providing liquidity, which has the side effect of
| causing bad things because it lets the rich accumulate
| wealth.
|
| curious, what if the people driving that engine opted for
| wealth tax instead? Wouldn't that be a win-win and your
| phrase could have been instead:
|
| > by providing liquidity, _with no side effect such as_
| causing bad things because it lets the rich accumulate
| wealth.
|
| -\\_(tsu)_/-
| tylerhou wrote:
| The Fed doesn't the power to enact a wealth tax. It's
| powers were delegated to it by Congress. Congress does
| have the power to enact a wealth tax. But it chooses not
| to. The way to change that is by voting.
| ItsMonkk wrote:
| This is an inaccurate narrative. The more wealth inequality
| there is in a nation, the less that increases in the money
| supply effect the economy. This is why we have no inflation
| with trillions injected. The rich simply store the money in
| assets like stocks and houses and it never touches
| consumption.
|
| The only thing that needed to happen to keep the economy
| afloat was the Congress passing their bills.
| tylerhou wrote:
| > The rich simply store the money in assets like stocks
| and houses and it never touches consumption.
|
| But these do affect consumption.
|
| 1) Stonks going up means that companies have more capital
| (through stock issuances and equity raises). Companies
| use this capital to buy things and pay workers, so the
| dollars end up recirculating through the economy just
| like if a regular person spent it.
|
| 2) Buying houses is consumption. And increases in housing
| prices causes more building of houses. Which leads to
| people getting paid for building houses and creating
| materials which leads to money circulating.
|
| Wealth inequality is bad, and Congress should have done
| more to help the American people. But the populist "rich
| people hoard money in stonks and houses so it doesn't
| recirculate" is also a complete misunderstanding.
| ItsMonkk wrote:
| 1. When the money supply is increasing at a rate faster
| than stuff, the best use of capital is to hoard it. Can
| you show me examples of major companies issuing stock
| right now? Looks to me like they are all buying back
| their stock, which has the opposite effect.
|
| 2. Buying houses is an investment and is specifically
| carved out in the CPI. Consumption is Owner's Equivalent
| Rent, buying is not.
| ISL wrote:
| Or adequately addressing the pandemic; the gravest error
| of our time.
| afarrell wrote:
| Agreed. The problem is that the Fed only has the power to
| inject dollars at the top of the economy, yet sales taxes
| and the IRS drain dollars from a broad base of the economy.
|
| I think an MMO designer would suggest two options:
|
| A. Nerf the Fed, which would have the problems you note.
|
| B. A balancing mechanic -- Some more universally-accessable
| way to inject income at the base of the economy.
| InitialLastName wrote:
| > B. A balancing mechanic -- Some more universally-
| accessable way to inject income at the base of the
| economy.
|
| Something like, for example, giving $1000 to every adult?
| anchpop wrote:
| This is risky, because if the fed accidentally injects
| too much money by buying back too many bonds, they can
| always un-inject it by selling the bonds back (and banks
| are compelled to buy). This lets the fed be more
| aggressive because it knows that if it goes too far and
| starts seeing more inflation than it intended, it can
| always walk back its decision. But there's no realistic
| way to do that after having given $1000 to every adult.
| breatheoften wrote:
| B. I've been contemplating it as mandatory minimum paid
| vacation days per year - fed provides free access to the
| money, corps borrow it and corps must pay employees
| minimum days off per year.
|
| The value of currency and debt has diverged too far from
| quality of life concerns -- days off seem a direct way to
| inject quality of life capital into the system and, I
| think, could prove an investment able to unearth very new
| and effective social transformation capabilities ...
| 3327 wrote:
| Crypto, decentralized, the fed is done and done should they
| be foe good reason.
| nickpp wrote:
| Naval had an extremely pertinent tweet [1]:
|
| The road to socialism via inflation:
|
| * Print money, crash the reserve currency, destroy savers, and
| force them into inflated assets.
|
| * Asset inflation leads to inequality. Demonize asset holders
| and tax the nominal gains, thereby confiscating the real value
| of the assets.
|
| [1] https://twitter.com/naval/status/1359650086221930496?s=21
| lefrenchy wrote:
| This entire take is predicated on the idea that the people in
| power have something to gain from doing this, since it
| requires the ruling class to do all of these things. It falls
| completely flat if you think about the logic beyond trying to
| make it fit your ideological narrative.
|
| Why would the ruling class (which his tweet presupposes is
| corrupt), who benefit from this status quo, purposefully
| destroy the systems that make them rich? It just doesn't make
| sense, the logic implies that a corrupt ruling class would
| purposefully destroy the systems that allow them to be
| corrupt in order to achieve "socialism" (which Naval clearly
| implies is somehow innately corrupt here). Why would they
| destroy what they benefit from on purpose?
|
| Ruling classes benefit from stability, if people are not
| starving and live generally decent/free lives they won't
| search above for answers or be inclined to upheaval.
|
| > destroy savers, and force them into inflated assets.
|
| I don't understand this part, isn't it a broad consensus in
| the US that savings should not be in cash but instead in a
| diverse set of assets and bonds? How does inflating assets
| destroy savers in this case? Every time I hear advice on
| saving in the US it's basically (take anything above
| emergency fund savings and invest it in ETFs/index
| funds/bonds)
| natenthe wrote:
| Naval is a smart man. Couldn't agree with this more. We are
| nearing the end of the road to socialism via inflation.
| seppin wrote:
| All countries print money and discourage saving.
|
| Taxing capital gains at a fraction of the rate you tax
| labor ensures increasing inequality, and is not the source
| of "confiscating" or theft of wealth.
|
| Naval is a fortune cookie philosopher at best, and seems to
| repackage college libertarian ideas of protecting the
| wealthy from adequately funding the country they reside in.
| matwood wrote:
| > you steal from the poor and give to the rich
|
| At this point it's really future generations who are being
| stolen from.
|
| I'm older, own a house, and paid for multiple degrees years
| ago. Inflation is _good_ for me personally, but destroys young
| people. Salaries just can 't keep up with how fast housing and
| education (and healthcare) costs have risen.
|
| I do not think the fed is solely to blame though.
| PragmaticPulp wrote:
| > I do not think the fed is solely to blame though.
|
| This doesn't get repeated often enough.
|
| People like to blame the fed for everything, but much of the
| inflation in categories like tuition has been driven by
| misguided efforts to increase college loans to young people
| and encourage everyone to attend the most prestigious college
| they can get into. Colleges have been more than happy to soak
| up the increased demand with ever-rising tuition costs.
|
| The fastest way to reduce college tuition would be to put an
| upper limit on federal subsidies and bankruptcy protection
| for college loans. College tuition would magically drop to
| match that amount, almost overnight.
|
| Likewise, we need to stop going to such lengths to
| incentivize everyone to own a home. It started with good
| intentions, but it turned into an unsustainable arms race.
| Slow down the federal backing of home loans and let the
| market sort it out. Renting isn't nearly as bad of a
| financial choice as many young people think.
| StreamBright wrote:
| Somehow most of the time when there is something bad
| systematically happening in the US it is almost always
| associated with government legislation. In my opinion it is
| largely because of intention based policies as opposed to
| outcome based policies. We rarely investigate what was the
| outcome of a policy and just doubling down on failed ones.
| bartimus wrote:
| Not to mention the low interest rates that caused the housing
| prices to sky-rocket.
|
| Also not to mention this new trend where younger generations
| prefer to spend their paychecks on vacations, smartphones,
| fashion as opposed to long-terms investments like a home.
| adamcstephens wrote:
| A home isn't an investment, at best it's a low interest
| savings account. That people consider it to be one is part of
| the reason house prices continue to outpace inflation.
|
| Buy a home to live in it, but don't expect that you'll make
| money from it.
| jrsj wrote:
| The Federal Reserve is just one tool used to achieve this. One
| of the most important ones sure, but to put too much emphasis
| on it is missing the forest for the trees.
| tachyonbeam wrote:
| The real problem is money in politics, legalized bribery. The
| government is not really working for the people.
| throw0101a wrote:
| > _When you bail out irresponsibly over-leveraged and nearly
| bankrupted banks and corporations, and pay for those bailouts
| with tax-payer money, you steal from the poor and give to the
| rich._
|
| Or, you know, the Fed is not authorized to deal directly with
| individuals via the Federal Reserve Act. The Fed's job is
| monetary and financial stability through credit markets. That's
| the tools that it has, and it uses them when needed.
|
| If you want to help individuals through taxes/redistribution,
| social programs, etc, then that's government spending which is
| controlled by Congress.
|
| It's not the Fed's fault that politicians in the House of
| Representatives and/or Senate do not wish to pass legislation
| that authorizes these types of things.
| paulpan wrote:
| > Or, you know, the Fed is not authorized to deal directly
| with individuals via the Federal Reserve Act. The Fed's job
| is monetary and financial stability through credit markets.
| That's the tools that it has, and it uses them when needed.
|
| Is this really true anymore? At least the past year, the Fed
| has taken an unprecedented powers to counter the effects of
| the pandemic. We've all heard of quantitative easing but
| there's a handful of programs such as SMCCF that allows the
| Fed to buy debt directly from large corporations.
|
| Corporations aren't people but they're owned by shareholders
| and controlled largely by the 1%. The amount of money the Fed
| has directly or indirectly injected into global economy is
| absurd and surely, if there's a reckoning, the blunt will be
| taken on by the bottom 90%.
|
| I thought this was a good overview of all the Fed's programs
| and initiatives since last year.
| https://www.americanactionforum.org/insight/timeline-the-
| fed...
| nknealk wrote:
| It's worth noting that, while this is true, the reason the fed
| exists is because if they didn't do that, we'd have bread
| lines.
|
| I'd argue that recent fed actions are the reason supermarket
| shelves aren't barren which is in the interest of all
| Americans.
| silexia wrote:
| The bailouts are tragic as it undermines the natural garbage
| collection in democracy - bankruptcy. Bankruptcy is an
| incredible positive because it allows for the safe and sane
| dismantling of bad organizations.
|
| The question is - how do we apply a mechanism like bankruptcy
| to government organizations?
| natenthe wrote:
| Exactly. Bankruptcy and insolvency is an immune response to
| financial illness in markets. However, instead of removing
| cancerous growths, we bail them out and thus they metastasize
| and become much larger and more lethal. This inevitably leads
| to the death of the host.
| TuringNYC wrote:
| >> The question is - how do we apply a mechanism like
| bankruptcy to government organizations?
|
| Not sure if this is an answer for _every_ government org, but
| hundreds of municipalities and possibly even states are going
| to go bankrupt due to obscene pension liabilities. The very
| difficult "solution" is to let them to bankrupt, and allow
| them to re-negotiate liabilities.
|
| Unfortunately many municipalities have promised the world to
| retirees, often with inflation adjustments and often starting
| at 20yrs of service (that is, age 41 until death). Add in
| tricks like matching final year salary (which is often packed
| with overtime) and you have unbearable pension obligations.
| It isnt the worker's fault. But the local leaders and pension
| managers are at fault, and citizens are on the hook.
| Unfortunately the decisions were made by leaders 10 or 20yrs
| ago, so it may not even be the current leadership.
|
| If the municipalities are bailed out, then it gives a signal
| to every other municipality to overpay massively because
| either the state or uncle sam or PBGC will come in and bail
| everyone out. It is going to be a mess.
| sfblah wrote:
| Very well put, and I hope at least some people read this and
| think about it.
| ksec wrote:
| >It amazes me why most people do not grasp this. I think it is
| lack of education.
|
| I dont think that is the case at all. The concept is simple and
| easy enough to understand. Most people just dont care and want
| a single target to blame. And someone decide that target will
| not be government or Feds.
| natenthe wrote:
| Bingo. I was being politically correct but actually agree
| wholeheartedly. Didn't want to get too conspiratorial on this
| forum.
| ksec wrote:
| Well now even the whole submission is flagged for some
| reason....
|
| Edit: And it is now unflagged.
| salmonellaeater wrote:
| The framing in the article is ahistorical. The post-WW2 period
| was a period of exceptionally _low_ inequality. If you look back
| to just the 1800s there were swings in inequality comparable to
| the present day. We're now moving back to the historical
| baseline.
|
| There are some contributing factors to the shift in inequality, a
| major one being that labor is now oversupplied compared to the
| post-war period, and the competition is driving wages lower. The
| U.S. has much higher immigration rates now, which contributes to
| the oversupply of labor. The late 1800s and early 1900s had
| similarly high immigration and high inequality. [1]
|
| Whether the historical baseline for inequality is the best amount
| of inequality is a different question though. It's clear that as
| redistribution flattens the income curve there is dead-weight
| loss as highly productive people stop wasting their time doing
| taxable work. It's also clear that investing in children who
| would otherwise be malnourished or lack education or healthcare
| is a net positive for society. It's not clear to me that the
| current level of inequality is the wrong one - we're admitting a
| lot of immigrants who are vastly improving their life prospects
| as a result, the economy is growing, and technology is amazing.
| Spending more money on health care would have limited benefits
| [2]. I don't really have a strong opinion on whether inequality
| should be higher or lower (it's hard to find a good-faith
| analysis in these terms), but the Time article uses an arbitrary
| timeframe and doesn't shed any light on the question.
|
| [1] See Ages of Discord for a much more detailed dive into this.
| http://peterturchin.com/ages-of-discord/
|
| [2] Robin Hanson gives an argument with lots of evidence here:
| https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-med...
| stefan_ wrote:
| Yeah well the 1800s were also a time where people barely
| traveled 50kms outwards in their whole life and _slaves
| existed_ so why on earth would we take that as a barometer for
| anything.
| brink wrote:
| Because history matters and we shouldn't throw the baby out
| with the bathwater.
| lazerpants wrote:
| I think the issue with inequality that bothers many people
| includes an extra feature, how difficult it is for someone to
| move between percentiles of wealth. If it were easy to join the
| top 10% in wealth via intelligence, grit, and hard-work, I
| doubt many would be bothered by even deeper inequality than the
| USA currently has. However, if it is both difficult to move up
| the wealth ladder and highly unequal, it is a recipe for social
| unrest.
| AlotOfReading wrote:
| The concept of a 'historical baseline' is nonsensical. As you
| extend your timeline, inequality is going to decrease because
| most human societies have not had the kinds of disparity we
| measure today. Moreover, we're not beholden to historical norms
| of any sort. Collective action can change things. It's happened
| quite a lot historically.
|
| If you insist on a specific citation, check out _Ten Thousand
| Years of Inequality_. The editors (whose detailed reasoning I
| ultimately disagree with) have spent years doing papers on this
| subject.
| User23 wrote:
| Usury, which is to say lending at interest, will inevitably in
| aggregate lead to a tiny minority owning virtually everything.
| This is obvious to anyone who has basic high school math and
| understands that interest compounds geometrically and wages grow
| linearly at best.
| dcolkitt wrote:
| > wages grow linearly at best.
|
| This isn't true at all.
|
| https://ourworldindata.org/grapher/average-real-gdp-per-capi...
| ajmadesc wrote:
| Analyses like this show why we need to teach statistics in
| place of calculus in high school.
| leetcrew wrote:
| not really. the key mistake here is treating gdp is a proxy
| for wages when there is no direct connection between the
| two. in a pathological case, you could have a $1T GDP and
| have zero wages paid. the question of whether mean or
| median figures are more appropriate when talking about
| wages (what I assume you are alluding to with your
| statistics quip) is a side issue. no amount of statistics
| knowledge will help someone who insists on comparing apples
| to oranges.
| leetcrew wrote:
| gdp per capita is not a good proxy for wages.
| dcolkitt wrote:
| Labor share of GDP went from 64% in 1950 to 58% today. That
| means wages grew slightly slower than GDP per capita,
| that's certainly not enough to mean wages grew sub-
| exponentially.
|
| For wages to grow linearly, labor share of GDP would have
| to fall exponentially towards zero.
|
| https://www.bls.gov/opub/mlr/2017/article/estimating-the-
| us-...
| leetcrew wrote:
| it may be true, but it's not _obvious_ without making some
| unstated assumptions. inflation-adjusted returns on loans are
| not necessarily positive (though they usually are). interest
| compounds geometrically by definition, but subexponential wage
| growth is an observation that may depend on how you calculate
| inflation.
| findthewords wrote:
| Lending at interest only leads to unlimited aggregation if the
| risk of lending is zero. Zero interest rate policy and
| government backed securities is indeed as close to zero risk as
| possible in the real world.
| chordalkeyboard wrote:
| > will inevitably in aggregate lead to a tiny minority owning
| virtually everything.
|
| I'm not convinced. Perhaps this is the case with a permissive
| central bank encouraging consumer credit.
| throwaway123x2 wrote:
| How do you run the economy without interest?
| jay_kyburz wrote:
| In utopian reality, you could run a state owned bank that was
| run not-for-profit and only charged interest enough to cover
| losses and expenses.
| xorx wrote:
| I've read some non-mainstream theories that economies based
| on cash accounts and equity-only investments are possible.
| Some would argue that equity-only investment arrangements are
| better for society, as they align interests between capital
| and production in a way that recourse interest lending
| cannot.
|
| You can already see some fintech startups attempting equity-
| based home "loans", in which the "lender"'s lien is on a
| percentage of the future sale value of the home, not a fixed
| dollar amount. It will be interesting to see how this
| develops.
|
| I'm not sure how financing on consumer debt like credit cards
| and non-commercial vehicles would work, though. Perhaps
| discouraging consumer profligacy would be a feature, however,
| not necessarily a bug.
| rizalp wrote:
| By barter? By producing something valuable and exchange it
| through fair trade, and using sound money (not worthless
| currency)
| kansface wrote:
| I have strong doubts given the amount of churn among both the
| ultra rich and our biggest companies. No one seems to stay in
| the top 10 for more than a few decades.
| klmadfejno wrote:
| "But poor people have iphones now" when people can't afford food,
| healthcare, or any leisure time is the 2021 equivalent of "Let
| them eat cake".
|
| The balance of wealth is insulting when we have so many basic
| needs not being met for those at the bottom
|
| "Stealing" is a word that gets knee jerk reactions. But the more
| polite way to phrase it is that the rich benefit from societal
| structure 1000x more than the poor and are able to acquire wealth
| at an accelerated pace because of these structures. Asking the
| wealthy to pay a greater share to improve society is perfectly
| reasonable. The fallacy in complaining against taxes for the rich
| that are already higher than their proportional of wealth is
| ignoring the fact that so much of taxes goes towards systems that
| just increase the rate of wealth accumulation. The wealthy reap
| the benefits of power in compounding ways.
| swiley wrote:
| I'm not even convinced owning an iPhone is a good thing.
| They're really the modern equivalent of a TV.
| NittLion78 wrote:
| I always found this graph enlightening, but strictly on its
| face:
|
| https://fee.org/media/17509/prices2-1.png?width=645&height=6...
|
| I don't agree with the argument FEE is trying to make:
| "Consider each product or service shown. College is heavily
| subsidized, regulated, and exclusionary, and the costs are
| soaring. The textbook industry is hobbled by extreme copyright
| regulation, and can depend on captive buyers. Childcare is one
| of the most regulated industries in the country. Not just
| anyone can enter. Every aspect of childcare provision is
| controlled by the state."
|
| To me, the point is the things that people truly need have
| risen steeply whilst things that are luxuries have decreased
| greatly in cost and I believe that's a failing of government to
| not correct where the market would not. If you're surprised
| that things like healthcare and childcare are regulated, you've
| likely never been anywhere they were not, but that doesn't mean
| the costs to end users have to be so exponentially exorbitant
| as time marches on.
| ashtonkem wrote:
| Also, cars are a pretty well regulated industry, and it's not
| like software and electronics aren't impacted by copyright
| and patent issues.
|
| This strikes me as a problem that escapes simple scapegoats.
| potshot wrote:
| This is explored in detail in "Why Are the Prices So Damn
| High?" [1]
|
| "Education and healthcare are notable examples of sectors
| seemingly stricken by constantly rising prices ... At the
| same time, home appliances and telecommunications have become
| much cheaper. Why?"
|
| [1] https://www.mercatus.org/publications/healthcare/why-are-
| pri...
| fat_pikachu wrote:
| The things that have seen large price increases are things
| that aren't scalable i.e. they still require the same amount
| of human input labor to produce
|
| Childcare is constrained by the fact that each childcare
| worker by law (for better or worse) can only look after so
| many children at once. This ratio varies by state but it's
| usually around 4 children per childcare worker. The result is
| that it has to be expensive because (short of having robot
| caretakers) it always takes 1/4 of a person's labor.
|
| Education is similar, but has gotten worse in the past few
| decades w.r.t. labor requirements. While class sizes have
| remained relatively constant, there are more administrators,
| special needs educators, counselors, etc. servicing the same
| group of students.
|
| This isn't to say they shouldn't be regulated, or that there
| isn't room for improvement. College tuition and textbooks
| could certainly use some downward pressure.
| JamesBarney wrote:
| It seems like most of taxes goes towards medicare, medicaid,
| social security, and the military.
| LanceH wrote:
| and servicing debt
| itsoktocry wrote:
| > _" But poor people have iphones now"_
|
| What makes that especially awesome is that Apple and the
| telecoms have gotten into the business of supplying credit to
| consumers who would otherwise have no business (literally and
| figuratively) owning a $1,500 phone when a $250 phone would do.
| zepto wrote:
| Given that the thread is about how $50T has been appropriated
| from the poor it seems odd to say that the poor should use
| $250 phones, and they have _no business_ owning anything
| which costs more.
| dpoochieni wrote:
| An iphone is as disposable as a kleenex. It is not an
| asset, at least not a better one than a 250 phone.
| Thorentis wrote:
| But not everybody can be in the top 1% by definition. So
| either a category of people exists that do not need/cannot
| afford $1500 phones, or $1500 phones are a basic necessity
| that every human needs alongside food and shelter.
|
| I would argue that yes, in the first world a smartphone is
| _almost_ required, but there are plenty of great <$200
| Android phones that do everything one would deem essential.
| $1500 smartphones are now simply a status symbol alongside
| Nike's and Rolex's, and have been for some time.
| zepto wrote:
| > But not everybody can be in the top 1% by definition.
|
| Sure - but what should the wealth ratio between the top
| 1% and everyone else be? Perhaps if the ratio were lower,
| everyone would be able to afford great phones.
|
| Also, who 'deems' what is essential?
| anonuser123456 wrote:
| The situation is more nuanced in my reading in wealth, income
| and inequality.
|
| In particular, people don't actually care about absolute
| inequality. They care about progress and opportunity. As you
| stated, the inability to provide for basic needs trumps the
| fact that you have an iPhone.
|
| But the inability to provide for basic needs is not necessarily
| caused by wealth divergence. Medical care costs today have
| little to do with wealth, and more to do with the cost disease,
| regulatory morass/capture and transferring costs from the young
| to old.
|
| Housing costs, another huge personal expenditure, are driven by
| local NIMBY restrictions and city zoning planners.
|
| Education costs are clearly not driven by the wealthy, unless
| you believe Bryan Caplan's signaling theory (which I personally
| do). But in that case, tax transfers don't help either.
|
| And so here is part of the nuance. Some of the wealthy are
| 'stealing' the money via power/regulatory capture etc. Others
| are not, they are growing real wealth. Yet others are
| destroying jobs via automation whole making products cheaper.
|
| I'm personally less well off because my Dr. can charge 3x his
| value and my local city vigorously defends single family zoning
| at the expense of non property owners. But I'm not really worse
| off that Elon Musk is selling cars at a competitive price or
| Tim Cook is selling headphones at 550 a pop.
|
| And that nuance is important. Equally punishing the growth with
| 'theft' hurts the economy and doesn't fix any of the underlying
| problems.
|
| All of these excess costs, make it very hard for people to stay
| afloat let alone build capital/wealth.
|
| And those problems persist regardless if we transfer via taxes;
| housing markets are artificially constrained and tax transfers
| will just get sucked up to bid the price up. The medical system
| will find ways to suck up as much money as it possibly can.
| Giving people more money just to have it siphoned off isn't a
| great fix.
|
| So I, as a 1%er wouldn't mind higher taxes. But we have to fix
| the underlying problems first. Otherwise your just taking my
| money to hand off to my Dr's Porsche fund while the less well
| off get nothing in return.
| tossmeout wrote:
| I think it's perfectly valid to point out that improvements in
| technology are beneficial to the poor. Technology is the reason
| why most people would likely prefer to be poor in 2021 than
| rich in 1547.
|
| It's not just iPhones. Even access to food is dramatically
| better thanks to technology. We no longer have wide-scale
| famines that we used to have in the past that would kill
| thousands. Even in the US, to my knowledge, food insecurity is
| much less of a problem today than it was in 1960.
|
| So I don't see the point in implying that technological
| progress is worthless.
|
| I do think it's correct that the rich benefit from societal
| structures more, but I'd rephrase: the rich are _more capable_
| of _leveraging_ societal structures. Which in and of itself isn
| 't a bad thing, so long as others are allowed a shot at
| utilizing those structures, too.
|
| In other words, the fact that more money gives you more
| benefits isn't something to be sneered at. It's kind of the
| whole point of money. It _should_ make your life better.
| Otherwise it fails as an incentive. What _shouldn 't_ be the
| case, however, is that people are unfairly barred from being
| able to make more money in the first place.
|
| I think we focus too much on equality of outcomes, and not
| enough on the three important questions:
|
| - It doesn't matter who can leverage societal structures the
| most. Kudos to the people who can. What matters tax-wise is,
| who is _stressing_ societal structures the most? An example for
| illustration 's sake: if Amazon is placing an insane burden on
| the road system and causing more maintenance work,
| theoretically they should pay more for that than the rest of
| society does.
|
| - Why don't people have more opportunity to make money? Is our
| educational system failing them? Are there laws and regulations
| that are keeping people down? Is rent-seeking behavior edging
| people out? Etc. This idea that people can't make money because
| rich people are "taking it all" is silly and not the real
| problem.
|
| - How can we raise the floor? How do we make it so being poor
| in America isn't so terrible, and ideally, is okay? We have so
| many problems with rising healthcare and educational and
| housing costs, segregation, crime, etc. Collecting more taxes
| doesn't seem to solve this. Look at SF. One of the most tax-
| rich cities in America. But do we even know how to deploy that
| budget effectively to curb homelessness? It doesn't seem so.
| throwawaysea wrote:
| > "But poor people have iphones now" when people can't afford
| food, healthcare, or any leisure time is the 2021 equivalent of
| "Let them eat cake".
|
| The iPhone is a luxury product within a category of luxury
| products. No one needs a smart phone to be successful in life -
| you don't need it to educate yourself, to find jobs, to do
| work, to entertained, etc. It could be used for all those
| things, but it isn't a prerequisite or the only way. But the
| fact that the vast majority of adults in the US can afford the
| disposable income to acquire such a luxury, a device that we
| could scarcely envision 15 years ago, is a sign of how healthy
| capitalism is. But leaving America aside - consider as well
| that globally, extreme poverty has plummeted under capitalism
| (https://fee.org/articles/extreme-poverty-rates-plummet-
| under...).
|
| People today have greater purchasing power, standards of
| living, and life expectancy than ever before, at every income
| level. To claim that people somehow cannot afford the basics in
| a country where immigrants regularly show up, live frugally,
| grind, save, and find a way to thrive, seems disconnected from
| reality. Instead of blaming the system fully, some blame must
| also be apportioned for those who don't show the personal
| responsibility required to manage their life well. That's not
| insulting, it's just common sense in my opinion.
|
| > Asking the wealthy to pay a greater share to improve society
| is perfectly reasonable.
|
| How is this not explicitly unfair and discriminatory?
| throwaway3699 wrote:
| I think people definitely need a phone. Maybe not an iPhone
| or even a computer, but access to email and internet is a
| must for applying to jobs, paying taxes or... finding out
| where to get Covid jabs.
|
| It's the same way you don't need a car either, but you're
| going to struggle.
| findthewords wrote:
| "But the fact that the vast majority of adults in the US can
| afford the disposable income to acquire such a luxury, a
| device that we could scarcely envision 15 years ago, is a
| sign of how healthy capitalism is."
|
| I take it as a sign of the deflationary nature of technology
| and economies of scale.
|
| Capitalism is a very fuzzy word. I'd say markets and the
| price mechanism clearly work better than barter. Poorly
| regulated capitalism is unhealthy.
| readams wrote:
| The question is, based on standard of living, would you rather
| be poor now or some time in the past? I don't think there's
| anyone who would choose the past.
| majormajor wrote:
| Poor is a loose word, but there are quite a few people I grew
| up with who do basically the same job as their parents yet
| can't afford as much of a house as their parents did at the
| same age and have less future financial security (retirement
| savings, pensions, whatever) as their parents did at the same
| age.
|
| Their TV is bigger, but they're also much more stressed about
| their security...
| vorpalhex wrote:
| I don't imagine it pays well to be a coalmaker or someone
| who makes horse drawn carriages either.
|
| Is the market actually shrinking or just shifting?
| mrguyorama wrote:
| "Things are less shitty now" does not mean things are not
| still shitty now
| dionidium wrote:
| Sure, but it's a perfectly reasonable retort to the claim
| that things are shittier now.
| A12-B wrote:
| It would be, if anyone was making that claim.
|
| Instead they say that because things are better now, then
| you cannot complain.
| jeffrogers wrote:
| Any story about income equality that neglects the distribution of
| income and wealth _within_ the top 1%, isn 't providing the whole
| picture. If you segment that group by ~.1%, you'll see a graph
| that reveals more about the fundamentals of the problem.
| slowhadoken wrote:
| She had me with the history of income inequality and then she
| lost me with "wage gap" talk. Why is a plea for bipartisanship
| always followed by throwing shade at white men? It's wearing on
| me.
| namelessoracle wrote:
| It's the poison pill that Amazon/Walmart/et cetra have injected
| into the conversation to make sure they keep on top. Unless you
| think that all the top 1% have adopted identity politics out of
| the goodness of their hearts? It's just classic divide and
| conquer strategy. It's no coincidence that identity politics is
| so popular with the relatively affluent tech community who dont
| want to take a good hard look at themselves.
|
| I remember seeing a meme the other day about two justice
| systems in America, one black kid getting held for 3 months in
| jail, while a white kid with a more serious charge got out on
| bail immediately. Of course the meme framed it as a racial
| issue. The actual root cause was ya know, the white kid has a
| family who could pay or put up the bail while the black kid
| didn't, which means it was income inequality issue. But it sure
| seems there's a dedicated group that really really wants you to
| think its a racial issue.
|
| And that you should spend your precious time, political
| capital, and energy fighting that racial issue over the wealth
| inequality one. And that you shouldn't ever ever ally with
| someone who would work with you on the inequality issue but
| disagrees with you about it being a racial one, because they
| are an icky nazi.
|
| I wonder what exact group of people benefits from this
| perfectly engineered storm of division?
|
| Trump got elected due to ultimately populist anger over wealth
| inequality. But telling a poor struggling white family that
| they are privileged is a great recipe for them to ignore
| actually prescriptive solutions to their problems and turn to
| people like Trump.
|
| Ultimately, it's wearing on you. Because it's supposed to wear
| on you. It's supposed to remind you what happened to the kulaks
| last time income inequality was addressed. And not so subtly
| remind you that white men are the kulaks of the modern age.
| A12-B wrote:
| What's amazing to me about HN is comments like this don't get
| downvoted, but comments about how maybe we should tax the
| wealthy a little bit do.
| Jochim wrote:
| It's a view that I once held and it's easy to agree with
| reflexively because it appears correct at a surface level.
|
| Poor white people hearing about "white privilege" does
| alienate them, it implies they've failed even with a kind
| of starting advantage and can be taken as an invalidation
| of the hardships they face. Rather than inviting them to be
| empathetic to the additional issues faced by others it
| instead prompts them to be defensive of their own
| difficulties.
|
| When GP frames the issue as one of income inequality and
| not racial inequality, he's partially correct. On the
| surface it is an income inequality problem, but for the
| black community that income inequality is the result of
| wealth inequality that is itself a product of historic
| racism.
|
| The same goes for the wage gap which he's dismissive of.
| The usual argument here is that women simply choose lower
| paid work. But if we look past that surface level analysis
| there are still issues with employers not wanting to hire
| women because they think they might get pregnant,
| underpaying them because they're less likely to complain,
| or whether the types of work performed by women should be
| lower paid in the first place.
| edoceo wrote:
| Kulak is on Wikipedia ""During the Russian Revolution, the
| label of kulak was used to chastise peasants who withheld
| grain from the Bolsheviks. According to Marxist-Leninist
| political theories of the early 20th century, the kulaks were
| class enemies of the poorer peasants""
|
| TIL.
| namelessoracle wrote:
| I think the oxford definition conveys it better "a peasant
| in Russia wealthy enough to own a farm and hire labor.
| Emerging after the emancipation of serfs in the 19th
| century the kulaks resisted Stalin's forced
| collectivization, but millions were arrested, exiled, or
| killed."
|
| IOW. The middle class. Small business owners. People who
| have acquired a tiny amount of capital.
| PeterStuer wrote:
| You were not supposed to notice this transfer.
|
| You were supposed to be fighting each other neck deep in the
| trenches of the culture wars while this was happening.
| [deleted]
| yawaworht1978 wrote:
| And the bottom 90% are told by the reps of the 1% that it will
| trickle down. This is like urinating on their heads and saying it
| is raining.
|
| I remember to be in the global 1% an annual income of 45k usd
| would be the qualifier. However, this is an US centric article so
| the following applies... "To be among the top 1 percent of U.S.
| earners, a family needs an income of $421,926, a new report from
| the Economic Policy Institute finds."
|
| On the bailouts, every time I hear a passionate right winger
| saying the bail outs are necessary, I know they would turn into
| fully fledged communists if it would be the trendy thing to do
| and if that kinda government were in place.
|
| It was never left center or right , people do not care beyond
| maybe closest family. They care about money, net worth, assets ,
| power and status. How they get hold of that was always secondary.
| bmmayer1 wrote:
| Ah yes, the famous cabal of 1 percenters sitting around and
| committing grand larceny as they raid the bank accounts of poor
| people. At least that's what this headline would have you
| believe.
|
| The reality is much more boring. Thanks to "math," they've
| determined that _if the ratio of incomes from 1945-1974 held
| steady_ , the bottom 90% would have "more" than they do now. Of
| course the bottom 90% itself is a fantasy and you can find
| yourself in or out of it many times in the course of a career.
|
| But is it possible that maybe, just maybe, wealth distribution
| isn't a 0 sum game? And maybe being in the bottom 90% is better
| now than it was 40 years ago, because of, I don't know, iPhones,
| next-day delivery for anything you want, telehealth, instant
| access to the world's information, electric cars, and many other
| things that 1 percenters have made for us?
| machello13 wrote:
| > and many other things that 1 percenters have made for us?
|
| Jesus christ, this has to be satire. The people "making" these
| things are not in the 1 percent. We don't have to look up to
| the elites in gratitude because they deigned to give us their
| magical gifts.
| pydry wrote:
| It's of little consolation having the price of your phone
| decline when the price of education, healthcare and a roof over
| your head have skyrocketed.
|
| Even if that were not the case, it's abundantly clear that
| geometrically increasing consolidated economic power is being
| translated into consolidated raw political power (which is zero
| sum). The events of the last few months and history in general
| have proved that this is very, very dangerous.
|
| We couldn't play flappy birds on a mini computer in our pockets
| in 1970, though, so I guess that makes all that r>g and
| compound interest accumulating in 0.1% pockets worthwhile.
| fiftyfifty wrote:
| It's interesting that the 3 things you give as an example
| have sky rocketed in cost not because of the 1%, but mostly
| due to government interference in the free market. Government
| backed loans have driven up the cost of education and
| housing. Local governments limiting housing construction have
| further driven up the cost in many areas. Government created
| monopolies like the AMA have driven up the cost of
| healthcare.
| jackson1442 wrote:
| Exactly this. As a college student looking at the outside
| world, I'm truly seeing how fortunate I am to have a family
| with the means to support me through my education. Pre-
| scholarship, my tuition bill comes out to > $10k per year
| (and that's not counting things like housing, and freshmen
| need to live in the dorms with a dining plan... that's
| another $10k that doesn't include the summer or winter
| breaks). The total estimated cost for an on-campus student is
| $25,000 per year.
|
| Looking at the value of my family's house, it's increased
| almost 40% in three years which seems like it's an insane
| amount of growth for any asset. Education and houses just
| seem like they're unreasonably expensive at this point and I
| honestly don't know how you're expected to break into this
| market without already owning a house or something along
| those lines.
| Pfhreak wrote:
| Wealth is obviously not a zero sum game. And of course the
| comforts of even the poorest have increased over the past half
| century.
|
| But don't discount out of hand the concern that the relative
| distribution is a problem. Money, and especially money that is
| capital, almost algorithmically and naturally captures more
| money.
|
| The trend line then becomes one where more and more wealth is
| concentrated at the top, even if the total amount of wealth
| increases.
|
| Wealth, at some level, is the ability to direct labor. As
| wealth becomes more concentrated, you have fewer people
| organizing the world's labor power. It becomes harder for the
| poorest to engage in self determination.
| RIMR wrote:
| >But is it possible that maybe, just maybe, wealth distribution
| isn't a 0 sum game? And maybe being in the bottom 90% is better
| now than it was 40 years ago, because of, I don't know, iPhones
|
| Telling homeless people that they are better off than the
| middle-class 40 years ago because they have a smartphone is
| basically the 21st century equivalent of "Let them eat cake".
| [deleted]
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