[HN Gopher] Never mind the 1 percent: Let's talk about the 0.01 ...
___________________________________________________________________
Never mind the 1 percent: Let's talk about the 0.01 percent
Author : arcanus
Score : 110 points
Date : 2021-05-28 20:14 UTC (2 hours ago)
(HTM) web link (review.chicagobooth.edu)
(TXT) w3m dump (review.chicagobooth.edu)
| gher-shyu3i wrote:
| Why is anyone surprised? This is the natural outcome of an
| economic system based on usury, gambling, fake money, and that
| has no built-in way of "trickle down" economics. Islam has solved
| this problem over 1400 years ago by having a proper foundation
| for economics, plus its Zakat laws.
|
| Keep this in mind next time you hear any politician pretending to
| offer a solution to the problems of student debt, mortgage
| crisis, inflation, etc. They will not offer real solutions, just
| fake ones to get votes.
| selimthegrim wrote:
| You've posted this like 15 times and yet have failed to define
| what this proper foundation is beyond ostensibly banning the
| time value of money.
| gher-shyu3i wrote:
| Islam recognizes the time value of money, just do it in a
| proper manner. Invest in a business and get a return.
| Purchase property and rent it out and make a return. There
| are many ways to make money that do not involve usury or
| gambling.
| burkaman wrote:
| Isn't the Saudi royal family among the richest on the planet?
| gher-shyu3i wrote:
| What does that have to do with following Islamic finance
| practices? The Saudi government does not fully apply Islamic
| law, e.g. they allow usurious banks to open, as well as other
| things not worth getting into for this discussion. The Saudi
| government is not a reference for Islamic law.
|
| Secondly, being rich is not prohibited in Islam.
| cjtrowbridge wrote:
| The blip or basis point.
| the_cat_kittles wrote:
| since i dont see it here in the comments- my opinion is the
| marginal tax rate should be very high when you get to this point
| of income, and the money should be redistributed via services,
| credits and direct payments (maybe?) to poorer people, since its
| shown very clearly in the data to result in longer lifespans,
| better mental health, and an improvment in economic activity
| (though the last thing i dont care much about). curious what
| people who disagree with this general approach have to say about
| it.
| tastyfreeze wrote:
| The biggest problem I have with that is that taxes for the rich
| have a history of becoming taxes for all. I want to see less
| wealth being consumed by government and more of it staying in
| the hands of the people that created it.
|
| I would like to see a flat tax rate with a negative income tax
| for people below a certain threshold to replace welfare. Flat
| tax to treat everyone equally and negative income tax to
| shorten the tail on the left of the curve.
|
| But, that is me. I don't have a problem with some people having
| vastly more wealth than me. They are still citizens that should
| be treated as equals under the law.
|
| I would really like to see the 16th Amendment repealed and
| government return to being funded by import/export tariffs. A
| flat tax with a negative tax on the low end is a compromise in
| my mind. I don't see the 16th Amendment ever being repealed but
| I do want to see tax code simplified, people keeping their
| income and less redistribution through welfare. That is not
| something that government should be doing. Sending more money
| to government is a bad investment.
| paulpauper wrote:
| You can do those things without having to tax the rich more.
| The treasury printed trillions in covid aid yet income taxes
| will not have to go up to pay for it. Inflation just budged a
| little. Bond market still holing well. Same for the US dollar.
| tastyfreeze wrote:
| Inflation takes years to fully emerge. And income taxes
| absolutely will have to go up to pay for it. It is not
| possible to print prosperity the same as it is not possible
| to tax our way to prosperity.
|
| Interestingly, printing money exacerbates wealth inequality.
| The people closest to the printer get to enjoy the fresh
| money before inflation hits the broader economy.
| pdonis wrote:
| _> my opinion is the marginal tax rate should be very high when
| you get to this point of income, and the money should be
| redistributed via services, credits and direct payments
| (maybe?) to poorer people_
|
| The problem with this is that the government simply can't do it
| effectively. We had marginal tax rates that high in the past
| and the revenue didn't get redistributed to the people who
| really needed it. It got squandered in pork just like it always
| does.
|
| Charity and helping those who need it is a fine thing, but it
| has to be done by people who will actually do it right. Whoever
| that is, it isn't the government.
| personjerry wrote:
| "The 1%" was never a literal number. It's the idea that the top
| whatever percent of people have disproportionate wealth compared
| to the rest. I appreciate that this article wants to draw the
| line somewhere more precise, but for most purposes I don't think
| this changes anything.
| elliekelly wrote:
| This article is literally from "the Chicago School" famed for
| their free-markets solve-all economic philosophy. They have a
| long history of pushing economic theory and policy that
| disproportionately benefits the 1% and this article is no
| different.
|
| If anything I'm somewhat pleased to see the Chicago School has
| passed the denial stage and moved on to bargaining vis-a-vis
| inequality.
| burkaman wrote:
| Seriously, this is so shameless. "Never mind the 1%" feels on
| par with "these aren't the droids you're looking for". "Sure
| the 1% make a lot, but if we make the graph go to FORTY
| MILLION, look how tiny it seems!"
| eloisant wrote:
| I think the interesting point that the article is doing is
| that contrary to the common assumption the revenue of the
| 1% didn't grew that much in past decades, however the
| revenue of the 0.01% really exploded in the same period of
| time.
| paulpauper wrote:
| _If this is true, the 0.01 percent are most likely benefiting
| from what economists call "skill-biased technological change"--
| the increasing return on certain skills in an economy driven by
| technology and globalization. Under this well-established theory,
| a shortage of in-demand skills raises the value of those skills
| in rapidly expanding markets, and new technology helps some
| workers' productivity grow much more than others', exacerbating
| inequality._
|
| a net worth of $300+ million dollars is more than skills. I think
| skill is a necessary but insufficient condition.
| anigbrowl wrote:
| For sure, but if you own a skills-centric business and can
| capture more of the productivity gains than your employees then
| you can laugh most of the way to the bank.
| rkk3 wrote:
| Accounting for inheritance and divorce, it's not even a
| necessary condition.
| ChrisArchitect wrote:
| (2017) !
| paulpauper wrote:
| even way richer now ..look how much stocks have surged since
| covid
| danielodievich wrote:
| I read The Economist which every year publishes their list of
| notable books. That is how I found Kleptopia: How Dirty Money Is
| Conquering the World by Tom Burgis of The Financial Times. That
| book describes how the richest people get there (mostly through
| ill gotten means) and what they do to hide money (lots and lots
| of real estate)
|
| WaPo review https://www.washingtonpost.com/outlook/trump-among-
| the-klept... The Economist review
| https://www.economist.com/books-and-arts/2020/10/08/two-book...
| (might require login)
|
| Small quote from The Economist that does a wonderful job
| summarizing why this book is very good:
|
| _"Kleptopia" is wonderfully if grimly entertaining, replete with
| tales of Zimbabwean thugs, late Soviet gangsters and kgb
| officers-turned-entrepreneurs, as well as a Romeo-and-Juliet
| romance between the children of rival oligarchs. Mr Burgis's
| depiction of the interlocking worlds of post-Soviet business and
| politics captures the way corruption binds together economic and
| political power. He meticulously demonstrates how, once overseas
| money enters Britain (attracted by the protections of its legal
| system), the associated power struggles and skulduggery follow._
|
| Except it is not just Britain, but also us here in USA -
| countries that he touches include USA, Canada, France, Italy,
| Spain, Colombia, Congo, Zimbabwe, South Africa, Ukraine, Russia,
| Kazakhstan, China and both Koreas.
|
| It was a fast and furious read that made me REALLY angry at
| times. It does not have a happy ending:
|
| _America and Britain, he thinks, are ever-more like Ukraine,
| Russia and Kazakhstan: "Like a parasite altering a cell it
| invades, so kleptocratic power transforms its host."_
|
| Highly recommend as a serious, if depressing read.
| narrator wrote:
| Kleptocracy is more blatant in Russia. Many business owners are
| jailed once their business gets to a certain level of success
| and they don't sell to the local political/business mafia. This
| isn't really the case in western countries where the big
| players aren't sharing their profits with government officials
| and have plenty of money to buy companies at market rates.
|
| https://www.bbc.com/news/business-13546177
| jollybean wrote:
| This is a different problem.
|
| Gates, Zuckerburg, Musk and Thiel are not Kleptocrats.
|
| Frankly, neither are the Walmart children.
|
| There are soft parrallels and kleptocracy does exist.
|
| But this issue is about power asymmetry and markets etc.
|
| It's a systematic problem.
|
| The 'big problem' is that a lot of small fish in the top 20%
| are making 'some money' from stocks, and will push back against
| rectifications, all the while not realizing that though they
| are 'getting a better deal than the bottom 80%' ... those above
| them, i.e. the 5%, 1% and 0.1% are getting gigantically better
| deals.
|
| The 0.1% is screwing over the 1% as bad as the 1% is screwing
| over the 10% as bad as the 10% is screwing over the middle
| class as bad as the middle class is screwing over the working
| class.
|
| I feel that this is true, and the 'natural result' of a system
| in which everyone believes they are 'doing much better than
| those below them' - but have no insight or information into the
| layers above to grasp how bad they are being screwed.
|
| Middle class don't quite understand Doctor/Dentist pay, who
| don't understand Executive/Banker pay, who don't quite
| understand mega wealth income.
|
| In Monaco, you can tell what 'class' people were by looking at
| them, and even if you wore a $2K suit, and were a high paid
| banker, you 'had a job' meaning you were still 'working class'
| to the 'true elite' there.
|
| And by the way, the other greatest source of inequality is
| housing.
|
| Everything I just said about housing is even more true: the
| first time owners think they are making bank, without realize
| the middle class is making more, and those with $3M homes even
| more.
|
| When everyone is making more from their property investments,
| which are not productive, then the people paying the price are
| those with the least leverage, i.e. working class.
|
| But politics is what it is, and you can basically never attack
| the working class - while they are sympathetic to the 'working
| class', they're not going to actually really want to give up
| massive benefits - and - working class people are less likely
| to vote. This is a huge systematic problem in Canada right now,
| with the government pandering hard to 'middle class' who are
| effectively leveraging themselves over working people with
| money-printing that is being plowed into homes. It's not
| productive, it's just rearranging deck-chairs, with 1 more
| chair going up the stack every time they are rearranged.
| 627467 wrote:
| ...and all this has been possible without crime-enabling
| cryptocurrencies
| actually_a_dog wrote:
| ...and the fact that these things happen without the aid of
| cryptocurrencies is not an argument that cryptocurrencies
| won't further enable these things, if that's what you're
| getting at.
| seibelj wrote:
| Bu bu bu tether something something
| xyst wrote:
| Anybody else think of Mr. Robot as you were reading this?
| thrusong wrote:
| I certainly did: "The top 1% of the top 1%, the men who play
| God without permission..."
| anigbrowl wrote:
| Although this looks like quite an interesting article, I gave up
| reading it because of the awful graphs. Surely people eager to
| analyse this issue can read a logarithmic scale, which would
| provide valuable clarity and context.
|
| I'm familiar with the issues in the article and understand the
| desire hook reader's attention by pointing out income disparities
| as dramatically as possible. Still, once a reader is engaged then
| a more technical presentation allows them to get more value from
| the article and better equips them to discuss or debate the
| issue.
| pvm3 wrote:
| (2017)
|
| Previous discussion:
|
| https://news.ycombinator.com/item?id=21670462 (2019)
| paulpauper wrote:
| Why stop at the top .01% , which is still only $19 million. How
| about the 10-50 richest people in the US if you want to get
| really granular.
| rkk3 wrote:
| The conflation between income and wealth in policy papers like
| this confuses me.
|
| Income is not the rate of change of wealth. Wealth can appreciate
| significantly without being reflected in taxable income.
| comboy wrote:
| But how would you measure it? The most objective way of
| measuring value when you are exchanging it to something else
| i.e. transaction, if you have real estate it can appreciate in
| value but if you sell it, or rent it, then you pay tax based on
| that transaction.
|
| It would be great if consumption and not income could be taxed
| though (not easy).
| rkk3 wrote:
| > But how would you measure it?
|
| Calculating wealth is hard, but they already do that. If you
| have numbers for wealth over time, take the rate of change.
| comboy wrote:
| They estimate that and wealthy know all about it. There is
| no equation for calculating value of a piece of art.
| dane-pgp wrote:
| What would happen if a country decided to ban the sale of
| any piece of art for more than $1 million?
|
| An exception could perhaps be made for sale on the death
| of the registered owner, and sale to public galleries.
| dasil003 wrote:
| Usually I have the same reaction, but this article in
| particular actually does a good job of distinguishing and
| showing a lot of different cuts such as change over time and
| slice average versus percentile thresholds. It actually
| directly addresses a lot of questions I've had for years and
| never seen expressed as clearly.
|
| Right at the top the terminology clearly delineates the two:
|
| > _These economists have been seeking to measure income
| inequality and wealth inequality, and to understand the nature
| of the 1 percent's income and assets._
| rkk3 wrote:
| >this article in particular actually does a good job of
| distinguishing
|
| I read it before I posted, and I think that by presenting
| wealth and income together, they are conflating them. The
| terminology is nice, but it is not backed up by the content.
|
| For example how much of the wealth comes from income? I
| imagine a significant portion has not been recognized.
| Someone could be self-made and have billions in wealth but
| only a fraction of that has been recognized as income.
| dkokelley wrote:
| Is there a measure of affluence that captures lifestyle,
| income, and assets? Something like: Change in
| overall net worth - consumption
|
| It seems there are so many ways to capture what "wealthy"
| really means. Some edge cases that challenge my understanding
| of wealthy:
|
| 1. I could make and spend $1m/year and have a net worth of $0.
|
| 2. I could earn $1m/year and consume $20k
|
| 2.1 I could donate the difference and have a net worth change
| of $0
|
| 2.2 I could save/invest the difference and grow my wealth
|
| 3. I could make $1m and have my $1m investments go to $0,
| leaving no change in my net worth (aside from that year's
| consumption)
|
| 4. I could make $0 and have my investments grow by $1m
|
| 5. I could have a net worth of $0 but earn $1m/year
|
| 6. I could make $10m/year but have my $100m investments go down
| to $50m, leaving me $40m poorer, but still be both a high
| earner and high net worth individual.
|
| Also, debt factors in to these.
|
| All of these variables move, and the definition of "rich" seems
| to be an ill-defined function of: - Income (from all sources) -
| Net worth - net worth change - Consumption/lifestyle - Debt -
| Other (connections, access to capital, creditworthiness)
| wangii wrote:
| It reminds me a sci-fi story in which the society reaches the
| final stage (ultra-capitalism) that the 1 person (the ultimate
| capitalist) owns 99.99% of the assets, and the rest lives in his
| mercy. Fun read, and our days are numbered!
| arrow7000 wrote:
| It's a short story published in Cixin Liu's The Wandering
| Earth. It was a great read.
| usrusr wrote:
| Seems like every system that achieves apparent stability but
| with a stable trend in only one direction will eventually reach
| a cathartic overturn. Population growth under absolute resource
| constraints, that interlocking network of pacts prior to ww1
| that for a while looked like a mechanism for peace. And wealth
| concentration? What you need for stability beyond that horizon
| is some form of control valve.
|
| I've recently started diving into the "what if" of a
| hypothetical society that used some kind of "financial lynchmob
| ritual" as an institutionalised check to infinite wealth
| concentration: it would be limited in rate, e.g. one property
| nullification per year per 100 million inhabitants. It would be
| open nomination, secret vote, "winner" would get stripped of
| every property and contract, perhaps with some generous
| lifetime pension in return. It would basically be like an
| inverse bankruptcy, just concentrated on one creditor instead
| of one debtor. The rate-limit would make sure that it wouldn't
| devolve into an ever accelerating tall poppy hunt, but it would
| be enough to force a requirement to be not disliked too much on
| the 0.0001% rich. This could have massive benefits, way beyond
| the direct spoils of occasionally nationalizing some Oracle or
| Facebook or Aliex. What would be its unavoidable failure modes?
| Lots of mud-slinging between the super wealthy, that wouldn't
| be pretty. Lots of defecting into other countries, for sure,
| but let's assume some total hegemony for the sake of the mind
| experiment. Seclusion, most rich and powerful would be more
| invisible than they already are. Chances are you'd eventually
| have a caste of super rich that keep an extremely low profile.
| Perhaps even secretly pulling strings for some exceptionally
| visible and unlikeable dickheads to somehow stumble into
| wealth, as a caste of sacrificial decoy rich. And the success
| of those, until eventually stripped, would make others try to
| emulate them. Perhaps that would be the failure mode?
| fxtentacle wrote:
| "Do we slow the 0.01 percent or lift the 99.99 percent, which
| could be a heavier and more complex assignment?"
|
| I always find it odd that these articles pretend that you can
| educate everyone well enough to earn a middle-class job. I
| believe it's more like a Red Queen race, meaning that as soon as
| you increase the average education of potential employees,
| companies will equally raise their requirements.
| missedthecue wrote:
| In the US at least, there is more that needs to be done than
| getting greater numbers of people through the degree mill. Some
| examples -
|
| - 50% of inner city school kids will not graduate high school.
|
| - 2/3 of the prison population is functionally illiterate.
|
| - 75% of the prison population did not finish high school.
|
| - 19% of the US population cannot read a newspaper. Nearly all
| of them earn incomes at or below the poverty level.
|
| The situation is the same in European countries as well. Italy
| has an extremely high rate of functional illiteracy. (Some
| estimates peg it at 47%) How can people be expected to live
| healthy productive lives when they cannot effectively
| communicate in written language?
| psychlops wrote:
| 50% of the population in the US is below average.
| psychlops wrote:
| This is the correct observation, although the education is only
| one small part of the article (and sometimes even useful for
| jobs). Wealth redistribution would work the same way.
| burkaman wrote:
| Also seems to ignore the fact that the simplest way to lift the
| 99.99 percent is just to give them some of the 0.01 percent's
| money.
| donmcronald wrote:
| I don't agree with that. I definitely think the super rich
| should have a huge portion of their wealth redistributed, but
| giving it directly to people is a bad use.
|
| I think it would be better to invest in solid infrastructure,
| education, healthcare, affordable housing, rehab, crime
| reduction, etc. so that everyone has a legit chance of
| improving their standard of living. There are some really
| hard, poverty skewed cultural problems that need to be solved
| and simply giving people money isn't going to do that.
|
| The benefit of investing in all of those infrastructure
| related things is that it creates jobs for people that want
| them. Hopefully enough people fight their way out of poverty
| that the next generation will have people with the knowledge
| base and skillset to improve things even more. I honestly
| don't think we're going to get a solution to poverty, petty
| crime, etc. until we're able to engage a lot more people that
| have lived in that world. Our supposed "leaders" just don't
| understand it well enough to come up with viable solutions.
|
| The biggest hurdle is filling the government with people that
| actually care and want to improve the world as a whole. I
| don't know if that'll every happen :-(
| kiba wrote:
| Giving cash directly does work, but it is a part of a
| solution in resolving a larger problem, like getting out of
| the car dependent suburbia schema that is considered
| unsustainable.
| donmcronald wrote:
| It's dependent on the person you're giving money to.
| Giving a drug addict money won't make a difference for
| anyone except the drug dealer that's going to end up with
| the cash.
| pdonis wrote:
| _> the simplest way to lift the 99.99 percent is just to give
| them some of the 0.01 percent 's money_
|
| No, the simplest way is for the 0.01 percent to _pay_ them to
| do things, not give them money.
| zorpner wrote:
| That is trivially not simpler.
| pdonis wrote:
| Sure it is. People pay other people for goods and
| services all the time; it happens naturally and is
| simple. Forcibly taking money away from some people and
| giving it to others is not natural or simple: it takes a
| huge, bloated government bureaucracy, which does a
| terrible job at it anyway.
| supernova87a wrote:
| If this is the new age of robber barons, where is all the money
| going? Or being physically manifest? In the age of Rockerfeller,
| etc. they built mansions that other people could envy/detest and
| see the excesses. Where is all the money in this new class?
| aazaa wrote:
| In financial assets.
| newsclues wrote:
| https://www.mansionglobal.com/articles/mark-zuckerberg-buys-...
| oblio wrote:
| There was a funny article a bit later after he bought that
| property, related to one of his comments.
|
| "Zuckerberg comments that people do not really need privacy
| anymore while buying himself a Fortress of Solitude" :-)
| dogsgobork wrote:
| Zuck's trying to catch up to Larry Ellison who owns nearly
| the entire island of Lanai in Hawaii.
| [deleted]
| canadianfella wrote:
| You mean that?
| [deleted]
| u678u wrote:
| https://www.superyachtfan.com/lists/biggest-yachts
| https://robbreport.com/motors/marine/largest-yachts-2837827/
| elliekelly wrote:
| Mars Missions are the new Newport Mansions.
| qntty wrote:
| Mostly equity is large corporates. In other words, power.
| cm2187 wrote:
| Rocket programs.
| menzoic wrote:
| Private Islands
| kokanator wrote:
| Consolidation of finance is the consolidation of power. These
| two have always walked hand in hand with very few exceptions (
| ie, Gahndi ).
|
| Currently, the consolidation is occurring in financial vehicles
| and global corporations. ( a new kind of colonialism )
| potatoman22 wrote:
| How is that a kind of colonialism? In addition, what's your
| definition of colonialism?
| kokanator wrote:
| >How is that a kind of colonialism? In addition, what's
| your definition of colonialism?
|
| It is a bit of a questionable correlation I would agree.
|
| Global corporations enter countries and begin to hold sway
| and control over the local governments. Though there is no
| settlements there is a strong financial force entering the
| countries. I know this isn't new but technology has
| compounded the effect.
|
| Think the Arab Spring ( a lot would agree this was a good
| thing, its just an example ). This effort was
| mobilized/made possible by technology firms that entered
| those countries allowing them to place large pressures on
| the systems and change them. Good or bad is not the
| argument the question is if the external corporations were
| able to sway the direction of the countries.
|
| In addition, I once heard a very famous investor from Omaha
| state they are able to sway the economic futures of
| countries. ( Hopefully they are benevolent in this )
| spoonjim wrote:
| Colonialism = guys with guns come from somewhere else, land
| in your backyard, and give you orders. The only difference
| now is that the guys have money instead.
| AnimalMuppet wrote:
| That's... kind of always true though? If you want
| peoples' money, you have to give them what they want.
| IAmGraydon wrote:
| Are you being serious? It doesn't take much searching to find
| many, many examples. Here's one.
|
| https://www.bloomberg.com/news/features/2021-05-07/jeff-bezo...
| burkaman wrote:
| I mean, they're still building enormous mansions. It might be
| less public now, because now they can afford to buy so much
| land around the mansions that nobody can see them. Also, since
| travel is so easy now, it might be more attractive to buy 100
| luxury apartments around the world and a few private jets to
| get between them.
| Animats wrote:
| Green Gables, 74 acres in Woodside, CA, is for sale again, if
| anyone has US$135M.
|
| Who lives here? [1]
|
| [1] https://earth.google.com/web/@37.45398166,-122.30164715,2
| 04....
| nikanj wrote:
| Nobody lives in the luxury houses, they're just a
| convenient way to stash away money.
| [deleted]
| Animats wrote:
| Land. Bill Gates owns 242,000 acres of farmland. Jim Bezos owns
| 420,000 acres, mostly in Texas. John Malone owns 2.2 million
| acres. None of them made their money in land or farming.
| spoonjim wrote:
| 242,000 acres of farmland is very little.
| evdubs wrote:
| It's 378 square miles. For comparison, Rhode Island is
| 1,214 square miles.
| gre wrote:
| Bill Gates is the largest landowner according to some recent
| articles. So how much does he really own, or is only
| _farmland_ considered?
| spoonjim wrote:
| Same stuff: huge houses, harems of mistresses, private islands,
| luxury boats, private jets.
___________________________________________________________________
(page generated 2021-05-28 23:01 UTC)