Rich people having too much wealth is not necessarily that bad a thing because most of the investment is in productive companies.
It’s not like they are using their wealth on frivolous consumption. Which means redistribution would only change who controls the investment and not the actual consumption patterns of people. Implication is that poor people will consume the same as before after redistribution with perhaps some extra assets.
So nothing materially changes other than some security. Poor people will continue to consume the same as before.
Bigger problem is it’s not so clear that redistribution is necessarily a good thing because I feel the people who made money are more likely to make better decisions on their own companies.
I don’t know how companies would fare if for example Amazon were redistributed and run like some public company.
There are a couple of nuanced issues with what you are saying.
1. In our current political system, wealth translates into political power, which can (and is) used to change laws to secure more wealth - just look at the portfolio performance of members of US Congress. Democracy is about putting political power in the vote.
2. Many if not most of our important problems are beyond the ability of one person (or a small group) to tackle - climate change, food security, etc. Having wealth more distributed means that more economic participants are involved in deploying it, and thus greater predictive power per dollar spent.
The fact you want to keep the current distribution, without considering that it could help many people if changed is a bit ignorant. Just because (without any indication why) you feel that the ones in control are doing well. I'm not seeing substance for these arguments when based on your feelings and presumptions. I wonder how many poor people you've really interacted with.
These sentiments are popular on Hacker News. For the readers: Consider that a few out-of-touch tech people who believe that rich people are some kind of genius, and that that is why they manage money is a circular argument.
Disclaimer: I'm a successful software engineer that wouldn't mind paying more taxes, if the rich paid their honest part.
I’m asking you very clearly how poor people’s consumption would change if you taxed the rich wealth?
The wealth is zero sum - you have to take away investments from Amazon etc and drive it into other places. That means Amazon will be smaller, employ fewer people and produce lesser. Why do you think that is necessarily a good thing? If you think that it is, then you can also stop the NASA program and drive all funds to poverty.
You're eliding the distinction between people and businesses. There's no reason Amazon the company would have to be smaller simply because the Bezos fortune was distributed among more people. It didn't get 50% smaller or employ 50% fewer people when he got divorced and had to split the marital property.
Fair point. Let’s take McKinsey and her woke charities. She sold Amazon shares and drove it into the charities. The charities are now consuming more. So there has to be equal decrease somewhere else right? People are consuming equally less somewhere else to allow for extra activity in charities.
You might think this is a nitpick but this is my main argument. If you redistribute Bezos wealth to poor people, there has to be equivalent reduction somewhere else.
I see this argument often but for me it misses something.
The difference is about power. The wealth being this concentrated means the power is concentrated.
If people are okay with the idea of an ETF, or a wealth manager (or any type do fund manager/investment bank) then they should be okay with sovereign wealth funds/national ETFs that provide dividends with a guaranteed single share single vote setup.
If you want competition, then the US government used to be good at creating and sustaining artificial compétition in military procurement - similar to how Amazon let's teams compete on the same projects internally.
Because the competition would be artificially and enforced by laws, there's just as much as potential for massive efficiency gains as there is potential for corruption (the Norwegian national wealth fund has gone swimmingly for them)
I agree with power argument but let’s not assume that this will solve any material problem with the poor. Sure they will have more “power” or say in how money is invested but they are consuming as per before.
I also think there are problems with having poor people have a say in how money should be invested. I think Bezos has a better say in how Amazon should run rather than random people.
2) "Investment in productive companies" now either goes to:
a) financial instruments that exist for pure wealth extraction/multiplication in form of being a landlord, private equity, REITS, etc.
c) stock market which is eaten by AI-adjacent companies which primary incentive is job displacement.
Neither of these seem to bring any >actual< benefit to the society in terms of living standards, health, food quality, personal independence, psychological well-being, stability, etc.
The idea that wealthy make decision beneficial to wider audience is as outdated as trickle-down economics. Both are false.
1) you are damn right that top 10% consume as much as bottom 50 or whatever. Let’s be clear that taxing this bunch of people even more will have disastrous consequences. I’m okay with it if it works out. Top 10% includes everyone pretty much in HN.
2)
a) PE is owned mostly by pension firms that the public has a huge stake in. Billionaires have stake mostly in their own companies rather than in PE firms.
b) AI investment for job displacement is necessary for overall prosperity and efficiency.
> Let’s be clear that taxing this bunch of people even more will have disastrous consequences.
?
> Top 10% includes everyone pretty much in HN.
I would suggest you take more caution with statements like that. There are people who read this page and don't have much luck in life. And foremost, what does HN mean in the scale of society? Should HN commenters high five and carry one because the are not the bottom part of the society?
> AI investment for job displacement is necessary for overall prosperity and efficiency.
AI will boost efficiency at expanse of society. I will give you some random examples to ponder about, maybe it will touch some people hearts:
1) What will happen to hundreds of thousands of managers and office workers in the US and EU who built mortgages and families when economy recovered after COVID if AI wipes out their jobs?
2) What will happen to hundreds of thousands of people in English-speaking counties in Africa who earned they daily bread by providing remote help desk services when AI takes heir jobs?
3) What will happen to hundreds of thousand of CS grads in India whose family spent life savings to give them "good" education in Bangalore when AI takes their jobs?
These and many more changes happening rapidly all at once?
> Let’s be clear that taxing this bunch of people even more will have disastrous consequences.
Clearly, it's a good thing that literally every US tax law passed in the last half-century has reduced taxes on the wealthy then.
I don't think anyone's asking to return to the pre-Reagan era where the top tax bracket was 90%, but rolling back some of the absurd tax cuts in the Bush and Trump eras only make sense, given how much they ratcheted up deficits while doing absolutely nothing to improve the economy.
No one is saying the rich shouldn’t exist. But there is a point where so much accumulated wealth is counter productive. The fact trillionaires will exist is mind boggling.
Eventually everything from vehicles to housing will be rented to us as a way to extract the little wealth that’s left. Or layered subscription services. These aren’t great corporate ideas they are extractions of wealth.
In the absence of regulation, with these levels of inequality - democracy becomes a facade. Whatever the few oligarchs want - happens, no matter if people like it or not.
And yes, redistribution is one solution, and it does work. You just have to repeat it regularly.
There are also other solutions - like strong regulations on influencing public opinion/legislation with "lobbying", propaganda, media ownership and ethical journalism etc.
For one example - USA has neither regulation nor redistribution - so it became an oligarchy.
How does redistribution solve material problems with the poor?
My post says exactly that it is zero sum - you have to take away investments in big companies and drive it into perhaps unproductive places. It’s not so clear that this is a good thing.
1. It isn't 0-sum (see the effect of Henry Ford paying his workers more for 1 obvious example).
2. But that's irrelevant, because the reason some people are poor is not lack of resources in the whole economy. We have way more stuff than we need even if it was 0-sum
3. Also I wasn't even talking about eliminating poor people, I was talking about ensuring poor people have a say in what the society does.
It is zero sum unless you can prove that redistribution will increase productivity. If you can prove it then it is an obvious thing to do. It actually isn't that obvious otherwise we would see more productivity from western Europe.
>But that's irrelevant, because the reason some people are poor is not lack of resources in the whole economy. We have way more stuff than we need even if it was 0-sum
Redistribution doesn't need to increase productivity, it suffices that it increases consumption for the economy to grow, if that's your only goal (it isn't the main goal for me).
Basically if you have the same amount of money in economy, but you double the number of transactions - economy will double too (assuming same distribution).
Money naturally accumulate. If you redistribute it - it starts moving again, and with each transaction something is produced.
That's why redistribution usually increases GDP.
But - the goal shouldn't be growing economy. The goal should be preventing oligarchy.
> That's why redistribution usually increases GDP.
It also raises prices until the same amount is done. A plumber might work extra hard when he gets more work than normal, but will burn out if he continues to work like that so he raises his prices until he has to work just like before.
I agree with your problem assessment, but it’s been known since the Greeks that democracy inevitably ends in oligarchy. It’s why the US did not start out as a democracy as the founders knew this as well.
And if you think about it from first principles, of course it’ll end like that. Mass groups of people are easily manipulated by a smaller group. Cambridge analytica is the modern form of this but it’s happened for centuries. You say regulation, but who writes and enforces that regulation? The oligarchs.
This gets uncomfortable when you look inward and start to question “why do I have this idea in my head that democracy is an objective good thing for society”. The same oligarchs benefiting from democracy write the history books, own the media, etc. Elon musk knows exactly what he is doing and is laughing with the other billionaires at us.
No, my reasoning is small groups can easily control large ones. There are tons of books on the failures of democracy throughout history. Here’s one from obamas summer reading list:
I can also dig up the quote from (Socrates I think?) a greek philosopher making the same argument thousands of years ago. Unlimited democracy ends in oligarchy. Look at how easily controlled you are - you didn’t respond to any of my points and simply said “well if everything keeps breaking we can just try again” instead of questioning why things are breaking. You’re carrying weight for billionaires for free.
Frivolous consumption would be a better thing than dumping more money into “productive companies.” Apple becomes a trillion dollar company and did that uplift the world at all? Not really. People at the top got rich. What is there to show for it but ewaste. Slave labor. Lithium mining. Data center pollution. A race to what, I’m not sure. They will spend it on lockheed stock to diversify. Missiles with swords. Bombs. Dead people. Wars to justify more bomb production. Arms races that amounts to lighting money on fire because wwiii will never happen since everyone is so globally overleveraged. Diversify into oil. More pollution. Human rights abuses. The worst leaders in the modern age rich beyond wildest imagination free to slaughter journalists and have the world look the other way after a few months of wagging a finger.
At least when they blow their money on some iberico ham a farmer somewhere keeps his livelihood. An expensive cocktail and a 200 year old distillery keeps its doors open. $100 tip on valet directly into the local economy. Live in housekeeper providing for their children.
Productivity is a cult. Why are the most “productive” things the most dehumanizing? What are the true great works of this world? Most reasonable people would say trying to help the poor, cure disease, save the environment. All things private investment has deemed insufficiently productive over some machiavellian horror.
The concentration of wealth isn’t a problem so much for poverty, because without doing something to increase the production of things people need, having more money would just result in higher prices. Like you said, the 0.001% aren’t consuming half the world’s food production, so redistributing there money alone would not solve world hunger.
A bigger problem as that fewer and fewer have any say in the direction of society now. That concentrated investment means they get to shape the world we live in. Years ago I had a more libertarian mindset about that as well. “They’re more likely to make better decisions with it because they made the money to begin with.” I no longer feel that way. It increasingly looks like the most wealthy are happy to destroy the world for everyone in their quest to become ever more elite.
I agree with your overall position but I disagree on the first point.
Wealth is ownership, ownership is control of value. Allocating more (not all) value away from SaaS companies and into food security or education is a good thing and would make things better for everyone.
> Allocating more (not all) value away from SaaS companies and into food security or education is a good thing and would make things better for everyone.
You are already doing that with your votes, the American government is already investing massive amounts into education and food security. Private investments would never do this, even poor people wouldn't invest in poor ROI endeavors, poor people invest in the same things as rich people they just invest less, so the wealth of the rich doesn't matter.
The American government gets that money from taxes. If wealthy people are using that wealth to avoid taxes and put the burden on to the worker then the worker is being hurt twice - first by the lost power in their vote, and second by paying an unfair share of public infrastructure costs.
It's not about what non-0.001% people invest in, but what they spend on. More evenly distributed wealth would mean more money for people to spend on education, food security, and housing, which in turn would spur increased production of those goods. Below a certain wealth threshold, people aren't putting every additional dollar into "investments" in the financial sense of the word. There's more ROI by sending your kids to college or moving to a better neighborhood.
I agree with that. I only mean that it’s not as simple as “if we gave everyone Elon’s money then we could all afford homes.” But you’re right, the higher concentration of wealth means there’s less investment into producing more resources that people need, so indirectly it does mean there are less homes to go around.
I do agree with what (I think) GP might have been trying to say though. Conspicuous spending itself is not a problem. Way rather have the ultra wealthy buying yachts that deciding to be a wealth-proportional amount of everyday commodities.
I sometimes think it's better to have (say) 1 very very rich person than 1000 rich people, just in terms of resource usage. 1000 centimilliomaires all want their own yachts and so on, whereas a centibillionaire might have one or two large yachts, not 1000 small yachts. Economies of scale!
I did some quick math: the top .001% consumes as much as bottom 3% of Americans cumulatively. It’s high but it gives an accurate picture of how bad the real problem is.
When you say "Americans" do you mean people in the USA? Or the continents?
Beyond the wealth inequality within countries, there is the wealth inequalities between countries which drives migration of people or jobs etc. Even the most closed off and isolationist country in the world - probably North Korea? - is not immune to relative wealth on the global stage.
Wealth inequality within countries again is solved elegantly within capitalism. Ignoring North Korea for now - India being poor has the advantage of labour that asks for very less wages so outsourcing is a natural strategy for companies in USA.
Beyond that imf loans and other means exist.
North Korea choosing to be isolationalist is doing it at its own peril.
This is misleading. It counts debt as negative. This means a person who has zero wealth and zero debt will have more wealth than bottom 5% of people cumulatively (their wealth cancels out due to debt).
It would be misleading to suggest that a single person with zero wealth has more wealth than 100k people’s wealth combined. But that’s what this headline and report are doing.
It's even more than the bottom 5% if you only look at the US. 13 million or 10.4% of US households have negative net worth according to [1]. I've seen articles claiming that the bottom 15-25% of US Americans have negative net worth. So I am richer than all these households combined. Technically true, but completely misleading.
How else to do it? Don't count debt at all and pretend that if you've borrowed money, you're rich? Calculate EV of that debt - but how and on what timeframe?
Let’s first agree that it’s misleading. A new born baby has more wealth than bottom 1 million peoples wealth cumulatively according to this metric. That’s ridiculous.
Counting debt makes the poorest person in the world being richer than the poorest 1% combined. That is ridiculous to say, because we intuitively don't read that with negative wealth in mind so you create these very misleading headlines.
It’s only “misleading” if you’re so out of touch that you don’t know a substantial portion of the population is in crippling debt.
There’s nothing misleading about the fact that negative net worth is worse than zero. And a person without debt factually does have far more wealth than 10 million people in debt.
Real estate, automobiles, credentials/degrees, and businesses are all assets that would counterbalance their debt. (Credentials and degrees are not liquid, but you'd be hard pressed to argue that a doctor's license isn't worth many dollars).
The much more likely situation is a person with no assets or money and some credit card debt. Indeed, a person with simply no money is better off than such a person.
Right, and they're arguing that the quoted statistic isn't counting credentials and degrees as assets, because there's not a convention for how to value them.
You're arguing that accounting is misleading, your argument is that we can ignore the balance and count only the assets column. A summation of assets ignoring liabilities is not a measure of wealth.
>It would be misleading to suggest that a single person with zero wealth has more wealth than 100k people’s wealth combined.
It wouldn't be misleading. You may have to explain it to somebody who has absolutely no understanding of how finance works, but that doesn't make the statement misleading.
Unless the baby was born into more debt than those people, no. It’s a fact that the baby is wealthier than they are. A substantial portion of our population is in debt. This is a fact.
Nobody pays attention to things aligned to the fundamentals. When people are crying that there is a bubble, it is a bubble. Plain and simple.
We know for certain it was a bubble as non-bubbles have sustainable growth. As all the software developers now struggling to find work will be happy to tell you, the growth wasn't sustainable. The proof is in the pudding.
> How do you prove that software development is a bubble?
By looking at the software development market. How else would you do it? Salaries rose sharply from 2020-2023, but then plateaued and are now starting to decline. Slowly, however. It did not crash. It ticks the boxes: Rapid price appreciation, speculation, a disconnect from fundamentals, widespread media attention, and an eventual correction.
> Stock prices are at all time high and continuously growing.
If we're sharing random facts: Global average temperature is also at an all time high and continuously increasing.
> the labour market has not much to do with whether it is a bubble or not
How can the very market we're talking about not indicate whether there is a bubble in that market or not? Do you think we should be looking at the price of soybeans instead?
> definition of bubble is that the market cap must precipitously reduce, which it hasn't.
Incorrect. It has, just not by very much. Which isn't surprising as we already established that there wasn't a crash.
of course market cap of housing went down! individual houses fell down in price.
that didn't happen for tech stocks. you are making your own definitions of bubble - the sufficient thing to happen is for the market cap to go down precipetously which it didnt.
> of course market cap of housing went down! individual houses fell down in price.
Traditionally, market cap only refers to companies. I accept your pet definition that includes any kind of market, but then we can apply it to the software development market just the same. Individual software developers have fallen in price. There was not a significant drop, but a slow decline.
> that didn't happen for tech stocks.
Nor gold. But what does that have to do with the software development market? Are you under the impression that stock certificates write code?
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