The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
I’m starting to think the entire system is corrupt and we are headed for a destroyed Europe and a civil war in the US. Maybe I’m very pessimistic but this moment in history feels like the end of the American empire, what comes after this is extremely uncertain but people only seem to demand a fair piece of the wealth after a world war.
Thomas Piketty lays it all out in "Capital in the 21st Century"
Basically he compares two kinds of growth rates : the growth rate of the 'real' economy and the growth rate of wealth itself. You need the wealth rate to be low enough that rich people want to invest some of it in the real world, not leave it in the bank.
If you do tax the rich, they do very well and you also have money to pay for things like education, roads, affordable housing, medical services, scientific research .. which benefit all and lubricate the general economic market.
If you dont tax the rich, you end up with a gilded age of emperors and kings or a few robber barrons, a small rich coterie around them and the gawping masses of poor eeking it out.
Postwar 70s and 80s were a unusual period of relative lower-inequality, in which we had money in the real economy to develop things.
Garys Economics made an interesting point that inequality _itself_ is a problem - because the actual real value of the world remaining the same [ goods, energy available, land, workers, housing, technology ], when there is higher inequality, then the poor are losing a proportion of that real wealth to the rich. Extreme inequality itself starves almost all the population of a share of real wealth, for them to use their skills effectively - renovate a house, invest in stocks, get a masters degree, do a garage project, travel, have kids, install solar panels etc.
> Basically he compares two kinds of growth rates : the growth rate of the 'real' economy and the growth rate of wealth itself. You need the wealth rate to be low enough that rich people want to invest some of it in the real world, not leave it in the bank.
I think your second sentence, and thus your explanation of Piketty's thesis, is wrong. Piketty's point was that if wealth grows faster than the economy, the total share of all assets held by the wealthy will grow and grow. I don't think he was concerned about the choice to invest 'in the real world'. In any case it's not clear what 'not investing in the real world' means or if it's meaningful. Any return on capital either comes from direct investment or from lending to someone else who will invest directly. There is a fundamental accounting equation which proves that all net saving is net investment.
> Any return on capital either comes from direct investment or from lending to someone else who will invest directly.
Is this true? I'm not saying it's a huge portion of all saving, but holding wealth in things like precious metals or greater fool investments like Bitcoin doesn't seem like "investing" in anything productive.
If you bury gold bars that you mined yourself in your backyard, or you bury your salary in cash there straight from your paycheck, then you remove money from the system and thus not invest it. And effectively damage the economy, mainly via lack of liquidity.
It's hard making your capital inaccessible to the economy, but it's easy to not get the benefits of that working capital.
For instance, any time you park your money in a regular bank account or lend it at a suboptimal rate, you don't get some of the benefits.
No it isn't true. Holding money as money in a bank account is also not investing unless you think that providing liquidity to a bank is a useful investment (liquidity they can trivially access from the central bank, albeit at a slightly less desirable rate). A bank deposit is a liability to the bank, not something that can be invested.
No, the deposit is a liability with a matching asset that comes with it. The asset is needed to balance the asset. They certainly don't lend it out to other customers, which always happens through new money creation. They do buy short duration government bonds with it because they're not stupid and can get a better return than on reserves, and bonds are acceptably liquid. Nothing they do can be construed as investment. Savings really are savings and are effectively removed from the economy.
> No, the deposit is a liability with a matching asset that comes with it. The asset is needed to balance the asset. They certainly don't lend it out to other customers
When a customer (customer A) deposits $10 of cash at a bank, the bank has a new $10 asset (the cash), and a new $10 liability (the deposit it owes to the customer).
If another customer (customer B) then comes in and asks for some cash in the form of a loan, the bank can loan that customer the $10 cash, at which point the bank goes from having a $10 asset in the form of cash, to a $10 asset in the form of an outstanding loan.
This new asset is less liquid than the cash, but the bank's balance sheet still balances.
> which always happens through new money creation
You are correct here - bank lending is the process through which the vast majority of money is created. Before the loan, customer A thinks they have $10. After the loan, customer A and customer B both think they have $10. In this sense, $10 of new money is created.
Interest rates moderate the rate at which banks lend and the rate at which money is created, and the Central Bank acts as one of the most important price-setters in the economy.
> They do buy short duration government bonds with it because they're not stupid and can get a better return than on reserves, and bonds are acceptably liquid. Nothing they do can be construed as investment. Savings really are savings and are effectively removed from the economy.
Even if you believe that banks only buy short duration government bonds (which is provably not the case[1]), this is still a form of lending, as it effectively finances government borrowing, and the Government can spend their borrowed money as they see fit (such as for building infrastructure).
You seem very confused about several different points here.
1. Deposits often fund loans. If deposits were never used to fund loans as you describe, most banks would have at least as many cash or HQLAs as they do deposit liabilities. Check any deposit-taking bank's balance sheet to see that this is not the case.
2. If banks do buy government bonds with deposits, that still does not negate the funds being invested. The government now has the money and will spend it. Again, you can quickly check the governments do not hold piles of cash and the vast majority of the money that they borrow is spent on their activities.
3. It is axiomatically untrue that 'savings are removed from the economy'. Savings means that someone consumes less than they produce. That production must either be consumed by someone else, or add to the stock of capital. It cannot disappear.
These deposits can move between banks along with an associated asset.
Balance sheets always balance. Most of the balancing asset against a deposit is a loan. This is how banks make money and arguably their purpose. You can see the balance sheet of HSBC here (page 12):
https://www.hsbc.com/-/files/hsbc/investors/hsbc-results/202...
It's clear that the majority of their assets are loans as expected. Then a fair chunk of reserves which reflects transfers from other banks (which hold a corresponding loan asset) or payments from the government. Finally there's a smallish quantity of financial investments that includes government bonds.
Bonds are just a floating price asset swap for reserves so the reserves must exist (have been spent) before the bond sale can happen. That is, governments don't borrow money until after the spend. In the case of the UK, this is shown in the following paper:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4890683
You seem to be of the understanding that there's a one to one correspondence between stuff and money, which a moments consideration of the endogenous nature of money (as described into BoE paper) would highlight as flawed. If you're suggesting something else by your point that savings imply a drop in consumption, please do clarify.
It feels like your understanding comes from an economics course, which generally bears no relation to actual monetary operations and understanding, rather reflecting the particular philosophical bent of the economic school.
Thanks, I know and agree that loans create deposits. Sadly this underrated fact seems to have thrown you a bit, to the point where a lot of what you say is just nonsense.
What does this mean? "Bonds are just a floating price asset swap for reserves so the reserves must exist (have been spent) before the bond sale can happen."
Are you able to explain what your understanding of liquidity is?
Do you know what it means for loans to be funded by deposits?
Do you know the origin of the equation between investments and savings and how it is justified?
You are giving the exact impression of someone who used to believe a flawed theory of money creation, watched the Netflix documentary about bank money and has lost it a little bit.
It’s been a while since I took a monetary theory class, but if people are interested in your first point they should look into fractional-reserve banking.
Essentially banks are only required to have a fraction of their deposit liabilities as liquid assets and can loan out the rest. If I remember correctly, this is actually how a substantial amount of money is created in the US and likely most of the world. If you deposit $100, a bank could make a $1000 loan assuming the reserve rate is 10%, which leads to an increase in the money supply of $900.
Money supply is definitely not the same as the size of the economy, but it is incorrect to say that bank deposits are just sitting stagnant. Banks are quite active with those deposits - how else would bankers make all that money!
Bankers make money by creating loans, which are subject to regulatory requirements imposed largely through the adoption of Basel III. The reason they take deposits is because they are the cheapest form of liquidity. The certainly don't make money lending out deposits, whatever that means. Many countries don't even have reserve requirements, which rather highlights the flaw in the fractional reserve model.
I don't think you know what 'liquidity' means, but if you do you are incorrect about it here. Deposits provide funding, not liquidity. Banks certainly do use deposits to fund loans.
It is not true that most countries do not have reserve requirements.
I think before commenting further you need to take a deep dive into actual banking operations, because you really are wide of the mark. I posted a few links in the other post local to this one that might help. I also suggest reading the Basel III accords (or at least a summary) to understand the role of liquidity in banking.
There's not much point me discussing this further with your since you're so wrong. Take care and good luck with your enquiries.
I do think that your original argument that bank deposits don’t contribute to economic growth is wrong though. As you point out, they are a cheap form of liquidity for lenders. I think you’d agree that loans play a key role in economic growth.
The ability of banks to lend is limited by the availability of credit worthy borrowers, not liquidity. Banks will always get the necessary liquidity from the central bank (assuming the system is working as intended), but prefer deposits because they are cheaper than whatever is offered by the CB. Inter-bank lending is an alternative preferred option if insufficient deposits are available.
Even if you try to tax the riches, they have billions of ways to evade it. The tax laws are so complicated for a reason. Here in Australia, there were cases that some individuals that earned just about A$1M pa., and they paid ~A$980K to companies registered in Virgin Islands etc. for managing tax affairs. Such arrangement knocked down their taxable income to ~A$19K, and thus they paid probably a couple of dollars taxes if not not even a dime. Eye-opening, right? But those were not those super rich ones. You can just imagine what those super rich people can do. So the burden of the tax would be on mid-income people. I would expect the same in US.
If there were political will to tax the rich then you'd have to, in addition to changing tax law (obviously), fund IRS investigations to ensure the taxes are actually collected. Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services. If you think people will commit tax evasion, then put more resources into investigating tax evasion. Historically, money spent recovering taxes has yielded more than the cost of said investigations.
> Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services.
It goes further than that, it is the exact argument made by wealthy people as to why we shouldn't tax them more aggressively. Parroting that argument is ludicrous unless you're considerably wealthy yourself.
Those loopholes were by design, complicated enough to prevent most people like us to take advantage of it but will allow those who can afford to evade lots. I'm not sure if people is just naive or playing dumb.
It is extremely difficult because you not only need to do it on a per-country level, but globally. Otherwise you just punish foreign companies that genuinely invest in a country with stricter tax laws (and most will just choose another country, just like it's happening in Europe). And ultimately, it depends on the will of the American administration - and they can be extremely bullish about imposing their laws on smaller countries, sometimes even using their military advantage.
> fund IRS investigations to ensure the taxes are actually collected.
Even people who want to tax the rich are skeptical about empowering / funding the IRS because there are many studies showing that the IRS disproportionately audits the poor.
If that’s true, then why would more funding help new enforcement against the rich rather than multiplying the current problem? Generally cash/support fixes material resource issues but cannot fix policy issues
IRS enforces against the poor because it is easier and they have been directed that way. It is possible to increase enforcement, direct where that enforcement goes, and change the law so that it is easier to enforce against the rich. Another would be simplify the law for to make audits for poor unnecessary and leave rich fewer places to hide.
We have gotten used to Congress being dysfunctional and not passing laws that we think the current laws are some unchangeable state.
Sounds like we agree then that it’s important to change policy first before dumping more resources on a malfunctioning org and hoping for the best. But parent mentions “funding investigations” as a cure.. my point is just that there’s no indication that this makes things better, and might actually make them worse.
I do agree that changing policy is a separate, yet complimentary, step. But maybe the poor are disproportionately audited because the IRS doesn't have the funding to effectively target the rich and succeed? Maybe with better funding, they could successfully extract more tax dollars from the rich, incearsing the ROI of funding the agency?
I don't think further funding the agency is a completely nutty idea. Although if you truly believe the agency is broken, and that being broken isn't related to their funding, then I could understand your perspective. I lean more towards the idea that at least some, maybe even most, of the issues they have might be due to a lack of funding. That makes more sense to me than most of the criticisms I've heard of the IRS, which seem to mostly be on partisan idealism framed as otherwise.
My point was that Tax Laws were deliberately complicated to allow some people to evade taxes. If you put that into consideration, you will find it's a lot easier to understand the status quo. Again, what you think or what I think do not matter after all.
It matters completely. Congress makes and changnes tax codes, people vote in congress. People need to remember they are the ones being served and they are in control. Absolving themselves of their representative's choices is the start of the downfall of the system.
1. Gary’s arguments for taxing the rich aren’t about taxing income. It’s about taxing wealth.
2. By his argument, most of the wealth are immovable: the rich disproportionately owns actual, physical real estates, and stocks of actual companies. As these assets are based in the country, you could tax right at the source.
For the really rich, I agree about the usefulness of taxing wealth.
The problem is that such a tax must be strongly progressive, or it may affect the poor much more than the rich.
For instance, I have seen cases in some countries, where after the discussions about the usefulness of such taxes for wealth, the result was the establishing of some high taxes on property, whose only effects were that e.g. someone who were jobless for some time might be forced to sell their house, and for a disadvantageous price, for not having with what to pay the property tax, thus becoming both jobless and homeless, or someone poor who inherited a house might be forced to sell it for a disadvantageous price, for not being able to pay the inheritance tax.
The result of this kind of misguided tax was an even greater transfer of wealth from the poor to the rich.
Yes, the only thing that genuinely scares the rich is wealth taxes.
It is next to impossible to hide the fact that someone owns something like real estate
In addition to real estate I might consider other property such as bank accounts, at least above a certain threshold. Presumably that cash has to be invested somewhere (or should be encouraged to do so)
If we could get a real wealth tax, I would do away with income taxes like some states have done (i.e. Texas)
>It is next to impossible to hide the fact that someone owns something like real estate
Real estate can already be taxed via property taxes. Unrealized gains in securities can't be taxed the same way as their value is much more volatile, with potentially large daily swings. Texas makes up for the lack of income taxes with relatively high property taxes.
>In addition to real estate I might consider other property such as bank accounts, at least above a certain threshold.
Interest from savings accounts is already taxed. The wealthy don't hoard their wealth in bank accounts though.
While it doesn't make sense to tax unrealized gains, they could be taxed if they are used as the basis for a loan. Loans on unrealized gains are one of the main ways the wealthy are able to live lavishly while paying very low effective tax rates.
It seems fair that you shouldn't be able to have it both ways—if you are getting any financial benefit from an asset, including a loan, there's a pretty strong argument that you yourself are "realizing" that value.
Sure, but everyone pays those taxes. If we are talking about inequality and the wealthy having ways to get out of (or better said, drastically reduce/defer) taxes that everyone else has to pay—i.e. income tax—I think loans on unrealized assets is probably the first thing to look at.
Banks are also taxed on the interest from the loans. Loans backed by assets are not just free untaxed money as you seem to think they are. If an entity is unable make the payment on a bank loan, then they would be subject to having their collateral seized, and the bank would then eventually sell the assets, which would be subject to capital gains.
I think it would be more realistic to heavily tax inheritance and re-evaluate trust based loopholes.
> Loans backed by assets are not just free untaxed money as you seem to think they are.
I mean, you’re clearly moving the goalposts here. We’re talking about tax on unrealized gains for the wealthy, not sales tax, property tax, or taxes on the bank.
If you’re able to keep taking out new loans to pay off the old loans until you die, with an appreciating “unrealized” asset as collateral, then yes all that money is effectively tax free if we’re talking about income tax and capital gains.
I believe the previous poster was arguing that taxation still exists at a macro level, i.e. money is sucked out of the economy. It doesn’t matter so much who paid the taxes. The wealthy pay the interest.
Part of me wonders if doubling down on taxing transactions (which tariffs is categorically) can thus work. It seems like an elegant way to avoid having to deal with wealth vs income.
I really don't see why "equity is volatile" is some insurmountable problem. We see the same exact "problem" show up with day trading, where it is possible to accumulate a lot of taxable gains and end up with less than you owe if you don't sock away the money to pay for taxes at the time of locking in the gains.
If an equity is valued at $X on some date when we lock in the value for a wealth tax or a tax on unrealized gains then sell enough of your equities on that date to pay for the tax and store that in a zero-risk asset. This can easily be done automatically.
Unrealized gains can be taxed - for example, Ireland has a Deemed Disposal tax on ETF investments, where after 8 years, any gains are considered to have been realized and tax is due (even if no sale has taken place)
Deemed disposal subject ETFs can be taxed under an eight year exit tax scheme, but this can be avoided by simply investing in US domiciled ETFs or individual stocks.
> Yes, the only thing that genuinely scares the rich is wealth taxes
Why though? We’ve already established the end game if we don’t do this. It’s hard to imagine society willingly regressing back to feudalism. What we likely need is a sensible plan which gradually adopts wealth tax rather than a radical step change.
I'm scared of 2% wealth taxes (as discussed in New Zealand) because I believe that will take 100% of retirement savings over time. And I'm no multimillionaire. Say portfolio returns 6% and drawdown(spending) is 4% then 2% takes 100% of gains.
The 1% or 2% figures sound trivial to the voting majority but they really are not trivial. Cue discussion on compounding.
The other issue is Forcing sale of private owned businesses. If you fuck with the incentives to grow a businesses, you will end up with a shitty economy and everybody suffers.
Apart from the obvious 2% * decades = lots (for low growth investments).
I could work to create new high-margin export income for New Zealand: I have the skills. But I don't work because I hate our taxation system: NZ loses.
An economy needs to incentivise everyone to work including the wealthy: otherwise it bombs. It scares me to see people in the US want to introduce features to cripple their most successful economy. I think most workers poorly understand businesses or economic incentives.
We (New Zealanders) are already getting taxed 1.4% on wealth effectively, if your on a tax rate of 30%+ (most people).
Most people just don't know about it. Due to the FIF rules. Any international investments you have get taxed like this (it's not so clear cut, but more or less). The only exceptions are NZ investments and Aussie investments, maybe. There is a tool to check if an aussie share is except from the FIF rules. e.g. Aussie ETFs aren't, even if they invest in only aussie stocks...
So everyone with a Kiwisaver (retirement scheme), aka most people, have large portion invested overseas, and thus are paying the 1.4% p.a.
It also discourages high net worth people from moving to NZ, as they usually have investments outside of NZ, which will get taxed once they move here (after a few years exception).
The small "win" we do get is you can (cost bases) invest up to $50k overseas without the 1.4% FIF rules applying, (though dividends are still taxed). But like no one knows about it, and managed funds can't take advantage of this, so most people don't utilize this, especially not low income people, who generally aren't that well educated on finances.
Don't get me started on our lackluster retirement scheme, Kiwisaver, with near 0 tax incentives, and propping up the housing market prices.
There's heaps more invisible wealth taxes that increase the marginal tax rate by a few percentage points. Rates, Insurance, increased financial liabilities, means testing, unequitable seperations, oodles of time wasted managing money, yadda yadda. And if you want to keep up appearances then the costs skyrocket up.
If you don't have anything then you can avoid certain costs, or sometimes you can get subsidised.
The wealthy also get some financial boosts e.g. house appreciation. And white collar crime has cheap convictions (or you can avoid consequences)
I've never had kiwisaver because I believe in the value of optionality with my own money. I severely hate locked up money. Being able to deploy money has gained me a small house worth of money. The FIF rules are a cunt to manage and Sharsies are SHIT - they've promised to deliver an FIF report but haven't done so.
Interestingly the actual website for Kiwisaver describes it as a "savings scheme". In the US we just have our own national Ponzi scheme, Social Security
I think our Kiwisaver is more like the US's 401k. We also have NZ Super, which you start getting at 65, and isn't asset tested (yet). But most can't live on just NZ Super.
Though some living frugal and have paid off their house, do live within super, even some renters living do make it work, but it's very bare bones.
While our NZ Super isn't asset tested, our residential care subsidy (elderly care) is asset tested, and is very expensive. When you get old and don't die suddenly, then it's likely your assets you've accumulated over the years will be used to pay for your care (though there are some way around it, but not usually cost effective unless you have a large amount of assets).
But, the elder care the govt gives you (if you can't afford it aka no assets), isn't very pleasant, so you really should plan for it while you're working age, and have investments large enough to cover the costs (which most in NZ don't do).
I don't think we have insurance here that covers elder care.
I believe the guys across the ditch (Australia), have a better retirement system setup. While in NZ our Kiwisaver by default contributions are 6% (total. 3% employer, 3% employee), been this since it started just about, while in Aussie, the current min default total is 11%.
Though Aussie's govt supported retirement payments are asset tested, where as they aren't in NZ.
I think having a higher min default is probably best for everyone, as most people don't change from the default.
If you think US Social Security is a "Ponzi scheme" (it is not, by definition), then do you also think all other highly developed nations are running Ponzi schemes because their national pension is paid from current accounts? Something that I see rarely discussed: Most national pension schemes need means testing. If you already have reasonably large savings, investments, or passive income, then you don't need the full amount of national pension. You can receive less. The remaining portion can be redirect to those in greater need. One thing we have learned in economics in the last 10 years, when poorer people receive direct cash payments from govt's, they spend it into the economy as a much greater portion than those wealthier.
Also, the US has 401(k) savings plans. It is pretty similar to Kiwisave.
Not quite. If you are ultra wealthy because you happen to own several large buildings, fleeing the country to avoid taxes is easy. Doing so with you wealth, however, isn’t.
Which is why they will leave with mobile wealth before the act goes into effect, taking away the capital workers use to earn a living. Property taxes on land and fixed structures work well as they cant run away in a practical way.
The means of production is still here, what’s left of it. Lower asset prices will benefit the poor. What should have happened during COVID is the government took a percentage of businesses to the cost of lockdown/furlough (if they were of a certain size) rather than subsidising the asset hoarding class at the expense of workers. Then you give the workers part of these businesses, spend the rest on re-industrialising. It would have caused the biggest economic boom in the UK maybe ever and with all these consumers available to buy things you’d get a lot of investment and some people would use some of this wealth (£1tn in the UK alone, about £15k for every adult and child in the UK) to start small businesses creating an even better economy.
It’s got to be worth a try rather than the disastrous economic policies that got us here.
The US already claims tax dominion (for its citizens) over the whole world. You get the foreign earned income exclusion, and you can also avoid double taxation in many countries that have a tax treaty with the US, but otherwise the default is that you need to report and pay income tax on worldwide income, no matter the source and no matter where you are a resident.
In the same vein, if the US were to implement a wealth tax, the simplest way in terms of enforcement and not creating perverse incentives to shelter wealth outside the country would be to make it international in scope. Yes, people could give up their citizenship, but that's a huge sacrifice which most wealthy people would not want to make at any price, and there's already an exit tax in place for people that do this.
Not totally. The wealthy are incredibly heavily invested in our economy. Take Elon Musk for example. He’s heavily invested in SpaceX, Tesla, and Twitter. If he walks away from the US, Tesla, Twitter, and SpaceX are all still here and can’t easily “run away”. Sure, they can take some “mobile wealth”, but if you are very wealthy you can’t just leave a whole economy (that’s where your wealth is).
> He’s heavily invested in SpaceX, Tesla, and Twitter.
You make it sound as though he put a lot of his own money (somehow obtained from elsewhere) into these companies.
But that's not true at all. It is correct English to say that he is "heavily invested" in these companies in the sense that his wealth is paper wealth based on the perceived value (stock price) of these companies.
But he is not invested in them the way that a typical person has their retirement funds invested in a company or mutual fund.
Elon came here under a similar story. The party in significant power cheers on 'kill the boer [farmer]' ( and 'redistribute' their capital to the poor). He escaped to here. It's admirable he wants to prevent America becoming like South Africa.
The problem with that politics is stagnation. It is hard to move SpaceX and Tesla out of the country, but you don't get new companies in this situations, there will be less competition and, as a consequence, Elon Musk get more power, and there is nothing you could do about this.
Property taxes are a thing. If Joe Dirt has to pay property taxes for the home he shelters in, the wealthy should have to pay property taxes for the shares of a company that they use to secure loans for yachts and Ferraris.
The really great thing about taxing land, is that it can't escape where it is. Capital flight is a risk for taxing other forms of wealth.
And land is something of finite quantity that is actually taken away from the rest of society. Capital is produced, and made, and is not finite like land.
This is one thing that California got really wrong, it should be taxing land heavily, and income less.
Not an economist, but not necessarily. A heavy land tax would discourage buying real estate as an investment vehicle which might help drive prices down (or at least slow the rate of growth). It would also discourage leaving rental units empty.
I’ve always been in favor of a land tax like the Georgist’s describe.
I still think property taxes on stocks should be a thing. Americans pay income taxes from foreign sources, so why shouldn’t the rich also pay the same for overseas investments? Just close the loopholes with simpler tax laws. That could be like saying it isn’t hard to program some feature into software, though, so perhaps not.
Example: “Thou shalt pay 0% of all income and assets up to 20k, 10% to 50k, …, and 95% on up to 20mm.”
> why shouldn’t the rich also pay the same for overseas investments?
They do. US taxes apply to global income. Can you give a specific example where they do not? Please don't write a lazy reply like "move all their assets to a zero tax location in the Carribean." They are still responsible to pay US taxes for any income derived from those offshore investments.
No, look up prop 13, it heavily incentivizes sitting on land and never triggering a valuation reset. It’s a massive wealth transfer from the newcomers (who tend to be younger) to those who’ve lived there longer.
A fix would be if you use unrealized capital to secure a loan, that unrealized capital amount to secure the loan becomes taxable. Of course that would tax people trying to get home equity loans though.
The problem is that people will always probe the tax code for loopholes that weren't considered. It's a cat and mouse game, except the cat is fat and lazy, and gets paid by the mouse.
Eh, an exception for a primary home is common throughout the tax codes and the like. Just saying you realize capital gains on an asset used to secure a loan (unless it's a primary residence) would cover that without being out of step with everything else.
Sure, a billionaire could then use their $143M estate as collateral on a loan to avoid realizing the capital gains, loophole, but since you can only have one primary home, it's a very limited loophole.
I think a more reasonable interpretation might be "the government knows about expensive cars (i.e. that they are registered, have numberplates etc), and so charges some annual tax on the owners of those cars."
Describing wealth tax reasoning with an absurd example of the same reasoning on an individual level is an attempt to get people to understand what wealth taxes are.
The government that is supposed to work for you thinks you have accumulated too much stuff and is trying to make it legal to take a percentage of your physical wealth annually.
You only accumulated and maintain the wealth because of the government. Without the government and the economic system it cultivates, you’d never have it.
>You only accumulated and maintain the wealth because of the government
This is simplistic nonsense. No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends. If it were otherwise, many more people would be rich just by virtue of living under a government. There is a real place for giving people credit for the wealth and capital accumulate, well beyond what government offers.
It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.
> They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends.
You are confusing two things thinking they aren’t highly related but they are. This statement could otherwise be written “government created a flawed system and motivated individuals achieved wealth by taking advantage of that system”. That implies a flawed system was causal. We don’t need bigger government, we need the right government. No one wants to say that those who worked hard - even by benefitting from a flawed government - should not have high wealth, but by your same argument, what did the wealthy children of these individuals do to justify their wealth? Their children? How long do we believe this chain of inheritance is sensible?
Most cancers didnt grow because some high and mighty body willed it into existence, they did it within a system of biological laws and conditions that admittedly the body does generate
Your argument is built on a flawed premise that ignores the foundational role government and society play in enabling wealth creation in the first place. The counterfactual is simple: without government, without the legal and social structures upheld by a functioning society, there would be no stable mechanism for accumulating wealth at all.
Wealth does not exist in a vacuum. It is not some inherent trait of individuals that manifests independently of the structures around them. The wealthiest people succeed not just because of their individual effort but because they operate within a framework that provides enforceable contracts, property rights, regulated markets, financial systems, infrastructure, security, and a workforce educated by public institutions. Strip all that away, and they are no better off than anyone else in a lawless wasteland where power is dictated purely by brute force.
If wealth were purely a function of individual effort, we’d see people amassing fortunes in failed states or ungoverned regions where there is no government interference—but we don’t. In fact, in those places, the absence of government results in instability, extreme poverty, and the inability to conduct large-scale business. Conversely, the wealthiest individuals overwhelmingly exist in places with strong institutions and legal protections—because those things are prerequisites for wealth accumulation.
Your contradiction is actually the real contradiction. You claim that people become rich despite the government but then ignore the fact that wealth is unequally distributed precisely because the government does not intervene enough to prevent market capture by a small elite. A government that enables wealth creation is not the same as one that ensures it is fairly distributed. It is perfectly consistent to acknowledge that wealth requires government structures while also recognizing that unchecked capitalism leads to oligarchy.
So no, this isn't simplistic nonsense. The simplistic nonsense is pretending that wealth creation happens in a vacuum when, in reality, it is entirely contingent on the existence of an organized society with functional institutions.
To steelman the argument that wealth is earned, this kind of stuff tend to follow a power law. So a 10% increase in effort or talent can result in a several fold increase in wealth - especially when the effects of compounding interest are considered.
This is most apparent in sports or the arts. Being just a little bit better at baseball can be the difference between a million dollar contract and being stuck in the minor leagues.
Of course the question of whether we should want success to follow a power law is a different matter. As is the role of luck. Going back to the sports example, being born at the right time of year can be a huge, permanent advantage[1].
> No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation.
This is akin to saying you only achieved a high score in a video game by your own sweat and effort, and saying the video game developer had nothing to do with it. Without their work, you wouldn't have a system within which to accrue wealth. You may not even have the concept of wealth or property. Bezos wouldn't have his wealth regardless of himself creating amazon if there didn't already exist power grids to electrify his warehouses and data centers, roads upon which his delivery vans could travel, a financial sector to see him be paid for his goods, on and on and on.
The mythmaking of the self-made-wealthy has gone completely off the fucking deep end at this point with a portion of the population, as if these CEOs fell from the sky, cratered in the Earth, raised their arms and from them spawned hyperscaler businesses and cavemen left their campfires, picked up Macbooks and started writing React code.
> It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.
This is not contradictory at all unless you boil the points down utterly beyond recognition.
But laws shouldn't be set based on how easy they are to avoid. Lots of people drive too fast all the time, yet few argue that we should do away with speed limits. Besides, there is zero empirical evidence that suggests that raising rich people's taxes is ineffective. Yes, they are good at avoiding taxes, but professional tax collectors are probably even better at enforcing taxes. It's a question of political will, or lack thereof, due to not wanting to lose your biggest donors.
I understand this is a tangent but you picked a really bad example. We should be trying to remove every single speed limit that we can.
If the design speed of a road does not match the speed limit of the road, people will drive the design speed, cops will learn to sit there all hours of the day waiting for people to mess up, and get ticketed. Instead of just putting up the speed limit sign, city planners should design for the road to be safe without need for the speed limits to be in place. This can mean things like reducing the width of a lane, could mean speed bumps, to purposeful non-straight sections.
There will always be people who go much faster than the design speed. They are ignoring their and everyone else's safety.
I live on major street where the speed limit is 25 to slow people down. It used to be 35, and people normally go 35-45. The problem is that people go much faster when there is no traffic because the street feels wider. I would love if they redesigned for a slower speed. But there are cars in the middle of the night that drive over 60. It doesn't matter if street is calmed, they will go super fast and only tickets with slow them down.
There will always be people who go much faster than the design speed. They are ignoring their and everyone else's safety.
Those people don't care about speed limits, in part because they are generally set significantly too low. This has the effect of normalizing the scofflaws' attitude even when carried to a genuinely reckless extreme.
Conversely, if you raise the speed limit to the 85th percentile, anyone exceeding it significantly will stand out enough to catch easily.
Speeding is a victimless crime anyway. If you hit something or someone, you were doing something wrong besides speeding.
There's a third choice, though. It's bad when speed limits are much lower than the natural speed of the road, for the reason you describe. And it's good when the natural speed of the road is the safe speed of the road. But in addition to those two, it's also possible to introduce fast, automated enforcement— speed cameras.
This, of course, applies just as much to the actual topic of the Economist article; new inheritance taxes are just and good, but they should be written to be enforceable, and then they should actually be enforced.
If the safe speed of the road is 25mph, and the design speed of the road is above 25mph, you will not have safety no matter what the speed limit is. Vision Zero strategies take these factors into account to ensure safety.
Bollocks. The only thing that gets you is young and reckless drivers going 200mph on the highway, endangering everyone around them. There are limits to increasing safety in road design, and limits in the reaction speed of humans.
And that's why Georgism exists! You can't offshore a plot of land.
If you've really managed to generate trillions in profit without using any, including indirectly (mining, showrooms, etc), fair enough. If your economic model is quite literally rent seeking, you can fuck off and give all those proceeds to whatever government ensures that land is not overrun by whatever raiders are historically a problem in your area. If you work for a living, you should be able to spend your earnings on a fancy apartment if you wish, and if a landlord wishes to make one instead of just sitting on land, they keep the profits from that too.
And the reason is those same rich influence the laws to their benefit.
It would be pretty trivial to tax the wealth if a society wanted to do so. But laws are made by lobbyists, who are paid by the rich, so what should we expect.
If the individual resides in Australia, how do they utilize the $980k sitting in the foreign company?
The company can buy assets in AU, such as a house, and lease it to the individual, but I'm pretty sure the ATO requires they pay the company rent at market rate, which will likely be unaffordable on a reported income of 20K pa.
In Washington state, they passed a capital gains tax primarilly to tax Jeff Bezos. Bezos simply left the state just before the tax took effect. So did a lot of other wealthy residents.
A land value tax would be impossible to evade. Even a business’s assets will exist somewhere on land. In the case of intellectual property, reducing copyright and agents to 10 years should solve the problem.
The only way to force everyone to pay is with a consumption tax. We'd tax based on consumption so those yachts, Rolexes, and home construction, etc. that the rich spend crazy amounts on gets taxed.
Of course since a consumption tax hurts the poor disproportionately, the gov't would send a refund check to them, in large enough amounts to make up for it, where the poor are basically paying zero tax.
It also fairly discourages illegal immigration because illegals wouldn't get that kickback check from the Gov't, since they're 'visitors' not 'citizens'.
As complicated as this would be to implement, it is only solution I think sounds like a fair policy to discourage getting filthy rich while lifting the poor to a better economic balance.
Although, I have a feeling the filthy rich would simply choose to spend elsewhere where the consumption taxes don’t exist or are lower…
Revenue neutral carbon taxes with all income dividended back out per capita are really the move here. It’s also one of the few really promising ways to tackle climate change effectively.
Seems to me like that's a similar approach but a consumption tax is easier for everyone to understand and would be therefore more palatable to the public. Also the consumption tax would have a similar affect of taxing people proportional to the amount of damage they're doing to the environment. For example, we want a big tax on Rolexes but making a watch doesn't really do that much carbon consumption.
> Seems to me like that's a similar approach but a consumption tax is easier for everyone to understand and would be therefore more palatable to the public.
There is a false assumption here, that easy to understand makes it more palatable. A flat capitation would be even easier to understand, and even less palatable, because the ease of understanding is directly connected, in its case, to the ease of opponents organizing against it. A flat consumption tax faces a similar problem, which is why the efforts to push one to replace the income and payroll taxes for decades now under the label "Fair Tax" have been unsuccessful -- easy to understand isn't a political benefit when people who understand it often don't like what they understand.
The current insanely complicated tax code (with trillion upon trillions of rules and special cases) is something that even professional Tax Accountants admit no human can possibly understand.
But we know one thing as a fact: MOST OF IT was WRITTEN by Washington DC lobbyists specifically to embed in it all the loopholes that make it so that the elite in this country will pay hardly any taxes at all. Basically the fox guarding the hen house.
The obvious solution is to throw it ALL out and go with something simple that everyone understands. The reason this doesn't ever happen is because those same K-Street lobbyists make very large financial "contributions" to the same politicians in DC whose votes are required for a change.
The title of this piece is “Effective Income Tax Rates Have Fallen for The Top One Percent Since World War II” which seems to directly contradict your statement they have been stable?
Right—they fell sharply from 1945 to 1955 (it looks the data points are sampled every 10 years) but have been pretty stable in the post-war era, as I said. Note that OP stated the top tax rate was lowered starting in the 1970s.
How is dramatically lowering since 1970s compatible with stable after 1955? The fact is tax on the rich started going down in the 1970s and since the 90s tax havens and other shenanigans like renting out your own mega yacht to off shore shell companies even though you were using it. And a million other ways these people don’t pay.
For the richest tax is optional to the point where that get loans against their shares rather than pay capital gains tax. It’s an absolute disgrace and it’s got to a point where governments need to taxing them properly.
Indirectly, we can point to the creation of Alternative Minimum Tax (AMT) in the 1960s to ensure that higher income taxpayers paid at least some minimum despite the plentiful deductions. Some of the things not allowed under AMT are state and local tax deductions, interest on mortgage equity debt (not acquistion debt), personal and dependent exemption deductions, deferring tax on compensation due to Incentive Stock Options (ISO), some kinds of accelerated depreciation, and so on.
While its true that its higher now than it was the 1950s-1980s, its an increase of about 15%.
It if was the case that the very high marginal rates were actually being paid, you would expect the percentage of income held by the top 1% to be much higher.
Here's another source with more direct comparison - how much their income they actually paid in tax
Even though this comment is inaccurate because it just takes a a single figure figure and generalises it to all-of-time, I still feel compelled by to say something like:
Giving money to politicians is like giving whiskey and car keys to teenage boys.
The very to extremely wealthy run nations, why would giving them control of more money, someone else’s money, be a reasonable idea.
I suppose the argument is tax the rich more, and the poor less.
Nah, there’s got to be a better way, like maybe tax everyone less.
Rich people generally don't keep the majority of their money as cash in a vault. When money lies in the bank, the bank invests it in the real world. Or more directly, when money lies in stocks and bonds, it is invested in the real world.
> when money lies in stocks and bonds, it is invested in the real world.
Is it though? How much did Nvidia invest more, after their stock hikes? How about Tesla, Microsoft, Apple? No. They cut their staff or maybe stayed at their current investment levels.
You have the ordering of events inverted. Companies do not automatically have more money to invest after their stock price rises, because the stock is traded between unrelated third parties. Rather, the stock price rises after the company made investments that paid off, increasing the company's expected future profit. This then retroactively provides the incentive for people to give money directly to companies to invest in exchange for partial ownership.
So the question you should be asking is: How much did Nvidia invest before their stock hikes? And which companies will the original investors fund next after selling their shares at a profit?
We should be careful when we say "economists disagree."
Economists disagree with Piketty about the causes of this inequality: that is true.
Economists agree with Piketty however about the extent of inequality, by and large. That is, no one is arguing "inequality isn't real" or even "inequality is decreasing."
So there is disagreement about what's causing the inequality, yes. But on what (to me) is the bigger question - is inequality real and increasing? - there is a consensus that it is.
It's all there in the historical record, and as a trend, it's huge.
OK, but Piketty's thesis is about the cause of inequality, not just that it exists and is growing. So, economists agree that inequality is growing, and disagree with Piketty's thesis.
Inequality can increase while the poorest are still getting richer in real terms (inflation-adjusted income). That's been the case for a decades now: https://archive.is/HcRsU
"It is the mechanic and teaching assistant in the middle who have the best claim to having missed the party: median real income rose by 57% from 1990 to 2019. But that is still a healthy 1.6% per year—a far cry from the stagnation in median earnings that is sometimes alleged".
For the record, I think inheritance tax should be way higher, and allowing the value of money to outstrip the value of labor is a travesty, but it's important to keep in mind that people across the income spectrum are getting richer in real terms. It's better to be poor in America than median income in most countries.
How does that work with so many people being worse off? I.e. most of my friends can't afford a home, avoid going to the doctor, can barely make ends meet in dead end jobs, etc. Maybe, the measurements they are using for inflation aren't measuring the right things?
Do you live in a major liberal city? Then your cost of housing is probably unreasonable by national standards. The CPI for 2025 is 44% determined by housing costs, so if you spend ~44% of your income on housing then it's probably a reasonably accurate measure of the inflation you're experiencing.
The extreme example is NYC where 1 in 3 spend more than 50% of their income on rent, and rent has appreciated there much faster than nationwide. So those people experiencing far higher inflation than the national average.
It's also pretty easy to overestimate how easy previous generations had it. It's called survivorship bias. This recent bout of inflation is bad, but it doesn't hold a candle to what happened in the 70s / 80s, which is still regarded as the good ole days by some
"...allowing the value of money to outstrip the value of labor is a travesty..."
I am NOT an economist, and wonder what you mean here? It feels contradictory to me, given a system that makes labor fungible with money.
I've armchair puzzled over this aspect of capitalism and human nature. It seems to me that we, as individuals in this system, most fundamentally want to be able to use capital to time-shift the fruits of our labor, i.e. for rainy days, retirement, and unforeseen events. We need to be able to convert labor to capital, hold it, then convert it back to gain benefits of someone else's labor later.
But it seems inherent that this ability to make labor and capital fungible will enable some to amass and wield much more capital than others. In a population with differing wages, lifestyles, life events, and appetites for risk, it seems inevitable that the integral of these net savings effects will be divergent.
If you introduce a "reset" or leveling function, it seems like it will contradict this stored labor feature. It pushes us back on the continuum towards living hand-to-mouth, since our stored efforts are diminished in the future. And, I think human nature is such that we will "optimize" to stop trying to store effort that we can't expect to get back...
Is this an inherent feature of economics (or of society)? Do we need a fiction of security and potential future wealth to motivate our contributions, yet eventually need discontinuity to terminate the outcomes of this fiction?
> We need to be able to convert labor to capital, hold it, then convert it back to gain benefits of someone else's labor later.
That part seems fine to me. The thing that feels intuitively "wrong" is that it's possible to amass money/capital way out of proportion to the amount of labor input.
The example of the "four hour work week" concept comes to mind, where the goal is explicitly to minimize the ratio of input labor to output capital. Why should 4 hours of my work now entitle me to, say, 40 (or 400, or 4000...) hours of someone else's work later?
I am also not an economist, so perhaps someone else can explain what other mechanism is working alongside your "labor is fungible with capital" that leads to this result, and whether it's a feature or a buy of the economic machine...
I'm not sure I follow what you mean. But, you can trace inductively how sellers of goods and services start to amass wealth, because prices are set by what buyers see as worthwhile rather than at a minimized "cost plus" basis.
And eventually, once you have enough capital, your new job becomes managing your capital instead of whatever you did before. There's two ways to look at that. Your labor is research and planning of your own investments. Alternatively, you are "selling" capital to others who are seeking investments, and they are "buying" it with labor. But the same story as above holds true. The price of capital (in terms of labor) becomes what the market will bear rather than a minimized "cost plus" pricing.
This duality is what it means for labor and capital to be fungible, right?
To partly answer my own question - clearly there is work we can do that is net-positive. I can spend my time turning a crank to charge a battery, and sometime later get back a subset of the energy I put in. Or, I can spend that amount of time digging up coal, or building a solar panel, and then sometime later have access to many multiples of the amount of energy that I put in.
> How can people not see that Trump is weakening USA?
Yes, but once income inceeases beyond starvation levels, relative deprivation predicts misery more than absolute deprivation, so in a relatively developed country, that's still a bad thing.
Perhaps. So what? Their wealth/incomes were increasing much slower than worker productivity. Technological progress compensates for the massively increasing inequality to some extent.
Also other figures show that median and bottom 10th percentile incomes were almost completely stagnant between 1967 and 2014.
Of course they do. They've built entire careers around the concept that the whole economy can be models on N=1. Inequality doesn't fit into their models, so they dismiss it out of hand because otherwise the 20+ years of their life they've spent devoting to their craft proves to be no more useful than a horoscope.
The VAST majority of developers I've encountered aren't interested in building sustainable codebases. Mainly that's because that's not what their bosses want so it's in their best interest not to care about it. I could see the same happening if the economist's bosses don't care about sustainable economies.
Depends on the developer and on their organization they work for. Ideally, most do, but the pressures of work and the styles of project management sometimes sideline that, or the team ends up in survival mode where they merely try to stave off the inevitable spaghetti apocalypse
LOL I just read something yesterday (possibly a tweet by Carmack?) that game devs optimize for public perception of their game and that is it. Certainly not long term maintainability unfortunately!
Inequality is very simply to include in these models, and they do. The problem is that the models often show that the median quality of life improves faster when there's somewhat more inequality in the system, which flies in the face of every socialist intuition. It's a lot easier to pretend we need state-enforced equality.
It's simple to include, but there's no denying that the 101-level economics models steer you away from thinking about inequality harder than Vin Diesel in a car chase.
Carefully omitting the fact that the economic notion of value is wealth-weighted (and you can march enough elephants through this loophole to wage a class war), drawing attention away from "rich people getting paid for being rich" dynamics by dividing out wealth wherever possible, inviting you to use averages where "rich get richer" hides "poor get poorer" -- it's a masterclass in propaganda. I have literally never in my life seen a more artful tapestry of deception than Econ 101.
101-level models in every field elide important details. That's pretty much their whole point. And it doesn't make them propaganda, it makes them a perfunctory introduction.
I cannot think of another subject whose “101” level magical thinking has affected the real world as much as economics, though. At some point the purpose of a system is what it does, and economics 101 affects the political discourse in a way I struggle to find adequate comparisons for.
No, you don't omit the leading term by accident. Not five times in a row from three different angles.
In any case, this is also matter of historical record: the purge of left-wing thought from economics and politics at the end of the New Deal Era was loud and vicious. It didn't stop at ensuring capitalist principles got top billing, it scorched the earth until even the most earnest self-examination of capitalism's largest weakness was cause for cancellation. You bury it, or you wear the scarlet letter. Most chose to bury it, and here we are.
Inequality exists on a spectrum and there is something in between Gini coefficients of zero and one.
If anything, I think economists have grossly underestimated how large increasing levels of inequality have had such a corrosive effect on our social cohesion and political systems, and that obviously does have a huge impact on eventual economic outcomes. This societal/political breakdown is not something that economists usually model well.
I don't know if anyone is really arguing for state enforced equality. Just that in a capitalist system money naturally accumulates at the top and slowly regresses into a socialist like centrally planned economy as fewer and fewer people have meaningful wealth to allocate. A little inequality is good because there's a reward mechanism for allocating resources better but a lot of inequality locks
up the economy. And the only thing to really do is tax it and recirculate it back to
the bottom.
(1) “American economists” only. (2)Also I am sure looking at the political/institutional affiliations of the responders would be interesting. (3) The responders comments show very different reasoning for disagreement. Some focus on stat derivatives, some on model incompatibility and some on more anecdotal evidence. (4) Some answers are bat-shit crazy like “not sure wealth inequality has risen in the US”.
Economists, the one with Master and PhD, built their understanding and thesis from those fundamental models where inequality was not in the picture (to simplify the model).
To agree with the opposite views mean to disprove their thesis and career.
Also, what those polled disagree with is this particular statement:
> The most powerful force pushing towards greater wealth inequality in the US since the 1970s is the gap between the after-tax return on capital and the economic growth rate.
This doesn't mean they disagree that r>g is a contributing factor to a greater portion of wealth being transferred to those with investment capital (which ultimately can have dire consequences for society). It's not difficult to demonstrate that those with a higher rate of return than the pace at which new wealth is being created (one definition of economic growth) will be capturing a greater share of that new wealth.
> That's partly because inequality doesn't fit into their models.
Well Piketty being wrong doesn't fit in many people's models either. Economists routinely do talk about inequality and I think it's intellectually dishonest to paint the whole field as wrong just because some parts of it don't agree with your pet theory.
I would bet at least 95% or more, personally. I'd survive okay here (until I got sick or injured) because my local environment is pretty easy to survive in, but I would die quick in a harsher wilderness, I am sure, and I am fine with admitting that!
There's a happy medium between what we have today (rampant consumerism and waste) and what we had a thousand years ago (every tribe for themselves). Perhaps you and I can agree that a lot of what humans do is useful transformations of resources into things that help us (housing, food, much of our tech and manufacturing), and then there is a lot of what we do that is completely wasteful that we could be doing less of (plastic crap, driving to offices to meet on Zoom, perhaps we build houses too large, we build in bad places for humans to survive, etc.).
My previous comment was a bit snarky, but my point via that comment is that not everything we do to transform resources into stuff increases the value of the world, perhaps some wasteful things even harm our world and decrease it's value in the future. You're a smart guy, you understand nuance and that wasting our natural resources, especially the non-renewable ones like oil, in a mostly closed ecosystem is a bad idea.
I figured it was obvious that creating something meant creating something of value.
If someone else is willing to trade for it, then something of value has been created.
P.S. Most people don't know how to make a fire from scratch, and will die of hypothermia in even modest environments. I know how to do it, but have never actually tried it. Doing it without even a knife will be really hard. The TV series "Alone" is instructive about how hard it is to survive, even if you're well-equipped with modern gear.
You don't "need" rich people, but they are an inevitable consequence of the ideas Western civilization is built on. We generally believe that someone is entitled to keep what they have earned and do what they wish with it (property rights). So, let's say you burn down society and start over with everyone working at subsistence level. The first generation, everyone will be basically equal. By the end of the generation, some will have done better than others (through luck, or through hard work and intelligence). They will want to pass it on to their children. Now in the next generation, some people will be starting at an advantage. Some of those will take it easy, but some will use their leg up to get even further ahead. The ones who get even further ahead will want to pass that on to their children, and so on.
Repeat this cycle enough times and you will wind up with rich people and poor people, even if you started with a perfectly level playing field. It's an inescapable outcome. Some people will always do better than others, even starting from nothing, and as that advantage accretes through generations it will mean you wind up with the haves and have-nots. The only way to prevent it is to enforce limits on what people can do with the fruits of their labor - and that is something most are not willing to do. People believe in property rights and aren't generally willing to violate them. So, you will inevitably have rich people in society.
Gary is great laying it out for the layman but he talks as if he "thought" it all up. It's really Thomas Piketty who pointed out the issue way before Gary.
I think the difference with Gary is that he has experienced both sides of the coin: grew up of modest means, then became wealthy trading FX for Citibank. As much as HN hates to admit it, storytelling does help to make your points more accessible.
> rich people want to invest some of it in the real world, not leave it in the bank
Honestly, I have no idea why would anyone need that. Money is not value. Money is just a way of keeping track who is owed by future society how much value. It's a way of keeping tabs who gets to consume in the future.
When rich people hoard their money it's not a problem, you can just print more money to replace what they sucked up and hoarded. It's exactly when they try to spend it where the problems start to show up. Because they are doing it stupidly causing at least some inflationary pressures but more often than not societal and environmental harm.
Countries should make every effort to make spending their money as hard as possible for the rich people. Disincentivize them with high (and highly progressive) luxury, investment and real estate taxes. If that causes them to hide their money to avoid tax, even better. Every dollar of rich money hidden is a dollar of value not wasted by society on servicing the rich and their whims and gambling.
People who make their money producing luxury goods or developing real-estate may disagree. As might all the people who work in the supply chains for those activities.
The fundamental theorem of capitalism: rich people get paid for being rich in proportion to how rich they are.
This is why your savings account looks like an exponential. The thing to understand is the difference in lived experience depending on where it starts. If you are poor, the returns are a joke, you tend to ignore them. If you are middle class, the returns fund your retirement, and it seems roughly fair: you work hard and at some point you earn the right to not work any more. Only if you are rich do you see the fountain of free money (homework: calculate yearly returns for the typical 10%er, 1%er, .1%er, and centabillionaire), and of course being the beneficiary you rationalize away the possibility that this could be a problem at all. It's a tidy system.
"That's an unfair characterization of capitalism!"
So is the one you get in economics which bends over backwards to hide the "fundamental theorem" as I have stated it inside a choice of units: "under conditions of market equilibrium every financial asset has an equivalent risk-adjusted rate of return from the perspective of its marginal buyer." Did you miss the class warfare? It was all hidden inside the word "rate." Very clever.
How does economics bend over backwards to hide the “fundamental theorem”?
Every intro to macroeconomics basically starts with a simplified conceptualisation of production as a function of labour and capital. Then it describes returns to labor and capital and so on. People who own capital get paid for that capital. It’s quite literally Economics 101.
> invest some of it in the real world, not leave it in the bank.
The richer you get, the more likely you are to engage in wealth management. This necessarily means investment. No one who's rich has that much liquidity or money just laying around. This is as stupid as hiding cash in your mattress.
The question is which are genuine investments or scams. And this cannot be emphasized enough: either money is made from value-generating labor, or you are in the business of theft. There is no middle ground or third option.
This is why I think one key element of restoring sanity to economies is the categorical criminalization of usury. Compound interest is theft, and it boggles the mind how easily people are intimidated into going along with the rationalizations purporting to explain that it is not (all that nonsense about opportunity cost, as if that is the borrower's problem or responsibility). Banks are important, but they are not productive per se. The only ways a bank can legitimately make money is through service fees and investments (and real investments, where there is a kind of partnership and proportionate skin in the game, not magic bailout money or some kind of weird accounting magic).
Once we destroy the superstitious idea that money can be bred, stop using euphemisms for theft, and acknowledge labor as the basis of all economic value, we will see a healthy economic shift and more distributive justice. Housing markets will improve, too. The change is deep cutting.
The whole discussion about inequality or taxing the rich or inheritance is confused and frankly a distraction from real problems, and I suspect at times a purposeful distraction, because it preserves perverse economic norms (making the tax simply the cost of doing business) instead of correcting them, which is the real threat.
> The question is which are genuine investments or scams. And this cannot be emphasized enough: either money is made from value-generating labor, or you are in the business of theft. There is no middle ground or third option.
Strong words. In your model/world view: Where does investing in the stock market fit? My guess: Nearly all people on this board earn more than the median income and will probably build multi-million dollar retirement savings accounts due to long term (multi-decade) stock market investments (probably passive index ETFs).
The problems with Piketty's arguments are addressed in the article:
"if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made"
Yes, if rich people invested their money wisely, gave nothing to charity, spent small amounts, and left their wealth to one of their children, wealth inequality would grow unchecked.
But wealth inequality has still grown quite a bit. Your point is not a refutation, it’s just an observation that the infection has progressed more slowly than it could have if it was completely optimal.
Why do people post stuff like this. If your ideology depends on misleading people about bad things that are obviously happening, just get a better ideology!
he didn't say it's ok. He said piketty is wrong. Anyone who studied even econ 101 and combined it with a teaspoon of common sense knows piketty is an idiot and that book is garbage. He's a politician.
Maybe actually take econ 101 so you can get the thrust of the book rather than getting lost in the details. His thesis, in that book, is that r > g and that over many years that difference results in very large accumulations of wealth. No one disputes that there are various means that r is achieved.
It doesn't change the thesis, which is wrong. r is not greater than g for any reasonable amount of time for individuals/families because humans have an amazing ability to behave stupidly and reduce r below g.
They're saying that self-made billionaires didn't inherit their wealth. Which means they created it. Which means that it created useful economic activity. And since rich people dont optimally pass on their wealth, those 1000 billionaires' spawn are likely to piss away that wealth while 1000 more economically active individuals create more healthy economic activity in pursuit of becoming billionaires so that they can pass on their wealth to their children to piss away, ad. Inf.
If that's the argument, then it sounds pretty flawed TBH. I mean how does not inheriting their wealth, automatically mean they created it? Is theft not also a possibility?
Piketty’s argument was not just that income inequality would increase, but that it would increase because the return on capital is greater than the growth rate of the economy, so, in his words, "It is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime's labor by a wide margin".
But inherited wealth does not dominate wealth amassed from a lifetime's labor. The largest fortunes today are dominated by people who built businesses, not by people who inherited their wealth. So if "there are fewer than 1,000 billionaires and the vast majority of them are self-made", that is a direct refutation of Pikkety's thesis.
It is hard to overstate just how bad Pikkety's arguments are. His argument assumes single inheritance of fortunes, it assumes that wealthy people don't donate significant sums to charity, it assumes that inheritors of wealth will invest that wealth as wisely as the person who created it, along with many, many other false assumptions. The most egregious one in my opinion is that it assumes the wealthy don't spend their money.
If a billionaire makes a 5% return on his billion dollars and spends $50 million dollars a year, does wealth inequality increase? No, it does not.
It's a ridiculous theory, it is directly contradicted by the facts, and I have no idea why it is taken seriously by people here other than just as an opportunity to participate in a 2 minutes hate against rich people.
"wealth inequality" is one of the dumbest ways of measuring the health of an economy, or to specifically aim to reduce. Unfortunately, there will always be a baseline group of people at, or near, zero wealth. The goal should simply be to reduce this number and the overall number of people living in or near poverty. Whether Warren Buffett has $50, 100, or 200 billion - which does affect wealth inequality calculations - is of zero consequence to the lives of the lowest-wealth individuals (nor did someone like SBF losing 10s of billions, help them)
It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions, or if a small handful of people can fund an effort to identify and groom a wide bench of lawyers to one day become judges who will bend the law in their favor. Not to mention plain old lobbying and campaign contributions. When wealth is power, wealth inequality is toxic to democracy.
>It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions,
Oh no, now it's important to stop this because some people are able to do these things while having political viewpoints that you don't like. Were you previously making the same argument against say, the New York Times, due to it's being owned by one family and following that family's specific ideological viewpoints?
Wealth inequality is an innate part of human society, and by itself has little bearing on democracy or even overall standards of living. There are also many countries with low wealth inequality in which democracy doesn't exist in any sense.
I’m not the person you’re responding to, but I’ll answer that yes, it has always been a problem that so much influence is concentrated in so few hands. It’s been said that a dictatorship would be the best form of governance if you could ensure the dictator would always be the best one possible. But you can’t. When you allow such concentrations of power, at some point someone who is willing to abuse that power, or someone who is simply incompetent, will come along and it’s a disaster for everybody.
Wealth inequality is not innate; there have been plenty of civilizations with far less of it. It’s only an inherent part of free-market capitalism.
Yep. A wealth tax on billionaires brings in some tax revenue, but that's not the key thing it achieves. It achieves no more billionaires. It is bad for society when one single unaccountable person can accrue this much power.
Oh my, individual ownership of newspapers? Bezos bought it from Katharine Graham, while the Sulzberger clan has owned the NYT for over a century. Scripps, Hearst, Pulitzer... how did these names get famous? Newspapers.
Twitter is much more effective at brainwashing stupid people into believing any old crap than newspapers ever were, there were journalistic standards in the coverage for one thing.
So you've managed to blend elitist ideas of some people being less or more "qualified" to disseminate certain opinions than others who don't share your ideological preferences with supposedly egalitarian ideas of reducing concentration of power.
Also, journalistic standards, historically, were little or not at all better than anything you see online today. Yellow journalism was a major part of media since long before the internet and newspapers pandering to very specific, dishonest biases was also pervasive, but with few genuinely unfiltered alternative viewpoints being available. The difference today is that a real plurality of opinions is finally possible and can be globally made visible. The media gatekeepers hate this and thus create contrived arguments about an imaginary golden standard of media integrity and mass misinformation.
We just went through a crisis which the federal government - both Trump and Biden administrations - attempted to alleviate by handing people free money. Are poor people better off because of it?
Yeah brilliant “businessmen” are born into rich families and destroy their wealth pretending to be real estate developers and managing to be so incompetent you bankrupt a casino where the house should always win!
adjusted by inflation the stock market only grew by 34.10% between 1900 and 1982 when adjusted and even if dividends were reinvested. And that's total growth, annualized was barely 0.36%
Their wealth wouldn't have increase at all during that period, especially if they wanted to spend 2% each year.
Of course it accelerated massively in the 80s (1900-2024 was 2.48% annualized) but using the average would make no sense.
If you were still very rich in 1982 you would have made a massive amount of money since then. e.g. somebody like Trump invested all of his inherited wealth (and everything his dad gave him before) into the stock market instead of pretending that he was a very "successful" businessman he would have been much, much richer than he was in 2016 and wouldn't have had to be so ashamed about realising his tax returns.
Piketty is a hack. Most billionaires don't spend anything even close to their net worth. In effect, they have a bunch of IOUs from other people and never cash them in.
Inequality is generally accepted as differences in material possessions acquired/consumed or access to services (eg health, travel, whatever). It's fair to aggregate it into "consumption".
Jeff Bezos is literally never cashing in the vast majority of the IOUs he has. The actual difference in his life isn't anything close to that suggested by the difference in net worth between he and I.
Net worth differences aren't a good proxy for actual lived differences. It's off by orders of magnitude. This isn't a groundbreaking idea, Piketty is aware. He discusses it briefly in his book, with handwavy, abstract notions about "power" and "influence", as if that's what most people care about. But, it doesn't sell the same way his nonsense does. So he pedals his nonsense.
This is nonsensical. The response to "net worth is a bad proxy for consumption" isn't to show various ways of slicing and dicing net worth. A person with net worth $30m doesn't consume 10x that of someone with $3m, or anything like it. Piketty's own assumption is that most of the money is used for investment capital.
The argument is clear - net worth is a bad proxy for consumption and lived experience. You just can't read. Piketty can, he just doesn't like that it makes his argument significantly less potent so he tries to paper over it with "power" and "influence" as if 99% of the world could care less about those things.
> net worth is a bad proxy for consumption and lived experience
Because it's simply not. It's a very good proxy. I understand what you said and only think you are somewhat right if talking about people who are at the very tail of the distribution (yes, when it comes to "consumption and lived experience" it hardly matters if you have 100 millions, 500 or even a billion).
For those in the the 99.X% it's certainly (and obviously backed by all kinds of data) good indicator.
Talking about the "lived" part. Here is another indicator http://www.equality-of-opportunity.org/health/. Of course now you'll claim that living for significantly longer does not say much about the "experience" part or some other nonsense.
> You just can't read.
Or have a low tolerance of ideologically driven demagoguery.
>doesn't like that it makes his argument significantly less potent
I'm still waiting for you to elaborate on that besides just claiming it as fact or "proving" that it doesn't apply if you're in the 0.1% (which is hardly relevant).
The top 1% make ~800k pa. The bottom 1% make ~15k. Thats over 50x difference.
The difference in life expectancy is 15%. That's 1.15x. And that's including that steepest part right at the front.
You've been bamboozled by the y axis not starting at 0. Someone making 10x more than someone else gets a few % extra life expectancy. Significantly less than just taking a 30 min run a few times a week.
Which is huge. Life expectancy in the US increased by ~15% between 1955 and now. Surely you would be entirely content with receiving the same level of care as was available back then and inhaling some lead now and then?
> You've been bamboozled by the y axis not starting at 0
It must be fun being so absurdly obtuse. The whole line of reasoning in your comment is so silly that it's hardly worth commenting on.
There is a massive difference between dying before you reach 72 vs living for another 15 years.
The difference in avg. life expectancy between Germany and Ethiopia is less than that.
Again, surely there is no measurable difference between living in either place when you are making median income?
The difference is less than those who exercise v not, slightly larger than that between men and women. For 50x chance in income. Money simply isn't as big a differentiator in life as you desperately want it to be. And that's the tiny bit of common sense required.
"ever increasing" - no. People die, billionaires tend to stay that way for a few decades then die. In the grand scheme they are nothing, zero. Death aside, look at all the billionaires currently running to kiss the ring of Trump - a populist elected by the people of the US against the will of the so called elite. No one is in control, no one has very much power. It's a story book idea.
Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood but all of us are better off than our parents at the same age and their parents are better off than their parents (with one exception).
All either studied hard in school and went on to get a degree or left school at 18 and apprenticed in a trade or got specific qualifications.
I read so much about declining wealth and how each generation is worse off that I have to assume I’m in a lucky bubble because it’s not the case for me.
None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
I feel like software has been an outlier here for a decade; the only place where traditional economic intuitions still apply (semi-smart people can work hard, learn a technical skill, find a job in their field, pay off their loans, make more than their parents, afford a house, and have a comfortable personal life and relatively fulfilling work life)
Everything I've heard from the rest of the economy is that this model is dead
Fair question, it’s a mix: IT admin, manufacturing project manager, primary school teacher, tree surgeon, mortgage advisor, doctor, something in finance, secondary school teacher, plumber, software developer, power electronics engineer, charity sector project lead
Okay, so a lot of ~£40k a year salaries (outside of medicine and finance) to afford a £400k house when your parents might have had a £20k salary to afford an £80k house? There's a real disparity when you consider what they did too. If your parents are anything like mine, they were in the pub 4 days a week, drinking and eating with friends. I can managed that just a few times a month. Wealth compared to income from my experience is significantly lower by .lost metrics.
Maybe you have an exceptional friend group because .. outside of your anecdata .. the statistically average salaries for many of those professions over large sample sets is below the median in the us and they are definitely not seeing their purchasing power increasing yearly
>they are definitely not seeing their purchasing power increasing yearly
In the US? Real Disposable Personal Income has been growing very consistently over time [1]. The rate of growth did stagnate between 2000 and 2013 but the trend has been remarkably consistent.
it claims that the average person has 50k usd in disposable yearly income - there's no way that's after housing and other non optional expenses have been accounted for.
using this measurement, if wages go up 5% but rent goes up 50%, it would still look as if people have more money to spend than before.
It also depends on who your parents are. My parents at my age were poor working class. We had a much smaller house (800 sq ft), used cheap cars, cheaper clothing, etc... My dad spent a lot of time fixing our cars (I don't even try), fixing plumbing issues, and we rarely ate out (and never DoorDash'ed!). I was lucky to get some quarters to go to the local arcade to play Pac Man.
My point -- even being slightly lower middle class now would feel like a good jump over my parents. That's just pointing out that comparisons to parental income is very relative.
"the only place where traditional economic intuitions still apply"
Which economy? In the US, healthcare, public schools in some states, and B2B sales come to mind as decent jobs. But I agree with the general sentiment - there do not seem to be great choices that support a nice life. Quite a few of my friend have to work multiple jobs or double shifts to make it work.
Most healthcare jobs don’t pay particularly well. The inefficiency is going to pay the salaries of medical transcriptionists, people handling billing inside insurance and in healthcare facilities etc. Things that aren’t improving outcomes are ultimately why healthcare is expensive in the US.
Just for comparison the minimum wage nationwide in Feb 1, 1968 was 1.60$/hour that’s ~14.61$/hour when adjusted for inflation. Median household income in 1968 was 8,600$ or ~$78,504.90 inflation adjusted and that was mostly single income.
That’s the higher end of medicine, orderlies are making 16$/h. People on ambulances are often making 17$/h. Some nurses make ok money, but starting salary for a school nurse is 20$/h and median school nurse is making 30$/h...
Granted I understand what you mean, but it’s kind of like saying managers make good money while ignoring all the shift managers at fast food joints.
Can we summarize it that 'easy' or 'low skilled' jobs aren't payed better today comparing with the past? Not surprising taking into account demand and population. More worrying is that high-skilled jobs aren't rewording. As for equality.. welcome to USSR, you see how it ended. Now only a few Arabs states have greater inequality.
I wouldn’t call working an ambulance as easy by any metric.
As to inequality, we’ve made this much worse intentionally via things like a tax code that massively favors high income earners. It’s not even that this tradeoff has increased GDP growth or anything the country was growing faster with higher tax rates on corporations and dividends.
Even just theoretically it’s suboptimal because jobs catering to or trying to extract money from high income people don’t lend themselves to automation. Long term everyone rich or poor has been worse off.
> You have no clue about the collapse of the USSR.
I lived through it. We can talk a lot about, but the fact is equality doesn't work. Maximum it gets to is everyone equally poor. And as a result of it there are no startups. You need middle class for this and motivation. Government controlled and own monopolies is also the result of equality. Nobody else has the resources. So commies had to create the economy, few bigger things are easier to manage. Managers aren't interested in risk taking, it's not worth it. Finally everything stalled and fell far behind the rest of the world. There were bright spots, but that's it. Like North Korea today can build missiles and not much else.
Just look around. Probably only Cuba and North Korea are still in true socialism. In both there is a small super-rich class and the rest is, yes, equally poor. Super-rich are pretending to be poor too and invent theories to keep the rest under control. BTW, I'm not sure Cuba still has strong ideology today.
Just as a factual matter I think everyone can agree with these three statements:
The USSR didn’t actually have economic equality.
The US has drastically lower tax rates for capital gains.
Finally, arguing for equal taxation isn’t arguing for equal pay.
As to my actual argument, I’m saying economic growth is slowed through the economic inefficiency resulting from unequal taxation. The point of economics is to make goods and services people want and capitalism achieves this through investments and exchanges of money. But distorting that feedback loop through taxes unequal taxes on individuals or companies is a distortion. Invest in the wrong things and economic growth stalls.
Why wouldn't the required skill level increase though? I think it's expected that as a society specializes it becomes more and more difficult to get ahead if you're producing goods or services at the lowest level of specialization. With education getting better and technology improving, it's impossible to make rote jobs be economically feasible for anything other than robots.
Certain industries now are at a point where they are paid a ton. Jobs like the trades, piloting boats or planes, that sort of thing. Your schedule might look a bit irregular, but the path to say a quarter a million a year is far more realistic today for someone who is a pilot vs someone who takes a white collar job.
That phenomenon was not always apparent. Growing up, I was told specifically to avoid those sorts of jobs and go for white collar, informed by a generation where those sorts of jobs were a lot more dangerous and less compensated. In some companies over the last century we went from say building floors of modestly paid draftsmen and a few highly paid white collar classes managing them to floors of modestly paid white collar people fiddling with excel and a few highly paid certified engineers doing the actual technical work. The dynamic has changed.
Yes, you and I are outliers and so are many people here.
Those of us who work in tech, and many of the people we find ourselves bonding with and staying close to in our adulthood, are lucky to have taken up in a sector that happened to see disproportionate growth during our careers and admitted many people from modest backgrounds.
But people who didn't stumble onto that path, or perhaps hoped to follow their parents into professions that were more flat or failing (medicine, education, academia, farming, manufacturing, "the trades"). In aggregate, some of those people are still doing okay, some are doing well, and some are flailing in desperation for having made the wrong bet.
Of the people I grew up with in a modest blue collar community, I don't know anyone besides the few most ambitious and capable that were able to find the security that their parents had. And as one of those more ambitious and capable people who later circled with people of fancier backgrounds, I similarly don't know anyone who pursued things like academia or medicine and found what they expected there either.
As someone in the US that’s bounced in and out of tech, including some longish stints in blue collar jobs, it honestly blows my mind that the tech scene is so all-encompassing that many in it feel like it is representative of… anything else. I’m not talking about the tech libertarian types that think any impediment to the ultra rich vacuuming up everyone else’s wealth is tantamount to dictatorship. I’m talking about the typical happy path developer (I shy away from saying average because all us developers are above-average developers) that went to college for comp sci right after high school pretty quickly secured a junior role for maybe 6x-9x the (ridiculous) Federal Poverty Level.
To be clear: I’m not saying they’re bad people or anything— most people think their experiences are more representative than they are. But, from outside, some of the assumptions software folks make about the world just seem utterly ridiculous. Consider that on average, junior developers make more money than a first year medical resident that has a PhD in perhaps the highest demand field in the US and works shifts of 16-30 hours with many consistently logging 80 hours per week, and occasionally end up working much more. Ask that medical resident what a really bad day, and a really bad week at work looks like for them and ask a developer with the same amount of post-school experience the same question, and then consider how much more school it took… and then ask that same question to an aircraft mechanic, a chef with a culinary degree, a construction worker, a public defender, a commercial fisherman, a firefighter, a nurse… the software industry is more than an aberration — it’s a different planet. The kind of shit I’ve seen developers say they’re going to “pivot to” if the software industry falls apart is, frankly, flabbergasting. If we see the sort of sustained job losses some fear in software, there are going to be a whole lot of people learning some extremely bitter, difficult truths about the world outside.
I’m not saying we all didn’t and don’t work hard to get where we are — it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world. It’s easy to see your own contributions to your success and miss the industry and market scaffolding you could stand on to get what you did.
> it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world
It's about margins. Software has the 2nd highest margins of any sector (highest is High Finance), so it's easy to pay competitively in software compared to other fields.
Right. There’s obviously a totally valid market-based reason for it, and I am absolutely not implying that developers should receive less of that than they do. However, its an external factor which gives many developers a very skewed understanding of how much work most people expend for the amount of money they receive and agency they get at work, and how much they’re worth as workers outside of the software world with roughly the same amount of ambition and effort. Compared to most industries, software companies coddled developers and really tried to trump up the mystique of the great hacker genius. While particularly apparent in the restaurant industry, developers thinking they’ve ‘solved’ an unrelated business they’ve got no experience in using their genius software brain or assume they can simply transfer their existing skills to a new field is pretty common. I encountered one developer who thought they’d simply pivot to crime to keep their family comfortable, which is hilarious. The beginning of a career in crime is long and full of petty bullshit crimes that pay very little because you don’t have the wisdom to not get caught doing more serious crimes, and you don’t have the network to support you doing things like getting unregistered guns, fencing, etc. What I wouldn’t pay to see that guy walk into a bar in a rough part of town, order a craft beer, and try to debate the sketchiest people he saw about why he’d make a trustworthy partner in crime.
I'm just saying the only reason SWEs (and IBs) get paid the big bucks is primarily because of market economics, even if plenty of other high stress roles (eg. Nursing, EMT, Teaching) get paid a relative pittance.
I think a lot of us members of the tech industry need to cut down on our hubris and respect other industries and jobs, and understand that we are cogs inasmuch as anyone else.
Much more recently to be honest. The bottom only fell in MechE fields (Automotive, Aerospace, Defense) in the 1990s, but if global tensions continue, it might be a good time to be a MechE.
That’s right. Things are changing and it’s going to be a really tough pill to swallow for a lot of people that only think they understand what work looks like for nearly everyone else in the world.
Ask the nurses how much they got for severance when steward health closed. Or what my severance was when I got laid off in 2009 working as a fine dining line cook as a culinary school graduate. Or the career concept artists replaced by AI. Add all three up, throw in 4 bucks, and you can buy yourself a coffee at Starbucks.
The dev world’s baseline for what constitutes good treatment, bad treatment, and fairness from employers is completely detached from the rest of the working world.
I'm a little surprised by this. While I'm better off than my parents I went into a much more highly paying field (software engineer vs teacher/social worker.) If I did a similar job to them I would have no hope of ever affording a similar house to them.
They were part of a generation that benefited from enormous house price appreciation due to a combination of falling interest rates went from almost 15% down to under 5% (this is about 3x on its own) and the fall in house building which drove up prices and rents generally.
This effect is somewhat less pronounced outside of southern England.
You make a good point about higher paying fields in the younger generations. While there is a spread of occupations that I replied to another commenter with you may have hit on something. Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
Thinking of one (not me) it’s delivery driver -> enlisted service -> mid level finance (not London)
> Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
That is unarguably true of our parents' and grandparents' generations, but I don't think it is as true of people of my age or younger (born in early 1980s.)
There was a huge expansion of higher skilled jobs after the war with large numbers of people moving into the middle classes. For me and everyone I know our mothers (born 1950s) worked. We all grew up in dual income families.
My great-grandfather was a miner. His son, my grandfather enlisted in the forces during the war, seems to have been recognised as being technically apt and worked with radar, became an officer and in the early 1960s left to be a manager at an engineering company.
His daughter, my mum, became a teacher (first in family to go to college) and his son did not go to college but became an IT manager (married a teacher). All of us grandchildren went to university but basically have similar jobs to our parents' generation.
Several of my siblings and cousins own houses but they got help from parents or partners' parents and mostly bought outside the south east. Renting a flat in London as a fairly highly paid IT contractor I had to pay six months up front because my parents didn't earn enough to be guarantors.
Boomers benefited from a ton. Significantly cheaper housing, education, healthcare, childcare, groceries, cars, gas. Even when adjusted for inflation. Employment was significantly easier to get, especially without degrees, and those easier to get jobs paid relatively much more in terms of the ratio of income to cost of living.
I have a very different experience. I did all the right things, more or less, got into a good field with a secure job in the broader tech industry, and indeed I make very good money.
Despite this, I can not afford to buy the house I grew up in; a 3 bedroom SFH with a decent sized yard and a pool, around 1400 square feet, 45 minutes away from downtown without traffic in a hot real estate market. My father was able to purchase this home as a tradesman with 4 kids, being the only parent who worked outside the home.
Same. Though my dad was also a software engineer, but he was just never good at negotiating raises. My wife and I both work and we could maybe swing the price of the house I grew up in, but the mortgage would be roughly the same as our rent now currently.
Similar case for my wife. Her parents bought in 2000 with a combined household salary of less than mine alone. The mortgage would be twice our monthly rent. Fortunately we stand to inherit that house, which sort of proves the article's point.
You're not an outlier. If you look at US GDP per capita, adjusted for inflation, it's higher than ever. If you then look at the median personal income, also adjusted for inflation (i.e. the middle class), you see the same trend.
There's a lot of doom and gloom but it doesn't seem consistent with the data.
There's a weird tendency to zoom in on particular data points that paint a particularly negative story and leave out the rest. For example, we look at housing and will say that its prices outpaced inflation. And that's true, sort of. But it's also completely untrue. For example, if I look at my own situation compared to my parents: I have a 1.5% interest rate on my mortgage, my parents paid 15%. Homes are now about 50-75% bigger than my parents' generation, on average. And the average home is shared by 33% fewer people than my parents' generation. So the cost to rent the money to buy a certain area of home for 1 person, i.e. housing costs, has actually gone down, despite the average price of a house having gone up.
In all fairness I wouldn't want to trade with the average person in past generations.
Romanticizing the past while at the same time having an apocalyptic view of the future, while I don't know if it is a human thing to do, it is certainly a western thing to do.
I think about how much is it worth for me to work remote vs working at the same factory for 40 years like my father. Some people pretend like this is just a given in the modern world and basically worthless. In reality, it is hard to put a price tag on because the difference is so valuable to me. I actually could have been the 4th generation working at a flour mill if I had wanted. Even if the flour mill paid double what it does, my life is so much more grand than what that would have been, it isn't even close.
So you're saying that on average if you can afford to buy a house, it's bigger and better than it used to be, but also that the fraction of people who can afford to do that is stagnating or declining.
> None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
I have a similar sample, all middle class in their 30's. The only ones who have bought houses have been given significant assistance from their parents, now none of them are poor by any stretch, but few have any significant assets.
Well things worked out for you and they have worked out for me as well. For a long time I have this arrogance expressed privately usually to myself or very close people that it is all due to hard work, diligence, thrift that I reached where I am today.
But lately after reading and observing around quite a bit I come to realize due to being ended up in a fast growing sector at least a minimum level of success was guaranteed. I see same thing at my company where a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me and growth was much faster than compare to when I joined in mid 2000s.
They can talk down to me just like I can talk down to more juniors about value of hard work, drive and so on. However, joining a growing sector early was best thing career wise. No amount of hard work will help if one is starting at a middling IT job in middling company in 2025 like I did in 2005.
Well, and even the company matters. I was in IT since post-grad school (with a bit of engineering earlier). But with dot-bomb, a company that struggled through and then 2008, I was only in an "OK" position. It was really the period post 2010 that set things up a lot better.
Indeed. For me 2010-11 was when I got a full-time job as compared to contracting (small time) which was big jump for me in terms of job quality and money. Interesting enough I met many people who joined Amazon in same time frame and earning about 50% more than me in straight first job that I earned after with 8-10 years of experience. So yeah company part is important.
I wouldn't even say it was work quality; the job I had for a good period really set me up for my ultimate full-time job and I mostly liked it. But that ultimate job was a public company and even if not FAANG level comp, set me up pretty well and provided the leverage to make investments that were pretty solid during that very good period.
> a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me
Not refuting your point but there is a selection bias here. You are in contact with people who did in fact achieve VP or higher levels. Lots more also joined the industry 10 or 20 years before you and burned out, failed, hated it, got fired, whatever. The people who succeeded may not be particularly exceptional in terms of talent, brainpower, innovative thinking, etc, (lots was luck, or being in the right place at the right time, surely) but it's also not true that everyone they worked with back then became a big success.
My dad migrated to London in the 70s and bought his first property in London around age 26. He didn't have a degree but did get a professional qualification.
I ended up getting a good degree at a top uni and started my career at Amazon but definitely couldn't have amassed the necessary amount for a down payment for a place in London by the time I was 26.
By the time my dad was 35 he had two kids and my mum was a full time mum.
This doesn't sound remotely close to the reality of my numerous banking, lawyer, accountant, engineering and doctor friends.
The only people I know who are remotely close to being able to own a property in London and have only one breadwinner work in hedge funds.
You can't compare London from back then to London today though. In terms of its place among cities around the world, it's a different place now.
There certainly would have been locations where your dad would not have been able to afford property, and conversely there certainly are places where you can afford property.
Point being, things change, but this anecdote doesn't illustrate that you're worse off than a previous generation.
Of my friends only one set lives in London and I have no idea how they afford it, one or both of them must be on silly money and it’s pretty clear most of the money must go into the mortgage. I started my career is a very cheap part of the UK so I sort of have to carve London out of any generalisations I make.
The argument in your case is you should actually be _much_ better off than you are without this massive wealth transfer.
That’s part of the challenge in the populous understanding this issue. Many people are better off than their parents, but for being the richest country in the world most people should be far better off.
How can you compare these experiences to a greater upward mobility which does not exist? You don’t have a baseline for comparison. What if you had 2x more leisure time with the same fiscal wealth? What if you had easier access to healthcare?
In the US, my anecdotes seem to show that things have stayed neutral or declined slightly. It seems harder to get a decent job than our parents. It seems that fewer of us have bought homes, or delayed buying due to financial reasons. Seems like more of us are working multiple jobs too. I think the aggregate measures showed real income only trending up slightly over the past couple generations.
Sure maybe there was some inertia from the benevolent bettering institutions of the New Deal that have given a chance to Americans.
I just think you'd have to be so willfully in denial as to miss the darkness we are descending into. To miss how bitterly the GOP and the wealthy are building empires of lies and bespoke manufactured realities to make up down and left right, to cover for horrible treacherous actions against the possibility of the individual, stacking the deck for empire and inherited wealth. (And Dems are frequently unwilling to bite the donor class that makes winning elections possible, after the courts have obstructed democratic funding reforms.) Are actively opposing the possibility of people doing good for themselves & the world.
I strongly recommend folks go read one of the darkest periods of America, before enough was enough
Adam Hochschild's American Midnight (2022) tells an amazing story of a circa-WW1 state that had radicalized against people, that had been totally overrun by well monied powers. Of Hoover using the full power of the police state to surveil as Ralph Van Demand had done during the Philippines civil war, of of the postal service run by someone using it for information control, of American Defense vigilanism.
Its not a tale of what happened next, how that broke, just a long amazing story of how dark America got, how badly the state was an extension of capital and power, and how deeply it subverted the individual, the union, any attempt for everyday humans to make any claim to life liberty, or pursuit of happiness.
We face today not quite such amassed power, but a completely warped infosphere where these bespoke realities create lifestyle beliefs where people are on board with incredible trains of lies crafting false enemies, supporting the opposite of the signalling they claim. Its different than dark; the world today is overloaded by hell's din, by monsters of abuse, doing their worst to harm us for greed and for the possibility of undoing the good of the world.
I'm in the same position as you, but I see myself as rather lucky. I worked very hard but I also was taught hard work translates into success, many people don't see that relationship. And I happened to be interested in a lucrative career path.
> I also was taught hard work translates into success, many people don't see that relationship.
That's a typical confirmation bias: you worked hard and got successful, so you're tempted to think that it's because you worked hard. Some don't work hard and get successful, many work hard and don't get successful.
The one thing that you clearly can't rule out is luck. Tell people in Gaza that if they work hard they will end up in a situation similar as yours...
It's related because you said "you can't rule out luck" which is basically casting doubt on the whole idea of hard work having an impact on success. Well, no reasonable person would say hard work guarantees success, or that all success is luck. The truth is luck and serendipity affect all outcomes, but to use that to question the impact of a human's agency on their own life outcomes is an insidiously disempowering perspective.
Sorry, to me it looks like a lot of words that say nothing.
Obviously, if you don't do, you don't do.
> to use that to question the impact of a human's agency on their own life outcomes
I'm not doing that at all. I am not saying that the effort put into achieving something is worth nothing. What I am saying is that whenever someone is successful, it means that they have been incredibly lucky (and on top of that they worked a lot, maybe). Whenever they compare themselves to someone else who also worked hard but was not successful, the first conclusion to make is that this someone else was not as lucky.
But the first thing that happens when someone gets successful is that they forget how lucky they are, and just start talking about merit. My point is just that whenever you talk about merit, just remember that you were not born in a poor family in a war zone, and that does not make you more deserving.
Very anecdotal. You can't just look at yourself and your circle (which is similar to yourself) and extrapolate to the general population. Also most people in HN are in Tech which did well in the last 15-20 years comparing to other fields.
> Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood
> all of us are better off than our parents at the same age and their parents are better off than their parents
These are conflicting statements. Your group are all beneficiaries of generational wealth by this description. Maybe it isn’t as overt as a trust fund, but you definitely inherited wealth and opportunity from your parents.
It's hard to understand what you're saying here. Being better off than your parents implies that you are a beneficiary of generational wealth? Connect the dots for us.
OP described a group of families that accrued wealth over 3 generations "without inheriting any wealth". Assuming they weren't orphaned at birth, each generation definitely benefited from the fruits of the previous generation. Even without an overt handout like a trust fund, we still inherit wealth from our ancestors (eg: housing, health care, education, credit, social networks, etc). In this case, the "handout" would have been their upbringing. They feel "the system is working" because of this, but not everyone in the system has an ancestry like this.
So by your definition, anyone who isn't an orphan is a beneficiary of generational wealth? In fact, even orphans are, because they inherited genes, weren't left to die, etc.? I suppose that is a definition, but it doesn't seem like a useful one, especially in the context of this conversation. Or maybe I've just misunderstood you?
Same here, but we are in a very similar boat in our voyage through socioeconomic statuses (though I'm in Ohio River Valley US). I may be fooled by the discourse that [Xennials/Oregon Trail gen/Gen Y/Elder Millennials], but we supposedly saved more, delayed gratification, planned more, and worked more than even Gen Z (who, don't get me wrong, have it worse because of undercompensation vs purchasing power and sheer hopelessness).
In which case you were able to save a deposit within 6 years of graduating? When i was at that stage my outgoings (rent, food, council tax, car, insurance) were probably 90% of my salary.
Some of it might be declining costs of everything apart form limited resources (like housing).
Perhaps you generation is better off than their parents were in terms of everything except real estate. But their parents are also better off now than they used to be when they were their age, because everything (except housing) is much cheaper (relatively) than it used to be thanks to optimizations in production and economies of scale of last 5 decades.
Ah, I was wondering too but my reply button was gone, yes I would say we’ll be net > 0 around the same time as you age wise. If we hadn’t had to renovate a 60s property we’d possibly be there already but UK housing stock needs work sadly.
Yep. A good friend of mine grew up to a very poor immigrant family, both him and his sister got full rides to good schools because of grades, and at age 30 bought a house in NJ with a very good school with 4 kids after saving non stop and living with his parents and taking care of them.
The system works fine if you don't need nonstop luxuries
It’s really incredible how much people feel entitled to in the us. And by entitled, I mean they spend money on these things because it’s beneath them to think they shouldn’t have said experience or thing.
> rich have been transferring money from the poor to themselves at a dramatic rate
Anyone not familiar with it needs to look up Georgism.
This transfer happens primarily via housing costs and rent payments.
The stratification of the rich happens via investment opportunities, but the core underlying mechanism for the majority of the population is via housing costs and Ricardo's law of rent.
Yeah, you can't have an realistic economy that will eventually inflate small, entry-level houses to $1mm+ and college costs to the $100k's but still have jobs paying $10-20/hr (or less). Any kid who does the math will realize how hopeless that economy is. Even if you scrape by, one emergency turns you into a debt slave.
Housing needs to stop increasing in price for a number of generations. Surely the rich can find someplace else for their money.
For housing to stop increasing in price, a lot of it has to be built.
The YIMBY movement is pushing in the right direction, but doesn't have the political power that they need. Particularly in California. And, as long as they don't, those with houses will continue to win against those who don't.
There are alternatives: make it expensive to own a house/apartment unless you physically live in it.
It would benefit ordinary people, therefore it is unlikely to be implemented for long if ever.
> For housing to stop increasing in price, a lot of it has to be built.
False.
You can depress the land-based monopolistic component of housing via a land value tax. If speculating on land values stops being a good investment strategy, the price will drop.
Many economists/nobel prize winners have been quietly pointing this out for over a century at this point. Here is a pretty good primer: https://www.youtube.com/watch?v=smi_iIoKybg
As long as there are more people needing housing than housing, prices will be high. California has such a shortage, and the people side of the equation is going up faster than housing is constructed. Making the problem worse over time.
A land value tax could indeed help with housing costs - but that's because it encourages development. It is the construction that makes the really big difference here.
Correct. Thank you for clarifying. Just want to point out that this is different from your initial claim.
> housing to stop INCREASING in price
Land value tax would immediately start decreasing the housing price. You are correct that it would stay high until demand and supply rebalanced, but it would start decreasing.
In fact, you actually pointed out a second mechanism that could lead to decreasing prices in your comment: a decrease in demand. As you mentioned, that decrease in demand could come from a decline in population. However, it could also come from a decrease in that population's capability to match their existing level of spend. People can't spend more than they have so if that amount goes down then prices would also have to go down as a result.
In fact, prices for housing are far more sensitive to changes in demand than for normal goods. Land supply supply is fixed and cannot increase. But likewise, it cannot decrease either and this is what makes land value tax so amazing! Normally, a decrease in price would lead to a decrease in production, but with land, supply never changes so you get a larger decrease in price.
Economists refer to this property as having zero deadweight loss, and it is what makes land value tax the most efficient theoretical tax possible as was mentioned by Adam Smith over 100 years ago. Effectively, you can tax land up to its full theoretical rental value and supply will never change.
Land is an economic edge case. It's like a massive glitch in normal economic assumptions. And that glitch is literally the largest asset class globally and makes up the majority of bank lending. It needs special attention that it's not currently being given.
Practically speaking, land value tax advocates are not proposing full rental capture, but rather first replacing property taxes, and slowly increasing the tax rate while decreasing other taxes.
No, my initial claim is correct. Per https://en.wikipedia.org/wiki/California_housing_shortage, "California needs to double its current rate of housing production (85,000 units per year) to keep up with expected population growth and prevent prices from further increasing...".
A land value tax by itself would not suffice to immediately change this dynamic.
I think we disagree here then. The article you linked assumes no land value tax so I don't think it's relevant.
My claim that land value tax would decrease property prices does admittedly depend on the tax rate. Do you dispute the fact that there is some tax rate where house prices would decrease? For example, going above 100% tax rates would actually force people off land so to me this seems obvious because clearly nobody would want to hold property if it cost more to hold than they could afford... So obviously there is some tax rate lower than 100% where property prices would start to decrease even accounting for other growth factors. Heck, you could even ignore it being a land value tax. This would happen with a property tax as well.
Does that make sense?
Keep in mind that the number that you quote there in the article would obviously change depending on the price of housing. People move out of cities or countries all the time due to cost of living.
EDIT: this seems pretty straightforward to me. It's a net present value calculation with an annual payment. Obviously there is some annual payment where net present value will decrease...
My claim isn't about housing prices. It is about the cost of housing. True, a land value tax transfers value from property owners to the government. But paying that tax represents a cost of housing. Either directly - you're paying tax on your property - or indirectly in the form of rent.
In theory this is net neutral on costs. In practice, it is likely to be an increase immediately because housing prices tend to be "sticky". So it takes time for land value to drop because of the tax.
Ahh that makes sense then. Yep agreed! I got confused because I usually hear people refer to housing prices as property purchase prices, and housing costs to the continuous component. I would have phrased this:
> For housing to stop increasing in price, a lot of it has to be built.
As
"For housing costs to stop increasing, a lot of it has to be built."
It's difficult and ambiguous either way though... Costs being plural and price being singular is maybe what threw me off as well?
LVT doesnt decrease housing prices by itself. It transfers the rent from landlords to the government but without housing expansion rent price doesnt change.
I think a common mistake (and one you’re doing here) is implying those things are fixed measurements. The common definition of a “small, entry-level” house has dramatically inflated over the last 70 years. When people compare to their parents generation, it’s not at all apples to apples — those houses were about half the size and much, much shittier and cheaper.
Similarly, college has become a thing that went from <40% of high school graduates prior to the 1950s, to 80-90%+ today. The demand has increased enormously, so of course prices has gone up.
Isn’t the point of markets to provide feedback and change behaviors? Live in a smaller house, go into trades instead of college, etc. (like many in the last generations did, in reality). Instead, everyone is trying funnel into the patterns that had the most success in the past, leading those to become oversubscribed and not working as well.
There's no recipe for happiness that primarily involves looking in the other guy's bowl. Even if you have everything to eat, you will still need unhappy if he has more.
No wonder you guys constantly post about unhappiness. You are obsessed with keeping up with the Joneses.
Much more joy if you instead care only about absolute living standards. My life has improved a lot and if Jeff Bezos appears before me and will make me 10x as wealthy if he is 100x I will gladly choose that.
We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses. I'd take this trade 10/10 times.
> Even if you have everything to eat, you will still need unhappy if he has more.
Yes if the demands on our personal resources (inc hours, energy, cognition) far outstrip our quality of life gains.
Me (gen x) vs my parents (silent gen): Parenting time went from a few hours per week to 24/7 adulting while kids growth resources (free range+adult free) was nearly eradicated.
My parents had tons of leisure time. I had none.
Mundane activities are unimaginably complicated now - needs that once had a couple of factors to consider now has dozens of compounding factors, each with their own subgroups to work through.
Consumer choices are flooded with bad options; long research is needed to avoid the never-ending line of traps.
> We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses.
What's left out of the "Live Better Than Kings" spiel is that gains turn into mandates (electricity, internet). They're required to meet basic needs like housing and not having kids taken away.
> I'd take this trade 10/10 times.
Draw up the entire list of factors that a poor American has to work through. Drop a king into that life for a month and have them report back.
It's not Jeff Bezos and Elon Musk who are making it impossible for your kids to be free-range. That's your fellow man. In fact, in a world of much greater inequality where your peers are not consulted about how children should be parented, your kids could be as free-range as they wanted. Jeff Bezos, in particular, is famous for letting his children risk physical damage if it means they can grow up resourceful https://www.youtube.com/watch?v=4CmyV5Ghxeg
You can also have lots of leisure time. That's a choice. I do.
You could drop me into the life of a poor American, and a month later I wouldn't be one. I know that's true because I came to San Francisco with nothing in my bank account and a $10/day bed-on-a-couch paid for for 2 weeks.
At first glance, this declaration seems ignorant. You plainly lack the details of my parenting years and they are fully required to make that judgment.
In context, it looks like hubris.
But then again you implicitly validated my claims (24/7 adulting due to free range loss); you reassigned the cause of kids adult-free time.
With acceptance of the demands on modern parents' time, your declaration appears to be self-contradictory.
> You could drop me into the life of a poor American, and a month later I wouldn't be one.
This bit seems to confirm my hubris suspicions and I'm a bit divided on which way to respond. I could be less judgy, given my own years of low-wisdom confidence or I could jump right into exampling ignorance that leads to poor assumptions about fortune and poverty.
In the interest of time, I'll roll it all together.
Below is what actual lives look like.
I'll presume you're above average at opportunity farming and pulling rabbits from hats. I'll further assume your desire to excel includes being a high quality parent and spouse.
You are now married and you have children in lower+upper grades. How many children you have is tied to your confidence in providing for them.
Your spouse is a few years into the medical condition that converted her from supportive parent to +3 children in time, +many children in expenses - which are eating thru your single-income-savings faster than you can add to them.
You keep switching employers because they unexpectedly go under (exec scandal), are bought out+resized or are moved overseas. Or you are self-employed and your product/service keeps not landing where it is clearly needed.
Nevertheless you are confident that your will+skill is enough to see you through. You know your efforts will eventually yield result. Those critical uncontrollable factors (~luck) will eventually turn in your favor!
In the mean time your owned home has succumbed to an event (radon/extreme weather/sinkhole/whatever) and isn't habitable so you are forced to take on a 2nd housing expense while the insurance begins an ordeal that will take a decade to resolve.
Once you+wife+kids are relocated, your wife's medical insurance company pulls out of the market, mid-treatment. You are left scrambling to match a new provider to the full suite of options she needs.
This is when you develop Menieres disease. The tinnitus is annoying but the recurring vertigo takes you out of play for a day at a time. It's a permanent addition to your life. Your employer is understanding - at first.
Parenting during vertigo attacks is tough. Doubly so, given that your own parents died before you married. And since your job took you away from your one functional sibling, you don't have a lot of support.
Your kids still need to be transported to their before-school private classes, to their schools, home from schools, to their after school activities and to the other events that are a poor (but best available) substitute for their eradicated free range/time. They need help with homework. They need routine medical visits and not so routine visits for your oldest who has an ongoing condition of their own.
FF to 20y later and your luck hasn't turned yet. At least not nearly enough for you to get a real footing. You are poor. You're over 50 in tech so good luck finding employment even without all the baggage.
Throughout the 20ys you had a daily choice to care for your family at the level they need or invest time in trying to craft opportunities that would fit your medically-adjusted lifestyle.
Over that 20ys, you more+more opted to not neglect your family's needs. You reduced your opportunity-gardening to being opportunity-aware. You saw some but they required an amount of time that was impossible to budget properly. Or at least that became clear after you jumped into them for a while.
> You can also have lots of leisure time. That's a choice. I do.
Life can and does take that choice away. It's a pure spin of the wheel whether your number is the one that comes up.
Given that I worked with Jeff Bezos at the beginning of amzn, and made roughly $1M before I was 33 as a result, I'm hardly in the "obsessed about keeping up with the Joneses" group: I was the Joneses.
That doesn't stop me from saying that the distribution of wealth within the US economy is immoral, and detrimental to our politics, our health, our environment and more. And it doesn't stop other people from saying so either:
Those folks are hardly obsessed with keeping up with anyone.
I'm glad that your life has "improved a lot". But that's not a reason to give up on fairness, decency and even just plain old self-interest. It's a better society for everyone if there's less inequality, even those at the top.
Keeping up with the Joneses isn't about the sum of money, which by that age is trivial in the Bay Area. It's about the constant attitude of one's unhappiness stemming deeply from a sense that others are doing better than oneself. Fairness is a concept with diverse meanings: for some it means equality and for others it means proportionality. The fact that you have not equalized your wealth to the global median by transferring fractions to those lower than you proves that you do not believe in equality and retain some concept of proportionality.
It's unsurprising that one conveniently draws the line at one's own wealth as decent and fair but it should also be unsurprising when others do the same with their own larger amounts.
The average Indian (the modal nationality in the world), as an example, must work 200 years to gain the wealth you did at the age of 33. Show us your commitment to fairness and decency. I am curious to see you achieve parity with him.
Quite the opposite, I've never yearned for more or even had a stable income. Yet I'm very happy.
Flat out concluding that everyone can make their own happiness by just being open to a system that constrains many others along the way, feels like regressing not progressing.
> During the most recent 22.5-year period from January 2000 to June 2022, the CPI for All Items increased by 74.4% and the chart displays the relative price increases over that time period for 14 selected consumer goods and services, and for average hourly wages. Seven of those goods and services have increased more than the average inflation rate of 74.4%, led by huge increases in hospital services (+220%), college tuition (+178%), and college textbooks (+162%), followed by increases in medical care services (+130%), child care (+115%), food and beverages (82%) and housing (80%). Average hourly earnings have also increased more than average inflation since January 2000 — by nearly 100% — indicating that hourly wages have increased 25% more over the last two decades that the average increase in consumer prices.
> The other seven price series have been flat or have declined since January 2000, led by TVs (-97%), toys (-72%), computer software (-70.5%), and cell phone service (-41%). The CPI series for new cars, household furnishings (furniture, appliances, window coverings, lamps, dishes, etc.), and clothing have remained relatively flat for the last 22 years while average consumer prices increased by 74.4% and wages by 99.6%, although all three series (TVs, toys, and software) have
> There's no recipe for happiness that primarily involves looking in the other guy's bowl. Even if you have everything to eat, you will still need unhappy if he has more.
What kind of happiness demands billions of dollars? These things go both ways.
> No wonder you guys constantly post about unhappiness. You are obsessed with keeping up with the Joneses.
As opposed to the ultrarich who have actively pursued this inequality? Curious, it consistently only goes one way in your mind.
> Much more joy if you instead care only about absolute living standards. My life has improved a lot and if Jeff Bezos appears before me and will make me 10x as wealthy if he is 100x I will gladly choose that.
Who said that Bezos could do that? Who said that wealth is created by the ultrarich? No one, but your mind seems to think so for some reason. Well, I’m sure you could find supposed evidence of it on X and the Washington Post, for whatever reason that might be.
> We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses. I'd take this trade 10/10 times.
So? This is a forum visited by high-earning US software engineers (that’s not me but a lot are). Not the kinds of people that the last four decades have hurt (the most). Which is why you get these surprise comments in these threads. “Woah guys, I’ve been reading these numbers lately and people are actually poor out there.”
No, I don’t think that it’s the Microsoft staff engineers that are personally mad about the state of things.
That 1970 middle-classer would be making around $450k in 2022 dollars, which sounds insane, but I also know my parents had normal jobs and were able to buy a house shortly after getting out of college.
Consider how big the difference is between each segment identified here. Realise that the upper income bracket itself could be broken down into three segments that would show an ever starker difference.
Unequal gains is the problem, and your intuition can help inform why: the 2023 dollar index used is based on what rate of inflation? CPI? RPI? Something else? Why is it that in 1970 a median income household could buy a home on a single income and raise a family (including sending kids to college), on a 2023-dollar income of $66k, but that's mostly not possible on $106k in actual 2023 for most households.
When you adjust for real buying power using a less favourable means of assessing inflation and taking into account housing costs more fully, I sense you'll find that the bottom two brackets are behind their 1970-adjusted counterparts, and the upper income bracket is significantly better off, especially if you then break that upper segment up a little into more categories.
And, without something happening to adjust this, the effect is going to just get worse and worse, and everyone knows it.
It seems to be using the CPI. The basket of goods & services the CPI is referencing is determined by the extensive Consumer Expenditure Survey, and reflects to a fair degree the actual spending habits of Americans.
Obviously, if you give more weight to housing, you're going to get different results. But it would distort the actual change in expenditure.
What makes you believe that housing is not included? Consider using a search engine (Google is pretty good) and using keywords like "cpi shelter weight" or "cpi housing weight". The BLS has a page on the subject.
Well, housing is obvious. It's because most Americans are eager to have community (by which they mean suburban homes) and a short commute and a separation between commercial and residential spaces. This is a process that clearly yields outcomes that are not time-invariant. In the same sense that asking "why did people back then get to put a house down near Golden Gate Park and I don't?" is meaningless. Because eventually all the places near GGP have houses.
As Adam Driver points out in Ferrari, "two objects cannot occupy the same place at the same time". A view some might find counterintuitive.
You’re probably right. The historical norm is that there are owners and there are workers. We seem to be regressing to that.
The difference is that medieval peasants knew their manorial lords had bigger houses and ate more meat, but the visible local differences were small and religion could operate (for worse or better) as a stabilizing force. People tolerated a caste system because they were information poor.
There’s no reason today, though, for people to put up with the kind of inequality that is not only extreme and senseless but constantly being shoved in their faces via social media. The only way the rich stay out of the guillotines is by creating new, weird cultural spectacles like litter boxes in schools (not even a real thing) for “furry kids.”
They were uninformed then, but people are misinformed now.
I think the latter is worse, because it means those in power now have an information lever they can use to manipulate the masses. When there were no broadcast or network media sources, those levers didn't exist and the powerful had fewer tools to control people.
> People tolerated a caste system because they were information poor.
Well no. Peasant rebellions/uprisings happened all the time. People tolerated the feudal system because those rebellions could at best pressure for greater leniency within the system, while it took the later historical developments of urbanization and increasing labor productivity to actually overthrow the system.
The new way to sell the lower and middle classes on persistent inequality and a caste system is the culture war. You scare them about culture war bogey men: trans people, immigrants, gays, etc. The deal is "let us rule over you and tax you and charge you rent, and we will marginalize people whose existence disturbs you."
A closely related variation is the appeal the current oligarch class is making to men all over the world: let us rule over you and tax you and we will keep women in their place and set things up so you have most of the power in relationships. Men get to rule over women, and in exchange the oligarchs get to rule over men and take most of their productivity in rent and taxes. You're poor, but your wife can't leave.
Workers have been sold the lie that if they work hard and smart, they too can get to the top and enjoy a life of luxury.
Relentless propaganda on social and legacy medias funded by billionaires succeeded in creating the most overtly pro-billionaire government ever.
They are now giving themselves massive tax cuts, implementing austerity and straight up picking in the treasury, and a lot of Americans are still defending them.
>The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
The US is setting up to make this worse by cutting services for the average person (like the CFPB and OSHA) and continuing to give tax breaks to the wealthy...again.
This is after the same group of people set off sky-rocketing inflation by injection almost a trillion dollars of new money into the economy by way of the PPP program, of course hurting the average person more than their wealthy financial backers.
Medicaid cuts are going to be the real nightmare fuel. People think Medicaid is for the poor (which some Americans are always happy to screw over) but Medicaid is what makes it possible for many working folks’ parents to afford geriatric care. God knows what happens when the GOP succeeds in slashing it.
A huge percentage of Medicaid goes to nursing homes. Medicare does not fully cover the service. You either pay out of pocket or if you’re destitute (as many elderly people are) you get Medicaid to cover the difference.
Also I want to add to this in case people don’t understand:
End of life care is a giant vacuum cleaner designed to move wealth out of families. It is incredibly depressing. Because Medicare does not fully cover nursing homes, you have basically two choices:
1. Give up a huge percentage of your family’s assets (home, retirement savings etc.) so that it never gets handed down to kids and grandkids.
2. Gift those assets early (at least five years I think) so you are technically broke and then can qualify for Medicaid.
Even if you don’t gift those assets early, many people will still run out of money because they aren’t wealthy. So they’ll also end up on Medicaid.
People have the very dangerous impression that “Medicaid is for the poor and Medicare is for the rich” and oh hell are they about to make a terrible mistake.
Nothing lasts forever. The rich get most of the economic growth is inevitable. It's the Matthew effect. In general, the more assets you have, the more passive income you have, which in turn frees people up from worries about making breads for the family, and thus can spend more time on think and do things more important in the long run. Again, that would reinforce their financial status. In the meantime, the poor would have to worry about next meal, and mostly don't have the reserve for investments. Thus, they will most likely struggle to save something, and even if they do manage to save some, an unexpected event can easily wipe it out before it reaches the threshold.
If the riches were conscious enough, they would return a fair share to the poor and the eventual crash will be deferred much longer. But you know, everyone wants more money, no exception for the riches. It looks the only thing we learn from the history is that we learn nothing from history. So here we are: the same drama of empires' rise and fall, the only differences are the locations and the actors.
Things that can be produced with machines rather than labor have become more affordable over time. Electronics, travel, clothes, and even food are cheaper than they used to be relative to wages. Then there are fields like education, childcare, and construction, which have not seen substantial productivity gains. The prices of their outputs can be expected to rise at the same rate as wages. (And then there is healthcare, which is complicated.)
But what has actually happened that increased housing costs have eaten the productivity gains for many people. Largely because of deliberate policy. Desirable areas often discourage new construction. When new construction is allowed, they prioritize single-family homes. And if really pressed, rental complexes.
As a rule of thumb, if you can afford to rent, you can afford to buy. If you expect to stay longer than a couple of years, you should buy. But in many places, if you can't afford a large home, you have to rent a small apartment. Because there is a shortage of small condos to buy. If the units available for purchase grow larger while the price per square foot grows at the same rate as wages, housing becomes less affordable.
In many of the denser population areas of the US _generations_ 30, 50, maybe more YEARS worth of insufficient building has left a completely broken situation of stagnation relative to population.
> people only seem to demand a fair piece of the wealth after a world war.
I think it's more that war has a tendency to literally destroy capital which is effectively a tax on the rich. When factories get bombed, factory owners lose out more than people who don't own factories.
War is horrible but it historically has at least been somewhat of an economic equalizer.
One of the real tragedies of the pandemic was that it turned that upside down. The virus didn't touch capital but destroyed humans, and the humans hit the worst were those in "essential" but low-paying jobs who couldn't socially isolate. The effect was that the pandemic increased economic inequality.
Are you sure it's true that the pandemic increased economic inequality?
The humans worst hit were by far the elderly, and the elderly tend to have more assets than the young in industrialized countries.
Among working-age people, lower-paid "essential" workers were exposed to more risk, but by a significant margin, old people are the ones who died more.
Individual old people may have died more, but we are talking about economic inequality. They had huge gains in their wealth due to asset inflation. Working people were by far the worst hit by the devaluation of their labour.
We've had terrible times without completely failing before but I agree with some of your sentiment. That isn't much solace at all but maybe it won't be the end of the entire experiment?
The extreme wealth gap and corruption paired with the loss of virtue (integrity seems to hold very little social value these days) seems like a bad mix to me if you like stability, let alone shared prosperity. Moreover, the response to the United healthcare assassination showed us that a bunch of folks don't think there is justice left in the system. The reactions to covid were a stark example of how a huge swath of people not only won't lift a finger to help their fellow citizens but will actively oppose it and be offended by the suggestion itself. This year the purges of non-straights or non-whites from all positions (and even from some records!) began and we don't yet know where that will end. Politically we've spent this year alienating our allies and generally acting like bullies.
I'm worried we'll be in a war in 3.5 years (real or manufactured) and "need" to delay the next election for a while, "in the name of national security".
people don't demand wealth equality after a war, they just create massive inflation during the war and solve it by taking everyone's savings after the war...half the countries in europe post ww2 did something akin to replacing the national currency at exchanges rates of like 10:1 in some cases like germany...and germanys post-war inflation solution is hailed as an 'economic miracle' by many history books. Somethings tells me I wouldn't feel too jazzed about taking 90% of my savings, but I would also be resigned to do whatever because war is worse.
I get really worried when I see people glamorize equality post-war...post-war times are not good times for the middle class. The most equal wealth humanity has ever had is during caveman times, but that is not the goal.
war does not make things better folks, I hope that's not what OP was trying to say, but just in case let's be very very clear about how awful war is for progress and humanity.
post-war reconstruction fervor can inspire wealth creation. This is largely because there are no NIMBYs and eco-warriros sat around saying that the returning troops cant have a place to live and we cant have new infrastructure. If we can get that reconstruction fervor without a war it would solve a lot of our problems.
I just don't believe this, not because I have hard data, but it just doesn't make any sense. Sure, the central banks will do everything they can to ignite the economy and everyone will be generally working their hardest to recover from hard times, but how can an economy that gets completely halted to go full bore in war efforts ever hope to generate the wealth of an economy that isn't halted and has been making incremental improvements, uninterrupted?
War destroys existing structures and gives them a chance to evolve again.
The economy is growth dependent and can only perform its basic functions under growth, even if that growth is fake. By basic functions I also include all functions that do not depend on growth.
> War destroys existing structures and gives them a chance to evolve again.
are you suggesting that destroying things, results in improvement in the long run? I don't know that I could be farther from agreeing with that. If starting from scratch was better, why wouldn't we be doing it voluntarily at frequent intervals? It just seems easily dismissed as entirely incorrect.
> The economy is growth dependent and can only perform its basic functions under growth, even if that growth is fake.
I don't think this describes the economy, it just describes some of the metrics we use to gauge the health of the economy. burning down the internet and killing everyone that understands it might result in another dotcom boom, but would you say the economy is more healthy than some other reality where the internet continued to exist with no reset and only has smaller incremental gains?
Seconding the Gary Stevenson rec, he frames in a very digestible way the flow of income from people working day to day being spent on modern day lifestyle (and necessities) to the people who own the assets modern lifestyles are dependent on and how this formulation of an economy may end up becoming increasingly unsustainable.
Isn’t Marx, when he documented Capitalism, predicted its collapse?
Capitalism has been tried in 100 countries over the past 100 years. Not a single country has reported a harmonious society without suffering and inequality. Failure over and over.
But no alternative is being seriously researched.
I’m not talking about socialism/communism. A new system designed according to current knowledge in sociology, anthropology, and human biology.
Capitalism wasn’t scientifically researched nor updated according to science. In humans, it amplifies greed and materialism.
And democracy that we use now wasn’t seriously reviewed and updated according to modern science. The democracy we use now is the system the ancient Greeks came up with to replace feudalism. And all they knew back then was feudalism, so they replaced kings with electable kings. And we use that primitive cavemen level system now! It’s so bad you wouldn’t even use it in your Civilisation type game unless you expand it with 100s of in-game regulations, which we are unable to do upon real world.
A Civil War in the USA? Where would the battle lines even be drawn? There is no consensus, and there are hardly even blue or red states anymore beyond 60/40 splits. Even racially we are seeing a lot less polarization.
> A Civil War in the USA? Where would the battle lines even be drawn?
Clear, obvious initial battle lines are not a prereauisite for a civil war. The American Civil War, where the conflict was largely motivated by an issue which had a geographical split among subordinate polities was kimd of a special case.
I live in Texas and back when the idea of succession was being thrown around I asked my friends if they’d go toe to toe with the US Marines while bombers and drones loitered above their heads. They got very quiet.
I don’t think a civil war in the us is possible but I think advertisers taking advantage of the divisiveness to see chaos is likely (and already happening).
Edit: I meant “adversaries” instead of “advertisers” but I think advertisers works equally well so left it in.
Most likely is that the side with the army and guns turns the blue areas into an occupied police state, and sells it to the constituency as a "civil war", despite it being completely one-sided.
Before the election, everyone on HN was telling me that we live in the best economy ever and we're in a "vibes recession" where ignorant Americans can't understand how impossibly good things are. Now that it's less politically salient, everyone can just say true things. I wish every subject were like this all the time.
> we are headed for a destroyed Europe and a civil war in the US
"Capital in the 21st Century" by Piketty does a good job arguing that the historical normal condition is for wealth to concentrate bc the returns on capital are greater than overall economic growth. It's depressing, but creating the kind of world that a lot of us and our parents enjoyed takes special conditions (and political will?) ... but the flip side of this view is that intense inequality can endure for long periods of time and doesn't necessarily lead to political instability.
Is this a serious reply? The poor may not have much, but every dime they do have is spent on necessities… rent, food, healthcare. So where does that money go? Who are the actual recipients of those dimes?
Are you attempting to make a “they provide jobs” argument? Because they wouldn’t if they didn’t have to. Jobs are an unwanted byproduct of a successful business.
Seems like you should just start a successful business then. The business owner provides no value and just gets tons of money for free. Sounds like an amazing deal. Why don’t you take it?
I think you would agree that success often depends on access to resources and support system - not everyone starts at the same point. Many who are celebrated as self-made often benefit from inherited advantages, which complicates the meritocracy narrative.
Lots of people have access to resources. Very few of them start successful businesses. Zuckerberg’s parents were dentists. They were well off, sure, but there are hundreds of thousands of dentists in the US, if not millions. Why don’t all of their kids start companies like Facebook?
I think you know at least some of the reasons Gabe. There is a series of filters: intelligence, early skill development, a supportive environment, elite networking, risk tolerance, strong vision, perfect market timing, and a business model benefiting from network effects in a market that can only sustain a few winners.
This list might be incomplete. Would you like to supplement it, or do you prefer to continue with the socratic method? I'd like if you did the former, because the latter comes across as arrogant and condescending.
I said hundreds of thousands, if not millions. It turns out there are around 200,00.
Success depends on some combination of hard work / talent / luck. You can have an extreme amount of all three and get an extreme outcome like being a billionaire, you can have moderate amounts of 2 / 3 and still be quite well off. You can have extreme amounts of one and be successful from very little.
Access to resources helps, obviously, but it is neither necessary nor sufficient.
It seems like we agree, more or less. I'd say there are more factors, and talented and hard working people can still get pretty screwed, but that's beside the point.
To your original question about the wealth transfer, this isn't just the rich selling their subscription services to the poor or something like that. It's a much broader subject.
Some ways in which it can happen include inflation eroding wages while increasing asset values, high-interest debt, tax loopholes favoring capital over labor, financialization driving up costs of essentials, government bailouts benefiting corporations, privatization shifting public assets into private hands.
You'll probably agree that some of these things have been happening for decades, and some people want to accelerate the rate at which they're happening.
Yes, many of those things happen, for various reasons. Not one of those reasons is a cabal of cigar-smoking men in top hats twisting the mustaches and saying "Muahahaha, now I'll steal money from the poor!" like many people seem to think.
It’s way more mundane than that. They just rationally protect their self interests using the power they already have.
To claim that it’s not happening is not believable. Why wouldn’t they protect and expand their wealth and power at the expense of the serfs if nobody is stopping them?
I think we’re seeing his spilt economic system coming into play with computer hardware. Less and less B2C sales over time. It’s just not as profitable to sell to poor people.
In 1995 my parents, both factory workers, bought me a $2500 Packard Bell PC with 100MHz Pentium, 8MB of RAM, and a 1GB hard drive. Adjusted for inflation that would be a $5,283.95 computer today.
I remember that exact model. Computers use to be very expensive. You can pick up a brand new powerful laptop to build a career on for $300 at Target. (I’m in the US I know many commenters here are not)
> the rich have been transferring money from the poor to themselves at a dramatic rate.
By definition, the poor have almost no money to transfer.
Wouldn't you have to transfer from the middle class - which is shrinking in relative terms?
The poor have never had anything and still largely have nothing. It is literally in the definition.
I don't see how it's possible to enrich yourself (when the amount you need to grow by even small percentages is enormous) from a class with nothing to take.
The poor have no money individually, but in aggregate they have some. $1 from a million poor people makes one millionaire.
IMO the main thing they extract from the working poor is time - what they're stealing is the excess value between their labor and the value is creates, and technology has made it easy to do this at a massive scale. So it's less $1 from each person, it's 8 hours per day from a million people makes 1 person a billionaire.
First - "poverty" is up to $14k per year. Many of those people are "poor" - but probably not the majority, and definitely not even close to all.
Second, billionaires have almost $7T in wealth - the top .1% are at about ~$20T.
They didn't get any meaningful percentage of that by taking pennies off of 45M. You'd need to take thousands. And they just don't have it. That's almost $450k per "poor" person.
That's more than the median HH wealth in the US.
If you look at the "actual poor" - you're likely looking >$1M per person.
You simply cannot "steal" that from the "poor" (who have almost nothing to steal, by definition).
Even if you amortize that over decades - it is just not how it happened.
What about family-owned property? Lots of poor people live in multigenerational homes that might be the last step before not owning anything. Also, the fact that the housing market is this bad just means a large portion of the population will be stuck in rental accommodation for the foreseeable future, and that should be accounted for as a form of money transfer somehow.
And for those who will say, "Then the government should just build more houses", let me point out that we might run out of space before the appetite for real estate investment dies out.
It's very common for people living in traditional working-class neighbourhoods to own a house and suddenly become paper rich when gentrification happens (e.g. Venice Beach in LA). They might find themselves in a situation where, in theory, they have a lot of wealth from the house but don't participate in the economy at the same level.
"Everything feels increasingly like a scam," she said. "Not only are grocery prices going up, but it's like everything has a fee and a surcharge. And I think that anger is put out at government."
Is your argument really that because things were really bad in 1905 we shouldn't complain that after many decades of progress* that we are now rapidly sliding back to things being extremely shitty again?
Because that's a really strange way to look at it.
(* driven largely by increased regulation, unionization, etc... all the dirty words for modern conservatives)
You might care to specify what exactly your argument is then, as I'd formed a similar conclusion.
The Jungle led to an era of reform over nearly a century in which laissez faire and caveat emptor were displaced, largely to positive results, by appropriate regulation.
That regulatory turn had been opposed, increasingly dismantled since the Reagan administration, and in the past month and some has been outright dynamited. The consequences are beginning to show.
If that is your argument, it would benefit by more precise communication.
OK. If I'm not making an argument then we both agree that my argument is not that because things were really bad in 1905 we shouldn't complain that after many decades of progress.
We need a way to both have the benefits of modern social organization without supressing the means to fall back to simpler but more resilient and decentralised societies which would come together to maintain the form of nations in times of crisis, which inevitably come again and again.
What we have is a social crisis that billionaire class used to exploit the nation for classist gains, with the collateral effect of damaging the nations memory, identity and values.
> Economic inequality is an umbrella term for a) income inequality or distribution of income (how the total sum of money paid to people is distributed among them), b) wealth inequality or distribution of wealth (how the total sum of wealth owned by people is distributed among the owners), and c) consumption inequality (how the total sum of money spent by people is distributed among the spenders).
Why is the only outcome 'a destroyed Europe and civil war in the US'? This sort of doomer thinking is more like to bring us to that point than anything else, it seems to me.
Maybe an alternative is we'll figure out how to change and fix these corrupt systems as more and more people wake up to how bad they really are.
Is not that they are seeking a transfer, but the incentives and system work is that it eventually converges to “poor get poorer and the money is transferred to the rich” as the most efficient way big biz makes money.
What I like about NFL, NBA, MLB etc is that they will tweek the rules to make things competitive so the rich don’t get too rich and win it all too much. We should have a “DOGE” system for rule tweeting to even things out once in a while
> the rich have been transferring money from the poor to themselves at a dramatic rate.
How does this work? Where do the poor get wealth, on a continual basis, for the rich to take? If the poor have so little, and have had their fraction of the wealth taken by the rich for three decades, assuming things have got worse for the poor since the end of the eighties, where’s all this wealth coming from?
I’m not singling out here, this is a question for the general audience.
I think there’s another possibility: people eventually accept inequality and lower their expectations and ambitions for life. A lot of energy is wasted on trying to make everyone equal when the scales have become too tipped. At some point they’re simply isn’t enough activation energy left to right the ship.
In the past (centuries ago), it seems like people simply accepted other classes were better and they could never be their equals. That’s how you end up with royal families, etc.
So in the future, people will simply work to the bone, find whatever pleasures they can when possible, and maybe just not wake up ever again on some morning before their shift starts. They will live in small simple residential units mostly for sleep, eating, bathing and watching some content on a screen.
The rich will segregate themselves away to enjoy a finer life somewhere that they can be shielded from the plight of the poor.
> The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
It blows my mind why pension funds continue to invest any money at all in PE and Hedge Funds. It's a straight up wealth transfer from the working class to the investor class. States should pass max fee laws for their own pension fund allocations.
This is what I've been struggling to articulate more succinctly since my college days, when I started really getting into macro-level systems analysis and long-term planning. Much of the Western world ceded pieces of its sovereignty to external entities without regard to the long-term consequences of said actions. Stuff like outsourcing domestic labor abroad, to countries like China (refining, manufacturing) or India (knowledge work) means those countries now have an outsized influence on domestic affairs that aren't easily clawed back. Ceding sovereignty of infrastructure (be it data centers, roads, hospitals, schools, etc) to private enterprise means those entities have dictatorial say over how those pieces of infrastructure are operated, maintained, and replaced.
In essence, the limited sovereignty the West retained was broadly centered around consumption and wealth, opposing ends of a larger economic system that are now grossly out of balance. It's at the point where there is no singular "silver bullet" to fix it, either. Taxing the wealthy will help, but absent meaningful reshoring of industry and jobs domestically, it won't actually right the economic ship. It's also not merely an American problem, but one largely affecting the neoliberal West that spent decades outsourcing, offshoring, contracting-out, and generally doing everything possible to min-max cost vs returns, quarter after quarter. I think the only country not substantially affected might be Germany, but there's still talk of automakers shuttering factories there in favor of using Chinese labor and shipping the vehicles back to save on costs.
We have created a global economy but without global regulation, which in turn has resulted in artificially depressed consumption prices (relative to actual local costs) and artificially increased wealth extraction through rampant exploitation. Absent a singular global currency and standard of living (which, let's be real is centuries away at the earliest), the only practical solution is a domestic rebuild of labor markets, supply chains, and industries, with a goal of refocusing national exports on what a country uniquely excels at rather than simply offshoring to whichever country has the optimal labor pool and exchange rate relative to your specific industry.
It's a hot mess to be sure, but not unsolvable. Reshoring industry gives us an opportunity to re-evaluate supply chains and resource management with a focus on closed-loops and renewables. Reshoring work will boost wages and living standards, which in turn will boost birth rates and economic growth. Diversifying the economy back into regions and localities will promote specialization and innovation, rather than the fad-copying of today. There's a lot of good to be had in facing the problem head-on rather than giving into fascist ideology and demagogues promoting "one easy trick" to fixing things, but all of it involves hard, honest work, which some folks will naturally be hostile toward.
Corrupt and fair are key points. I believe it comes from a change in worldview.
The fundamentals used to be closer to the Bible's. They shifted to subjectivity, nationalism, authoritarianism (unchecked), and capitalism. Then, new groups around 1900 shifted to more subjectivity and atheism. Add pleasure-driven culture from the sequel revolution onward. Then, evolution, intersectionality, and feelings over facts.
As I look at these, I see a dangerous combo of not seeing individuals with inherent worth, thinking people are like animals, believe/do whatever without long term consequences, and do what maximizes selfish gain, money or pleasure. Our problems are inevitable under that mindset.
Let's look at specific examples in your post. The rich should take more wealth for themselves since that's maximizing selfish gain. The poor (or scheming) should also try to take their wealth by theft or welfare. If people get hurt, it's an unavoidable problem in a workd of conflict where the fittest survive. No objective morals even exist.
Fortunately, we're seeing a growing rejection of those values leading to life transformations. That's a huge part of Trump getting elected since his policies are appealing to such people. The Spirit of Christ is also causing revivals across the country with thousands to tens of thousands gathered trying to change at the core. Inner change leads to outward effects.
Right now, our college students are taught conflict theory, favoring specific geoups, subjectivism, work against our natural design no matter the losses, and pleasure/money/intellect are god.
What will happen when college students instead are taught objective truth, doing what's right above all, building on our natural design, loving others with sacrifices made, helping those in need onto their feet, unity despite our differences, and building companies that are profitable within those virtues?
I think the results will be beautiful. I've already seen places like that on a small scale. For big ones, Chic-fil-A and Hobby Lobby are pretty close. Part of God's design is some people will be rich and eventually generous. So, that won't change in most places.
His whole narrative he crafted was really unbelievable. I watched a video of him explaining his story, expecting to hear some story of finding consistent signals that stayed alive for a long time or finding crafty wording in bond contracts, but the whole story was that he took a punt on the GFC being worse than the market expected, and he made low 8 figures. And somehow, because of this, by some measure, he was the best trader in the world.
I too was the best trader in the world when I got some skittles from my friend in the playground for free and sold them to another kid for a dollar making an infinity percent profit, but I didn’t feel the need to make a YouTube career out of it.
I too was intrigued to find him but it took 10mins of watching a few videos to be left feeling duped.
Felt like he's working out his problems on YouTube rather than therapy (after first trying to in a trading career). I really dislike his (and most progressive's) narrative that others are distinctly out to get you. It shrouds the real complex machinery, and papers it over with intent. Which impedes meaningful progress i think.
I find it surprising that someone who worked inside a banking corporation, and has seen first hand that nothing ever goes according to plan, is able to believe that somehow the machinery is perfectly orchestrating a privilege loop.
Grifters gunna grift. He is just another lippy barrow boy that claims to be the "best trader in the world" - actually surprisingly common in London bank dealing rooms.
The oddity is that it has taken so long for them to find YouTube.
He has found something of an audience in the social media oriented audiences, who are educated enough to grasp the general idea, but not specialized enough to verify his claims.
I've only heard of him because of this sort of Hacker News comments, and my general impression is that he is usually so off the mark that it is hard to have relevant conversations.
He makes money selling books and having an Youtube channel.
Dude Gary Stevenson is so good, great to see him shouted out on these conversations.
I've long wondered why so many economists get inequality so incredibly wrong without any hint of self-awareness whatsoever, and the answer (in part 3 of that series) was mind-blowing. So, so well put together.
I won't give the spoilers here, but do watch it. It's an experience.
Raise taxes to 80% after making more than a million a year? That's more than enough of a ceiling to keep incentives for 99% of the population. And any taxed income comes back to the masses anyway. Of course this depends on having good government programs so that the money is not wasted or stolen.
No. If you bring up what is “fair” in a given economic system, there are only 2 options: Prices set by the system/economy, or prices set by people. Why should I leave out the latter? I’m not trying to red-bait anyone since even in the US capitalist system, prices are sometimes set by humans (see: helium!)
The idea that an average person, working hard, can eventually own part of a nation's land and resources, setting up their family with generational wealth, is derived from the pioneer days when land was plentiful.
This was never going to be able to last forever as long as the population keeps increasing. This is why settlers left Europe etc in the first place to seek fortune overseas. And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Working hard is necessary in its own right for many reasons, but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing. So is shaming anyone who fails to achieve it as "lazy", when it was never going to be possible for more than a fraction.
Land is not scarce in the US. My road trip through Nevada to Salt Lake City convinced me of that much. What is scarce is land people actually want to live in - with safe neighborhoods, good schools, restaurants, shops, etc. Restrictive zoning and NIMBYism is definitely making this worse.
I don't think the amount of "unexplored" or "undeveloped" land is a good metric for social mobility. Economic growth is. New "frontiers" are created all the time. They do not have to be in the physical world (e.g. computers, the web, biotech, the App store, social media influencer, crypto, and now AI). Even in the physical world, frontiers can sometimes expand. Desirable land can be created in the middle of a desert (e.g. Las Vegas), we just don't want to anymore.
Despite its many flaws, I think the US is still better than pretty much anywhere else in the world.
This is one of the reasons I wish companies embraced remote work more, and which I wish the government encouraged more. Plenty of locations could be rebuilt and revitalized simply by moving working families there, and plenty of people would be happy to buy up the cheaper housing and contribute to the local economy if their places of work allowed for such flexibility.
Its a real shame that both state and federal governments do not see the advantages of this...
Most of that rust belt infrastructure from mid century population highs is actually at end of life. Some cities are having a crisis with things like their sewer systems right now. Its underreported because no one cares about the intricacies of stormwater and sewage movements, much less in a smaller midwestern city.
Agriculture, the Saudis get five harvests of alfalfa a year by leasing unlimited water rights in Arizona for practically nothing. The Az Governor could call the leases and stop that, but they haven't for some reason. Most water in AZ is for Manufacturing and Farming, very little is used for people.
Not really, no. The land the BLM owns is mostly scrubland suitable for cattle grazing and basically nothing else. I suspect whoever told you that has an ideological bone to pick with the BLM and is bullshitting you to try and make you equally mad at them.
Define "orginally". You might be interested to research how the Native Americans interacted, especially the Lakota. Rights by conquest was not a new idea.
Well the obvious response is then "can I conquer your land by force too?". No. Because there is a construction of "lawful property rights" that starts with the appropriation of land by force but protects the new owner from the same.
Well technically the land can still be appropriated by force, only you have to apply it against the entire system which enforces "lawful property rights"
There were a few hundred thousand of them across the entire continent. In the best case scenario, most of them still would have died to disease. Unless you believe a few hundred thousand people own should own an entire continent as their blood and soil birthright the land was always going to end up like this
There’s still a lot of land out there. The only problem today is nobody wants to start over with no plumbing, electricity, or other modern conveniences.
You’re right, I mistook the Canadian numbers for all of North America. I know south and Central America had a much higher population but that’s not what this thread is about. It looks like a more accurate number is in the low millions so my point still stands.
I'm gonna go conquer Georgia, then. Genocide some country folks, burn every Confederate flag I see, end some bloodlines forever. There's not many people living there, right by conquest, etc., plus Reconstruction wasn't finished properly anyway.
Native Americans did have dogs. They didn't have sheep, but the Incans did have access to wool-bearing animals in the form of the alpaca (though the Incan Empire was geographically isolated so these animals never reached North America). Guinea pigs were also domesticated in this region. There were neither cows nor chickens, but there were other forms of poultry such as turkeys and ducks.
You need pack animals for civilisations. Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement.
You've drawn this argument from Jared Diamond's Guns, Germs, and Steel. There are a few problems with the theory:
1) Diamond's argument rests on the idea that world historical developments are effectively determined by geography (and implicitly, by factors which precede the existence of a civilization). While I can't make a strong argument against historical determinism, the conclusions Diamond draws are strange. The chief problem is that Diamond is trying to make the case that the exceptional prosperity of Northern Europe and all of its colonies was effectively a fluke of geography. The problem for Diamond is that this pattern repeats over the course of about four hundred years all over the world, not just in the places where Europeans had the advantage of small pox on their side.
2) Native Americans had access to pack animals by way of the llama.
3) The Aztecs lacked access to pack animals. They still had specialized tradesmen and constituted a civilization.
The germs argument is the only one of Diamond's that I think holds any water with regards to the European conquest of North America, and perhaps I was being too brash in my original assertion (these civilizations existed, but were decimated by small pox). The issue with this argument is that it doesn't address European colonialism in Asia (where the disease factor is absent) and Subsaharan Africa (where the disease factor actually worked against Europeans).
The fact of the matter is that Europeans (and specifically Northern Europeans) happened upon a method of conquest that worked. This could have been an accident of geography, biology, or ideology, but it's absurd to pretend that the model didn't exist when it was the basis of a successful campaign to conquer the world. It had nothing to do with having access to pack animals.
The Llama is not a very good pack animal, you would know this if you ever looked at one. Pack animals are not necessary for any specialisation, but the are for the degree that brings technological advancement. If you want advanced society, you need to move lumber from forests to cities and ore from mines to furnaces. It's difficult to do this by hand.
> it was the basis of a successful campaign to conquer the world
I am referring specifically to the conquest of America here. You can see that there were several advanced societies at the time (China, India, Europe, Middle East) and it is essentially luck which of them won out. There are also many places which could not have feasibly conquered the world, America was among them precisely due to the lack of pack animals barring further societal advancement. By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
>The Llama is not a very good pack animal, you would know this if you ever looked at one.
They are pack animals with carrying capacities comparable to donkeys and slightly less than horses.
>America was among them precisely due to the lack of pack animals barring further societal advancement.
You never addressed the issue of Tenochtitlan, which was constructed without the use of pack animals, so this isn't a compelling claim to begin with. Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals (e.g. moose, caribou). Diamond makes some weak attempt to claim that the animals available were too temperamental to be domesticated, conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf.
> By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
You're making this argument because these places are islands. This was not a hindrance to the British. You'll then make the argument that you were really arguing that these places are isolated (which is maybe valid if we're talking about Polynesia, less so for Australia), to which I'd reply: "Isolated from what?" to which you'd reply: "The pack animals, the germs, and the steel," to which I'd inquire: "Why were these things found in Europe and not Australia?" and that is where we get to the root of the matter. Europe's conquests were not a matter of luck or an accident of geography. There was something in their method that simply worked better than the methods of those peoples that they conquered. I haven't reached a conclusion as to what it was in that approach that led Europe to becoming the dominant power of the last five hundred years, but there's no compelling case to be made that this method didn't exist.
I don't know who that is and have never read any of his work.
> Tenochtitlan
> Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals
Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
> conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf
If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
> Why were these things found in Europe and not Australia?
Because Europe has horses and Australia doesn't, and horses cannot swim therefore could not reach Australia. The moon also doesn't have horses for a similar reason. In fact, you'll find that horses only really inhabited areas reachable by horses, until someone put them on a boat and took them to other places (which didn't happen for Australia until quite late). You have this strange assumption that all areas are secretly equal in geography and must be equally hospitable to human flourishing, but this is not true. Europe is more hospitable than Australia, therefore humans flourished more in Europe than Australia. All you need do is assume differences in geography exist and you'll reach the conclusion that humans in more amenable areas are more likely to conquer those in less amenable areas.
> Europe's conquests were not a matter of luck or an accident of geography
You say this with precisely no proof. The closest you get is saying "other people didn't do it, and Europeans did so it couldn't have been luck". The idea that knowledge is what held other areas back, as opposed to luck or geography, is ridiculous and trivially disprovable. Knowledge exists in equal quantities for all people (unless you believe certain races are inferior to others). The difference between regions is geographical or in fortune, which could include the fortune of having a particularly skilled leader or successful sequence of conquests.
> Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
They built their city on a marsh because an eagle landed on a cactus and they interpreted this as a sign from heaven. They subsequently conquered the city-states that already existed there. It had nothing to do with considerations surrounding the ease of transport as they were a nomadic people and were initially forced to settle in a marsh on the fringes of the lake.
Further, you are getting away from your original claim, which was: "Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement." This was not the case for the Aztecs. "Ah," you say, "but we can amend my claim to include analogs to pack animals which facilitate the movement of materials, such as Tenochtitlan's canal system," at which point I would draw your attention to the Cahokia, the Pueblos, the Mayans, and the Olmecs, none of which fit this pattern, all of which formed complex civilizations that soundly refute your claim.
> If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
Dogs were domesticated thousands of years prior to the arrival of humans in North America.
> Knowledge exists in equal quantities for all people
There is no evidence of this whatsoever and plenty of evidence to disprove it.
Yes: You made the erroneous claim that Native Americans domesticated dogs. I corrected your error by pointing out that dogs were domesticated prior to the arrival of humans in the Americas. Thus, knowledge is not evenly distributed.
"I meant intelligence, not knowledge," you counter, to which I retort: The idea that intelligence is evenly distributed among populations has been soundly refuted. There are demonstrable differences in every metric of intelligence thus far devised both between and within populations. Incidentally, intelligence by itself is not sufficient for colonialism. The Han Chinese typically score higher on IQ tests than Europeans, and yet it was the latter that conquered the world, not the former. "You're proving my point!" you protest - I never made the claim that Europeans conquered the world due to their intelligence, I rejected the notion that this had anything to do with luck, because it kept occurring over the course of dozens of geographies and hundreds of years.
Let's suppose it was luck. Do you have this luck? Can I see it, have it defined? What would it mean for Europeans to have conquered the world by means of luck? Does it manifest out a magical aether like the pot of gold at the end of a rainbow?
>I haven't reached a conclusion as to what it was in that approach that led Europe to becoming the dominant power of the last five hundred years
500 years is a blink. Anatomically modern humans have existed for 150,000 years, yet civilizations as we understand them are at most 5000 years old. You are comparing two continents that have been isolated during that timespan, with different geography, diseases, and domesticable animals, and which developed a virtually independent separate history until the 1500s. How can you assert that all of this is irrelevant and that it was pure "Northern European superiority" or whatever that meant European colonialism was successful?
> How can you assert that all of this is irrelevant and that it was pure "Northern European superiority" or whatever that meant European colonialism was successful?
Because the alternative is doing what James_K is doing and claiming that these events were essentially chance developments; that is, that there was nothing endogenous to European civilization (or, perhaps, as you're inferring, European peoples themselves) that led to these world conquests, but that they were instead either just a series of coincidences or a product of the environment.
This discussion can get quite philosophical because like I said earlier in the thread, I can't refute historical determinism - I don't know if there is any way that we can really exit the chain of causality and determine events for ourselves, so in that sense, the underlying claim that it's all just the environment (or more accurately, antecedent causes) is correct, but this doesn't tell the whole story.
The fundamental question at hand here is if European civilization had anything within it that led to its rise to power. What you, James_K, and decolonialists everywhere are preoccupied with is the idea that if this is true, it must mean that this "thing" (which I will refer to as the European method) originated as a result of European intelligence, or more broadly from its biological characteristics. It is then inferred that this will necessarily lead to normative scientific racism and subsequently a world-homogenizing genocide.
There is reason to be weary of these things. They do not refute the notion that the Europeans possessed something endogenous which allowed them to conquer the world. Drawing the conclusion that Europeans did possess this endogenous thing would not validate any normative moral claim; we can only do that ourselves.
This article is saying the native Americans spread the horses faster than the Europeans spread. They still sourced the original horses from Europeans in the 1600s.
> The Americas had no horses before Europeans brought them.
> Long since debunked
I mean, the linked article says horses were introduced in the 1600s (brought by Europeans), and then spread throughout the Americas without requiring further European distribution.
Horses in North America are a weird one. I believe the current thinking is that horses started in North America, migrated to Asia, then the population died off after the continents split. So there were horses in the Americas prior to the Europeans, but also potentially before humans.
Humans and horses probably did that thing where you're looking for someone and you go to where they are then they go to where you are and you both miss eachother.
And then died out, before Cortes brought them back to the continent in 1519. Native Americans then discovered the horses before they ran into the Europeans and began spreading them across the country.
> Horses evolved in the Americas around four million years ago, but by about 10,000 years ago, they had mostly disappeared from the fossil record, per the Conversation. Spanish settlers likely first brought horses back to the Americas in 1519, when Hernán Cortés arrived on the continent in Mexico. Per the new paper, Indigenous peoples then transported horses north along trade networks.
Would you say this of the Jews during WW2, or do you have the understanding that it's a little less than tactful do describe the victims of genocide as "suckers"?
Most first nations at first contact had 0 conception of ownership, rather seeing it as some sort of stewardship (or if you put it in modern terms you could use the marxist notion of personal property where it's 'use it or lose it') as well as low enough populations that they figured there was enough to go around to share the land with settlers.
Some of the nations were large, such as the Aztec. And at least a few of them understood right by conquest. They also had extensive trade routes across the continent, seeming to disprove the lack of ownership.
You seem to be confusing the concept of "ownership" with that of "private property" (on immovables, especially). The "Marxist notion" of personal property still requires the concept of ownership.
And if there happened to be people on the land they “wanted” well then there’s guns and smallpox blankets to take care of those pesky details.
“The people there didn’t have the concept of ownership” but some pioneers sure as hell made sure to enlighten them by laying claim to that same land and then threatening anyone for encroaching on it.
genocide is an intentional act. Smallpox did 90% of the work and nobody lifted a finger, at the time nobody could have forseen the effect of smallpox on the native population.
After smallpox when the population of the Americas had been reduced by something like 90% they most certainly didn't need all the land.
> at the time nobody could have forseen the effect of smallpox on the native population
Are you really unaware that the colonials intentionally spread smallpox to the natives? This is not some obscure detail - it's in approximately all of the history textbooks in a fair bit of detail.
The few references to potentially intentionally spreading disease, all well after they were spreading in the Americas, are unlikely to be the cause of more than a tiny sliver of deaths due to disease. The timelines simply do not match.
I can't say I fully agree with the premise, but suppose we run with it.
If someone acted with clear intent to commit genocide, but the mass deaths would have happened anyway, does that clear them of the charge?
Put another way, if I stab someone, the knife goes in and all, but as I'm doing it a car also runs over him, am I no longer guilty of murder? Seems pretty questionable to me.
It was an intentional act. They wrote about it being an intentional act. The violence was not an accidental nor rare event either, it was an intentional act too.
The east expansion took a lot of time, involved quite a few massacres and invonluntary relocations.
If the settlers had done what the first thousand or so invading cultures did and just exterminated the natives, they would have been able to cast them in whatever light they chose. Instead they gave them rather a lot of autonomous territory relative to their population, along with legal monopolies designed to prevent them from being forced into wage slavery.
The truth has always been and will always be that the people who are most technologically advanced will end up with the land, weather by force or purchase.
Simply due to the fact that it's more valuable in their hands. Driving out some campers to build a town is the rule, not an exception.
European colonization of the world is a unique enough phenomenon to not hand wave it away as business as usual. Further, the industrial intensification and financialization of this colonization through the 18th-20th centuries alone is singular on its impact on human civilization with no precedent.
Apart from the Sentinelese, I can't think of one civilization that hasn't warred and taken over land and resources from others. And we really don't have proof the Sentinelese didn't do this at some point themselves.
You can think of many examples of war and conquest, but what happened in America is more than just war. Genocide is more than just war. Framing the atrocities upon which the US was founded as merely "historically normal" is a deeply revisionist view of history. Technological development at that time allowed for many great evils which were simply not possible before.
How do you know that what happened to the natives was so much worse than the hundreds if not thousands of similar fates that must have befallen other cultures over the last several tens of thousands of years?
Because the things you're referring to didn't happen. That's why you say they "must have happened" instead of "actually did happen". I can think of some examples of similar treatment, for example the British in Scotland, Wales, and Ireland around that time, but even then we see that there are many living natives in those lands today. America is unique in that the overwhelming majority (97%) of the population is non-native and has no native ancestry.
> overwhelming majority (97%) of the population is non-native and has no native ancestry
Em. First, numbers of "native ancestry" are almost all self-reported which has more to do with self-identified culture than genetic ancestry.
Second, trying to argue through the use current numbers of native ancestry is nonsensical given the US has been an outlier in terms of immigration for a very long time making it impossible to compare against. For goodness sake, around a tenth of the population has been foreign born for the better part of two centuries which has had a dramatic effect on ancestry (both genetic and self-reported).
A big part of the problem is that too many people want and/or have to live in very tiny portions of the country: major cities.
There is a lot of cheap land and even a lot of cheap houses for those willing to live in a different place. Even many of my friends in Seattle, for example, have discovered that if they move 30-60 minutes away their housing costs plummet dramatically. This has opened the door to many of them moving even farther away, unlocking an entire new world of affordability.
There was a brief moment where all of this looked like it was a very real possibility for many of us, but the rubber band is snapping back with remote work and now many are being required to move back to those few cities again to find the best jobs.
> but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing.
I don't think most people believe that you can just work hard and then have generational wealth for your heirs. That feels like a strawman argument. Generational wealth has always been a difficult feat for the few, not something we promised everyone could achieve.
However, people also underestimate the power of compounding for retirement savings. Obviously not helpful to someone working at McDonalds and trying to pay rent in a big city, but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years. Not "generational wealth" or "setting up your heirs", but enough to make big contributions to education, helping kids with emergencies, possibly leaving some non-trivial inheritance. This happens all the time and continues to happen with millenials, as it will happen with Gen Z. Again, not literally everyone but to suggest that it's out of reach is really out of alignment with the reality of what we see people earning and saving.
> but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years.
You’re off by at least a factor of ten.
40 years of $100/month savings at a generous 5% compounding is $148,242. And that’s in future dollars. Drop it to 4% and you’re down $116,606.
The real formula to consider is what percentage of your monthly spending you are savings. If it’s 100%, then every month worked is one month of retirement. If it’s 50% then two months of working is one month of retirement. If you live frugally and save 400% of your spend, each month counts as four retired months.
It’s a simple fraction with the numerator as your net savings and the denominator your total spending. And lowering the denominator scales things much faster.
No he said 5% 'is in future dollars', i.e. not inflation adjusted to a present value... When in reality the nominal S&P500 returns are 10% leading to the same 'future dollars'. That is conservative.
Plus if 7% real returns (after a 3% inflation) is the historical average, how is 5% real returns generous? That's still conservative even if he meant to claim a 5% real return.
America isn't overpopulated. The pyramid scheme you're describing is not a Malthusian constraint but the product of bad monetary policy privileging non-productive investments in real estate. There's still no better place on earth for normal people to build wealth, unless you're playing the digital nomad game.
I would contest the idea that this construction isn't happening - it's largely just resulting in sprawl at the periphery of existing cities. America has a lot of space available and a lot of space actively being developed.
As to why new cities aren't being built in completely empty areas, I would have to know where you're talking about to make a guess as to why they aren't being developed. Off the top of my head:
1) Environmental concerns
2) Expropriation concerns making projects politically untenable
3) The concerns of aboriginals
4) Cost of infrastructure development
5) Lack of market demand
To elaborate on the fifth point, I would posit that people don't tend to populate such greenfield cities unless there is a compelling reason to do so; either by being pulled (e.g. by resource extraction opportunities, a growing economy, educational opportunities, etc.) or by being pushed (e.g. fleeing a war, the effects of climate change, or political persecution). China is the example to look at here. They spent most of the 2010s buying up an enormous amount of resources to build cities that ended up just sitting empty before eventually being demolished. A lot of this was just fraud (the buildings weren't constructed to be habitable to begin with), but at least some proportion of it had to do with the factors I mentioned above. The cost of physically moving to a new city, as well as the loss of social capital resulting from such a move make relocating to a new city both undesirable and prohibitively expensive for most people.
I do (becuase I've heard it from a buddy of mine who's an MD at a Bulge Bank) - there is no capital to invest in consumer real estate anymore.
Large portions of that industry died out in 2008-12, and capital for large real estate projects like a housing community tend to be allocated 2-3 years before ground breaking, and then an additional 1-2 years to build.
So to build a brand new community by 2020, you should have done all the leg work in 2014-16. And to build a new one today, it should have been done in 2019-20.
Any pipeline that even existed is now dead, because manufacturing construction was the asset class of choice in the 2022-24 period along with high interest rates (making projects much more expensive) and tariffs on Canadian lumber, so the housing shortage is about to get even worse.
It does not come about magically from monetary or even fiscal policy. The demand for housing (and other construction) was and is real. People find use for, and like having much space, while being close together. What was and is lacking is supply.
It was never implied that this mechanism was magical.
If you reread the original post, the claim being made is:
> The idea that an average person, working hard, can eventually own part of a nation's land and resources, [...] was never going to be able to last forever as long as the population keeps increasing.
This is manifestly not the case. My response was that, insofar as a pyramid scheme exists, it has nothing to do with some fundamental Malthusian limit on how many people can fit in a given space; this limit exists, but is not the reason that the rich are getting richer, which instead has to do with monetary policy.
You make cheap money available to those with good credit. These people take out loans and use the money to buy real property with the expectation that they will be able to rent it out for more than the carrying cost of the loan. This causes the price of real estate to rise artificially beyond what it would if the cheap credit had not been made available. The key issue here is that this credit isn't being made available to everyone at once - you have to qualify for the loan first.
"
This is why settlers left Europe etc in the first place to seek fortune overseas."
And why you guys are looking at Mars now.
Here in latam we haven't filled the land at all, you guys have been hard working and filled with riches. But our laziness might give us more longevity, we are playing the long game with the amazon
LATAM will get a lot of remote work if the wages stay lower than the US since they're in better-for-US-company-timezones than India or others overseas. That's what my company is outsourcing to.
Doubtful. Digital nomads, short-term rental tourism, real estate investors (prompted by the former two) are increasing housing costs and CoL in all the popular destinations. Costs in some regions like Barcelona almost got equalized with costs in major US tech hubs. The same is happening in places like Buenos Aires. So its unlikely that the trend in LATAM will continue as it is.
Also, this is very bad for not only the locals as they get gentrified from living in their own city/urban centers (and in some cases even rural zones), but also the local companies: The US and other rich Western companies dump their healthcare and housing costs onto the locals through arbitration while making it harder for local companies to keep up with the CoL increase through wages, therefore increasing their expenses and reducing their competitiveness. And the reduced taxes that the nomads etc pay doesn't help it. (that is, the ones who actually pay).
> The US and other rich Western companies dump their healthcare and housing costs onto the locals [...] And the reduced taxes that the nomads etc pay doesn't help it. (that is, the ones who actually pay).
Most nomads are going to be getting private health insurance. It's true that a lot of them are not paying their taxes, but if you're talking about Latin America that's true for a large portion of the domestic population as well. I looked into relocating to a country in South America a few years ago and had a lawyer tell me to not even worry about filling out the relevant visas because he had clients from China who had been living there for decades with no papers (I opted not to retain his services). The key here is that even if they aren't paying taxes, they are bringing money into the economy and are generally not competing with local laborers. This attitude has started to shift in places like Mexico City because a lot of the expats are not digital nomads but instead run-of-the-mill immigrants competing with the working population for jobs.
> Most nomads are going to be getting private health insurance
Those private health insurances are subsidized by the public healthcare because they piggyback off of the public healthcare system. That's why they are affordable, unlike the US. And as a result, those nomads end up congestion the public healthcare system because the private health insurers also send their own patients to public hospitals for anything serious. Im telling this from a place that is experiencing precisely this.
> It's true that a lot of them are not paying their taxes, but if you're talking about Latin America that's true for a large portion of the domestic population as well
The amount of taxes avoided by the poor majority in such countries don't compare to the taxes avoided by the rich white collars. Nomads earn 2 to 5 times more than the local white collars as well. Even in some European countries.
> The key here is that even if they aren't paying taxes, they are bringing money into the economy
They don't. People think that but neither tourists nor nomads nor short term-renters (whatever the kind) bring money into the economy:
The nomad doesn't buy 10 shoes every month, 2 cars every year, eat out 20 times every day or buy 50 loaves of bread every day. He consumes just like any other human being (obviously), and his consumption does not move the needle of the local economy much.
What nomad's consumption boosts is a few local/luxury shops that cater to the rich or nomads, and maybe one or two local shops or services that they also use. Those few businesses make bank even as other businesses in the same neighborhood rot. And those few businesses that benefit don't buy dozens of employees to make up for the added workload - they hire one or two and everyone works harder and that's it. So what nomads end up doing is enriching a few local, already-well-to-do shop and business owners. On the other side, they cause a 20 to 30% increase in rents (even in Europe), housing prices and significant increases in CoL.
> This attitude has started to shift in places like Mexico City because a lot of the expats are not digital nomads but instead run-of-the-mill immigrants competing with the working population for jobs.
It started changing in Europe too. In places like Barcelona, Madrid, Southern Spain, Portugal, some central European 'bohemian' destinations etc. Mostly because of the sharp gentrification the nomads are causing even for the white collars. But especially the English-speaking foreigner population concentration in some places became way too visible and they started outnumbering the locals. In Barcelona there seems to be a lot of cafes in the city center where the waiters don't know Spanish or Catalan, people having difficulty hearing either language being spoken in the city center etc.
In any case a strong reaction came to being against nomadism and its not looking good.
> Those private health insurances are subsidized by the public healthcare because they piggyback off of the public healthcare system.
Most nomads I know have insurance that is either global or based in their home country. If I had been injured in my host country I would have been required to pay full price for my medical services, which is why I bought insurance in my own country. If you're at the point that you've purchased insurance in the place you are living, are you really a nomad anymore?
> The amount of taxes avoided by the poor majority in such countries don't compare to the taxes avoided by the rich white collars.
Do you have any evidence of this, or are you just speculating? I've read about this with regards to South America and what I took away from it was that the informal economy is largely made up of low wage laborers, not white collar professionals. In either case, this is kind of irrelevant to the discussion because any taxes the nomads pay represent revenues that the host would not otherwise have had. As a nomad you aren't going to be consuming more in services than you're spending unless you're camping in a tent and end up breaking a leg.
> They don't. People think that but neither tourists nor nomads nor short term-renters (whatever the kind) bring money into the economy:
I spent more on rent in 3 months in my host country than most people spend in a year. I ate out at restaurants almost every night I was there, and took taxis every day. These aren't normal consumption patterns where I was living. Your point might hold if you're talking about Europe; but if we accept that it does, we would then have to ask how it's possible for nomads to be driving rents up.
> Those few businesses make bank even as other businesses in the same neighborhood rot.
Does the economy improve or does it not?
> And those few businesses that benefit don't buy dozens of employees to make up for the added workload - they hire one or two and everyone works harder and that's it.
This is pure speculation on your part and there's no compelling reason to think that it occurs.
Yeah, looks like the go to strategy, but I may have to pass on the gold mine and go for the higher payoff of a decent living but a more spiritually fulfilling trade diplomacy
In international trade there's complementary/productive trade, you have gold, we have silver, let's trade. And you also have redundant/substitutive trade, you have soy, we have cheaper soy, buy our soy.
I don't believe from the bottom of my heart in substitutive trade for similar reasons I don't believe in (most) inmigration. We've conquered the americas, now we have to populate it, god won't reward desertors who revert their ancestor's decision by running back to the old continent, and the excuse of "I was born in the wrong hemisphere" is also quite petty, we rolled the dice and this is what we got.
Substitutive trade isn't far from immigration, the poor want to go to the rich countries, and the rich buy the cheap labour. Where is the pride in that? In both sides. Leave your country for another with a different religion, leave your mother your brethren, and serve. Leave a war instead of fighting? Take a 1 hour bus to a fancy neighbourhood to serve coffee and wash dishes. Conversely, you can wash your own dishes, you can use a bottle of water and fill that up before you leave, we don't need a migrant washing our dishes, and we don't need to migrate to wash dishes.
So I'm trying to focus on trade that is not replaceable with local labour, hopefully countries start nailing down remote work and we start locking those behind visas.
And unfortunately india and philipinnes get that productive trade, they can cover night shifts.
We'll find stuff to export. There's not much, as Trump said "they need us more than we need them".
Local entertainment, sports and games will always be there, it's like cybertourism.
there might be an argument for redundant trade as a counterweight to an unbalanced productive export. But I don't think that works long term.
There's also localization services, in language and legal, but those are just costs of exporting really.
Lithium is probably the lesser evil, super extractive, but we gotta pay somehow.
Sorry about the super rant. Lately I've been more using forums as a way to write things that I already had drafted in my mind.
"is derived from the pioneer days when land was plentiful."
Land is still generally plentiful. The need to all live in one spot is more social/artificial and really accelerated in the late 19th and early 20th centuries due to rapid urbanization.
And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Land use is a complex topic, but you’re basically right. Everything good—not just land but social opportunities—is spoken-for and what we’re seeing in South Korea and Japan is probably the best solution: peaceful natural attrition and non-replacement of capital’s reserve army that is unwanted labor.
This is a fairly simplistic/wrong view. If this were the case, say, you’d expect housing costs to be fairly reliably lower in low density European countries than high density ones. Spoiler: nope.
In practice housing costs are driven by shortages of _housing_, not land. And these are quite different.
The Puritans became settlers in the New World because they were hated and thrown out of Europe / England so they set up shop and managed to derange society to this day in the US.
In the US you can buy land at quantity for, say, ~$1k/acre in places where there aren't people/infrastructure/etc...
There is no shortage of land in the US. There is a shortage of land in a few high density areas. But increasing their density makes them more attractive.
I don't think it's reasonable to make the pioneer comparison-- if you want to do what pioneers did and build something from almost nothing in the middle of nowhere with great effort then there is still an analogous route open to you.
It always strikes me as bizarre that people can "own" land. It existed before you and will exist after you, so how can a short-lived being really "own" it?
It would make so much more sense if land "ownership" was related to whether you live on or work that particular piece of land rather than relying on arbitrary pieces of paper that were mainly decided before any of us were even born.
Isn't the tax paying towards a society that will respect your "ownership" so that you can have access to legal redress if someone prevents you using it?
Look at Georgism, and LVT. A 100% "tax" on the value of unimproved land would ensure the forces of market itself would push away from the situation you describe.
I wonder about the economics of places with declining population like Japan and South Korea. I always read that declining population is bad for the economy but feels like those countries will have more opportunities for the young in the future.
of course this was never going to last forever, we have more than 8 billion people in the world, if even 0.00001% of people wanted to do what you proposed, eventually own a part of a nation’s land, thats 80 thousand people.
From the article:
"Building enough houses in the right place is the single biggest action governments can take to restore the link between work and wealth"
No greater truth can can be spoken about what's wrong with the economy in rich countries today.
I think Austin, TX is just a great proof point for this over the past 5 or so years. We built a ton of housing over the past 5 years, and last I read rents have fallen 22% and house prices have also gone down considerably (though they were so insane during the pandemic I still think they've got a way to go).
I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
Looking at the Case-Shiller index for Austin[1], Dallas[2], NYC[3], SF[4], and LA[5], it doesn’t seem like Austin’s prices have grown any less in the last five years. They’ve basically all nearly doubled in that time. If there is any improvement it’s too small for my eyes to see. In fact, SF seems to have had the lowest price growth (perhaps due to fears about crime?).
I can't edit this comment, so instead I'm replying.
>They’ve basically all nearly doubled in that time
This statement is incorrect. In another comment I did the math, and most of them had about 50% growth in the last 5 years, with SF being the outlier with 33% growth. Sorry for the mistake, my eyeballs are not as good as my math.
You're reading a lot into the wobbles in the plot, when you probably want to be looking at the total change over the last 5 years. Here's the change by city, Q4 2019 - Q4 2024:
Austin: 346 -> 510. 510/346 = 1.47
Dallas: 192-> 295. 295/192= 1.53
NYC: 203-> 318. 510/346 = 1.56
SF: 271-> 361. 510/346 = 1.33
LA: 291-> 443. 510/346 = 1.52
These numbers are all pretty close imo, clustered around 50% growth in the last 5 years. Austin in particular grew 47% over the last 5 years, for a annualized growth rate of ~8% -- that is some _crazy_ growth for real estate, when the long term average in the US is about 3% annualized. IMO SF is the only remarkable datapoint, with 33% growth -> ~6% annualized growth. Even that is still high though.
It would be easier to visualize if we can plot them all on top of each other, but I didn't find an easy way to do that.
The problem with such calculations is that they're very sensitive to the chosen starting point: compare the growths in the most recent 3 instead of 5 years:
If we're looking for a trend that follows a specific city instead of specific year and city, then I agree. For that purpose I think I'd like to run this same calculation for the 5 year interval 2019-2024, and 2018-2023, and 2017-2022, etc, to see if there is a trend that is unique to the cities, as opposed to the cities in a certain year.
However, my interpretation of the original claim about Austin is "Austin house prices have grown less in the last 5 years than other places". That claim is pretty specific, and can be examined by looking at just the start and end points. Looking at the end points, it seems incorrect.
You're looking at the start and the end of the plots and totally ignoring what happens in between. If Austin had followed the linear trendline from Q4 2019 to Q2 2022 (increase of 22.7/Q) then it would have been at 800 in Q4 2024.
That means that over the last five years, Austin real estate prices could still be up more than other cities. It looks like they went from $400K average prices in 2020 March to $600K now, but the peak is $680k. Is that because it took builders a while to catch up with a sharp increase in 2020, and now they "caught up"?
I don’t understand how rents actually go down in a market. My landlord has raised rent every year save for when covid laws prevented that. It is their incentive to always raise rent even when articles about my city claim “rents went down 5%” or whatever this past year. Whose rent? Expensive commercial landlord new construction rents where they try and hide the price anyhow with two months free on the first year? The rent that therefore only matters for the bank to put a valuation on that property because people move in year 2 at these sort of properties to avoid paying that full rent? Maybe that is what they are referring to. No one I know has ever had a call from their landlord telling them to pay less money next month due to the declining value of their asset.
In a high demand market though? My landlord had like 3 tenants go over the last couple of years and they had a new one moving in that month basically to no affect on their cashflow. Whenever I applied for apartments in this town it was always tour the place and be prepared to sign a lease right there because you have no time to think before someone else bites. Maybe thats true when you have a failing local job market but that isn’t the case in high housing cost regions by definition.
We reduced rent during COVID both for a present tenant and for the following tenant. Generally those statistics are across all units while individual experiences can be wildly different.
[Edit] FWIW that was based on the rental market rather than anything related to asset value.
SFR had no decreases during those years in the US. Markets like the Southeast had 7-14% increases every year. SFR companies were doing “cash for keys” because rates were increasing so quickly that it was better business to buyout a lease from the current tenant and bring in a new one at a 14% increase.
It's not clear what you're trying to say. The GP said they weren't sure how rents went down. As an at-the-time-I-referenced landlord we reduced rents. Or tenants may have been privileged people who didn't need it but it seemed like the right thing at the time. Mostly because the impartial rent statistics source we repeatedly used indicated rents had gone down for the market local to the unit we offered. Maybe this is why we got out, because we weren't practicing exuberant total maximization of what we could extract. We got in because my partner was sentimental about the unit and felt we could hold aside a small part of the market to be a little kinder and more human. What triggered us getting out, in fact, was hostile policy enacted by Seattle that frequently poisoned the relationships with our tenants. That is, with the same behaviors we began being treated very poorly. I'm off the opinion that Sawant was in the pocket of large corporate holders given what I understand of the effectiveness with which she had consolidated the Seattle rental markets into a smaller set of hands.
> I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
? Private development is the heart of liberalism. We haven't had anyone but liberal leadership since, like, LBJ I think? And he was also a liberal acting out of character. Any alternative would surely imply public investment in housing. No, re-zoning is not going to make a dent in homelessness.
I'm aware that you're referring to liberal in the sense of "loyalist democrat" or whatever, but the reality is that both parties have virtually the same policy when it comes to housing: blame the market, act as though the market will still answer our problems even though it hasn't in the past, and feign helplessness that the government can directly influence housing in the first place outside of zoning. I.e., liberalism.
“The people” (local voters in the places that have the lomits in place) are the ones who want rules against building housing, not some external-to-the-people government.
Even if a majority would vote for a construction ban, many people would build new housing if it was legal. Both people who would vote against and for a ban.
This is what the internet urbanists don’t get. Government is a mirror on its electorate. You want urbanist principles it starts by educating this electorate directly, not waiting for the government to do something to get itself unseated by that angry electorate the next cycle.
Well, or you change the level of government you target to one whose constituency is less invested in the policies causing the problem and more concerned with solving the problem, e.g., over the last several years the California State government restricting the practical ability of local governments to restrict housing.
I don't think that when higher levels of government make it harder for lower levels to restrict individual freedom that is “the road to authoritarianism”.
If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income from capital.
I hope we start there, a very simple and straightforward action to take.
If you’re looking for what to tax instead of income, the best things are: land, pollution and consumption.
Land is great because people will not use less of it, no matter how high the tax. Pollution is great to tax, because we want to produce less of it. Consumption (or purchases or spending) is good to tax because economic growth is good and this tax encourages investment rather than spending your wealth. The most common consumption taxes are the sales tax or VAT tax.
You may have heard of consumption taxes described as “regressive “, but that comes from looking at only part of the policy. For example, a universal basic income funded by a sales or VAT tax would see the poor better off than the rich.
Do you know what happens to your income tax when you pay it to the government? They destroy it (if it's cash), or simplify nullify electronic values. The government literally prints money, it doesn't need your taxes to "make" money. Income taxes were invented before the creation of fiat (non-gold backed) currency.
Lots of countries in the world operate without income taxes.
> Lots of countries in the world operate without income taxes.
Okay, but "lots" feels untrue and saying "operate" is borderline deceptive - there are 21 that I can find from a random infographic [0]. Human rights superstars like the UAE, NK, Brunei, and Saudi Arabia; above-board corporate havens like the Cayman Islands; and places I can't come up with a quippy joke about like Monaco or Vatican City.
I'm no geopolitics expert, but it looks like one thing that "functional sovereign states meaningfully participating in the world stage without oil money or some clear outside source of capital" all have in common is income taxes.
The government of Florida operates with no income tax. Its GDP is comparable to Spain and its population sits between Chile and Australia.
Less than one fifth of its revenue comes from federal sources. If its residents weren't paying federal income taxes, Florida could probably afford to increase its taxes to cover the difference.
In the US, local taxes—not federal taxes—pay for the majority of surface street maintenance, schools, emergency services, licensing regimes, health and safety inspections, unemployment insurance, etc. I.e., most of what one considers to be staples of the social contract in a well-administered society.
It seems as though you're implying income taxes are a prerequisite to some standard of living comparable to the US, but that presupposes that income taxes in the US actually pay for the things that make a place worth living in.
If all of those staples are paid for by local governments, then what do federal income taxes pay for? Retirees and military procurement, for the most part.
> Less than one fifth of its revenue comes from federal sources
Over one-quarter (26%) comes from Federal sources according to the Census Bureau's Annual Survey of State and Local Government Finances.
Having 26% of your government funded by (Federal) income taxes sure sounds like Florida can't operate without income taxes. They simply outsource collection to another jurisdiction.
my guess is because capital has more options than labor, and the decision makers since time immemorial are more afraid of capital leaving than labor leaving
This seems backwards to me. Labour can leave; someone can get on a plane in the UK where they get taxed 40%, and arrive in Dubai where they're taxed 0. Their buildings and assets can't come with them however. Capital that's not ethereal assets like stocks, shares, credit, etc, can't be moved. If you want to leave the country you need to become liquid, which means you sell off your assets and whoever is left in the country gets to buy them at cheaper rates.
The issue is when we allow people who do not live or pay tax in this country to make profit on assets in said country. A landlord who lives in the Cayman Islands should not be able to collect rent on UK assets while not paying the UK government tax in turn.
> This seems backwards to me. Labour can leave; someone can get on a plane
most labor does not individually have the means to leave like that.
also, you're talking about capital moving as in already-invested capital, while I'm talking about the people with capital making decisions to invest in the first place.
The noncogent and unrespectable argument is that labor is less liquid and more difficult to move around for tax-dodging purposes than capital. States have been reduced to opportunists in the realm of taxation and tax enforcement.
As predicted in Piketty's book "Capital in the Twenty-First Century". He posited that wealth trumps labour and the post-war period was an anomaly. His proposed solution is a wealth tax. I can't see those with wealth/power implementing a wealth tax, so the alternative is to invest to accumulate wealth and know that your children, who are not in a position to invest, will probably be relying on that wealth.
Capital flight is a thing. Land isn't going anywhere.
Economists including multiple Nobel laureates on both the left and right have been screaming for land value tax for almost a century for this and many other reasons.
Is it basically saying to tax land that has productive assets? Like if you have land that has a factory, you're paying taxes, but if you have land with a house, you're not?
I was thinking it makes sense to tax land with productive assets and don't tax those without. Housing is not a productive asset so it shouldn't matter how much you fix it up. If you tax productive land there shouldn't be an incentive to not do anything as there would be nowhere to "escape" to that has a greener financial pasture. The problem I see with this route is the tax payers with productive land will start making a case for them being the only ones who should vote.
The tricky thing is it’s taxing land on what your neighbors built in their land.
If you build something that makes my land valuable, I get taxed more.
I like the incentive structure, but I think part of the incentives are towards collectivization so you and I become one unit, which may or may not be a good thing.
Yeah one problem I still haven't seen solved is that when you build improvements on both neighbouring land, taxes on both of those lands will increase. It seems unfair for big developers who essentially built their own cities. I've heard something about rent system where the tax is frozen for 99 years, but this seems like an obvious rule patch that'll make LVT loses what makes it unique and relevant.
the chief challenge is: how does one actually value land?
if I own 1000 acres in the middle of nowhere that holds an enormously profitable business, I could end up paying almost zero tax simply because I dont have any nearby real estate development
Also, LVT has never been proposed with taxing 100% of the annual rental value of land. This means you do not need to be 100% accurate with your assessment in order for the land to still be profitable to utilize. A 33% tax would mean you could literally be off by a factor of three in the assessment and it would still be marginally profitable.
I'm not sure about your example, but land of little potential value should be taxed little. Keep in mind that it is taxed according to its potential value though - not its current. 1,000 acres in the middle of nowhere is likely to cost basically zero in taxes if it can't be utilized for any purpose either now or in the future. If it has future value then you would need to do a net present value calculation.
The big problem with a land tax is that you'd have billionaires paying little tax. One may reasonably counter that that's fine if they aren't actually consuming much and it's probably correct. The majority of society won't go for it though.
What is this obsession people have with the taxation of billionaires?
There aren’t many billionaires. Expropriating all their wealth wouldn’t move the needle for any of our budgetary problems.
I’m all for closing the step up in basis on death, which is what allows billionaires (and of course only moderately rich folks) to avoid paying much tax over their full life cycle.
But LVT is a good idea, regardless of whether billionaires get some extra punishment for having the temerity to create successful businesses.
One of the largest drivers of social issues is the magnitude of the wealth inequality that is present. Taxing the high end should help to address this. Also, I think there's a general sense that they can afford it.
I'm with you. But that means little. Society has a warped view of "fair" an always has. Any tax idea that you want to put in practice has to account for it. Else you may as well be counting horse teeth.
> The big problem with a land tax is that you'd have billionaires paying little tax.
I don't think so. Billionaires consume quite a lot of real-estate, even if indirectly through their business enterprises. Consider the Google campus in Mountain View or the Microsoft one in Redmond.
except that capital flight usually takes place in the form of exchanging one asset for another (stocks for crypto or money, for example), an event that is subject to taxation (in the US at least) if a profit is realized.
I also enjoyed the comic book version of “ Capital and Ideology” by Picketty, Claire Alet and Benjamin Adam which follows the fortunes of a French family through the generations.
I haven’t read Piketty, but another book pointing in the same direction is The Meritocracy Trap, essentially explaining how non-meritocratic a lot of the economy is despite the common belief that it is. Wealthy parents spend a ton of resources developing the human capital of their children. It has basically eroded the middle class as a result. The author calls for an inheritance tax among other things.
Almost everyone I know got several hundred thousand dollars gifted for a down payment and most of these people are from typical middle or upper middle class backgrounds. I have a top 2% income (by Canadian standards) but the best I can do is a 2 bedroom condo or a bottom of the market townhouse with a long commute
I don’t know a single neighborhood in this city where the average household in that neighborhood makes enough to live there with current prices.
I genuinely don’t know why I even work anymore. I don’t have any achievable financial goals except save as much as I can until I move away to live off my savings in a cheap area
I see this a lot as someone that came from a solidly middle-class background (parents were a teacher and secretary) and went to a "highly-ranked" university with plenty of upper-middle or upper class students.
I work in the same jobs as my peers, but there is a clear wealth difference in how our lives are spent.
We have a nice house in a good neighborhood, but our peers have very nice houses is some of the best neighborhoods due in large part to down payment gifts, gifts for remodeling, etc. We can both afford the mortgage payment, but the down payment would take us probably a decade to save for.
On vacations, we'll drive a couple hours away with the kids, while our peers will fly to Europe and spend two weeks since they pay for the flights and their parents pay for lodging and food.
And then there is family support. Some of my peers have parents who bought second (or third) homes to be closer to their grandchildren, or will pay for the very nice private school, etc.
It's taken me a lot to not very bitter about this -- and I'm clearly still a little bitter -- but I also know that we will likely be in a position to offer some of this support to our kids in 20+ years.
Grew up in a very small house with two lower middle class parents. Frugal upbringing.
My wife and I out earn my parents by more than 10x. And so we can afford to do some things that I couldn’t as a kid like “ski weekend in Park City”
I’ve jealously looked around many times and frustrated myself with comparisons to wealthier people. They can do X and I can’t.
But as I’m getting older and raising kids, I’m continually reassessing the value of these high cost adventures. Am I happier, healthier, more refreshed, etc or is it instead my access to high-cost that fools me into feeling those ways?
I see the path forward similar to you. I’d like to help my kids however I can while not giving them a financial ticket for life. Want to do things that fulfill us without feeling too extravagant or costly.
I moved to the USA and got 2.5x my salary in CAD. Canada is fucked and I'm glad I left. I've lived in tiny apartments there and now I just bought my first house in an expensive city with 0 help from my parents. Am also starting a family here which is something I could have never dreamed of in Canada.
I suggest you look at historical trends for USD to CAD and trends for home prices vs income in Canada.
I bought a house here on ridiculous terms (believed in my job at the time). Then I got let go and I've been paying $4k/mo ever since hahahaha. I cannot wait to sell and get out.
I've got one friend who was gifted a house when he graduated from college. He works a similar type of job and makes a similar salary to the other members of our friend group, but the gift of the house, given from his wealthy parents, makes his financial situation drastically different from the rest of us.
I'm glad for him. But it's incredible how different one's life can be from their peers just based on their parent's wealth.
I don't have any wealthy relatives, so I'll never be so lucky as a lot of my friends. It's a struggle to even save up a down payment to buy a car, as our car is pretty old now - and I make 200k a year. Renting a house is really the only realistic way I'll ever get to live in a house, at least in the expensive city I've lived in most of my life.
Becoming? This may sound like a trope and a canard, but indeed this very publication, The Economist is partially owned and controlled by the Rothschild dynasty.
If you read the second paragraph the authors explain what they mean by "becoming".
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. This shift has alarming economic and social consequences, because it imperils not just the meritocratic ideal, but capitalism itself.
>If you consider this as a whole, the growing importance of inheritance starts to become clear. In Britain one in six of those born in the 1960s is projected to receive an inheritance that exceeds ten years of average annual earnings for that generation. For those born in the 1980s, the ratio rises to one in three. The inequality of what people inherit, meanwhile, is startling. A fifth of 35- to 45-year-olds are expected to inherit less than £10,000 ($13,000), whereas a quarter are expected to inherit more than £280,000.
Moreover, how does this fact disprove the article's thesis? Is the implication that because less than 50% of people are getting giant inheritances, everything's fine?
And they do not need to be correlated even. What if rich families maintain their wealth, and meanwhile other families create wealth and become rich. How is this incompatible?
Because as wealthy families produce offspring who do not need to work or earn income in order to compete for finite resources with those who do, the cost of those resources increases, while the burden of labor and stress falls increasingly on the employed.
Eventually the man dying while making an income and spending no time with his child will grow to resent the one making the same income through family wealth who has enough time for that and more.
Thank you for passive-aggressively outlining the infinite growth mindset.
Falsely equating economic growth with cost of living metrics, and assuming that with more money everything can just continue happily. It’s been a very successful evolutionary niche for a handful of centuries.
when wealthy people have kids their wealth is diluted. Truly, one of the best parts of Elon Musk having so many fucking kids is that at least his fortune will be greatly divided and spread the second he dies
Generational wealth rarely lasts more than a generation or two. Families like the Rothschilds seem to be more the exception than the rule.
Though I am not wealthy so perhaps I truly don't know what it's like in the big club I'm not in
Sure, each one of his kids will probably only inherit a few 10's of billions. What do you think the effective difference between 10 billion and 100 billion is? You're rich AF either way.
Your evidence is that there are more billionaires when arguing there is upward mobility? We are talking about completely different things. Many of those people started out as multimillionaires and then became billionaires - almost none of them started out poor. And you're focusing on a tiny percent of the population and extrapolating that to everyone as though it's representative of anything meaningful.
The last bit is sus though. "Only inherited after making a million". Sounds like it would include born rich, high education, basic necessities covered, can work on startups without worrying about earning a salary, many such cases.
Inheriting is the root cause of all corruption. We can never, ever, have a just society based on the principle of giving our children wealth that they did not earn nor deserve.
It's almost a self fulfilling prophecy. Many people who have owned a house for the last 20 years got in at a lower price compared to their salaries. The only way younger people can get a house now is to inherit their parents wealth.
Even if I work my ass off, I won't be able to afford a house the same as my parents did. My only hope is that I inherit their house when they pass.
What most people have yet to realise is that home ownership is a quite negative phenomenon. The dual of owning a home is the ability to deny others access to housing. People who are particularly attached to the capitalist system will suggest crazy solutions like a limit on the number of houses per person, but the real solution has always been government ownership of all land. There is no advantage to privately owned land except the ability to horde it and create waste, or rent it out and create inefficiency.
Problem is, homes have two functions: a place to live and a wealth preservation vehicle. As a result, many homes are owned by those who have no need to live in that particular place. Bitcoin can substitute some wealth preservation functionality, because it has the same scarcity property as the land, thus improving the housing situation.
Assets which purport to preserve wealth (outside of a bank account) usually end up as some kind of pyramid scheme. This is particularly unfortunate in the case of housing as the victims have no choice but to buy in, and take out increasingly large loans to pay off the previous generation's buy in. Bit coins are quite similar in structure, though they lack the forced buy in, which is why many of them are now attempting to target pensions funds and even lobbying to create official government reserves. (About half of all corporate spending in the last US election was crypto.)
I'll bite, why do you think a limit on how many homes a person can own is a bad thing? Let's clearly separate homes and other real estate here, so shop floors, factories, warehouses, etc are out of the equation. Since you mention inefficiency, how many homes can one person realistically reasonably use?
I think it is better than the current situation but worse than the optimal situation, that is government ownership. What's more, ignoring commercial land ignores that many commercial enterprises would benefit from the proposed solution in the same way people living in houses would, yet there is no mechanism by which you could limit one company to a single building of operation.
> how many homes can one person realistically reasonably use?
This question is why I consider the solution of a limit on ownership stupid. A person can reasonably use however many houses which they can afford to rent. It isn't up to me to decide what counts as reasonable use. It is simply a question of whether other people would be willing to pay more for some other purpose. Suppose someone wishes to purchase an entire abandoned town and can do so at a relatively low rate due to it being abandoned, I see no reason to deny them them this, yet a limit on home ownership would do precisely that.
One should also note that a land tax is another inferior solution to the problem. It is effectively a government lease on land which doesn't allow the rent charged to be determined by market forces. What makes total government ownership of land the most practical solution is that it most closely follows market principals. Usage of land is contingent on productive revenue from that land in excess of the revenue generated from alternative usages. Any other solution will fall short of the optimal allocation of resources which the market provides.
What is owning a home? It is having the power to legally demand other people leave it. Hence owning a home requires the ability to rent out a home, and to to rent out many homes and drive up the price. Likewise we have much land, but it has not been developed because people own it. In a system of government ownership, they would eventually be outbid on the lease for their land and it would be developed into a larger amount of affordable and higher density housing. Instead people own that land and are able to keep it underdeveloped at the cost to everyone else, then use this leverage to enrich themselves through the increase in house prices. There is no positive argument for the private ownership of land over public ownership.
Just say “ownership is theft” if thats what your argument reduces to.
That said, I think the concepts around georgism and dynamic value based taxes are a bit more interesting and address the “land banking” concerns you inserted.
I hate having to explain this to people, but a tax based on the value of something is called rent. Georgism is a system where the government owns all land and leases it out, but then the call the rent a "tax" to make it more palatable to people who are afraid of public ownership.
Thats a pretty reductive world view. I suppose “the monopoly of force and law implies control, and quote-unquote ownership, by the state.”?
So, mission accomplished? The state already compels me to pay annual taxes based on the value of my titled real estate, my car, my income, my foreign assets, etc… I guess Im just renting it all from the state?
Mind you Im no John Birch-man here. I actually pay 42% of my income in taxes, and think real property _should_ be taxed more effectively here in AU. But jumping all the way to “ownership is theft, and taxes are double secret ownership” doesnt seem particularly useful.
You are trying so desperately to put those words in my mouth, but I will not say them as I don't know what they mean.
> taxes are double secret ownership
I'm not making an ideological point here, simply pointing out that the proposed systems are isomorphic in their objectives and execution. They both aim to increase the productive use of land by charging a periodic fee to the occupants of said land based on the market value of the land. There are two differences: the first is one of language (rent vs. tax), and the second on how the rate of this fee is determined. Under socialised land, the market price of land is the same as the fee charged. Under Georgism, the fee is charged by a bunch of politicians looking at the market price of land and trying to figure it out based on that.
Given that the two systems are essentially identical, but the second brings in undue political meddling, I see no reason to prefer it to the first solution outside of the practical situation that many people are afraid of public ownership and therefore would be more likely to vote for the worse option. Do you have any real argument for Georgism over public ownership?
Honestly, he argument you make is quite confusing as it seems to conflate ideas/terms[1], redefine language[2], and draw distinctions[3] at will. It's a bit hard to reason about something when it mixes interpretations of 'what is' with 'what could be'.
You're conveniently glossing over issues like price discovery (auctions?), periodicity (annual?), and what I suspect are some pretty large inefficiencies implied by requiring continual re-bid/repurchase of existing real property vs a small proportional tax. Im an amateur, no graduate degree in economics here, but I would wager there's a reasonable amount of literature around the benefits of surety of title and depth of markets for efficient discovery to support a distributed, private, ownership & transaction model.
WRT "scary" ownership, as I said I live in Australia. I understand what crown land is, title, registry, and how we've transitioned through those ~3 times in 200 years. That's actually another example where some proclamations[4] don't quite hold up; Land ownership in Australia _is_ owned by the crown already. I merely hold (indefinite) title, so maybe 'government ownership' isn't quite the panacea? I do find our current real property and capital rate mechanisms deficient, and would appreciate something a lot closer to an annual LVT.
When you say "... the real solution has always been government ownership of all land. There is no advantage to privately owned land ..." don't act surprised if you get lumped in with those who argue against private ownership of real property.
[1] "The dual of owning a home is the ability to deny others access to housing"
[2] "a tax based on the value of something is called rent"
[3] "Given that the two systems are essentially identical, but the second brings in undue political meddling"
[4] "...the real solution has always been government ownership of all land."
> I suspect are some pretty large inefficiencies implied by requiring continual re-bid/repurchase of existing real property
You are incorrect to suspect that. The price must still be discovered in the Geogist system through market means, and the additional burden of rediscovering it to issue the tax means doing that work twice. You are on a software forum so I assume you understand computers well enough to appreciate that the effort required for this in practice is essentially zero. A system sufficient to serve an entire nation of people could be programmed by perhaps ten engineers.
> I would wager there's a reasonable amount of literature around the benefits of surety
You can't just assume someone else has made your point for you and expect me to buy that. The system of government ownership can provide any degree of surety depending on how its implemented, but in general the objective of both systems is to force people to sell land instead of hording it, i.e. to reduce the surety people have over their ability to occupy land indefinitely.
> a tax based on the value of something is called rent
This is not a redefinition of language, but a simple observation that the two things are identical in practice.
> don't act surprised if you get lumped in with those who argue against private ownership of real property.
I don't care how justified you feel in mischaracterising my views.
> so maybe 'government ownership' isn't quite the panacea?
Yes, clearly if you read my argument made thusfar it dictates that government ownership is only effective when it is leased back to people in a market fashion. "The government owns it but you have an indefinite lease with no charge" is another example of changing the language of something without changing the practice of it. In practice, you own that land.
Finally, I am going to ask that you no longer attempt to find differences between Gerogism and social ownership. When you look at the actual implementation of both systems, they are the same. Any policy in Georgism has a one-to-one equivalent policy under government ownership. In fact Georgism is equivalent to a government ownership system with the following setup:
1) Leases are indefinite.
2) A substantial upfront cost is levied against people who wish to acquire a lease, determined by the highest bidder.
3) The charge on a lease is determined by some fraction of the upfront cost on surrounding leases of buildings.
Having observed this, we can see that it could be improved by removing the upfront cost, and instead have the lease determined by the leases on surrounding buildings when those buildings are vacated and the lease is put back up for auction. Forced renewal of leases is not necessary under a government ownership system as the increase in lease prices should be enough to naturally remove under-performing businesses. However the opportunity to renew a lease gives you a positive advantage over a Georgist one: if you feel your rent is too high, you can subject it to market scrutiny by voluntarily ending the lease on the property and offering the highest bid in the resultant auction.
Nope. The government could own all land and have the same system for withdrawing leases as is currently employed for eminent domain. You might say the government could change that system, but it can also change eminent domain. This is not an inherent difference of the two systems. One could even envision a system where the government has no ability at all to withdraw a lease and thus occupants are more safe than they would be under eminent domain. On a practical level, the Georgist system might even be more likely to turf people out than a social land system, because presumably the land tax would increase to price people out at the market rate, where a lease agreement is more likely to have controlled increases.
Well as nice as the sentimental definition you gave is, the legal definition of home ownership revolves around a set of rights granted to you by the government over a plot of land. I could feel safe and secure with my family a t Pizza Hut, but I don't own Pizza Hut.
This is pretty basic knowledge, there is only State and Collective owned land in the PRC. Individuals can only obtain _leases_ of State owned land. Property rights of _buildings_ are distinct, but will generally follow land title/lease.
Collective ownership isn't State or Government Ownershaip (negating the "all land" part) and in China "State Ownership" is an underlying ownership that doesn't carry the weight of immediate direct ownership, hence nail houses where individual lease holding rights that are automatically renewed trump the underlying state ownership.
Point being, it's not as simple as it's made out to be and it's not dissimilar to many other countries that have a notion of underlying ownership, seperation of surface and mineral rights, cave outs for eminant domain, etc.
In this specific context it's not especially clear what the GP's "how's that working out for them" is meant to convey.
Please do some research before accusing people of "BS".
>In general, rural collectives own agricultural land and the state owns urban land. However, Article 70 of The Property Law allows for ownership of exclusive parts within an apartment building, which endorses the individual ownership of apartments.
Rural collectives own agricultural land is not "government ownership of all land" which you asserted to be true.
Moreover, the devil's in the details:
( In China, your maint.loc.gov ) According to the 2007 Property Rights Law, when the term for the right to use land for residential purposes expires, the term will be automatically renewed
Which means that residential land use rights persist, as they do in the US, and while mineral rights remain with the state it's not the case that all land ownership in the US comes with mineral rights, these may have been signed awy by prior owners or retained by the State or Federal Government whe first transferred.
Both countries are more complicated than you sweepingly make things out to be.
The desire to help your offspring is a very deep part of the human nature. Any way to prevent that is inherently inhumane. I don't think such system can last long (and coincidentally they never did).
Until the children of the have nots outnumber the children of the haves and kill them and take their stuff by force. That was also human nature in the past.
That's why we have wealth taxes to even the playing field and encourage children of the have-nots to putting their effort in work and contributing in the system instead of on way to murdering the children of the haves for their stuff.
It's sort of protection tax the wealthy have to pay to live in a safe society that benefits them since their wealth comes from the work of the poor.
I actually agree with that, even though it's not certain wherever the "revolt of have nots" could be held off forever or it's inevitable.
However my point is that there's a huge difference between demanding a wealth tax and the "inheriting is the root cause of all corruption" approach. Former is a measure to preserve status quo, latter is a dangerous utopia.
I don't think that's true either. Indirectly everyone benefits because in a good system the total produced wealth is growing and the poor majority sees the improvement of living standards.
In a bit more details, the wealth can be created, preserved, redistributed and destroyed (i.e. failed to be preserved). Obsession with fair redistribution harms the creation and preservation of wealth, in the end there's nothing left to distribute. We saw that happen IRL.
In my view, creation and preservation of wealth is more important to get right. At least you'll have something to redistribute in the first place. And within that framework, inheritance is a good way to preserve wealth because passing it to the state inevitably destroys part of the value due to bad governance. Inheritance is also a very good incentive to create wealth, I personally wouldn't work 12 hours a day if I didn't have kids to set up in a new country where they have nothing.
So while inheritance is only a part of the whole system, I argue that it's not only humane part but a necessary one. Live country-wide experiments seem to confirm this so far.
What about gifts? Does it follow that gifts are a form of corruption, that exchanges need to be equivalent? Or how would you, for both practical law application as well as moral purposes, distinguish an inheritance, from a gift before death, from a gift in life, from providing shelter in youth and from giving a the gift of life through a part of oneself?
This isnt abstract, modulo reasonable thresholds Gifts are taxed as income by value in most countries. Inheritance (in the US) _is_ the weird wealth transfer exception.
Just checked and in argentina there is no federal tax gift, and in some provinces it's just much lower. We also have a wealth tax so that may address the gen wealth issue in another manner.
Tax is like that different in every country and hard to compare apples to apples.
I could only see this statement being accurate in a world where each generation of kids was synchronized into a discrete quanta. The continuous and arbitrary nature of birth and death in the real world makes this viewpoint somewhat incoherent to me.
The way the ultra-wealthy manage to make it entirely taxless; super evil for sure. Even so, it's not really the root - maybe a very large branch of it.
Nonsense. In order to focus on the supposed injustice of inheritance itself, suppose that someone becomes wealthy through ethical means. If they then turn out to have a mutation that causes them to be immortal, at what point does it become just to simply take their wealth away from them? If your answer is “never”, why is it any different if they gift their wealth to their descendants? Why is gifting wealth wrong?
The reason to let rich people keep their money is twofold: ethical economic activity is positive sum and rich people have shown an ability to generate these positive spillovers, and letting them keep it gives them an incentive to engage in this economic activity in the first place.
The former does not apply to heirs, and the latter only weakly applies.
One effect of wealth is the ability to dictate the direction of development over physical assets in the real world. I've come to realize that the personalities of those who are able to amass large amounts of wealth over their lifetime tend to coalesce around a certain mean that results in somewhat predictable development patterns everywhere I go. These patterns, which are concerned with maximum efficiency and return on investment, result in an overwhelming bland, commercial, "sameness" that is taking over the globe.
As it turns out, some of the most unique and interesting things I observe in the public sphere are owned by trust fund babies who took a different path to development (or just inefficiently left some ancient thing alone to decay). Either way, personally I appreciate this diversity in ownership of the world around me and this observation has changed the way I view the transfer of wealth through generations.
Most of my friends who bought a house in Seattle in their 20s or 30s used inherited funds. When I worked in mortgage lending it was basically universal that anyone younger than 30 was getting a lot of help from parents. There's a massive advantage to owning a house when you're young, especially pre-rate hike.
Why isn't the inheritance tax 100%? Or say 100% on anything that isn't real property? Inheritance made sense back when most peoples' estate was land, and you needed an orderly arrangement to keep land in the hands of the people who would work it. But why should the government provide legal means to transfer say stock ownership after death?
Housing is the obvious problem, only way to fix this is by making it easier to build houses and some kinda land value tax (higher property taxes would work but not as well). Problem is most western countries are gerontocracies and property taxes are the most hated tax. If you didn't get lucky you might as well give up on ever owning a house.
You are onto something but I would suggest a slightly different conclusion: that the best and brightest STEM students are attracted to the shiniest jobs, which right now involve programming computers to trade money (HFT) and teaching computers to do advertising (ML-backed ads). Neither of those are fundamentally useful.
Did you go to American high school? Most kids barely pass algebra 2. Even the “smart kids” can’t really compete in college. With standard American route there’s a sub 1% chance you can make it as a researcher in a hard science.
Yes, and what you’re describing is inaccurate. This is a meme promulgated by the for-profit education industry but it’s based on people not comparing like cohorts. The American education system is huge and includes everyone, so if you compare averages it appears to produce worse results than systems which track poor/lower-performing kids out into vocational education, exclude kids with special needs or limited English proficiency, etc. but if you compare matching cohorts based on socio-economic status, etc. the results aren’t bad. The trick is realizing that research over the last century has shown that the most accurate predictor for educational outcomes is the socio-economic stability of their parents at birth, and the United States has both a lot of poor people and done less to help them than many of our peer countries.
Regarding science, there are plenty of American scientists who graduated from public high schools. The problem there is that even highly-qualified students probably aren’t going to have a research career because the funding isn’t there to support it - even if you look at people who completed graduate school that was like 1/10 even before the Republicans’ savage cuts.
What? I went to an American public high school, there were/are plenty of kids who are very smart. 8% of my graduating class were in the uber-advanced honors math track. This is in a flyover state outside a small city.
I also used to work in science, the reason there's so few chances to make it as a top researcher is that there is little opportunity. Look at jobs for a lot of life science majors after a BS, you will find a ton that is washing glassware in a lab, a complete waste of anyone with half a brain.
There's reasons why there is little opportunity that's not worth exploring here, but suffice to say there are a ton of very smart kids in America that choose other paths. Outside tech and specialized physicians, nerd careers are not lucrative on average. With little opportunity, smart people end up doing banal work. Why do banal work and have a mediocre salary predicated on jumping through higher than average academic hoops? Doesn't add up for most people.
I'd say the reason there is so little opportunity in science is that science as an instiution is terrible at capturing the value it creates. Thus it instead relies on charity of which there isn't enough.
There's plenty of work for educated people. And my understanding is that each dollar in education spending adds many dollars to the overall economy, an indicator of its importance.
What we need is wealth that's spread out more evenly so more of our educated (and just simply smart) people have the resources to apply that education in valuable ways. If you have a valuable education but the only way to make a living is to work for some tech company selling ads or writing increasingly sophisticated AI software then, yeah, you're being wasted.
Or if the entire economy is aligned to whatever whim Elon Musk or Donald Trump in their most gracious overlordship feels like funding. The a lot of valuable people will be wasted.
If you do not get the chance to go to or complete college at a young age then you will never own a home in America in 2025. You will be a cattle who pays almost everything you earn to the rent seekers of America. The American Dream is dead.
This is why I believe the Financial Independence movement is too rearward looking, if you have children. Parents now need to plan for the college (and graduate school) tuition and the house downpayments of their children, because the cost of both have increased by an order of magnitude in the last 50 years.
I reached the same conclusion. Ultimately I do not believe my children will own a house unless I give them down payments. Ensuring your children don't start life saddled with education loans + ensuring they can own a house are the two biggest legs up you can give them going forward.
The alternative is indentured servitude and variable housing costs keeping them impoverished forever.
The solutions are simple, but the execution requires a radical change in the way we all see each other.
You don't cut off your finger when you get a splinter, or tell your earlobe it needs to fend for itself because it just hangs there and does nothing most of the time.
Pain in our bodies can make us shift our whole being to ease pressure on a stiff muscle or avoid a small burn.
Pain in our society falls on deaf ears and drives us to fight over scraps when there is abundance everywhere.
The solutions are simple. We all need our basic needs met, we should strive to end the suffering of others, and to help each other reach our true potential from where we are right now.
This article seems to contradict itself. It notes that tax system is flawed in favor or inheritors but goes on to suggest that taxing the inheritance or property will address this issue. Why would those not be tilted to benefit the inheritors?
History of mankind has been shaped by housing. It also is the most common and long lasting vehicle of investment, primarily because how easy it is to pass it down to descendants. It's not going away anytime soon.
Higher inheritance/gift/estate taxes + closing loopholes like step-up basis upon death at least in the USA seem like pretty direct ways to combat these issues as well - though nobody with money (read: nobody who benefits from the inequality) really wants to support that, which is reflected by almost nobody in the comment section here mentioning them.
If skills and knowledge matter less and less because technology and automation grow over time, what matters if not already existing wealth? Might be an hyperbole dictated by the current times, who knows.
We are building a new aristocracy where people are better than others just by virtue of being born into the right family. And if we don't limit the ability to inherit this process will just accelerate.
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP
this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
other nits, the baby boomers were an unusually large population group in an unusually prosperous and healthy period of history: we've known they would die for quite some time and we've known they would leave a lot of money. It's not "a trend" and it's not "news". It's a well known anomoly, a blip/bulge passing through the system. It's interesting but it's not alarming.
>this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
I get where you're trying to go with this (ie. "you can't compare stock vs flows!"), but you've patterned matched too aggressively. There's nothing wrong with using GDP of a country as a benchmark. Sure, it's comparing stock vs flows, but GDP of a country is nonetheless a valuable yardstick when comparing sums, for instance comparing debt to GDP levels. As long as they're not directly comparing the figures (eg. implying that the whole country is going to be inherited in 10 years time or whatever), it's fine.
A dirty little secret is that that over a third of Gen Z and Millennials get down payment help from their home-owning parents. In expensive cities, the percentage is even higher. When you add the number of parents who co-sign in order to secure the mortgage, the number could reach 2/3rds in expensive metros.
In the sense that there’s a growing class of landed gentry and nobody else can buy anything. People with houses today will be the aristocracy in a few decades
Because you own land. It will make more money than most people make through employment. This is true in many parts of Canada over the last decade and the trend will probably spread
> Because you own land. It will make more money than most people make through employment.
I genuinely don't follow. Yes, the bungalow sits on land ( enough for BBQ for 5-6 people ) and I sit inside the bungalow. Neither of the them make me any money. I can't sold them and live in the stratosphere. I either have to buy something else or rent.
I think we need to shift from seeing inheritance as something we benefit from.
Every positive comes with a negative, nothing is created nothing is destroyed.
Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
I won't deny that you CAN ignore the responsibilities that come from inheriting wealth, yes you can sell your father's company and life mission, but you destroy your legacy, and your children will destroy yours.
Wealth comes with its own set of problems if taken. Sure we may argue about which problems are worst, but must we? Each is born into a place, each is born into a class. And the principle of balance shall bring equity in the form of responsibility (to paraphrase Spiderman's uncle).
I just feel it's a more appropriate response to tell your parent "I will take care of it" rather than "thank you" and selling it to go on trips and snort cocaine. I'm not saying I'm free of sin and don't indulge in the pleasures of hedon, be it in a coffee (brought to me by a less attractive waiter of a distinct race from other commensals serving a publicly traded company, and made with beans grown and brought under a veil I can assume hides even more injustices) or in the wasting of my intellectual and physical talents on the pursuit and satisfaction of short term audiovisual novelty, but I will do so in guilt damnit!
>Every positive comes with a negative, nothing is created nothing is destroyed.
>Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
This is a platitude that has no bearing on reality. Technological advance in the past 2 centuries has increase our wealth and standards of living by orders of magnitude. You can come up with token objections about how each advancement had some downsides (indoor plumbing is bad because... copper mines pollute the environment?), but it's certainly not the case that "nothing is created nothing is destroyed". Technological advancement has created untold wealth.
Are you trying to say it’s harder to inherit wealth than it is to be born low income, grind a construction job, and come home to the house your parents bought 40 years ago that homes your grandparents, parents, and your family?
I suppose it’s something like inequality is inevitable so you can’t remove it; instead you can try to make it comfortable for everyone and that due diligence can help.
Perhaps a well-run military would be an example; unequal by definition but without all the parts working well it falls apart.
This doesn’t hold up logically. To inherit money means the generation before you saved it, but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
For inheriting wealth to be important to your success, it would either have to come much sooner or you would have to have no kids of your own
>but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
At least in theory that's not hard to pull off. From the article:
>By one calculation, if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made.
The average inheritor might be too spendthrift to stick to the plan, it's not exactly impossible as you suggest.
I’m not saying it’s impossible for someone to invest inherited money, just that on average, the returns aren’t that significant and the money comes too late. I’m sure there are people who’s parents pass way early and they get a lot of money at 25
If we’re talking about an average population, the authors premise doesn’t make sense if you look beyond one generation. It sort of feels like the author is jealous of someone else’s inheritance, and wrote this article to complain about it.
>If we’re talking about an average population, the authors premise doesn’t make sense if you look beyond one generation. It sort of feels like the author is jealous of someone else’s inheritance, and wrote this article to complain about it.
Are you arguing that because the average person only inherits $100k or whatever, rather than the $20M+ required to build "generational wealth", everything's fine?
A groundbreaking 20-year study conducted by wealth consultancy, The Williams Group, involved over 3,200 families and found that seven in 10 families tend to lose their fortune by the second generation, while nine in 10 lose it by the third generation.
This study matches my anecdotal experiences. Second and third generations of wealth don't respect money and this manifest in all kinds of bad behavior that leads to wealth destruction.
This is an interesting concept that in its abstract form applies to far more than inheritance. For example, it's a pretty thoroughly studied phenomenon that if a part of an immigration population becomes radicalized, it's usually the third generation. The reasoning if I recall correctly off the top of my head is similar to your reasoning.
I suddenly became the poor person in my peer group that all went to same school and did similar jobs. Why? because they all got 'help' buying a home and now have a fancy homes. I live in a rental apartment. I am still the most judicious about spending money but its hard to hang out with a ppl who can afford to be more careless.
Taxing estates over 1B at 100% would move the needle a good amount. Rich people will insist that if you remove their incentive to earn more than a billion they’ll stop working and I’m ok with that. There will always be plenty of non billionaires left to pick uo the slack.
I think it would better to let them renovate/build public goods like schools/libraries/streets etc. If they pay taxes I don’t think it would help society. It would require politicians which don’t use tax money to improve their wealth on their own (I know they would be taxed too but then the money is just moving on paper and not really used).
Make it 99%. Then they will increase their wealth by $.01 for every dollar earned, which is better than $.00 for doing nothing. Logically they must continue using their special billionaire-skills because they are earning money for it. Probably at a faster rate than 99% of us.
Plain economics. Surely they will make the rational choice.
part of the reason marriage was invented as a social technology was intergenerational transfer of wealth. so, inheritance has been 'nearly as important' as working for millennia.
In United vs FEC, corporations were granted to the ability to be treated as persons - with all the rights - when it was good for them. And to enjoy the protections of being a corporation when that was good for them. This was a unilateral decision by the US Supreme Court.
The result is that corporations now choose who candidates are in the US and who gets elected. Once a candidate is elected they serve the master who got them elected. Not, We the people. Any even casual evaluation of the laws passed confirms this. Affordable medical care, which the People want and need? No. Obscene profits from corporations overcharging people for medical care? Great!
Regular people push addictive drugs? Jail. The Sackler Family, probably the biggest cause of drug overdoes deaths ever? Are they in jail? And what about the millions of stock owners who made a tidy sum? Did they lose their money, are they in jail? Nope.
We are not a democracy, we are a corpocracy. Because of a US Supreme Court decision. We need to fix this. And hint: is the word corporation in the US Constitution. Hint #2 does the 14th amendment prohibit unequal protection under the law.
In a democracy the representatives represent the will of the people. In a corpocracy they represent the will of the wealthy corpocrats and corporations. We have two corpocratic parties to choose from. Democrats and Republicans.
We do tax wealth of course. We wealth is defined as primary residence. No need to remind me about 'services'.
Countries tax plebs by constantly changing the definitions of income, wealth.
People don't seem to realize that the alternative to a democratic, egalitarian society is a violent one. For rich and poor alike.
People will strive to make their lives better. If that effort can be funneled into productive actions that provide benefits to society as a whole, then that's what people will do. If that effort requires stealing from and killing hoarders of wealth because there's no other way to get resources, then that's what people will do.
The hyper-wealthy seem oblivious to the fact that you can't both be a trillionaire that's causing societal economic desperation and live in a society where people politely do their business and leave you in peace.
We have lived in a stable system long enough for people to forget the horrors of instability. It is a certainty that a reminder is coming - what is uncertain is how far away it is.
When you look around at how expensive homes are in certain areas and continue to lose the auction because everyone else had a cash bid, realize a lot of people are getting a lot of money from their aging and dying boomer parents. Where I live nearly everyone had a lot of help from mom & dad.
The American economy can be explained very simply: We went broke in 1970, and so we went off the Gold Standard, got the world to agree to use USD as reserve currency, and then just started printing money on an as-needed basis to fund gov't spending, and also for banks to hand out [basically] freely to investors, which pumped up the stock market (and all other assets) USD valuation to crazy insane levels.
All this free money also caused inflation and so everyone holding assets saw those USD valuations rise accordingly. Basically the baby boomers indebted the nation by stealing $36T from all future generations, and every one of them will all be long dead before one nickle of this debt is paid down, if it ever is, and no one even thinks it ever will be.
In other words the rich are an increasingly large parasite that is increasingly impairing the functions of real society and subverting it to their ends. Two oligarchs are running the country right now in their own interest.
I'd be more worried about a swarm of smaller, less flashy oligarchs that have a choke-hold over large groups of American population through various for-profit schemes across myriad of industries who influenced lawmaking for over half a century or more.
I like how they always forget to mention the elephant in the room, 8 billion in absurd amount of any living organism, by many estimates we already surpassed the number of rats in the world, but the responses about doing anything at all to reduce that number in the long-term are all emotionally charged and empty of any rational thought.
In the context of capitalism as we known scarcity increases value, such thing is true for number of employees available, the less employable people around the higher the wages and therefore the quality of life of the living.
https://archive.is/RKUl4
People really should look at the work of Gary Stevenson here: https://youtu.be/TflnQb9E6lw
The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
I’m starting to think the entire system is corrupt and we are headed for a destroyed Europe and a civil war in the US. Maybe I’m very pessimistic but this moment in history feels like the end of the American empire, what comes after this is extremely uncertain but people only seem to demand a fair piece of the wealth after a world war.
Thomas Piketty lays it all out in "Capital in the 21st Century"
Basically he compares two kinds of growth rates : the growth rate of the 'real' economy and the growth rate of wealth itself. You need the wealth rate to be low enough that rich people want to invest some of it in the real world, not leave it in the bank.
If you do tax the rich, they do very well and you also have money to pay for things like education, roads, affordable housing, medical services, scientific research .. which benefit all and lubricate the general economic market.
If you dont tax the rich, you end up with a gilded age of emperors and kings or a few robber barrons, a small rich coterie around them and the gawping masses of poor eeking it out.
Postwar 70s and 80s were a unusual period of relative lower-inequality, in which we had money in the real economy to develop things.
Garys Economics made an interesting point that inequality _itself_ is a problem - because the actual real value of the world remaining the same [ goods, energy available, land, workers, housing, technology ], when there is higher inequality, then the poor are losing a proportion of that real wealth to the rich. Extreme inequality itself starves almost all the population of a share of real wealth, for them to use their skills effectively - renovate a house, invest in stocks, get a masters degree, do a garage project, travel, have kids, install solar panels etc.
> Any return on capital either comes from direct investment or from lending to someone else who will invest directly.
Is this true? I'm not saying it's a huge portion of all saving, but holding wealth in things like precious metals or greater fool investments like Bitcoin doesn't seem like "investing" in anything productive.
If you bury gold bars that you mined yourself in your backyard, or you bury your salary in cash there straight from your paycheck, then you remove money from the system and thus not invest it. And effectively damage the economy, mainly via lack of liquidity.
It's hard making your capital inaccessible to the economy, but it's easy to not get the benefits of that working capital.
For instance, any time you park your money in a regular bank account or lend it at a suboptimal rate, you don't get some of the benefits.
This comment was down voted, but is a reasonable response.
Further to the parent comment, if you park your money in gold or crypto, you’ve given that money to someone else, and so on and so forth.
But there’s a balance to be bad, if no one actually spends anything other than acquiring investments, they starve, and the economy suffers.
No it isn't true. Holding money as money in a bank account is also not investing unless you think that providing liquidity to a bank is a useful investment (liquidity they can trivially access from the central bank, albeit at a slightly less desirable rate). A bank deposit is a liability to the bank, not something that can be invested.
A bank deposit is both an asset and a liability to the bank - a customer depositing money in a bank expands both sides of the bank's balance sheet.
Banks can and do then lend out deposited money to other customers, who can then spend it in the economy as they see fit.
No, the deposit is a liability with a matching asset that comes with it. The asset is needed to balance the asset. They certainly don't lend it out to other customers, which always happens through new money creation. They do buy short duration government bonds with it because they're not stupid and can get a better return than on reserves, and bonds are acceptably liquid. Nothing they do can be construed as investment. Savings really are savings and are effectively removed from the economy.
> No, the deposit is a liability with a matching asset that comes with it. The asset is needed to balance the asset. They certainly don't lend it out to other customers
When a customer (customer A) deposits $10 of cash at a bank, the bank has a new $10 asset (the cash), and a new $10 liability (the deposit it owes to the customer).
If another customer (customer B) then comes in and asks for some cash in the form of a loan, the bank can loan that customer the $10 cash, at which point the bank goes from having a $10 asset in the form of cash, to a $10 asset in the form of an outstanding loan.
This new asset is less liquid than the cash, but the bank's balance sheet still balances.
> which always happens through new money creation
You are correct here - bank lending is the process through which the vast majority of money is created. Before the loan, customer A thinks they have $10. After the loan, customer A and customer B both think they have $10. In this sense, $10 of new money is created.
Interest rates moderate the rate at which banks lend and the rate at which money is created, and the Central Bank acts as one of the most important price-setters in the economy.
> They do buy short duration government bonds with it because they're not stupid and can get a better return than on reserves, and bonds are acceptably liquid. Nothing they do can be construed as investment. Savings really are savings and are effectively removed from the economy.
Even if you believe that banks only buy short duration government bonds (which is provably not the case[1]), this is still a form of lending, as it effectively finances government borrowing, and the Government can spend their borrowed money as they see fit (such as for building infrastructure).
[1] See JP Morgan's consolidated balance sheet as an example, page 206 - https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chas...
You seem very confused about several different points here.
1. Deposits often fund loans. If deposits were never used to fund loans as you describe, most banks would have at least as many cash or HQLAs as they do deposit liabilities. Check any deposit-taking bank's balance sheet to see that this is not the case.
2. If banks do buy government bonds with deposits, that still does not negate the funds being invested. The government now has the money and will spend it. Again, you can quickly check the governments do not hold piles of cash and the vast majority of the money that they borrow is spent on their activities.
3. It is axiomatically untrue that 'savings are removed from the economy'. Savings means that someone consumes less than they produce. That production must either be consumed by someone else, or add to the stock of capital. It cannot disappear.
Loans create deposits, as outlined in this document from the Bank of England: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
These deposits can move between banks along with an associated asset.
Balance sheets always balance. Most of the balancing asset against a deposit is a loan. This is how banks make money and arguably their purpose. You can see the balance sheet of HSBC here (page 12): https://www.hsbc.com/-/files/hsbc/investors/hsbc-results/202...
It's clear that the majority of their assets are loans as expected. Then a fair chunk of reserves which reflects transfers from other banks (which hold a corresponding loan asset) or payments from the government. Finally there's a smallish quantity of financial investments that includes government bonds.
Bonds are just a floating price asset swap for reserves so the reserves must exist (have been spent) before the bond sale can happen. That is, governments don't borrow money until after the spend. In the case of the UK, this is shown in the following paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4890683
You seem to be of the understanding that there's a one to one correspondence between stuff and money, which a moments consideration of the endogenous nature of money (as described into BoE paper) would highlight as flawed. If you're suggesting something else by your point that savings imply a drop in consumption, please do clarify.
It feels like your understanding comes from an economics course, which generally bears no relation to actual monetary operations and understanding, rather reflecting the particular philosophical bent of the economic school.
Thanks, I know and agree that loans create deposits. Sadly this underrated fact seems to have thrown you a bit, to the point where a lot of what you say is just nonsense.
What does this mean? "Bonds are just a floating price asset swap for reserves so the reserves must exist (have been spent) before the bond sale can happen."
Are you able to explain what your understanding of liquidity is?
Do you know what it means for loans to be funded by deposits?
Do you know the origin of the equation between investments and savings and how it is justified?
You are giving the exact impression of someone who used to believe a flawed theory of money creation, watched the Netflix documentary about bank money and has lost it a little bit.
It’s been a while since I took a monetary theory class, but if people are interested in your first point they should look into fractional-reserve banking.
Essentially banks are only required to have a fraction of their deposit liabilities as liquid assets and can loan out the rest. If I remember correctly, this is actually how a substantial amount of money is created in the US and likely most of the world. If you deposit $100, a bank could make a $1000 loan assuming the reserve rate is 10%, which leads to an increase in the money supply of $900.
Money supply is definitely not the same as the size of the economy, but it is incorrect to say that bank deposits are just sitting stagnant. Banks are quite active with those deposits - how else would bankers make all that money!
Bankers make money by creating loans, which are subject to regulatory requirements imposed largely through the adoption of Basel III. The reason they take deposits is because they are the cheapest form of liquidity. The certainly don't make money lending out deposits, whatever that means. Many countries don't even have reserve requirements, which rather highlights the flaw in the fractional reserve model.
I don't think you know what 'liquidity' means, but if you do you are incorrect about it here. Deposits provide funding, not liquidity. Banks certainly do use deposits to fund loans.
It is not true that most countries do not have reserve requirements.
I think before commenting further you need to take a deep dive into actual banking operations, because you really are wide of the mark. I posted a few links in the other post local to this one that might help. I also suggest reading the Basel III accords (or at least a summary) to understand the role of liquidity in banking.
There's not much point me discussing this further with your since you're so wrong. Take care and good luck with your enquiries.
I suppose that’s true.
I do think that your original argument that bank deposits don’t contribute to economic growth is wrong though. As you point out, they are a cheap form of liquidity for lenders. I think you’d agree that loans play a key role in economic growth.
The ability of banks to lend is limited by the availability of credit worthy borrowers, not liquidity. Banks will always get the necessary liquidity from the central bank (assuming the system is working as intended), but prefer deposits because they are cheaper than whatever is offered by the CB. Inter-bank lending is an alternative preferred option if insufficient deposits are available.
Even if you try to tax the riches, they have billions of ways to evade it. The tax laws are so complicated for a reason. Here in Australia, there were cases that some individuals that earned just about A$1M pa., and they paid ~A$980K to companies registered in Virgin Islands etc. for managing tax affairs. Such arrangement knocked down their taxable income to ~A$19K, and thus they paid probably a couple of dollars taxes if not not even a dime. Eye-opening, right? But those were not those super rich ones. You can just imagine what those super rich people can do. So the burden of the tax would be on mid-income people. I would expect the same in US.
If there were political will to tax the rich then you'd have to, in addition to changing tax law (obviously), fund IRS investigations to ensure the taxes are actually collected. Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services. If you think people will commit tax evasion, then put more resources into investigating tax evasion. Historically, money spent recovering taxes has yielded more than the cost of said investigations.
> Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services.
It goes further than that, it is the exact argument made by wealthy people as to why we shouldn't tax them more aggressively. Parroting that argument is ludicrous unless you're considerably wealthy yourself.
Those loopholes were by design, complicated enough to prevent most people like us to take advantage of it but will allow those who can afford to evade lots. I'm not sure if people is just naive or playing dumb.
If only there were some way to change a tax code... Alas, no country has ever figured out how to do that!
We have a way... oh, they have spent 20 years in gridlock arguing over political lines. And the Rich apparently won given the current proposal.
You heard it here first. There will be no tax reform from here on.
Why not? The billionaires are still paying some tax.
And evil if you are.
As long as political campaigns are funded by the rich, there will be no political will to tax the rich.
It is extremely difficult because you not only need to do it on a per-country level, but globally. Otherwise you just punish foreign companies that genuinely invest in a country with stricter tax laws (and most will just choose another country, just like it's happening in Europe). And ultimately, it depends on the will of the American administration - and they can be extremely bullish about imposing their laws on smaller countries, sometimes even using their military advantage.
The world is degloballuzing rapidly and yiu really can not anything in a dictatorship or oligarchy. Look at those falling out of favour in Russia .
s/favour/windows/g
> fund IRS investigations to ensure the taxes are actually collected.
Even people who want to tax the rich are skeptical about empowering / funding the IRS because there are many studies showing that the IRS disproportionately audits the poor.
If that’s true, then why would more funding help new enforcement against the rich rather than multiplying the current problem? Generally cash/support fixes material resource issues but cannot fix policy issues
IRS enforces against the poor because it is easier and they have been directed that way. It is possible to increase enforcement, direct where that enforcement goes, and change the law so that it is easier to enforce against the rich. Another would be simplify the law for to make audits for poor unnecessary and leave rich fewer places to hide.
We have gotten used to Congress being dysfunctional and not passing laws that we think the current laws are some unchangeable state.
Sounds like we agree then that it’s important to change policy first before dumping more resources on a malfunctioning org and hoping for the best. But parent mentions “funding investigations” as a cure.. my point is just that there’s no indication that this makes things better, and might actually make them worse.
I do agree that changing policy is a separate, yet complimentary, step. But maybe the poor are disproportionately audited because the IRS doesn't have the funding to effectively target the rich and succeed? Maybe with better funding, they could successfully extract more tax dollars from the rich, incearsing the ROI of funding the agency?
I don't think further funding the agency is a completely nutty idea. Although if you truly believe the agency is broken, and that being broken isn't related to their funding, then I could understand your perspective. I lean more towards the idea that at least some, maybe even most, of the issues they have might be due to a lack of funding. That makes more sense to me than most of the criticisms I've heard of the IRS, which seem to mostly be on partisan idealism framed as otherwise.
My point was that Tax Laws were deliberately complicated to allow some people to evade taxes. If you put that into consideration, you will find it's a lot easier to understand the status quo. Again, what you think or what I think do not matter after all.
It matters completely. Congress makes and changnes tax codes, people vote in congress. People need to remember they are the ones being served and they are in control. Absolving themselves of their representative's choices is the start of the downfall of the system.
It should matter, but it actually doesn't matter as much as you thought as there is a level of indirection.
Just look back to the promises made before the election, how many were never fulfilled?
This is because we continuously being divided with lesser pressing issues: abortion, same-sex, universal toilet, etc.
The left or right are the same side of the coins that the rich will support no matter what.
They shun people like Bernie Sanders, Picketty, etc.
In USA, social programs = socialists = commie.
That's how bad the brainwashing is.
There is a level of indirection as it should. But that indirection also adds distortions.
Two points here:
1. Gary’s arguments for taxing the rich aren’t about taxing income. It’s about taxing wealth.
2. By his argument, most of the wealth are immovable: the rich disproportionately owns actual, physical real estates, and stocks of actual companies. As these assets are based in the country, you could tax right at the source.
For the really rich, I agree about the usefulness of taxing wealth.
The problem is that such a tax must be strongly progressive, or it may affect the poor much more than the rich.
For instance, I have seen cases in some countries, where after the discussions about the usefulness of such taxes for wealth, the result was the establishing of some high taxes on property, whose only effects were that e.g. someone who were jobless for some time might be forced to sell their house, and for a disadvantageous price, for not having with what to pay the property tax, thus becoming both jobless and homeless, or someone poor who inherited a house might be forced to sell it for a disadvantageous price, for not being able to pay the inheritance tax.
The result of this kind of misguided tax was an even greater transfer of wealth from the poor to the rich.
Yes, the only thing that genuinely scares the rich is wealth taxes.
It is next to impossible to hide the fact that someone owns something like real estate
In addition to real estate I might consider other property such as bank accounts, at least above a certain threshold. Presumably that cash has to be invested somewhere (or should be encouraged to do so)
If we could get a real wealth tax, I would do away with income taxes like some states have done (i.e. Texas)
>It is next to impossible to hide the fact that someone owns something like real estate
Real estate can already be taxed via property taxes. Unrealized gains in securities can't be taxed the same way as their value is much more volatile, with potentially large daily swings. Texas makes up for the lack of income taxes with relatively high property taxes.
>In addition to real estate I might consider other property such as bank accounts, at least above a certain threshold.
Interest from savings accounts is already taxed. The wealthy don't hoard their wealth in bank accounts though.
While it doesn't make sense to tax unrealized gains, they could be taxed if they are used as the basis for a loan. Loans on unrealized gains are one of the main ways the wealthy are able to live lavishly while paying very low effective tax rates.
It seems fair that you shouldn't be able to have it both ways—if you are getting any financial benefit from an asset, including a loan, there's a pretty strong argument that you yourself are "realizing" that value.
The property or goods purchased with a loan are subject to tax.
What if I told you that the largest and most liquid market for assets in the United States wasn’t covered by any transaction tax?
Sure, but everyone pays those taxes. If we are talking about inequality and the wealthy having ways to get out of (or better said, drastically reduce/defer) taxes that everyone else has to pay—i.e. income tax—I think loans on unrealized assets is probably the first thing to look at.
Banks are also taxed on the interest from the loans. Loans backed by assets are not just free untaxed money as you seem to think they are. If an entity is unable make the payment on a bank loan, then they would be subject to having their collateral seized, and the bank would then eventually sell the assets, which would be subject to capital gains.
I think it would be more realistic to heavily tax inheritance and re-evaluate trust based loopholes.
> Loans backed by assets are not just free untaxed money as you seem to think they are.
I mean, you’re clearly moving the goalposts here. We’re talking about tax on unrealized gains for the wealthy, not sales tax, property tax, or taxes on the bank.
If you’re able to keep taking out new loans to pay off the old loans until you die, with an appreciating “unrealized” asset as collateral, then yes all that money is effectively tax free if we’re talking about income tax and capital gains.
I believe the previous poster was arguing that taxation still exists at a macro level, i.e. money is sucked out of the economy. It doesn’t matter so much who paid the taxes. The wealthy pay the interest.
Part of me wonders if doubling down on taxing transactions (which tariffs is categorically) can thus work. It seems like an elegant way to avoid having to deal with wealth vs income.
I really don't see why "equity is volatile" is some insurmountable problem. We see the same exact "problem" show up with day trading, where it is possible to accumulate a lot of taxable gains and end up with less than you owe if you don't sock away the money to pay for taxes at the time of locking in the gains.
If an equity is valued at $X on some date when we lock in the value for a wealth tax or a tax on unrealized gains then sell enough of your equities on that date to pay for the tax and store that in a zero-risk asset. This can easily be done automatically.
Unrealized gains can be taxed - for example, Ireland has a Deemed Disposal tax on ETF investments, where after 8 years, any gains are considered to have been realized and tax is due (even if no sale has taken place)
Deemed disposal subject ETFs can be taxed under an eight year exit tax scheme, but this can be avoided by simply investing in US domiciled ETFs or individual stocks.
> Yes, the only thing that genuinely scares the rich is wealth taxes
Why though? We’ve already established the end game if we don’t do this. It’s hard to imagine society willingly regressing back to feudalism. What we likely need is a sensible plan which gradually adopts wealth tax rather than a radical step change.
> scares the rich is wealth taxes.
I'm scared of 2% wealth taxes (as discussed in New Zealand) because I believe that will take 100% of retirement savings over time. And I'm no multimillionaire. Say portfolio returns 6% and drawdown(spending) is 4% then 2% takes 100% of gains.
The 1% or 2% figures sound trivial to the voting majority but they really are not trivial. Cue discussion on compounding.
The other issue is Forcing sale of private owned businesses. If you fuck with the incentives to grow a businesses, you will end up with a shitty economy and everybody suffers.
Apart from the obvious 2% * decades = lots (for low growth investments).
I could work to create new high-margin export income for New Zealand: I have the skills. But I don't work because I hate our taxation system: NZ loses.
An economy needs to incentivise everyone to work including the wealthy: otherwise it bombs. It scares me to see people in the US want to introduce features to cripple their most successful economy. I think most workers poorly understand businesses or economic incentives.
We (New Zealanders) are already getting taxed 1.4% on wealth effectively, if your on a tax rate of 30%+ (most people).
Most people just don't know about it. Due to the FIF rules. Any international investments you have get taxed like this (it's not so clear cut, but more or less). The only exceptions are NZ investments and Aussie investments, maybe. There is a tool to check if an aussie share is except from the FIF rules. e.g. Aussie ETFs aren't, even if they invest in only aussie stocks...
So everyone with a Kiwisaver (retirement scheme), aka most people, have large portion invested overseas, and thus are paying the 1.4% p.a.
It also discourages high net worth people from moving to NZ, as they usually have investments outside of NZ, which will get taxed once they move here (after a few years exception).
The small "win" we do get is you can (cost bases) invest up to $50k overseas without the 1.4% FIF rules applying, (though dividends are still taxed). But like no one knows about it, and managed funds can't take advantage of this, so most people don't utilize this, especially not low income people, who generally aren't that well educated on finances.
Don't get me started on our lackluster retirement scheme, Kiwisaver, with near 0 tax incentives, and propping up the housing market prices.
There's heaps more invisible wealth taxes that increase the marginal tax rate by a few percentage points. Rates, Insurance, increased financial liabilities, means testing, unequitable seperations, oodles of time wasted managing money, yadda yadda. And if you want to keep up appearances then the costs skyrocket up.
If you don't have anything then you can avoid certain costs, or sometimes you can get subsidised.
The wealthy also get some financial boosts e.g. house appreciation. And white collar crime has cheap convictions (or you can avoid consequences)
I've never had kiwisaver because I believe in the value of optionality with my own money. I severely hate locked up money. Being able to deploy money has gained me a small house worth of money. The FIF rules are a cunt to manage and Sharsies are SHIT - they've promised to deliver an FIF report but haven't done so.
Interestingly the actual website for Kiwisaver describes it as a "savings scheme". In the US we just have our own national Ponzi scheme, Social Security
I think our Kiwisaver is more like the US's 401k. We also have NZ Super, which you start getting at 65, and isn't asset tested (yet). But most can't live on just NZ Super. Though some living frugal and have paid off their house, do live within super, even some renters living do make it work, but it's very bare bones.
While our NZ Super isn't asset tested, our residential care subsidy (elderly care) is asset tested, and is very expensive. When you get old and don't die suddenly, then it's likely your assets you've accumulated over the years will be used to pay for your care (though there are some way around it, but not usually cost effective unless you have a large amount of assets).
But, the elder care the govt gives you (if you can't afford it aka no assets), isn't very pleasant, so you really should plan for it while you're working age, and have investments large enough to cover the costs (which most in NZ don't do).
I don't think we have insurance here that covers elder care.
I believe the guys across the ditch (Australia), have a better retirement system setup. While in NZ our Kiwisaver by default contributions are 6% (total. 3% employer, 3% employee), been this since it started just about, while in Aussie, the current min default total is 11%. Though Aussie's govt supported retirement payments are asset tested, where as they aren't in NZ.
I think having a higher min default is probably best for everyone, as most people don't change from the default.
If you think US Social Security is a "Ponzi scheme" (it is not, by definition), then do you also think all other highly developed nations are running Ponzi schemes because their national pension is paid from current accounts? Something that I see rarely discussed: Most national pension schemes need means testing. If you already have reasonably large savings, investments, or passive income, then you don't need the full amount of national pension. You can receive less. The remaining portion can be redirect to those in greater need. One thing we have learned in economics in the last 10 years, when poorer people receive direct cash payments from govt's, they spend it into the economy as a much greater portion than those wealthier.
Also, the US has 401(k) savings plans. It is pretty similar to Kiwisave.
> If you already have reasonably large savings, investments, or passive income, then you don't need the full amount of national pension.
Says who? According to whom? Who gets to make that call?
There would be a threshold below which the rate is zero, just like there is with income
Yep. Get your points. They can if they wish. The question is do they want to? If so, why were those loopholes there in the first place?
So the government takes physical assets? Didn't we fight a war over property rights?
My neighbor is way wealthier than me. So its ok if I take his car. He has enough he can just buy another one.
> So the government takes physical assets?
Not quite. If you are ultra wealthy because you happen to own several large buildings, fleeing the country to avoid taxes is easy. Doing so with you wealth, however, isn’t.
Which is why they will leave with mobile wealth before the act goes into effect, taking away the capital workers use to earn a living. Property taxes on land and fixed structures work well as they cant run away in a practical way.
The means of production is still here, what’s left of it. Lower asset prices will benefit the poor. What should have happened during COVID is the government took a percentage of businesses to the cost of lockdown/furlough (if they were of a certain size) rather than subsidising the asset hoarding class at the expense of workers. Then you give the workers part of these businesses, spend the rest on re-industrialising. It would have caused the biggest economic boom in the UK maybe ever and with all these consumers available to buy things you’d get a lot of investment and some people would use some of this wealth (£1tn in the UK alone, about £15k for every adult and child in the UK) to start small businesses creating an even better economy.
It’s got to be worth a try rather than the disastrous economic policies that got us here.
The US already claims tax dominion (for its citizens) over the whole world. You get the foreign earned income exclusion, and you can also avoid double taxation in many countries that have a tax treaty with the US, but otherwise the default is that you need to report and pay income tax on worldwide income, no matter the source and no matter where you are a resident.
In the same vein, if the US were to implement a wealth tax, the simplest way in terms of enforcement and not creating perverse incentives to shelter wealth outside the country would be to make it international in scope. Yes, people could give up their citizenship, but that's a huge sacrifice which most wealthy people would not want to make at any price, and there's already an exit tax in place for people that do this.
Not totally. The wealthy are incredibly heavily invested in our economy. Take Elon Musk for example. He’s heavily invested in SpaceX, Tesla, and Twitter. If he walks away from the US, Tesla, Twitter, and SpaceX are all still here and can’t easily “run away”. Sure, they can take some “mobile wealth”, but if you are very wealthy you can’t just leave a whole economy (that’s where your wealth is).
> He’s heavily invested in SpaceX, Tesla, and Twitter.
You make it sound as though he put a lot of his own money (somehow obtained from elsewhere) into these companies.
But that's not true at all. It is correct English to say that he is "heavily invested" in these companies in the sense that his wealth is paper wealth based on the perceived value (stock price) of these companies.
But he is not invested in them the way that a typical person has their retirement funds invested in a company or mutual fund.
Elon got started with zip2 when South African socialists induced capital flight causing elons dad to send his money and Elon to the USA/Canada.
Elon realised that as well. That's why he is in the oval office now.
Elon came here under a similar story. The party in significant power cheers on 'kill the boer [farmer]' ( and 'redistribute' their capital to the poor). He escaped to here. It's admirable he wants to prevent America becoming like South Africa.
The problem with that politics is stagnation. It is hard to move SpaceX and Tesla out of the country, but you don't get new companies in this situations, there will be less competition and, as a consequence, Elon Musk get more power, and there is nothing you could do about this.
Property taxes are a thing. If Joe Dirt has to pay property taxes for the home he shelters in, the wealthy should have to pay property taxes for the shares of a company that they use to secure loans for yachts and Ferraris.
The really great thing about taxing land, is that it can't escape where it is. Capital flight is a risk for taxing other forms of wealth.
And land is something of finite quantity that is actually taken away from the rest of society. Capital is produced, and made, and is not finite like land.
This is one thing that California got really wrong, it should be taxing land heavily, and income less.
> it should be taxing land heavily, and income less.
Wouldn't that inflate housing prices even more? Which disproportionally affect those in the bottom 90% or so.
Not an economist, but not necessarily. A heavy land tax would discourage buying real estate as an investment vehicle which might help drive prices down (or at least slow the rate of growth). It would also discourage leaving rental units empty.
I’ve always been in favor of a land tax like the Georgist’s describe.
I still think property taxes on stocks should be a thing. Americans pay income taxes from foreign sources, so why shouldn’t the rich also pay the same for overseas investments? Just close the loopholes with simpler tax laws. That could be like saying it isn’t hard to program some feature into software, though, so perhaps not.
Example: “Thou shalt pay 0% of all income and assets up to 20k, 10% to 50k, …, and 95% on up to 20mm.”
Framing this as a personal income tax concern is a bit off the mark.
https://en.m.wikipedia.org/wiki/Base_erosion_and_profit_shif...
No, look up prop 13, it heavily incentivizes sitting on land and never triggering a valuation reset. It’s a massive wealth transfer from the newcomers (who tend to be younger) to those who’ve lived there longer.
A fix would be if you use unrealized capital to secure a loan, that unrealized capital amount to secure the loan becomes taxable. Of course that would tax people trying to get home equity loans though.
The problem is that people will always probe the tax code for loopholes that weren't considered. It's a cat and mouse game, except the cat is fat and lazy, and gets paid by the mouse.
you could create an exception: if you have <= $1M in unrealized capital gains, those assets are not subject to unrealized gains tax.
Eh, an exception for a primary home is common throughout the tax codes and the like. Just saying you realize capital gains on an asset used to secure a loan (unless it's a primary residence) would cover that without being out of step with everything else.
Sure, a billionaire could then use their $143M estate as collateral on a loan to avoid realizing the capital gains, loophole, but since you can only have one primary home, it's a very limited loophole.
Larry Ellison will write off the island of Lanai as his primary charging station.
Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.[0]
[0] https://news.ycombinator.com/newsguidelines.html
I think a more reasonable interpretation might be "the government knows about expensive cars (i.e. that they are registered, have numberplates etc), and so charges some annual tax on the owners of those cars."
Describing wealth tax reasoning with an absurd example of the same reasoning on an individual level is an attempt to get people to understand what wealth taxes are.
The government that is supposed to work for you thinks you have accumulated too much stuff and is trying to make it legal to take a percentage of your physical wealth annually.
You only accumulated and maintain the wealth because of the government. Without the government and the economic system it cultivates, you’d never have it.
>You only accumulated and maintain the wealth because of the government
This is simplistic nonsense. No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends. If it were otherwise, many more people would be rich just by virtue of living under a government. There is a real place for giving people credit for the wealth and capital accumulate, well beyond what government offers.
It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.
> They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends.
You are confusing two things thinking they aren’t highly related but they are. This statement could otherwise be written “government created a flawed system and motivated individuals achieved wealth by taking advantage of that system”. That implies a flawed system was causal. We don’t need bigger government, we need the right government. No one wants to say that those who worked hard - even by benefitting from a flawed government - should not have high wealth, but by your same argument, what did the wealthy children of these individuals do to justify their wealth? Their children? How long do we believe this chain of inheritance is sensible?
Most cancers didnt grow because some high and mighty body willed it into existence, they did it within a system of biological laws and conditions that admittedly the body does generate
Your argument is built on a flawed premise that ignores the foundational role government and society play in enabling wealth creation in the first place. The counterfactual is simple: without government, without the legal and social structures upheld by a functioning society, there would be no stable mechanism for accumulating wealth at all.
Wealth does not exist in a vacuum. It is not some inherent trait of individuals that manifests independently of the structures around them. The wealthiest people succeed not just because of their individual effort but because they operate within a framework that provides enforceable contracts, property rights, regulated markets, financial systems, infrastructure, security, and a workforce educated by public institutions. Strip all that away, and they are no better off than anyone else in a lawless wasteland where power is dictated purely by brute force.
If wealth were purely a function of individual effort, we’d see people amassing fortunes in failed states or ungoverned regions where there is no government interference—but we don’t. In fact, in those places, the absence of government results in instability, extreme poverty, and the inability to conduct large-scale business. Conversely, the wealthiest individuals overwhelmingly exist in places with strong institutions and legal protections—because those things are prerequisites for wealth accumulation.
Your contradiction is actually the real contradiction. You claim that people become rich despite the government but then ignore the fact that wealth is unequally distributed precisely because the government does not intervene enough to prevent market capture by a small elite. A government that enables wealth creation is not the same as one that ensures it is fairly distributed. It is perfectly consistent to acknowledge that wealth requires government structures while also recognizing that unchecked capitalism leads to oligarchy.
So no, this isn't simplistic nonsense. The simplistic nonsense is pretending that wealth creation happens in a vacuum when, in reality, it is entirely contingent on the existence of an organized society with functional institutions.
> strenuous effort by these people
strenuous effort by their employees or are you telling me that the average billionaire works 50000 hours a day?
To steelman the argument that wealth is earned, this kind of stuff tend to follow a power law. So a 10% increase in effort or talent can result in a several fold increase in wealth - especially when the effects of compounding interest are considered.
This is most apparent in sports or the arts. Being just a little bit better at baseball can be the difference between a million dollar contract and being stuck in the minor leagues.
Of course the question of whether we should want success to follow a power law is a different matter. As is the role of luck. Going back to the sports example, being born at the right time of year can be a huge, permanent advantage[1].
[1] https://medium.com/@connorbaldwin28/why-athletes-tend-to-be-...
> No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation.
This is akin to saying you only achieved a high score in a video game by your own sweat and effort, and saying the video game developer had nothing to do with it. Without their work, you wouldn't have a system within which to accrue wealth. You may not even have the concept of wealth or property. Bezos wouldn't have his wealth regardless of himself creating amazon if there didn't already exist power grids to electrify his warehouses and data centers, roads upon which his delivery vans could travel, a financial sector to see him be paid for his goods, on and on and on.
The mythmaking of the self-made-wealthy has gone completely off the fucking deep end at this point with a portion of the population, as if these CEOs fell from the sky, cratered in the Earth, raised their arms and from them spawned hyperscaler businesses and cavemen left their campfires, picked up Macbooks and started writing React code.
> It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.
This is not contradictory at all unless you boil the points down utterly beyond recognition.
> Didn't we fight a war over property rights?
We just wanted to be the ones setting the rules.
We were quite quick to put our own stamp on the populace. https://en.wikipedia.org/wiki/Whiskey_Rebellion
I can think of two wars over property rights.
But laws shouldn't be set based on how easy they are to avoid. Lots of people drive too fast all the time, yet few argue that we should do away with speed limits. Besides, there is zero empirical evidence that suggests that raising rich people's taxes is ineffective. Yes, they are good at avoiding taxes, but professional tax collectors are probably even better at enforcing taxes. It's a question of political will, or lack thereof, due to not wanting to lose your biggest donors.
I understand this is a tangent but you picked a really bad example. We should be trying to remove every single speed limit that we can.
If the design speed of a road does not match the speed limit of the road, people will drive the design speed, cops will learn to sit there all hours of the day waiting for people to mess up, and get ticketed. Instead of just putting up the speed limit sign, city planners should design for the road to be safe without need for the speed limits to be in place. This can mean things like reducing the width of a lane, could mean speed bumps, to purposeful non-straight sections.
There will always be people who go much faster than the design speed. They are ignoring their and everyone else's safety.
I live on major street where the speed limit is 25 to slow people down. It used to be 35, and people normally go 35-45. The problem is that people go much faster when there is no traffic because the street feels wider. I would love if they redesigned for a slower speed. But there are cars in the middle of the night that drive over 60. It doesn't matter if street is calmed, they will go super fast and only tickets with slow them down.
There will always be people who go much faster than the design speed. They are ignoring their and everyone else's safety.
Those people don't care about speed limits, in part because they are generally set significantly too low. This has the effect of normalizing the scofflaws' attitude even when carried to a genuinely reckless extreme.
Conversely, if you raise the speed limit to the 85th percentile, anyone exceeding it significantly will stand out enough to catch easily.
Speeding is a victimless crime anyway. If you hit something or someone, you were doing something wrong besides speeding.
There's a third choice, though. It's bad when speed limits are much lower than the natural speed of the road, for the reason you describe. And it's good when the natural speed of the road is the safe speed of the road. But in addition to those two, it's also possible to introduce fast, automated enforcement— speed cameras.
This, of course, applies just as much to the actual topic of the Economist article; new inheritance taxes are just and good, but they should be written to be enforceable, and then they should actually be enforced.
That’s a horrible idea. I very much like driving on straight wide roads without speed bumps, even if I’m going 25mph.
If the safe speed of the road is 25mph, and the design speed of the road is above 25mph, you will not have safety no matter what the speed limit is. Vision Zero strategies take these factors into account to ensure safety.
Bollocks. The only thing that gets you is young and reckless drivers going 200mph on the highway, endangering everyone around them. There are limits to increasing safety in road design, and limits in the reaction speed of humans.
Yes, this nuance was already included in my previous post. Thank you for agreeing with me.
> that we can
Highways are designed to be unsafe by design, so without a redesign they require speed limits.
You don't cut your own fingers. And that pretty much the whole story.
This is such a "'No Way To Prevent This,' Says Only Nation Where This Regularly Happens" comment.
And that's why Georgism exists! You can't offshore a plot of land.
If you've really managed to generate trillions in profit without using any, including indirectly (mining, showrooms, etc), fair enough. If your economic model is quite literally rent seeking, you can fuck off and give all those proceeds to whatever government ensures that land is not overrun by whatever raiders are historically a problem in your area. If you work for a living, you should be able to spend your earnings on a fancy apartment if you wish, and if a landlord wishes to make one instead of just sitting on land, they keep the profits from that too.
> The tax laws are so complicated for a reason.
And the reason is those same rich influence the laws to their benefit.
It would be pretty trivial to tax the wealth if a society wanted to do so. But laws are made by lobbyists, who are paid by the rich, so what should we expect.
Mostly it is other way around. People, who influence the laws - become reach.
Do you have a link?
If the individual resides in Australia, how do they utilize the $980k sitting in the foreign company?
The company can buy assets in AU, such as a house, and lease it to the individual, but I'm pretty sure the ATO requires they pay the company rent at market rate, which will likely be unaffordable on a reported income of 20K pa.
I remembered I read the article from Australian Financial Review, although I could not find the original link, got a more detailed one instead.
See Page #3. https://australiainstitute.org.au/wp-content/uploads/2020/12...
> they have billions of ways to evade it
In Washington state, they passed a capital gains tax primarilly to tax Jeff Bezos. Bezos simply left the state just before the tax took effect. So did a lot of other wealthy residents.
Ah, but proponents also want to make it difficult for you to leave with your money.
Capital controls are very seductive, even though they’re very authoritarian.
Why have laws either? Honest people would have not needed them anyway, and people seeking to break the law will find ways around them.
I often tell my friends, we can't be wealthy, we still pay taxes.
Lol. That's probably one of the considerations while designing the tax rules.
A land value tax would be impossible to evade. Even a business’s assets will exist somewhere on land. In the case of intellectual property, reducing copyright and agents to 10 years should solve the problem.
"You can't possibly defeat me, why do you even try?"
Come on. You have fallen for cartoon-villain level smack talk. Chew it up, spit it out. We've done this before and we can do it again.
Sounds illegal.
The only way to force everyone to pay is with a consumption tax. We'd tax based on consumption so those yachts, Rolexes, and home construction, etc. that the rich spend crazy amounts on gets taxed.
Of course since a consumption tax hurts the poor disproportionately, the gov't would send a refund check to them, in large enough amounts to make up for it, where the poor are basically paying zero tax.
It also fairly discourages illegal immigration because illegals wouldn't get that kickback check from the Gov't, since they're 'visitors' not 'citizens'.
As complicated as this would be to implement, it is only solution I think sounds like a fair policy to discourage getting filthy rich while lifting the poor to a better economic balance. Although, I have a feeling the filthy rich would simply choose to spend elsewhere where the consumption taxes don’t exist or are lower…
Revenue neutral carbon taxes with all income dividended back out per capita are really the move here. It’s also one of the few really promising ways to tackle climate change effectively.
Seems to me like that's a similar approach but a consumption tax is easier for everyone to understand and would be therefore more palatable to the public. Also the consumption tax would have a similar affect of taxing people proportional to the amount of damage they're doing to the environment. For example, we want a big tax on Rolexes but making a watch doesn't really do that much carbon consumption.
> Seems to me like that's a similar approach but a consumption tax is easier for everyone to understand and would be therefore more palatable to the public.
There is a false assumption here, that easy to understand makes it more palatable. A flat capitation would be even easier to understand, and even less palatable, because the ease of understanding is directly connected, in its case, to the ease of opponents organizing against it. A flat consumption tax faces a similar problem, which is why the efforts to push one to replace the income and payroll taxes for decades now under the label "Fair Tax" have been unsuccessful -- easy to understand isn't a political benefit when people who understand it often don't like what they understand.
The current insanely complicated tax code (with trillion upon trillions of rules and special cases) is something that even professional Tax Accountants admit no human can possibly understand.
But we know one thing as a fact: MOST OF IT was WRITTEN by Washington DC lobbyists specifically to embed in it all the loopholes that make it so that the elite in this country will pay hardly any taxes at all. Basically the fox guarding the hen house.
The obvious solution is to throw it ALL out and go with something simple that everyone understands. The reason this doesn't ever happen is because those same K-Street lobbyists make very large financial "contributions" to the same politicians in DC whose votes are required for a change.
Can that class of scams be foiled with consumption tax ?
Consumption taxes are almost always regressive, hitting the poorest the hardest. Depends on how you structure them.
Good point
Small surprise: top marginal tax rates used to be 70-90% from the 40s to the 70s.
https://taxpolicycenter.org/statistics/historical-highest-ma...
That’s not a meaningful number because the taxable income was calculated differently: https://taxpolicycenter.org/taxvox/effective-income-tax-rate...
The effective tax rate on the top 1% has been quite stable in the post war era.
The title of this piece is “Effective Income Tax Rates Have Fallen for The Top One Percent Since World War II” which seems to directly contradict your statement they have been stable?
Right—they fell sharply from 1945 to 1955 (it looks the data points are sampled every 10 years) but have been pretty stable in the post-war era, as I said. Note that OP stated the top tax rate was lowered starting in the 1970s.
Got it. Thank you. I guess saying “they have been stable after 1955 would have made more sense time than “post-war” but maybe just being pedantic.
How is dramatically lowering since 1970s compatible with stable after 1955? The fact is tax on the rich started going down in the 1970s and since the 90s tax havens and other shenanigans like renting out your own mega yacht to off shore shell companies even though you were using it. And a million other ways these people don’t pay.
For the richest tax is optional to the point where that get loans against their shares rather than pay capital gains tax. It’s an absolute disgrace and it’s got to a point where governments need to taxing them properly.
There were so many deductions and ways of hiding things the effective rate was maybe 20%
Indirectly, we can point to the creation of Alternative Minimum Tax (AMT) in the 1960s to ensure that higher income taxpayers paid at least some minimum despite the plentiful deductions. Some of the things not allowed under AMT are state and local tax deductions, interest on mortgage equity debt (not acquistion debt), personal and dependent exemption deductions, deferring tax on compensation due to Incentive Stock Options (ISO), some kinds of accelerated depreciation, and so on.
source?
Tax revenue as a percentage of GDP historically has floated around 18%
https://www.ceicdata.com/en/indicator/united-states/tax-reve...
Here's the income percentage held by the top 1% 1950-2010
http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014Fig...
While its true that its higher now than it was the 1950s-1980s, its an increase of about 15%.
It if was the case that the very high marginal rates were actually being paid, you would expect the percentage of income held by the top 1% to be much higher.
Here's another source with more direct comparison - how much their income they actually paid in tax
https://taxfoundation.org/data/all/federal/taxes-on-the-rich...
The period of true fear that communism could be a superior system .
Even though this comment is inaccurate because it just takes a a single figure figure and generalises it to all-of-time, I still feel compelled by to say something like:
Giving money to politicians is like giving whiskey and car keys to teenage boys.
The very to extremely wealthy run nations, why would giving them control of more money, someone else’s money, be a reasonable idea.
I suppose the argument is tax the rich more, and the poor less.
Nah, there’s got to be a better way, like maybe tax everyone less.
Rich people generally don't keep the majority of their money as cash in a vault. When money lies in the bank, the bank invests it in the real world. Or more directly, when money lies in stocks and bonds, it is invested in the real world.
> when money lies in stocks and bonds, it is invested in the real world.
Is it though? How much did Nvidia invest more, after their stock hikes? How about Tesla, Microsoft, Apple? No. They cut their staff or maybe stayed at their current investment levels.
You have the ordering of events inverted. Companies do not automatically have more money to invest after their stock price rises, because the stock is traded between unrelated third parties. Rather, the stock price rises after the company made investments that paid off, increasing the company's expected future profit. This then retroactively provides the incentive for people to give money directly to companies to invest in exchange for partial ownership.
So the question you should be asking is: How much did Nvidia invest before their stock hikes? And which companies will the original investors fund next after selling their shares at a profit?
Economists mostly disagree with Piketty's thesis: https://www.kentclarkcenter.org/surveys/piketty-on-inequalit...
We should be careful when we say "economists disagree."
Economists disagree with Piketty about the causes of this inequality: that is true.
Economists agree with Piketty however about the extent of inequality, by and large. That is, no one is arguing "inequality isn't real" or even "inequality is decreasing."
So there is disagreement about what's causing the inequality, yes. But on what (to me) is the bigger question - is inequality real and increasing? - there is a consensus that it is.
It's all there in the historical record, and as a trend, it's huge.
OK, but Piketty's thesis is about the cause of inequality, not just that it exists and is growing. So, economists agree that inequality is growing, and disagree with Piketty's thesis.
Inequality can increase while the poorest are still getting richer in real terms (inflation-adjusted income). That's been the case for a decades now: https://archive.is/HcRsU
"It is the mechanic and teaching assistant in the middle who have the best claim to having missed the party: median real income rose by 57% from 1990 to 2019. But that is still a healthy 1.6% per year—a far cry from the stagnation in median earnings that is sometimes alleged".
For the record, I think inheritance tax should be way higher, and allowing the value of money to outstrip the value of labor is a travesty, but it's important to keep in mind that people across the income spectrum are getting richer in real terms. It's better to be poor in America than median income in most countries.
How does that work with so many people being worse off? I.e. most of my friends can't afford a home, avoid going to the doctor, can barely make ends meet in dead end jobs, etc. Maybe, the measurements they are using for inflation aren't measuring the right things?
Do you live in a major liberal city? Then your cost of housing is probably unreasonable by national standards. The CPI for 2025 is 44% determined by housing costs, so if you spend ~44% of your income on housing then it's probably a reasonably accurate measure of the inflation you're experiencing.
The extreme example is NYC where 1 in 3 spend more than 50% of their income on rent, and rent has appreciated there much faster than nationwide. So those people experiencing far higher inflation than the national average.
It's also pretty easy to overestimate how easy previous generations had it. It's called survivorship bias. This recent bout of inflation is bad, but it doesn't hold a candle to what happened in the 70s / 80s, which is still regarded as the good ole days by some
Is 1.6% a healthy median rise in income? According to Statista the inflation rate has been equal or more than that with the exception of four years during that time frame. https://www.statista.com/statistics/191077/inflation-rate-in...
>According to Statista the inflation rate has been equal or more than that with the exception of four years during that time frame.
The 57% growth is after inflation:
>>...median real income rose by 57% from 1990 to 2019.
('real' income means after inflation, 'nominal' income means before inflation.)
An annual rise of 1.6% means income doubles ever 44 years.
Again: These number are already adjusted for inflation.
It's already adjusted for inflation, like most economic statistics posted by non-cranks. "Real" means inflation adjusted, "nominal" means not adjusted
"...allowing the value of money to outstrip the value of labor is a travesty..."
I am NOT an economist, and wonder what you mean here? It feels contradictory to me, given a system that makes labor fungible with money.
I've armchair puzzled over this aspect of capitalism and human nature. It seems to me that we, as individuals in this system, most fundamentally want to be able to use capital to time-shift the fruits of our labor, i.e. for rainy days, retirement, and unforeseen events. We need to be able to convert labor to capital, hold it, then convert it back to gain benefits of someone else's labor later.
But it seems inherent that this ability to make labor and capital fungible will enable some to amass and wield much more capital than others. In a population with differing wages, lifestyles, life events, and appetites for risk, it seems inevitable that the integral of these net savings effects will be divergent.
If you introduce a "reset" or leveling function, it seems like it will contradict this stored labor feature. It pushes us back on the continuum towards living hand-to-mouth, since our stored efforts are diminished in the future. And, I think human nature is such that we will "optimize" to stop trying to store effort that we can't expect to get back...
Is this an inherent feature of economics (or of society)? Do we need a fiction of security and potential future wealth to motivate our contributions, yet eventually need discontinuity to terminate the outcomes of this fiction?
> We need to be able to convert labor to capital, hold it, then convert it back to gain benefits of someone else's labor later.
That part seems fine to me. The thing that feels intuitively "wrong" is that it's possible to amass money/capital way out of proportion to the amount of labor input.
The example of the "four hour work week" concept comes to mind, where the goal is explicitly to minimize the ratio of input labor to output capital. Why should 4 hours of my work now entitle me to, say, 40 (or 400, or 4000...) hours of someone else's work later?
I am also not an economist, so perhaps someone else can explain what other mechanism is working alongside your "labor is fungible with capital" that leads to this result, and whether it's a feature or a buy of the economic machine...
I'm not sure I follow what you mean. But, you can trace inductively how sellers of goods and services start to amass wealth, because prices are set by what buyers see as worthwhile rather than at a minimized "cost plus" basis.
And eventually, once you have enough capital, your new job becomes managing your capital instead of whatever you did before. There's two ways to look at that. Your labor is research and planning of your own investments. Alternatively, you are "selling" capital to others who are seeking investments, and they are "buying" it with labor. But the same story as above holds true. The price of capital (in terms of labor) becomes what the market will bear rather than a minimized "cost plus" pricing.
This duality is what it means for labor and capital to be fungible, right?
To partly answer my own question - clearly there is work we can do that is net-positive. I can spend my time turning a crank to charge a battery, and sometime later get back a subset of the energy I put in. Or, I can spend that amount of time digging up coal, or building a solar panel, and then sometime later have access to many multiples of the amount of energy that I put in.
> How can people not see that Trump is weakening USA?
Yes, but once income inceeases beyond starvation levels, relative deprivation predicts misery more than absolute deprivation, so in a relatively developed country, that's still a bad thing.
> poorest are still getting richer in real terms
Perhaps. So what? Their wealth/incomes were increasing much slower than worker productivity. Technological progress compensates for the massively increasing inequality to some extent.
Also other figures show that median and bottom 10th percentile incomes were almost completely stagnant between 1967 and 2014.
https://www.census.gov/library/visualizations/2015/demo/real...
Of course real median income increased massively (compared to previous decades) in the last 10 years but it's not clear yet how sustainable is that
Of course they do. They've built entire careers around the concept that the whole economy can be models on N=1. Inequality doesn't fit into their models, so they dismiss it out of hand because otherwise the 20+ years of their life they've spent devoting to their craft proves to be no more useful than a horoscope.
Are you saying that economists aren’t interested in sustainable economies?
IANAE, but this sounds about as implausible as claiming that developers aren’t interested in building sustainable codebases
The VAST majority of developers I've encountered aren't interested in building sustainable codebases. Mainly that's because that's not what their bosses want so it's in their best interest not to care about it. I could see the same happening if the economist's bosses don't care about sustainable economies.
Depends on the developer and on their organization they work for. Ideally, most do, but the pressures of work and the styles of project management sometimes sideline that, or the team ends up in survival mode where they merely try to stave off the inevitable spaghetti apocalypse
“Not invented here.” syndrome
Just for the record, no one in AI (the space where increasingly all of code is moving to) cares about building "sustainable codebases".
Worst code quality: AI devs
Best code quality: Game devs
> Game devs
LOL I just read something yesterday (possibly a tweet by Carmack?) that game devs optimize for public perception of their game and that is it. Certainly not long term maintainability unfortunately!
Inequality is very simply to include in these models, and they do. The problem is that the models often show that the median quality of life improves faster when there's somewhat more inequality in the system, which flies in the face of every socialist intuition. It's a lot easier to pretend we need state-enforced equality.
It's simple to include, but there's no denying that the 101-level economics models steer you away from thinking about inequality harder than Vin Diesel in a car chase.
Carefully omitting the fact that the economic notion of value is wealth-weighted (and you can march enough elephants through this loophole to wage a class war), drawing attention away from "rich people getting paid for being rich" dynamics by dividing out wealth wherever possible, inviting you to use averages where "rich get richer" hides "poor get poorer" -- it's a masterclass in propaganda. I have literally never in my life seen a more artful tapestry of deception than Econ 101.
101-level models in every field elide important details. That's pretty much their whole point. And it doesn't make them propaganda, it makes them a perfunctory introduction.
I cannot think of another subject whose “101” level magical thinking has affected the real world as much as economics, though. At some point the purpose of a system is what it does, and economics 101 affects the political discourse in a way I struggle to find adequate comparisons for.
No, you don't omit the leading term by accident. Not five times in a row from three different angles.
In any case, this is also matter of historical record: the purge of left-wing thought from economics and politics at the end of the New Deal Era was loud and vicious. It didn't stop at ensuring capitalist principles got top billing, it scorched the earth until even the most earnest self-examination of capitalism's largest weakness was cause for cancellation. You bury it, or you wear the scarlet letter. Most chose to bury it, and here we are.
This is an awesome take.
Inequality exists on a spectrum and there is something in between Gini coefficients of zero and one.
If anything, I think economists have grossly underestimated how large increasing levels of inequality have had such a corrosive effect on our social cohesion and political systems, and that obviously does have a huge impact on eventual economic outcomes. This societal/political breakdown is not something that economists usually model well.
Is the MAGA movement really about the economy? I’m trying to understand it.
Do their models show that the median quality of life in the US has increased in the last 20 years? Honest question.
I don't know if anyone is really arguing for state enforced equality. Just that in a capitalist system money naturally accumulates at the top and slowly regresses into a socialist like centrally planned economy as fewer and fewer people have meaningful wealth to allocate. A little inequality is good because there's a reward mechanism for allocating resources better but a lot of inequality locks up the economy. And the only thing to really do is tax it and recirculate it back to the bottom.
2045 - the America dividend!
(1) “American economists” only. (2)Also I am sure looking at the political/institutional affiliations of the responders would be interesting. (3) The responders comments show very different reasoning for disagreement. Some focus on stat derivatives, some on model incompatibility and some on more anecdotal evidence. (4) Some answers are bat-shit crazy like “not sure wealth inequality has risen in the US”.
Economists, the one with Master and PhD, built their understanding and thesis from those fundamental models where inequality was not in the picture (to simplify the model).
To agree with the opposite views mean to disprove their thesis and career.
_Some_ economists disagree. That's partly because inequality doesn't fit into their models. Gary Stevenson explains this quite well[0]
[0] https://www.youtube.com/watch?v=CivlU8hJVwc
Also, what those polled disagree with is this particular statement:
> The most powerful force pushing towards greater wealth inequality in the US since the 1970s is the gap between the after-tax return on capital and the economic growth rate.
This doesn't mean they disagree that r>g is a contributing factor to a greater portion of wealth being transferred to those with investment capital (which ultimately can have dire consequences for society). It's not difficult to demonstrate that those with a higher rate of return than the pace at which new wealth is being created (one definition of economic growth) will be capturing a greater share of that new wealth.
> That's partly because inequality doesn't fit into their models.
Well Piketty being wrong doesn't fit in many people's models either. Economists routinely do talk about inequality and I think it's intellectually dishonest to paint the whole field as wrong just because some parts of it don't agree with your pet theory.
> the actual real value of the world remaining the same
If I take raw materials, and create something with them, I have increased the real value of the world.
Those 2025 new years glasses are going to be so valuable.
If you went naked into the wilderness, how long would you survive?
I expect 90% would be dead within 24 hours, most likely from hypothermia.
I would bet at least 95% or more, personally. I'd survive okay here (until I got sick or injured) because my local environment is pretty easy to survive in, but I would die quick in a harsher wilderness, I am sure, and I am fine with admitting that!
There's a happy medium between what we have today (rampant consumerism and waste) and what we had a thousand years ago (every tribe for themselves). Perhaps you and I can agree that a lot of what humans do is useful transformations of resources into things that help us (housing, food, much of our tech and manufacturing), and then there is a lot of what we do that is completely wasteful that we could be doing less of (plastic crap, driving to offices to meet on Zoom, perhaps we build houses too large, we build in bad places for humans to survive, etc.).
My previous comment was a bit snarky, but my point via that comment is that not everything we do to transform resources into stuff increases the value of the world, perhaps some wasteful things even harm our world and decrease it's value in the future. You're a smart guy, you understand nuance and that wasting our natural resources, especially the non-renewable ones like oil, in a mostly closed ecosystem is a bad idea.
I figured it was obvious that creating something meant creating something of value.
If someone else is willing to trade for it, then something of value has been created.
P.S. Most people don't know how to make a fire from scratch, and will die of hypothermia in even modest environments. I know how to do it, but have never actually tried it. Doing it without even a knife will be really hard. The TV series "Alone" is instructive about how hard it is to survive, even if you're well-equipped with modern gear.
I don’t understand why you need rich people in the first place. You don’t need human beings that hoard wealth that they didn’t make. It’s superfluous.
You don't "need" rich people, but they are an inevitable consequence of the ideas Western civilization is built on. We generally believe that someone is entitled to keep what they have earned and do what they wish with it (property rights). So, let's say you burn down society and start over with everyone working at subsistence level. The first generation, everyone will be basically equal. By the end of the generation, some will have done better than others (through luck, or through hard work and intelligence). They will want to pass it on to their children. Now in the next generation, some people will be starting at an advantage. Some of those will take it easy, but some will use their leg up to get even further ahead. The ones who get even further ahead will want to pass that on to their children, and so on.
Repeat this cycle enough times and you will wind up with rich people and poor people, even if you started with a perfectly level playing field. It's an inescapable outcome. Some people will always do better than others, even starting from nothing, and as that advantage accretes through generations it will mean you wind up with the haves and have-nots. The only way to prevent it is to enforce limits on what people can do with the fruits of their labor - and that is something most are not willing to do. People believe in property rights and aren't generally willing to violate them. So, you will inevitably have rich people in society.
Gary is great laying it out for the layman but he talks as if he "thought" it all up. It's really Thomas Piketty who pointed out the issue way before Gary.
I think the difference with Gary is that he has experienced both sides of the coin: grew up of modest means, then became wealthy trading FX for Citibank. As much as HN hates to admit it, storytelling does help to make your points more accessible.
> rich people want to invest some of it in the real world, not leave it in the bank
Honestly, I have no idea why would anyone need that. Money is not value. Money is just a way of keeping track who is owed by future society how much value. It's a way of keeping tabs who gets to consume in the future.
When rich people hoard their money it's not a problem, you can just print more money to replace what they sucked up and hoarded. It's exactly when they try to spend it where the problems start to show up. Because they are doing it stupidly causing at least some inflationary pressures but more often than not societal and environmental harm.
Countries should make every effort to make spending their money as hard as possible for the rich people. Disincentivize them with high (and highly progressive) luxury, investment and real estate taxes. If that causes them to hide their money to avoid tax, even better. Every dollar of rich money hidden is a dollar of value not wasted by society on servicing the rich and their whims and gambling.
Or just transfer their wealth to the rest of society. What they think is theirs is only true if the rest of us agree.
Please go build your communist utopia elsewhere.
People who make their money producing luxury goods or developing real-estate may disagree. As might all the people who work in the supply chains for those activities.
> the growth rate of wealth itself
The fundamental theorem of capitalism: rich people get paid for being rich in proportion to how rich they are.
This is why your savings account looks like an exponential. The thing to understand is the difference in lived experience depending on where it starts. If you are poor, the returns are a joke, you tend to ignore them. If you are middle class, the returns fund your retirement, and it seems roughly fair: you work hard and at some point you earn the right to not work any more. Only if you are rich do you see the fountain of free money (homework: calculate yearly returns for the typical 10%er, 1%er, .1%er, and centabillionaire), and of course being the beneficiary you rationalize away the possibility that this could be a problem at all. It's a tidy system.
"That's an unfair characterization of capitalism!"
So is the one you get in economics which bends over backwards to hide the "fundamental theorem" as I have stated it inside a choice of units: "under conditions of market equilibrium every financial asset has an equivalent risk-adjusted rate of return from the perspective of its marginal buyer." Did you miss the class warfare? It was all hidden inside the word "rate." Very clever.
How does economics bend over backwards to hide the “fundamental theorem”?
Every intro to macroeconomics basically starts with a simplified conceptualisation of production as a function of labour and capital. Then it describes returns to labor and capital and so on. People who own capital get paid for that capital. It’s quite literally Economics 101.
> invest some of it in the real world, not leave it in the bank.
The richer you get, the more likely you are to engage in wealth management. This necessarily means investment. No one who's rich has that much liquidity or money just laying around. This is as stupid as hiding cash in your mattress.
The question is which are genuine investments or scams. And this cannot be emphasized enough: either money is made from value-generating labor, or you are in the business of theft. There is no middle ground or third option.
This is why I think one key element of restoring sanity to economies is the categorical criminalization of usury. Compound interest is theft, and it boggles the mind how easily people are intimidated into going along with the rationalizations purporting to explain that it is not (all that nonsense about opportunity cost, as if that is the borrower's problem or responsibility). Banks are important, but they are not productive per se. The only ways a bank can legitimately make money is through service fees and investments (and real investments, where there is a kind of partnership and proportionate skin in the game, not magic bailout money or some kind of weird accounting magic).
Once we destroy the superstitious idea that money can be bred, stop using euphemisms for theft, and acknowledge labor as the basis of all economic value, we will see a healthy economic shift and more distributive justice. Housing markets will improve, too. The change is deep cutting.
The whole discussion about inequality or taxing the rich or inheritance is confused and frankly a distraction from real problems, and I suspect at times a purposeful distraction, because it preserves perverse economic norms (making the tax simply the cost of doing business) instead of correcting them, which is the real threat.
The problems with Piketty's arguments are addressed in the article:
"if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made"
Yes, if rich people invested their money wisely, gave nothing to charity, spent small amounts, and left their wealth to one of their children, wealth inequality would grow unchecked.
But rich people don't do that.
But wealth inequality has still grown quite a bit. Your point is not a refutation, it’s just an observation that the infection has progressed more slowly than it could have if it was completely optimal.
Wealth inequality hasn't grown since 1900.
https://wid.world/news-article/inequality-across-700-years/
Why do people post stuff like this. If your ideology depends on misleading people about bad things that are obviously happening, just get a better ideology!
No. It decreased massively and then went up again so now we're back at where it was back in 1900.
This significantly challenges the "if America’s rich families in 1900 had invested passively in the stockmarket"
e.g. the equivalent of S&P 500 if adjusted by inflation was in 1982 was well below it's 1929 peak. Almost all growth happened after that.
>But wealth inequality has still grown quite a bit.
This is called stability. The more stable the system - the more value have investments.
>> Your point is not a refutation
"there are fewer than 1,000 billionaires and the vast majority of them are self-made"
That's a refutation, Piketty made assertions not just about the outcome, but about the process by which that outcome would happen.
So long as rich-get-richer mechanics play out inside of a single generation they are unquestionably OK? What even is this argument?
he didn't say it's ok. He said piketty is wrong. Anyone who studied even econ 101 and combined it with a teaspoon of common sense knows piketty is an idiot and that book is garbage. He's a politician.
No, inheritance isn't the only dubious method of accumulation that Piketty described. Try again.
Maybe actually take econ 101 so you can get the thrust of the book rather than getting lost in the details. His thesis, in that book, is that r > g and that over many years that difference results in very large accumulations of wealth. No one disputes that there are various means that r is achieved.
It doesn't change the thesis, which is wrong. r is not greater than g for any reasonable amount of time for individuals/families because humans have an amazing ability to behave stupidly and reduce r below g.
Explain your argument because it's not at all clear to me. I do not see how that statement refutes the arguments the above poster gave.
They're saying that self-made billionaires didn't inherit their wealth. Which means they created it. Which means that it created useful economic activity. And since rich people dont optimally pass on their wealth, those 1000 billionaires' spawn are likely to piss away that wealth while 1000 more economically active individuals create more healthy economic activity in pursuit of becoming billionaires so that they can pass on their wealth to their children to piss away, ad. Inf.
If that's the argument, then it sounds pretty flawed TBH. I mean how does not inheriting their wealth, automatically mean they created it? Is theft not also a possibility?
The billionaires' spawn pissing their wealth away would likely generate a lot of economic activity.
Piketty’s argument was not just that income inequality would increase, but that it would increase because the return on capital is greater than the growth rate of the economy, so, in his words, "It is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime's labor by a wide margin".
But inherited wealth does not dominate wealth amassed from a lifetime's labor. The largest fortunes today are dominated by people who built businesses, not by people who inherited their wealth. So if "there are fewer than 1,000 billionaires and the vast majority of them are self-made", that is a direct refutation of Pikkety's thesis.
It is hard to overstate just how bad Pikkety's arguments are. His argument assumes single inheritance of fortunes, it assumes that wealthy people don't donate significant sums to charity, it assumes that inheritors of wealth will invest that wealth as wisely as the person who created it, along with many, many other false assumptions. The most egregious one in my opinion is that it assumes the wealthy don't spend their money.
If a billionaire makes a 5% return on his billion dollars and spends $50 million dollars a year, does wealth inequality increase? No, it does not.
It's a ridiculous theory, it is directly contradicted by the facts, and I have no idea why it is taken seriously by people here other than just as an opportunity to participate in a 2 minutes hate against rich people.
"wealth inequality" is one of the dumbest ways of measuring the health of an economy, or to specifically aim to reduce. Unfortunately, there will always be a baseline group of people at, or near, zero wealth. The goal should simply be to reduce this number and the overall number of people living in or near poverty. Whether Warren Buffett has $50, 100, or 200 billion - which does affect wealth inequality calculations - is of zero consequence to the lives of the lowest-wealth individuals (nor did someone like SBF losing 10s of billions, help them)
It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions, or if a small handful of people can fund an effort to identify and groom a wide bench of lawyers to one day become judges who will bend the law in their favor. Not to mention plain old lobbying and campaign contributions. When wealth is power, wealth inequality is toxic to democracy.
>It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions,
Oh no, now it's important to stop this because some people are able to do these things while having political viewpoints that you don't like. Were you previously making the same argument against say, the New York Times, due to it's being owned by one family and following that family's specific ideological viewpoints?
Wealth inequality is an innate part of human society, and by itself has little bearing on democracy or even overall standards of living. There are also many countries with low wealth inequality in which democracy doesn't exist in any sense.
I’m not the person you’re responding to, but I’ll answer that yes, it has always been a problem that so much influence is concentrated in so few hands. It’s been said that a dictatorship would be the best form of governance if you could ensure the dictator would always be the best one possible. But you can’t. When you allow such concentrations of power, at some point someone who is willing to abuse that power, or someone who is simply incompetent, will come along and it’s a disaster for everybody.
Wealth inequality is not innate; there have been plenty of civilizations with far less of it. It’s only an inherent part of free-market capitalism.
Yep. A wealth tax on billionaires brings in some tax revenue, but that's not the key thing it achieves. It achieves no more billionaires. It is bad for society when one single unaccountable person can accrue this much power.
Oh my, individual ownership of newspapers? Bezos bought it from Katharine Graham, while the Sulzberger clan has owned the NYT for over a century. Scripps, Hearst, Pulitzer... how did these names get famous? Newspapers.
Twitter is much more effective at brainwashing stupid people into believing any old crap than newspapers ever were, there were journalistic standards in the coverage for one thing.
So you've managed to blend elitist ideas of some people being less or more "qualified" to disseminate certain opinions than others who don't share your ideological preferences with supposedly egalitarian ideas of reducing concentration of power.
Also, journalistic standards, historically, were little or not at all better than anything you see online today. Yellow journalism was a major part of media since long before the internet and newspapers pandering to very specific, dishonest biases was also pervasive, but with few genuinely unfiltered alternative viewpoints being available. The difference today is that a real plurality of opinions is finally possible and can be globally made visible. The media gatekeepers hate this and thus create contrived arguments about an imaginary golden standard of media integrity and mass misinformation.
> is of zero consequence to the lives of the lowest-wealth individuals
That wouldn't be the case if those at the top were taxed and more of their wealth transferred to those at the bottom.
We just went through a crisis which the federal government - both Trump and Biden administrations - attempted to alleviate by handing people free money. Are poor people better off because of it?
Yeah brilliant “businessmen” are born into rich families and destroy their wealth pretending to be real estate developers and managing to be so incompetent you bankrupt a casino where the house should always win!
Rich peoples descendants dont do that...
Thanks for that correction.
> 1900 had invested passively in the stockmarket, spent 2% of their wealth
How is that possible, though?
e.g. according to
https://ofdollarsanddata.com/sp500-calculator/
adjusted by inflation the stock market only grew by 34.10% between 1900 and 1982 when adjusted and even if dividends were reinvested. And that's total growth, annualized was barely 0.36%
Their wealth wouldn't have increase at all during that period, especially if they wanted to spend 2% each year.
Of course it accelerated massively in the 80s (1900-2024 was 2.48% annualized) but using the average would make no sense.
If you were still very rich in 1982 you would have made a massive amount of money since then. e.g. somebody like Trump invested all of his inherited wealth (and everything his dad gave him before) into the stock market instead of pretending that he was a very "successful" businessman he would have been much, much richer than he was in 2016 and wouldn't have had to be so ashamed about realising his tax returns.
Piketty is a hack. Most billionaires don't spend anything even close to their net worth. In effect, they have a bunch of IOUs from other people and never cash them in.
How exactly do your subsequent claims prove:
> Piketty is a hack.
Generally those IOUs are real as a ton of gold bars or dollar bills somebody might be hoarding in their vault.
Inequality is generally accepted as differences in material possessions acquired/consumed or access to services (eg health, travel, whatever). It's fair to aggregate it into "consumption".
Jeff Bezos is literally never cashing in the vast majority of the IOUs he has. The actual difference in his life isn't anything close to that suggested by the difference in net worth between he and I.
Net worth differences aren't a good proxy for actual lived differences. It's off by orders of magnitude. This isn't a groundbreaking idea, Piketty is aware. He discusses it briefly in his book, with handwavy, abstract notions about "power" and "influence", as if that's what most people care about. But, it doesn't sell the same way his nonsense does. So he pedals his nonsense.
Perhaps. Then you can use something else instead of Gini. e.g. comparing wealth 10th, 50th, 90th, 99th percentiles. That would exclude Bezos & co.
e.g.
https://upload.wikimedia.org/wikipedia/commons/thumb/1/1e/19...
I agree that this is probably a better metric. Easier to visualize and interpret than Gini.
> his nonsense
You could actually try making some coherent arguments before coming out with such conclusions?
This is nonsensical. The response to "net worth is a bad proxy for consumption" isn't to show various ways of slicing and dicing net worth. A person with net worth $30m doesn't consume 10x that of someone with $3m, or anything like it. Piketty's own assumption is that most of the money is used for investment capital.
The argument is clear - net worth is a bad proxy for consumption and lived experience. You just can't read. Piketty can, he just doesn't like that it makes his argument significantly less potent so he tries to paper over it with "power" and "influence" as if 99% of the world could care less about those things.
> net worth is a bad proxy for consumption and lived experience
Because it's simply not. It's a very good proxy. I understand what you said and only think you are somewhat right if talking about people who are at the very tail of the distribution (yes, when it comes to "consumption and lived experience" it hardly matters if you have 100 millions, 500 or even a billion).
For those in the the 99.X% it's certainly (and obviously backed by all kinds of data) good indicator.
Talking about the "lived" part. Here is another indicator http://www.equality-of-opportunity.org/health/. Of course now you'll claim that living for significantly longer does not say much about the "experience" part or some other nonsense.
> You just can't read.
Or have a low tolerance of ideologically driven demagoguery.
>doesn't like that it makes his argument significantly less potent
I'm still waiting for you to elaborate on that besides just claiming it as fact or "proving" that it doesn't apply if you're in the 0.1% (which is hardly relevant).
The top 1% make ~800k pa. The bottom 1% make ~15k. Thats over 50x difference.
The difference in life expectancy is 15%. That's 1.15x. And that's including that steepest part right at the front.
You've been bamboozled by the y axis not starting at 0. Someone making 10x more than someone else gets a few % extra life expectancy. Significantly less than just taking a 30 min run a few times a week.
> The difference in life expectancy is 15%.
Which is huge. Life expectancy in the US increased by ~15% between 1955 and now. Surely you would be entirely content with receiving the same level of care as was available back then and inhaling some lead now and then?
> You've been bamboozled by the y axis not starting at 0
It must be fun being so absurdly obtuse. The whole line of reasoning in your comment is so silly that it's hardly worth commenting on.
There is a massive difference between dying before you reach 72 vs living for another 15 years.
The difference in avg. life expectancy between Germany and Ethiopia is less than that.
Again, surely there is no measurable difference between living in either place when you are making median income?
The difference is less than those who exercise v not, slightly larger than that between men and women. For 50x chance in income. Money simply isn't as big a differentiator in life as you desperately want it to be. And that's the tiny bit of common sense required.
So you're saying they have ever increasing influence and are keeping the rest of society in debt to them.
"ever increasing" - no. People die, billionaires tend to stay that way for a few decades then die. In the grand scheme they are nothing, zero. Death aside, look at all the billionaires currently running to kiss the ring of Trump - a populist elected by the people of the US against the will of the so called elite. No one is in control, no one has very much power. It's a story book idea.
Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood but all of us are better off than our parents at the same age and their parents are better off than their parents (with one exception).
All either studied hard in school and went on to get a degree or left school at 18 and apprenticed in a trade or got specific qualifications.
I read so much about declining wealth and how each generation is worse off that I have to assume I’m in a lucky bubble because it’s not the case for me.
None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
Which fields?
I feel like software has been an outlier here for a decade; the only place where traditional economic intuitions still apply (semi-smart people can work hard, learn a technical skill, find a job in their field, pay off their loans, make more than their parents, afford a house, and have a comfortable personal life and relatively fulfilling work life)
Everything I've heard from the rest of the economy is that this model is dead
Fair question, it’s a mix: IT admin, manufacturing project manager, primary school teacher, tree surgeon, mortgage advisor, doctor, something in finance, secondary school teacher, plumber, software developer, power electronics engineer, charity sector project lead
So a real mix
Okay, so a lot of ~£40k a year salaries (outside of medicine and finance) to afford a £400k house when your parents might have had a £20k salary to afford an £80k house? There's a real disparity when you consider what they did too. If your parents are anything like mine, they were in the pub 4 days a week, drinking and eating with friends. I can managed that just a few times a month. Wealth compared to income from my experience is significantly lower by .lost metrics.
This paper has an excellent, readable breakdown of how compensation and productivity has changed since the 1970s.
Which paper?
Maybe you have an exceptional friend group because .. outside of your anecdata .. the statistically average salaries for many of those professions over large sample sets is below the median in the us and they are definitely not seeing their purchasing power increasing yearly
>they are definitely not seeing their purchasing power increasing yearly
In the US? Real Disposable Personal Income has been growing very consistently over time [1]. The rate of growth did stagnate between 2000 and 2013 but the trend has been remarkably consistent.
[1] https://fred.stlouisfed.org/series/DSPIC96
the per capita version of your graph: https://fred.stlouisfed.org/series/A229RX0
it claims that the average person has 50k usd in disposable yearly income - there's no way that's after housing and other non optional expenses have been accounted for.
using this measurement, if wages go up 5% but rent goes up 50%, it would still look as if people have more money to spend than before.
If you consider most of this going to rich people it's more understandable. Per capita doesn't try to describe the average person.
very minimally and not in proportion to their output.
the rich are taking The Lion's share of productivity growth
https://www.epi.org/publication/charting-wage-stagnation/#:~...
It also depends on who your parents are. My parents at my age were poor working class. We had a much smaller house (800 sq ft), used cheap cars, cheaper clothing, etc... My dad spent a lot of time fixing our cars (I don't even try), fixing plumbing issues, and we rarely ate out (and never DoorDash'ed!). I was lucky to get some quarters to go to the local arcade to play Pac Man.
My point -- even being slightly lower middle class now would feel like a good jump over my parents. That's just pointing out that comparisons to parental income is very relative.
800 sq ft is a small house in some part of the world?
Depends on the occupancy. For a 2BHK I would say 800 is small. For a 1BHK, it is good.
"the only place where traditional economic intuitions still apply"
Which economy? In the US, healthcare, public schools in some states, and B2B sales come to mind as decent jobs. But I agree with the general sentiment - there do not seem to be great choices that support a nice life. Quite a few of my friend have to work multiple jobs or double shifts to make it work.
Most healthcare jobs don’t pay particularly well. The inefficiency is going to pay the salaries of medical transcriptionists, people handling billing inside insurance and in healthcare facilities etc. Things that aren’t improving outcomes are ultimately why healthcare is expensive in the US.
Just for comparison the minimum wage nationwide in Feb 1, 1968 was 1.60$/hour that’s ~14.61$/hour when adjusted for inflation. Median household income in 1968 was 8,600$ or ~$78,504.90 inflation adjusted and that was mostly single income.
https://www.census.gov/library/publications/1969/demo/p60-66...
https://www.usinflationcalculator.com/
I wasn't really talking about the billing, but more about doctors, nurses, medical manufacturing, etc.
That’s the higher end of medicine, orderlies are making 16$/h. People on ambulances are often making 17$/h. Some nurses make ok money, but starting salary for a school nurse is 20$/h and median school nurse is making 30$/h...
Granted I understand what you mean, but it’s kind of like saying managers make good money while ignoring all the shift managers at fast food joints.
Can we summarize it that 'easy' or 'low skilled' jobs aren't payed better today comparing with the past? Not surprising taking into account demand and population. More worrying is that high-skilled jobs aren't rewording. As for equality.. welcome to USSR, you see how it ended. Now only a few Arabs states have greater inequality.
I wouldn’t call working an ambulance as easy by any metric.
As to inequality, we’ve made this much worse intentionally via things like a tax code that massively favors high income earners. It’s not even that this tradeoff has increased GDP growth or anything the country was growing faster with higher tax rates on corporations and dividends.
Even just theoretically it’s suboptimal because jobs catering to or trying to extract money from high income people don’t lend themselves to automation. Long term everyone rich or poor has been worse off.
You have no clue about the collapse of the USSR. Its economy was crippled by monopolies and absurd subsidies, not by equality.
> You have no clue about the collapse of the USSR.
I lived through it. We can talk a lot about, but the fact is equality doesn't work. Maximum it gets to is everyone equally poor. And as a result of it there are no startups. You need middle class for this and motivation. Government controlled and own monopolies is also the result of equality. Nobody else has the resources. So commies had to create the economy, few bigger things are easier to manage. Managers aren't interested in risk taking, it's not worth it. Finally everything stalled and fell far behind the rest of the world. There were bright spots, but that's it. Like North Korea today can build missiles and not much else.
Just look around. Probably only Cuba and North Korea are still in true socialism. In both there is a small super-rich class and the rest is, yes, equally poor. Super-rich are pretending to be poor too and invent theories to keep the rest under control. BTW, I'm not sure Cuba still has strong ideology today.
Just as a factual matter I think everyone can agree with these three statements:
The USSR didn’t actually have economic equality.
The US has drastically lower tax rates for capital gains.
Finally, arguing for equal taxation isn’t arguing for equal pay.
As to my actual argument, I’m saying economic growth is slowed through the economic inefficiency resulting from unequal taxation. The point of economics is to make goods and services people want and capitalism achieves this through investments and exchanges of money. But distorting that feedback loop through taxes unequal taxes on individuals or companies is a distortion. Invest in the wrong things and economic growth stalls.
Why wouldn't the required skill level increase though? I think it's expected that as a society specializes it becomes more and more difficult to get ahead if you're producing goods or services at the lowest level of specialization. With education getting better and technology improving, it's impossible to make rote jobs be economically feasible for anything other than robots.
Certain industries now are at a point where they are paid a ton. Jobs like the trades, piloting boats or planes, that sort of thing. Your schedule might look a bit irregular, but the path to say a quarter a million a year is far more realistic today for someone who is a pilot vs someone who takes a white collar job.
That phenomenon was not always apparent. Growing up, I was told specifically to avoid those sorts of jobs and go for white collar, informed by a generation where those sorts of jobs were a lot more dangerous and less compensated. In some companies over the last century we went from say building floors of modestly paid draftsmen and a few highly paid white collar classes managing them to floors of modestly paid white collar people fiddling with excel and a few highly paid certified engineers doing the actual technical work. The dynamic has changed.
Yes, you and I are outliers and so are many people here.
Those of us who work in tech, and many of the people we find ourselves bonding with and staying close to in our adulthood, are lucky to have taken up in a sector that happened to see disproportionate growth during our careers and admitted many people from modest backgrounds.
But people who didn't stumble onto that path, or perhaps hoped to follow their parents into professions that were more flat or failing (medicine, education, academia, farming, manufacturing, "the trades"). In aggregate, some of those people are still doing okay, some are doing well, and some are flailing in desperation for having made the wrong bet.
Of the people I grew up with in a modest blue collar community, I don't know anyone besides the few most ambitious and capable that were able to find the security that their parents had. And as one of those more ambitious and capable people who later circled with people of fancier backgrounds, I similarly don't know anyone who pursued things like academia or medicine and found what they expected there either.
Appreciate what you have! Many don't share it.
As someone in the US that’s bounced in and out of tech, including some longish stints in blue collar jobs, it honestly blows my mind that the tech scene is so all-encompassing that many in it feel like it is representative of… anything else. I’m not talking about the tech libertarian types that think any impediment to the ultra rich vacuuming up everyone else’s wealth is tantamount to dictatorship. I’m talking about the typical happy path developer (I shy away from saying average because all us developers are above-average developers) that went to college for comp sci right after high school pretty quickly secured a junior role for maybe 6x-9x the (ridiculous) Federal Poverty Level.
To be clear: I’m not saying they’re bad people or anything— most people think their experiences are more representative than they are. But, from outside, some of the assumptions software folks make about the world just seem utterly ridiculous. Consider that on average, junior developers make more money than a first year medical resident that has a PhD in perhaps the highest demand field in the US and works shifts of 16-30 hours with many consistently logging 80 hours per week, and occasionally end up working much more. Ask that medical resident what a really bad day, and a really bad week at work looks like for them and ask a developer with the same amount of post-school experience the same question, and then consider how much more school it took… and then ask that same question to an aircraft mechanic, a chef with a culinary degree, a construction worker, a public defender, a commercial fisherman, a firefighter, a nurse… the software industry is more than an aberration — it’s a different planet. The kind of shit I’ve seen developers say they’re going to “pivot to” if the software industry falls apart is, frankly, flabbergasting. If we see the sort of sustained job losses some fear in software, there are going to be a whole lot of people learning some extremely bitter, difficult truths about the world outside.
I’m not saying we all didn’t and don’t work hard to get where we are — it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world. It’s easy to see your own contributions to your success and miss the industry and market scaffolding you could stand on to get what you did.
> it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world
It's about margins. Software has the 2nd highest margins of any sector (highest is High Finance), so it's easy to pay competitively in software compared to other fields.
Right. There’s obviously a totally valid market-based reason for it, and I am absolutely not implying that developers should receive less of that than they do. However, its an external factor which gives many developers a very skewed understanding of how much work most people expend for the amount of money they receive and agency they get at work, and how much they’re worth as workers outside of the software world with roughly the same amount of ambition and effort. Compared to most industries, software companies coddled developers and really tried to trump up the mystique of the great hacker genius. While particularly apparent in the restaurant industry, developers thinking they’ve ‘solved’ an unrelated business they’ve got no experience in using their genius software brain or assume they can simply transfer their existing skills to a new field is pretty common. I encountered one developer who thought they’d simply pivot to crime to keep their family comfortable, which is hilarious. The beginning of a career in crime is long and full of petty bullshit crimes that pay very little because you don’t have the wisdom to not get caught doing more serious crimes, and you don’t have the network to support you doing things like getting unregistered guns, fencing, etc. What I wouldn’t pay to see that guy walk into a bar in a rough part of town, order a craft beer, and try to debate the sketchiest people he saw about why he’d make a trustworthy partner in crime.
I'm in agreement with you!
I'm just saying the only reason SWEs (and IBs) get paid the big bucks is primarily because of market economics, even if plenty of other high stress roles (eg. Nursing, EMT, Teaching) get paid a relative pittance.
I think a lot of us members of the tech industry need to cut down on our hubris and respect other industries and jobs, and understand that we are cogs inasmuch as anyone else.
Right right. I imagine it was much the same for mechanical engineers during the Industrial Revolution.
Much more recently to be honest. The bottom only fell in MechE fields (Automotive, Aerospace, Defense) in the 1990s, but if global tensions continue, it might be a good time to be a MechE.
Plenty Tech CEOs are humbling tech workers lately by performing a ritual known as mass Layoffs.
That’s right. Things are changing and it’s going to be a really tough pill to swallow for a lot of people that only think they understand what work looks like for nearly everyone else in the world.
I still see plenty of first person syndrome on HN crying about RTO or multi-month severances.
I get it, because it sucks, but it's still tone deaf for people in the top income brackets, 401Ks, and plenty of disposable income.
Most Americans (employed or unemployed) don't get any of those kinds of benefits.
Not all of them have plenty disposable income given the ever increasing cost of home ownership, healthcare (tied to employment), and everything else.
Ask the nurses how much they got for severance when steward health closed. Or what my severance was when I got laid off in 2009 working as a fine dining line cook as a culinary school graduate. Or the career concept artists replaced by AI. Add all three up, throw in 4 bucks, and you can buy yourself a coffee at Starbucks.
The dev world’s baseline for what constitutes good treatment, bad treatment, and fairness from employers is completely detached from the rest of the working world.
I'm a little surprised by this. While I'm better off than my parents I went into a much more highly paying field (software engineer vs teacher/social worker.) If I did a similar job to them I would have no hope of ever affording a similar house to them.
They were part of a generation that benefited from enormous house price appreciation due to a combination of falling interest rates went from almost 15% down to under 5% (this is about 3x on its own) and the fall in house building which drove up prices and rents generally.
This effect is somewhat less pronounced outside of southern England.
You make a good point about higher paying fields in the younger generations. While there is a spread of occupations that I replied to another commenter with you may have hit on something. Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
Thinking of one (not me) it’s delivery driver -> enlisted service -> mid level finance (not London)
Hmmm, food for thought, thank you
> Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
That is unarguably true of our parents' and grandparents' generations, but I don't think it is as true of people of my age or younger (born in early 1980s.)
There was a huge expansion of higher skilled jobs after the war with large numbers of people moving into the middle classes. For me and everyone I know our mothers (born 1950s) worked. We all grew up in dual income families.
My great-grandfather was a miner. His son, my grandfather enlisted in the forces during the war, seems to have been recognised as being technically apt and worked with radar, became an officer and in the early 1960s left to be a manager at an engineering company.
His daughter, my mum, became a teacher (first in family to go to college) and his son did not go to college but became an IT manager (married a teacher). All of us grandchildren went to university but basically have similar jobs to our parents' generation.
Several of my siblings and cousins own houses but they got help from parents or partners' parents and mostly bought outside the south east. Renting a flat in London as a fairly highly paid IT contractor I had to pay six months up front because my parents didn't earn enough to be guarantors.
Falling interest rate also benefits the rich that can hoard assets, especially with higher leverage because they know how to game the systems.
Boomers benefited from a ton. Significantly cheaper housing, education, healthcare, childcare, groceries, cars, gas. Even when adjusted for inflation. Employment was significantly easier to get, especially without degrees, and those easier to get jobs paid relatively much more in terms of the ratio of income to cost of living.
There was a lot of discrimination that benefited those not being discriminated against too
Absolutely, thank you for mentioning that, too.
I have a very different experience. I did all the right things, more or less, got into a good field with a secure job in the broader tech industry, and indeed I make very good money.
Despite this, I can not afford to buy the house I grew up in; a 3 bedroom SFH with a decent sized yard and a pool, around 1400 square feet, 45 minutes away from downtown without traffic in a hot real estate market. My father was able to purchase this home as a tradesman with 4 kids, being the only parent who worked outside the home.
Same. Though my dad was also a software engineer, but he was just never good at negotiating raises. My wife and I both work and we could maybe swing the price of the house I grew up in, but the mortgage would be roughly the same as our rent now currently.
Similar case for my wife. Her parents bought in 2000 with a combined household salary of less than mine alone. The mortgage would be twice our monthly rent. Fortunately we stand to inherit that house, which sort of proves the article's point.
You're not an outlier. If you look at US GDP per capita, adjusted for inflation, it's higher than ever. If you then look at the median personal income, also adjusted for inflation (i.e. the middle class), you see the same trend.
There's a lot of doom and gloom but it doesn't seem consistent with the data.
There's a weird tendency to zoom in on particular data points that paint a particularly negative story and leave out the rest. For example, we look at housing and will say that its prices outpaced inflation. And that's true, sort of. But it's also completely untrue. For example, if I look at my own situation compared to my parents: I have a 1.5% interest rate on my mortgage, my parents paid 15%. Homes are now about 50-75% bigger than my parents' generation, on average. And the average home is shared by 33% fewer people than my parents' generation. So the cost to rent the money to buy a certain area of home for 1 person, i.e. housing costs, has actually gone down, despite the average price of a house having gone up.
In all fairness I wouldn't want to trade with the average person in past generations.
Romanticizing the past while at the same time having an apocalyptic view of the future, while I don't know if it is a human thing to do, it is certainly a western thing to do.
I think about how much is it worth for me to work remote vs working at the same factory for 40 years like my father. Some people pretend like this is just a given in the modern world and basically worthless. In reality, it is hard to put a price tag on because the difference is so valuable to me. I actually could have been the 4th generation working at a flour mill if I had wanted. Even if the flour mill paid double what it does, my life is so much more grand than what that would have been, it isn't even close.
GDP (per capita or not) cannot show wealth inequality.
Personal income does not include capital gain.
Wealth grow is not included in either of these dataset.
CEO unrealized gain is huge and represents a huge chunk of his/her eventual hidden income that becomes wealth.
So you're saying that on average if you can afford to buy a house, it's bigger and better than it used to be, but also that the fraction of people who can afford to do that is stagnating or declining.
> None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
I have a similar sample, all middle class in their 30's. The only ones who have bought houses have been given significant assistance from their parents, now none of them are poor by any stretch, but few have any significant assets.
Well things worked out for you and they have worked out for me as well. For a long time I have this arrogance expressed privately usually to myself or very close people that it is all due to hard work, diligence, thrift that I reached where I am today.
But lately after reading and observing around quite a bit I come to realize due to being ended up in a fast growing sector at least a minimum level of success was guaranteed. I see same thing at my company where a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me and growth was much faster than compare to when I joined in mid 2000s.
They can talk down to me just like I can talk down to more juniors about value of hard work, drive and so on. However, joining a growing sector early was best thing career wise. No amount of hard work will help if one is starting at a middling IT job in middling company in 2025 like I did in 2005.
Well, and even the company matters. I was in IT since post-grad school (with a bit of engineering earlier). But with dot-bomb, a company that struggled through and then 2008, I was only in an "OK" position. It was really the period post 2010 that set things up a lot better.
Indeed. For me 2010-11 was when I got a full-time job as compared to contracting (small time) which was big jump for me in terms of job quality and money. Interesting enough I met many people who joined Amazon in same time frame and earning about 50% more than me in straight first job that I earned after with 8-10 years of experience. So yeah company part is important.
I wouldn't even say it was work quality; the job I had for a good period really set me up for my ultimate full-time job and I mostly liked it. But that ultimate job was a public company and even if not FAANG level comp, set me up pretty well and provided the leverage to make investments that were pretty solid during that very good period.
> a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me
Not refuting your point but there is a selection bias here. You are in contact with people who did in fact achieve VP or higher levels. Lots more also joined the industry 10 or 20 years before you and burned out, failed, hated it, got fired, whatever. The people who succeeded may not be particularly exceptional in terms of talent, brainpower, innovative thinking, etc, (lots was luck, or being in the right place at the right time, surely) but it's also not true that everyone they worked with back then became a big success.
My dad migrated to London in the 70s and bought his first property in London around age 26. He didn't have a degree but did get a professional qualification.
I ended up getting a good degree at a top uni and started my career at Amazon but definitely couldn't have amassed the necessary amount for a down payment for a place in London by the time I was 26.
By the time my dad was 35 he had two kids and my mum was a full time mum.
This doesn't sound remotely close to the reality of my numerous banking, lawyer, accountant, engineering and doctor friends.
The only people I know who are remotely close to being able to own a property in London and have only one breadwinner work in hedge funds.
You can't compare London from back then to London today though. In terms of its place among cities around the world, it's a different place now.
There certainly would have been locations where your dad would not have been able to afford property, and conversely there certainly are places where you can afford property.
Point being, things change, but this anecdote doesn't illustrate that you're worse off than a previous generation.
Of my friends only one set lives in London and I have no idea how they afford it, one or both of them must be on silly money and it’s pretty clear most of the money must go into the mortgage. I started my career is a very cheap part of the UK so I sort of have to carve London out of any generalisations I make.
The argument in your case is you should actually be _much_ better off than you are without this massive wealth transfer.
That’s part of the challenge in the populous understanding this issue. Many people are better off than their parents, but for being the richest country in the world most people should be far better off.
How can you compare these experiences to a greater upward mobility which does not exist? You don’t have a baseline for comparison. What if you had 2x more leisure time with the same fiscal wealth? What if you had easier access to healthcare?
what if we lived forever and money grew on trees
You didn't even try to understand what you scoffed at. Do better.
"in the UK"
In the US, my anecdotes seem to show that things have stayed neutral or declined slightly. It seems harder to get a decent job than our parents. It seems that fewer of us have bought homes, or delayed buying due to financial reasons. Seems like more of us are working multiple jobs too. I think the aggregate measures showed real income only trending up slightly over the past couple generations.
Sure maybe there was some inertia from the benevolent bettering institutions of the New Deal that have given a chance to Americans.
I just think you'd have to be so willfully in denial as to miss the darkness we are descending into. To miss how bitterly the GOP and the wealthy are building empires of lies and bespoke manufactured realities to make up down and left right, to cover for horrible treacherous actions against the possibility of the individual, stacking the deck for empire and inherited wealth. (And Dems are frequently unwilling to bite the donor class that makes winning elections possible, after the courts have obstructed democratic funding reforms.) Are actively opposing the possibility of people doing good for themselves & the world.
I strongly recommend folks go read one of the darkest periods of America, before enough was enough Adam Hochschild's American Midnight (2022) tells an amazing story of a circa-WW1 state that had radicalized against people, that had been totally overrun by well monied powers. Of Hoover using the full power of the police state to surveil as Ralph Van Demand had done during the Philippines civil war, of of the postal service run by someone using it for information control, of American Defense vigilanism.
Its not a tale of what happened next, how that broke, just a long amazing story of how dark America got, how badly the state was an extension of capital and power, and how deeply it subverted the individual, the union, any attempt for everyday humans to make any claim to life liberty, or pursuit of happiness.
We face today not quite such amassed power, but a completely warped infosphere where these bespoke realities create lifestyle beliefs where people are on board with incredible trains of lies crafting false enemies, supporting the opposite of the signalling they claim. Its different than dark; the world today is overloaded by hell's din, by monsters of abuse, doing their worst to harm us for greed and for the possibility of undoing the good of the world.
I'm in the same position as you, but I see myself as rather lucky. I worked very hard but I also was taught hard work translates into success, many people don't see that relationship. And I happened to be interested in a lucrative career path.
> I also was taught hard work translates into success, many people don't see that relationship.
That's a typical confirmation bias: you worked hard and got successful, so you're tempted to think that it's because you worked hard. Some don't work hard and get successful, many work hard and don't get successful.
The one thing that you clearly can't rule out is luck. Tell people in Gaza that if they work hard they will end up in a situation similar as yours...
some work hard and get successful; some work hard and fail
all who don't try fail
I fail to see how this is related to what I said.
It's related because you said "you can't rule out luck" which is basically casting doubt on the whole idea of hard work having an impact on success. Well, no reasonable person would say hard work guarantees success, or that all success is luck. The truth is luck and serendipity affect all outcomes, but to use that to question the impact of a human's agency on their own life outcomes is an insidiously disempowering perspective.
Sorry, to me it looks like a lot of words that say nothing.
Obviously, if you don't do, you don't do.
> to use that to question the impact of a human's agency on their own life outcomes
I'm not doing that at all. I am not saying that the effort put into achieving something is worth nothing. What I am saying is that whenever someone is successful, it means that they have been incredibly lucky (and on top of that they worked a lot, maybe). Whenever they compare themselves to someone else who also worked hard but was not successful, the first conclusion to make is that this someone else was not as lucky.
But the first thing that happens when someone gets successful is that they forget how lucky they are, and just start talking about merit. My point is just that whenever you talk about merit, just remember that you were not born in a poor family in a war zone, and that does not make you more deserving.
Very anecdotal. You can't just look at yourself and your circle (which is similar to yourself) and extrapolate to the general population. Also most people in HN are in Tech which did well in the last 15-20 years comparing to other fields.
You all studied so hard but never heard about https://en.wikipedia.org/wiki/Sampling_bias?
Whether or not you're really outliers, it would be very surprising if "my friends and I" were representative of the general population.
> Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood
> all of us are better off than our parents at the same age and their parents are better off than their parents
These are conflicting statements. Your group are all beneficiaries of generational wealth by this description. Maybe it isn’t as overt as a trust fund, but you definitely inherited wealth and opportunity from your parents.
It's hard to understand what you're saying here. Being better off than your parents implies that you are a beneficiary of generational wealth? Connect the dots for us.
OP described a group of families that accrued wealth over 3 generations "without inheriting any wealth". Assuming they weren't orphaned at birth, each generation definitely benefited from the fruits of the previous generation. Even without an overt handout like a trust fund, we still inherit wealth from our ancestors (eg: housing, health care, education, credit, social networks, etc). In this case, the "handout" would have been their upbringing. They feel "the system is working" because of this, but not everyone in the system has an ancestry like this.
So by your definition, anyone who isn't an orphan is a beneficiary of generational wealth? In fact, even orphans are, because they inherited genes, weren't left to die, etc.? I suppose that is a definition, but it doesn't seem like a useful one, especially in the context of this conversation. Or maybe I've just misunderstood you?
Oh get off your high horse.
I’m not on a high horse.
While I don’t doubt things have worked out well for you, how many of you are able to afford owning real estate?
Same here, but we are in a very similar boat in our voyage through socioeconomic statuses (though I'm in Ohio River Valley US). I may be fooled by the discourse that [Xennials/Oregon Trail gen/Gen Y/Elder Millennials], but we supposedly saved more, delayed gratification, planned more, and worked more than even Gen Z (who, don't get me wrong, have it worse because of undercompensation vs purchasing power and sheer hopelessness).
I doubt we're typical, is my point.
did you buy a house? when?
Yes, 2014 with a 95% mortgage
is you're birth year 87?
In which case you were able to save a deposit within 6 years of graduating? When i was at that stage my outgoings (rent, food, council tax, car, insurance) were probably 90% of my salary.
Some of it might be declining costs of everything apart form limited resources (like housing).
Perhaps you generation is better off than their parents were in terms of everything except real estate. But their parents are also better off now than they used to be when they were their age, because everything (except housing) is much cheaper (relatively) than it used to be thanks to optimizations in production and economies of scale of last 5 decades.
Where are you and how long did it take to save up for a downpayment?
First house was in the North of England, took 4 years to save up enough.
Are you in the black as a household overall?
We aren't yet. Our projection is that we will be in 5-7 years. I'm turning forty soon.
Just to give you an anchor point.
What does “in the black” mean at a household level? Total assets minus loan balances being positive?
Sorry, yes. I was thinking net worth > 0.
Ah, I was wondering too but my reply button was gone, yes I would say we’ll be net > 0 around the same time as you age wise. If we hadn’t had to renovate a 60s property we’d possibly be there already but UK housing stock needs work sadly.
You're outliers. Boomers hold the bulk of the wealth in the US.
> Perhaps my friends and I are outliers
That's it, you're outliers.
Yep. A good friend of mine grew up to a very poor immigrant family, both him and his sister got full rides to good schools because of grades, and at age 30 bought a house in NJ with a very good school with 4 kids after saving non stop and living with his parents and taking care of them.
The system works fine if you don't need nonstop luxuries
Prior generation was buying houses at 20 with less skill.
I'm happy to see that your friend made it work for himself, but his was a much harder path than most people saw in prior generations.
It’s really incredible how much people feel entitled to in the us. And by entitled, I mean they spend money on these things because it’s beneath them to think they shouldn’t have said experience or thing.
> rich have been transferring money from the poor to themselves at a dramatic rate
Anyone not familiar with it needs to look up Georgism.
This transfer happens primarily via housing costs and rent payments.
The stratification of the rich happens via investment opportunities, but the core underlying mechanism for the majority of the population is via housing costs and Ricardo's law of rent.
Yeah, you can't have an realistic economy that will eventually inflate small, entry-level houses to $1mm+ and college costs to the $100k's but still have jobs paying $10-20/hr (or less). Any kid who does the math will realize how hopeless that economy is. Even if you scrape by, one emergency turns you into a debt slave.
Housing needs to stop increasing in price for a number of generations. Surely the rich can find someplace else for their money.
For housing to stop increasing in price, a lot of it has to be built.
The YIMBY movement is pushing in the right direction, but doesn't have the political power that they need. Particularly in California. And, as long as they don't, those with houses will continue to win against those who don't.
There are alternatives: make it expensive to own a house/apartment unless you physically live in it. It would benefit ordinary people, therefore it is unlikely to be implemented for long if ever.
> For housing to stop increasing in price, a lot of it has to be built.
False.
You can depress the land-based monopolistic component of housing via a land value tax. If speculating on land values stops being a good investment strategy, the price will drop.
Many economists/nobel prize winners have been quietly pointing this out for over a century at this point. Here is a pretty good primer: https://www.youtube.com/watch?v=smi_iIoKybg
As long as there are more people needing housing than housing, prices will be high. California has such a shortage, and the people side of the equation is going up faster than housing is constructed. Making the problem worse over time.
A land value tax could indeed help with housing costs - but that's because it encourages development. It is the construction that makes the really big difference here.
Correct. Thank you for clarifying. Just want to point out that this is different from your initial claim.
> housing to stop INCREASING in price
Land value tax would immediately start decreasing the housing price. You are correct that it would stay high until demand and supply rebalanced, but it would start decreasing.
In fact, you actually pointed out a second mechanism that could lead to decreasing prices in your comment: a decrease in demand. As you mentioned, that decrease in demand could come from a decline in population. However, it could also come from a decrease in that population's capability to match their existing level of spend. People can't spend more than they have so if that amount goes down then prices would also have to go down as a result.
In fact, prices for housing are far more sensitive to changes in demand than for normal goods. Land supply supply is fixed and cannot increase. But likewise, it cannot decrease either and this is what makes land value tax so amazing! Normally, a decrease in price would lead to a decrease in production, but with land, supply never changes so you get a larger decrease in price.
Economists refer to this property as having zero deadweight loss, and it is what makes land value tax the most efficient theoretical tax possible as was mentioned by Adam Smith over 100 years ago. Effectively, you can tax land up to its full theoretical rental value and supply will never change.
Land is an economic edge case. It's like a massive glitch in normal economic assumptions. And that glitch is literally the largest asset class globally and makes up the majority of bank lending. It needs special attention that it's not currently being given.
Practically speaking, land value tax advocates are not proposing full rental capture, but rather first replacing property taxes, and slowly increasing the tax rate while decreasing other taxes.
No, my initial claim is correct. Per https://en.wikipedia.org/wiki/California_housing_shortage, "California needs to double its current rate of housing production (85,000 units per year) to keep up with expected population growth and prevent prices from further increasing...".
A land value tax by itself would not suffice to immediately change this dynamic.
I think we disagree here then. The article you linked assumes no land value tax so I don't think it's relevant.
My claim that land value tax would decrease property prices does admittedly depend on the tax rate. Do you dispute the fact that there is some tax rate where house prices would decrease? For example, going above 100% tax rates would actually force people off land so to me this seems obvious because clearly nobody would want to hold property if it cost more to hold than they could afford... So obviously there is some tax rate lower than 100% where property prices would start to decrease even accounting for other growth factors. Heck, you could even ignore it being a land value tax. This would happen with a property tax as well.
Does that make sense?
Keep in mind that the number that you quote there in the article would obviously change depending on the price of housing. People move out of cities or countries all the time due to cost of living.
EDIT: this seems pretty straightforward to me. It's a net present value calculation with an annual payment. Obviously there is some annual payment where net present value will decrease...
My claim isn't about housing prices. It is about the cost of housing. True, a land value tax transfers value from property owners to the government. But paying that tax represents a cost of housing. Either directly - you're paying tax on your property - or indirectly in the form of rent.
In theory this is net neutral on costs. In practice, it is likely to be an increase immediately because housing prices tend to be "sticky". So it takes time for land value to drop because of the tax.
Ahh that makes sense then. Yep agreed! I got confused because I usually hear people refer to housing prices as property purchase prices, and housing costs to the continuous component. I would have phrased this:
> For housing to stop increasing in price, a lot of it has to be built.
As
"For housing costs to stop increasing, a lot of it has to be built."
It's difficult and ambiguous either way though... Costs being plural and price being singular is maybe what threw me off as well?
Thanks for clarifying!
LVT doesnt decrease housing prices by itself. It transfers the rent from landlords to the government but without housing expansion rent price doesnt change.
> For housing to stop increasing in price, a lot of it has to be built.
There is excess supply of housing which is intentionally kept empty, hence this is not applicable.
No there isnt. This claim is pretty much 100% bullshit. All the housing that people want is pretty much full.
I think a common mistake (and one you’re doing here) is implying those things are fixed measurements. The common definition of a “small, entry-level” house has dramatically inflated over the last 70 years. When people compare to their parents generation, it’s not at all apples to apples — those houses were about half the size and much, much shittier and cheaper.
Similarly, college has become a thing that went from <40% of high school graduates prior to the 1950s, to 80-90%+ today. The demand has increased enormously, so of course prices has gone up.
Isn’t the point of markets to provide feedback and change behaviors? Live in a smaller house, go into trades instead of college, etc. (like many in the last generations did, in reality). Instead, everyone is trying funnel into the patterns that had the most success in the past, leading those to become oversubscribed and not working as well.
And then there's Australia.
>economic growth hasn’t been occurring in real terms for most people for a long time
This is just not true.
At least in the U.S., people of all income tiers have seen their incomes grow[0] while their working hours shrunk[1].
Inequality is a problem in itself, but equating unequal gains with "transferring money from the poor" seems like bad faith.
[0] - https://www.pewresearch.org/race-and-ethnicity/2024/05/31/th...
[1] - https://ourworldindata.org/grapher/annual-working-hours-per-...
Two things can be true at once; growing income per working hour has not resulted in less income inequality.[0]
[0]: https://ourworldindata.org/explorers/inequality?tab=chart&Da...
True. Income inequality increased.
The person I responded to suggested that only the rich saw income growth, and that they were achieving this by taking from the poor, which is wrong.
This was true until quite recently (within the last 5-6 years).
Income growth in real dollars had been stagnant since the late 1970s for most deciles.
There's no recipe for happiness that primarily involves looking in the other guy's bowl. Even if you have everything to eat, you will still need unhappy if he has more.
No wonder you guys constantly post about unhappiness. You are obsessed with keeping up with the Joneses.
Much more joy if you instead care only about absolute living standards. My life has improved a lot and if Jeff Bezos appears before me and will make me 10x as wealthy if he is 100x I will gladly choose that.
We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses. I'd take this trade 10/10 times.
> Even if you have everything to eat, you will still need unhappy if he has more.
Yes if the demands on our personal resources (inc hours, energy, cognition) far outstrip our quality of life gains.
Me (gen x) vs my parents (silent gen): Parenting time went from a few hours per week to 24/7 adulting while kids growth resources (free range+adult free) was nearly eradicated.
My parents had tons of leisure time. I had none.
Mundane activities are unimaginably complicated now - needs that once had a couple of factors to consider now has dozens of compounding factors, each with their own subgroups to work through.
Consumer choices are flooded with bad options; long research is needed to avoid the never-ending line of traps.
> We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses.
What's left out of the "Live Better Than Kings" spiel is that gains turn into mandates (electricity, internet). They're required to meet basic needs like housing and not having kids taken away.
> I'd take this trade 10/10 times.
Draw up the entire list of factors that a poor American has to work through. Drop a king into that life for a month and have them report back.
It's not Jeff Bezos and Elon Musk who are making it impossible for your kids to be free-range. That's your fellow man. In fact, in a world of much greater inequality where your peers are not consulted about how children should be parented, your kids could be as free-range as they wanted. Jeff Bezos, in particular, is famous for letting his children risk physical damage if it means they can grow up resourceful https://www.youtube.com/watch?v=4CmyV5Ghxeg
You can also have lots of leisure time. That's a choice. I do.
You could drop me into the life of a poor American, and a month later I wouldn't be one. I know that's true because I came to San Francisco with nothing in my bank account and a $10/day bed-on-a-couch paid for for 2 weeks.
> You can also have lots of leisure time.
At first glance, this declaration seems ignorant. You plainly lack the details of my parenting years and they are fully required to make that judgment.
In context, it looks like hubris.
But then again you implicitly validated my claims (24/7 adulting due to free range loss); you reassigned the cause of kids adult-free time.
With acceptance of the demands on modern parents' time, your declaration appears to be self-contradictory.
> You could drop me into the life of a poor American, and a month later I wouldn't be one.
This bit seems to confirm my hubris suspicions and I'm a bit divided on which way to respond. I could be less judgy, given my own years of low-wisdom confidence or I could jump right into exampling ignorance that leads to poor assumptions about fortune and poverty.
In the interest of time, I'll roll it all together.
Below is what actual lives look like.
I'll presume you're above average at opportunity farming and pulling rabbits from hats. I'll further assume your desire to excel includes being a high quality parent and spouse.
You are now married and you have children in lower+upper grades. How many children you have is tied to your confidence in providing for them.
Your spouse is a few years into the medical condition that converted her from supportive parent to +3 children in time, +many children in expenses - which are eating thru your single-income-savings faster than you can add to them.
You keep switching employers because they unexpectedly go under (exec scandal), are bought out+resized or are moved overseas. Or you are self-employed and your product/service keeps not landing where it is clearly needed.
Nevertheless you are confident that your will+skill is enough to see you through. You know your efforts will eventually yield result. Those critical uncontrollable factors (~luck) will eventually turn in your favor!
In the mean time your owned home has succumbed to an event (radon/extreme weather/sinkhole/whatever) and isn't habitable so you are forced to take on a 2nd housing expense while the insurance begins an ordeal that will take a decade to resolve.
Once you+wife+kids are relocated, your wife's medical insurance company pulls out of the market, mid-treatment. You are left scrambling to match a new provider to the full suite of options she needs.
This is when you develop Menieres disease. The tinnitus is annoying but the recurring vertigo takes you out of play for a day at a time. It's a permanent addition to your life. Your employer is understanding - at first.
Parenting during vertigo attacks is tough. Doubly so, given that your own parents died before you married. And since your job took you away from your one functional sibling, you don't have a lot of support.
Your kids still need to be transported to their before-school private classes, to their schools, home from schools, to their after school activities and to the other events that are a poor (but best available) substitute for their eradicated free range/time. They need help with homework. They need routine medical visits and not so routine visits for your oldest who has an ongoing condition of their own.
FF to 20y later and your luck hasn't turned yet. At least not nearly enough for you to get a real footing. You are poor. You're over 50 in tech so good luck finding employment even without all the baggage.
Throughout the 20ys you had a daily choice to care for your family at the level they need or invest time in trying to craft opportunities that would fit your medically-adjusted lifestyle.
Over that 20ys, you more+more opted to not neglect your family's needs. You reduced your opportunity-gardening to being opportunity-aware. You saw some but they required an amount of time that was impossible to budget properly. Or at least that became clear after you jumped into them for a while.
> You can also have lots of leisure time. That's a choice. I do.
Life can and does take that choice away. It's a pure spin of the wheel whether your number is the one that comes up.
Given that I worked with Jeff Bezos at the beginning of amzn, and made roughly $1M before I was 33 as a result, I'm hardly in the "obsessed about keeping up with the Joneses" group: I was the Joneses.
That doesn't stop me from saying that the distribution of wealth within the US economy is immoral, and detrimental to our politics, our health, our environment and more. And it doesn't stop other people from saying so either:
https://www.responsiblewealth.org/
Those folks are hardly obsessed with keeping up with anyone.
I'm glad that your life has "improved a lot". But that's not a reason to give up on fairness, decency and even just plain old self-interest. It's a better society for everyone if there's less inequality, even those at the top.
Keeping up with the Joneses isn't about the sum of money, which by that age is trivial in the Bay Area. It's about the constant attitude of one's unhappiness stemming deeply from a sense that others are doing better than oneself. Fairness is a concept with diverse meanings: for some it means equality and for others it means proportionality. The fact that you have not equalized your wealth to the global median by transferring fractions to those lower than you proves that you do not believe in equality and retain some concept of proportionality.
It's unsurprising that one conveniently draws the line at one's own wealth as decent and fair but it should also be unsurprising when others do the same with their own larger amounts.
The average Indian (the modal nationality in the world), as an example, must work 200 years to gain the wealth you did at the age of 33. Show us your commitment to fairness and decency. I am curious to see you achieve parity with him.
> Show us your commitment to fairness and decency.
25+ years writing open source software. Will that do?
Quite the opposite, I've never yearned for more or even had a stable income. Yet I'm very happy.
Flat out concluding that everyone can make their own happiness by just being open to a system that constrains many others along the way, feels like regressing not progressing.
> We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses.
https://www.aei.org/carpe-diem/chart-of-the-day-or-century-8...
> During the most recent 22.5-year period from January 2000 to June 2022, the CPI for All Items increased by 74.4% and the chart displays the relative price increases over that time period for 14 selected consumer goods and services, and for average hourly wages. Seven of those goods and services have increased more than the average inflation rate of 74.4%, led by huge increases in hospital services (+220%), college tuition (+178%), and college textbooks (+162%), followed by increases in medical care services (+130%), child care (+115%), food and beverages (82%) and housing (80%). Average hourly earnings have also increased more than average inflation since January 2000 — by nearly 100% — indicating that hourly wages have increased 25% more over the last two decades that the average increase in consumer prices.
> The other seven price series have been flat or have declined since January 2000, led by TVs (-97%), toys (-72%), computer software (-70.5%), and cell phone service (-41%). The CPI series for new cars, household furnishings (furniture, appliances, window coverings, lamps, dishes, etc.), and clothing have remained relatively flat for the last 22 years while average consumer prices increased by 74.4% and wages by 99.6%, although all three series (TVs, toys, and software) have
> There's no recipe for happiness that primarily involves looking in the other guy's bowl. Even if you have everything to eat, you will still need unhappy if he has more.
What kind of happiness demands billions of dollars? These things go both ways.
> No wonder you guys constantly post about unhappiness. You are obsessed with keeping up with the Joneses.
As opposed to the ultrarich who have actively pursued this inequality? Curious, it consistently only goes one way in your mind.
> Much more joy if you instead care only about absolute living standards. My life has improved a lot and if Jeff Bezos appears before me and will make me 10x as wealthy if he is 100x I will gladly choose that.
Who said that Bezos could do that? Who said that wealth is created by the ultrarich? No one, but your mind seems to think so for some reason. Well, I’m sure you could find supposed evidence of it on X and the Washington Post, for whatever reason that might be.
> We live as long as kings, with greater variety of food and drink, greater variety of entertainment, and big comfortable houses. I'd take this trade 10/10 times.
So? This is a forum visited by high-earning US software engineers (that’s not me but a lot are). Not the kinds of people that the last four decades have hurt (the most). Which is why you get these surprise comments in these threads. “Woah guys, I’ve been reading these numbers lately and people are actually poor out there.”
No, I don’t think that it’s the Microsoft staff engineers that are personally mad about the state of things.
That first link is not adjusted for inflation.
$1 in 1970 == $7.54 in 2022
That 1970 middle-classer would be making around $450k in 2022 dollars, which sounds insane, but I also know my parents had normal jobs and were able to buy a house shortly after getting out of college.
https://www.bls.gov/data/inflation_calculator.htm
(yes we all have more luxuries than back then, toys got cheaper, necessities exploded in cost)
Consider how big the difference is between each segment identified here. Realise that the upper income bracket itself could be broken down into three segments that would show an ever starker difference.
Unequal gains is the problem, and your intuition can help inform why: the 2023 dollar index used is based on what rate of inflation? CPI? RPI? Something else? Why is it that in 1970 a median income household could buy a home on a single income and raise a family (including sending kids to college), on a 2023-dollar income of $66k, but that's mostly not possible on $106k in actual 2023 for most households.
When you adjust for real buying power using a less favourable means of assessing inflation and taking into account housing costs more fully, I sense you'll find that the bottom two brackets are behind their 1970-adjusted counterparts, and the upper income bracket is significantly better off, especially if you then break that upper segment up a little into more categories.
And, without something happening to adjust this, the effect is going to just get worse and worse, and everyone knows it.
It seems to be using the CPI. The basket of goods & services the CPI is referencing is determined by the extensive Consumer Expenditure Survey, and reflects to a fair degree the actual spending habits of Americans.
Obviously, if you give more weight to housing, you're going to get different results. But it would distort the actual change in expenditure.
Why wouldn't you include housing? It's often people's largest expense?
What makes you believe that housing is not included? Consider using a search engine (Google is pretty good) and using keywords like "cpi shelter weight" or "cpi housing weight". The BLS has a page on the subject.
Well, housing is obvious. It's because most Americans are eager to have community (by which they mean suburban homes) and a short commute and a separation between commercial and residential spaces. This is a process that clearly yields outcomes that are not time-invariant. In the same sense that asking "why did people back then get to put a house down near Golden Gate Park and I don't?" is meaningless. Because eventually all the places near GGP have houses.
As Adam Driver points out in Ferrari, "two objects cannot occupy the same place at the same time". A view some might find counterintuitive.
1. What are the growth rates per quartile?
2. How have living expenses grown?
You’re probably right. The historical norm is that there are owners and there are workers. We seem to be regressing to that.
The difference is that medieval peasants knew their manorial lords had bigger houses and ate more meat, but the visible local differences were small and religion could operate (for worse or better) as a stabilizing force. People tolerated a caste system because they were information poor.
There’s no reason today, though, for people to put up with the kind of inequality that is not only extreme and senseless but constantly being shoved in their faces via social media. The only way the rich stay out of the guillotines is by creating new, weird cultural spectacles like litter boxes in schools (not even a real thing) for “furry kids.”
They were uninformed then, but people are misinformed now.
I think the latter is worse, because it means those in power now have an information lever they can use to manipulate the masses. When there were no broadcast or network media sources, those levers didn't exist and the powerful had fewer tools to control people.
Or diverting nascent discontentment toward a manufactured enemy (that does the same in his own fiefdom), 1984's style.
> People tolerated a caste system because they were information poor.
Well no. Peasant rebellions/uprisings happened all the time. People tolerated the feudal system because those rebellions could at best pressure for greater leniency within the system, while it took the later historical developments of urbanization and increasing labor productivity to actually overthrow the system.
> The historical norm
By which you mean the most recent 1% or so of human history.
Before that societies were a lot more egalitarian [0].
0 - https://medium.com/inside-of-elle-beau/yes-our-ancient-ances...
The new way to sell the lower and middle classes on persistent inequality and a caste system is the culture war. You scare them about culture war bogey men: trans people, immigrants, gays, etc. The deal is "let us rule over you and tax you and charge you rent, and we will marginalize people whose existence disturbs you."
A closely related variation is the appeal the current oligarch class is making to men all over the world: let us rule over you and tax you and we will keep women in their place and set things up so you have most of the power in relationships. Men get to rule over women, and in exchange the oligarchs get to rule over men and take most of their productivity in rent and taxes. You're poor, but your wife can't leave.
I would hardly call that strategy "new", it was the same one employed by European autocrats in the 30s.
Workers have been sold the lie that if they work hard and smart, they too can get to the top and enjoy a life of luxury.
Relentless propaganda on social and legacy medias funded by billionaires succeeded in creating the most overtly pro-billionaire government ever.
They are now giving themselves massive tax cuts, implementing austerity and straight up picking in the treasury, and a lot of Americans are still defending them.
>The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
The US is setting up to make this worse by cutting services for the average person (like the CFPB and OSHA) and continuing to give tax breaks to the wealthy...again.
This is after the same group of people set off sky-rocketing inflation by injection almost a trillion dollars of new money into the economy by way of the PPP program, of course hurting the average person more than their wealthy financial backers.
Medicaid cuts are going to be the real nightmare fuel. People think Medicaid is for the poor (which some Americans are always happy to screw over) but Medicaid is what makes it possible for many working folks’ parents to afford geriatric care. God knows what happens when the GOP succeeds in slashing it.
My guess is that all of this moronic fiscal policy causes a significant recession by the next presidential election.
At this point I've fully converted to accelerationism. I can only hope this recession happens soon and rid us of this circus quickly.
Medicaid is indeed for persons under the poverty line. Medicare is for people 65 and older. Not that I think they'll stop at Medicaid.
A huge percentage of Medicaid goes to nursing homes. Medicare does not fully cover the service. You either pay out of pocket or if you’re destitute (as many elderly people are) you get Medicaid to cover the difference.
Also I want to add to this in case people don’t understand:
End of life care is a giant vacuum cleaner designed to move wealth out of families. It is incredibly depressing. Because Medicare does not fully cover nursing homes, you have basically two choices:
1. Give up a huge percentage of your family’s assets (home, retirement savings etc.) so that it never gets handed down to kids and grandkids. 2. Gift those assets early (at least five years I think) so you are technically broke and then can qualify for Medicaid.
Even if you don’t gift those assets early, many people will still run out of money because they aren’t wealthy. So they’ll also end up on Medicaid.
People have the very dangerous impression that “Medicaid is for the poor and Medicare is for the rich” and oh hell are they about to make a terrible mistake.
That's a misunderstanding that many people have.
Medicare does _not_ cover nursing and long-term care facilities for the elderly. That is covered by Medicaid.
Nothing lasts forever. The rich get most of the economic growth is inevitable. It's the Matthew effect. In general, the more assets you have, the more passive income you have, which in turn frees people up from worries about making breads for the family, and thus can spend more time on think and do things more important in the long run. Again, that would reinforce their financial status. In the meantime, the poor would have to worry about next meal, and mostly don't have the reserve for investments. Thus, they will most likely struggle to save something, and even if they do manage to save some, an unexpected event can easily wipe it out before it reaches the threshold.
If the riches were conscious enough, they would return a fair share to the poor and the eventual crash will be deferred much longer. But you know, everyone wants more money, no exception for the riches. It looks the only thing we learn from the history is that we learn nothing from history. So here we are: the same drama of empires' rise and fall, the only differences are the locations and the actors.
Yes, historically the rich lose their heads when they forget that their taxes are used to buy social peace...
I don't think it's that simple.
Things that can be produced with machines rather than labor have become more affordable over time. Electronics, travel, clothes, and even food are cheaper than they used to be relative to wages. Then there are fields like education, childcare, and construction, which have not seen substantial productivity gains. The prices of their outputs can be expected to rise at the same rate as wages. (And then there is healthcare, which is complicated.)
But what has actually happened that increased housing costs have eaten the productivity gains for many people. Largely because of deliberate policy. Desirable areas often discourage new construction. When new construction is allowed, they prioritize single-family homes. And if really pressed, rental complexes.
As a rule of thumb, if you can afford to rent, you can afford to buy. If you expect to stay longer than a couple of years, you should buy. But in many places, if you can't afford a large home, you have to rent a small apartment. Because there is a shortage of small condos to buy. If the units available for purchase grow larger while the price per square foot grows at the same rate as wages, housing becomes less affordable.
In many of the denser population areas of the US _generations_ 30, 50, maybe more YEARS worth of insufficient building has left a completely broken situation of stagnation relative to population.
> people only seem to demand a fair piece of the wealth after a world war.
I think it's more that war has a tendency to literally destroy capital which is effectively a tax on the rich. When factories get bombed, factory owners lose out more than people who don't own factories.
War is horrible but it historically has at least been somewhat of an economic equalizer.
One of the real tragedies of the pandemic was that it turned that upside down. The virus didn't touch capital but destroyed humans, and the humans hit the worst were those in "essential" but low-paying jobs who couldn't socially isolate. The effect was that the pandemic increased economic inequality.
Are you sure it's true that the pandemic increased economic inequality?
The humans worst hit were by far the elderly, and the elderly tend to have more assets than the young in industrialized countries.
Among working-age people, lower-paid "essential" workers were exposed to more risk, but by a significant margin, old people are the ones who died more.
> Are you sure it's true that the pandemic increased economic inequality?
Yes, the wide majority of economic data suggests this.
Individual old people may have died more, but we are talking about economic inequality. They had huge gains in their wealth due to asset inflation. Working people were by far the worst hit by the devaluation of their labour.
We've had terrible times without completely failing before but I agree with some of your sentiment. That isn't much solace at all but maybe it won't be the end of the entire experiment?
The extreme wealth gap and corruption paired with the loss of virtue (integrity seems to hold very little social value these days) seems like a bad mix to me if you like stability, let alone shared prosperity. Moreover, the response to the United healthcare assassination showed us that a bunch of folks don't think there is justice left in the system. The reactions to covid were a stark example of how a huge swath of people not only won't lift a finger to help their fellow citizens but will actively oppose it and be offended by the suggestion itself. This year the purges of non-straights or non-whites from all positions (and even from some records!) began and we don't yet know where that will end. Politically we've spent this year alienating our allies and generally acting like bullies.
I'm worried we'll be in a war in 3.5 years (real or manufactured) and "need" to delay the next election for a while, "in the name of national security".
Money is power, and power needs to be in checks.
"Billionare" is not a word which should exist.
We are not far off from trillionaires. Saying billionaires shouldn’t exist at this point sounds pretty radical to spin in positively
An easier solution would be money not being power.
people don't demand wealth equality after a war, they just create massive inflation during the war and solve it by taking everyone's savings after the war...half the countries in europe post ww2 did something akin to replacing the national currency at exchanges rates of like 10:1 in some cases like germany...and germanys post-war inflation solution is hailed as an 'economic miracle' by many history books. Somethings tells me I wouldn't feel too jazzed about taking 90% of my savings, but I would also be resigned to do whatever because war is worse.
I get really worried when I see people glamorize equality post-war...post-war times are not good times for the middle class. The most equal wealth humanity has ever had is during caveman times, but that is not the goal.
war does not make things better folks, I hope that's not what OP was trying to say, but just in case let's be very very clear about how awful war is for progress and humanity.
post-war reconstruction fervor can inspire wealth creation. This is largely because there are no NIMBYs and eco-warriros sat around saying that the returning troops cant have a place to live and we cant have new infrastructure. If we can get that reconstruction fervor without a war it would solve a lot of our problems.
I just don't believe this, not because I have hard data, but it just doesn't make any sense. Sure, the central banks will do everything they can to ignite the economy and everyone will be generally working their hardest to recover from hard times, but how can an economy that gets completely halted to go full bore in war efforts ever hope to generate the wealth of an economy that isn't halted and has been making incremental improvements, uninterrupted?
There are two reasons.
War destroys existing structures and gives them a chance to evolve again.
The economy is growth dependent and can only perform its basic functions under growth, even if that growth is fake. By basic functions I also include all functions that do not depend on growth.
> War destroys existing structures and gives them a chance to evolve again.
are you suggesting that destroying things, results in improvement in the long run? I don't know that I could be farther from agreeing with that. If starting from scratch was better, why wouldn't we be doing it voluntarily at frequent intervals? It just seems easily dismissed as entirely incorrect.
> The economy is growth dependent and can only perform its basic functions under growth, even if that growth is fake.
I don't think this describes the economy, it just describes some of the metrics we use to gauge the health of the economy. burning down the internet and killing everyone that understands it might result in another dotcom boom, but would you say the economy is more healthy than some other reality where the internet continued to exist with no reset and only has smaller incremental gains?
Seconding the Gary Stevenson rec, he frames in a very digestible way the flow of income from people working day to day being spent on modern day lifestyle (and necessities) to the people who own the assets modern lifestyles are dependent on and how this formulation of an economy may end up becoming increasingly unsustainable.
> the rich have been transferring money from the poor to themselves at a dramatic rate.
1. The poor don't have money to be transferred to the rich
2. The top 1% pay 40% of the Federal income taxes
3. Medicare, Medicaid, Education and Social Security are wealth transfers to the poor
The wealthy businessmen created their wealth, it was not transferred to them.
Where is all this productivity [0] going, then, if not to wages? Is it just "disappearing" [unlikely, IMHO]?
[0] researchgate.net/figure/US-Productivity-and-Hourly-Compensation-Source-Bureau-of-Labor-Statistics_fig1_270640833
Wages don't count benefits, total compensation has risen faster than wages.
It goes to the government. The government consumes something like 24% of the GDP.
That's federal only!
Isn’t Marx, when he documented Capitalism, predicted its collapse? Capitalism has been tried in 100 countries over the past 100 years. Not a single country has reported a harmonious society without suffering and inequality. Failure over and over. But no alternative is being seriously researched. I’m not talking about socialism/communism. A new system designed according to current knowledge in sociology, anthropology, and human biology. Capitalism wasn’t scientifically researched nor updated according to science. In humans, it amplifies greed and materialism. And democracy that we use now wasn’t seriously reviewed and updated according to modern science. The democracy we use now is the system the ancient Greeks came up with to replace feudalism. And all they knew back then was feudalism, so they replaced kings with electable kings. And we use that primitive cavemen level system now! It’s so bad you wouldn’t even use it in your Civilisation type game unless you expand it with 100s of in-game regulations, which we are unable to do upon real world.
A Civil War in the USA? Where would the battle lines even be drawn? There is no consensus, and there are hardly even blue or red states anymore beyond 60/40 splits. Even racially we are seeing a lot less polarization.
> A Civil War in the USA? Where would the battle lines even be drawn?
Clear, obvious initial battle lines are not a prereauisite for a civil war. The American Civil War, where the conflict was largely motivated by an issue which had a geographical split among subordinate polities was kimd of a special case.
I live in Texas and back when the idea of succession was being thrown around I asked my friends if they’d go toe to toe with the US Marines while bombers and drones loitered above their heads. They got very quiet.
I don’t think a civil war in the us is possible but I think advertisers taking advantage of the divisiveness to see chaos is likely (and already happening).
Edit: I meant “adversaries” instead of “advertisers” but I think advertisers works equally well so left it in.
I think it would be a lot more like the Troubles than the original American Civil War.
If it were to happen, it would also be very skewed towards one side, since only the right believes in arming themselves.
Most likely is that the side with the army and guns turns the blue areas into an occupied police state, and sells it to the constituency as a "civil war", despite it being completely one-sided.
Before the election, everyone on HN was telling me that we live in the best economy ever and we're in a "vibes recession" where ignorant Americans can't understand how impossibly good things are. Now that it's less politically salient, everyone can just say true things. I wish every subject were like this all the time.
> we are headed for a destroyed Europe and a civil war in the US
"Capital in the 21st Century" by Piketty does a good job arguing that the historical normal condition is for wealth to concentrate bc the returns on capital are greater than overall economic growth. It's depressing, but creating the kind of world that a lot of us and our parents enjoyed takes special conditions (and political will?) ... but the flip side of this view is that intense inequality can endure for long periods of time and doesn't necessarily lead to political instability.
By definition, the poor don't have money. How are you transferring wealth away from people who don't have any?
Is this a serious reply? The poor may not have much, but every dime they do have is spent on necessities… rent, food, healthcare. So where does that money go? Who are the actual recipients of those dimes?
[flagged]
I didn’t attempt to define the rich.
Are you attempting to make a “they provide jobs” argument? Because they wouldn’t if they didn’t have to. Jobs are an unwanted byproduct of a successful business.
Seems like you should just start a successful business then. The business owner provides no value and just gets tons of money for free. Sounds like an amazing deal. Why don’t you take it?
I think you would agree that success often depends on access to resources and support system - not everyone starts at the same point. Many who are celebrated as self-made often benefit from inherited advantages, which complicates the meritocracy narrative.
Lots of people have access to resources. Very few of them start successful businesses. Zuckerberg’s parents were dentists. They were well off, sure, but there are hundreds of thousands of dentists in the US, if not millions. Why don’t all of their kids start companies like Facebook?
There aren't millions of dentists :)
I think you know at least some of the reasons Gabe. There is a series of filters: intelligence, early skill development, a supportive environment, elite networking, risk tolerance, strong vision, perfect market timing, and a business model benefiting from network effects in a market that can only sustain a few winners.
This list might be incomplete. Would you like to supplement it, or do you prefer to continue with the socratic method? I'd like if you did the former, because the latter comes across as arrogant and condescending.
I said hundreds of thousands, if not millions. It turns out there are around 200,00.
Success depends on some combination of hard work / talent / luck. You can have an extreme amount of all three and get an extreme outcome like being a billionaire, you can have moderate amounts of 2 / 3 and still be quite well off. You can have extreme amounts of one and be successful from very little.
Access to resources helps, obviously, but it is neither necessary nor sufficient.
It seems like we agree, more or less. I'd say there are more factors, and talented and hard working people can still get pretty screwed, but that's beside the point.
To your original question about the wealth transfer, this isn't just the rich selling their subscription services to the poor or something like that. It's a much broader subject.
Some ways in which it can happen include inflation eroding wages while increasing asset values, high-interest debt, tax loopholes favoring capital over labor, financialization driving up costs of essentials, government bailouts benefiting corporations, privatization shifting public assets into private hands.
You'll probably agree that some of these things have been happening for decades, and some people want to accelerate the rate at which they're happening.
Yes, many of those things happen, for various reasons. Not one of those reasons is a cabal of cigar-smoking men in top hats twisting the mustaches and saying "Muahahaha, now I'll steal money from the poor!" like many people seem to think.
It’s way more mundane than that. They just rationally protect their self interests using the power they already have.
To claim that it’s not happening is not believable. Why wouldn’t they protect and expand their wealth and power at the expense of the serfs if nobody is stopping them?
I think we’re seeing his spilt economic system coming into play with computer hardware. Less and less B2C sales over time. It’s just not as profitable to sell to poor people.
In 1995 my parents, both factory workers, bought me a $2500 Packard Bell PC with 100MHz Pentium, 8MB of RAM, and a 1GB hard drive. Adjusted for inflation that would be a $5,283.95 computer today.
I remember that exact model. Computers use to be very expensive. You can pick up a brand new powerful laptop to build a career on for $300 at Target. (I’m in the US I know many commenters here are not)
> the rich have been transferring money from the poor to themselves at a dramatic rate.
By definition, the poor have almost no money to transfer.
Wouldn't you have to transfer from the middle class - which is shrinking in relative terms?
The poor have never had anything and still largely have nothing. It is literally in the definition.
I don't see how it's possible to enrich yourself (when the amount you need to grow by even small percentages is enormous) from a class with nothing to take.
The poor have no money individually, but in aggregate they have some. $1 from a million poor people makes one millionaire.
IMO the main thing they extract from the working poor is time - what they're stealing is the excess value between their labor and the value is creates, and technology has made it easy to do this at a massive scale. So it's less $1 from each person, it's 8 hours per day from a million people makes 1 person a billionaire.
You don't get $400B by stealing pennies from poor people.
For one, there aren't 100m poor people in the US. Not even close.
Somewhere around 45m in poverty in the US (2023), already counting around 1m homeless.
First - "poverty" is up to $14k per year. Many of those people are "poor" - but probably not the majority, and definitely not even close to all.
Second, billionaires have almost $7T in wealth - the top .1% are at about ~$20T.
They didn't get any meaningful percentage of that by taking pennies off of 45M. You'd need to take thousands. And they just don't have it. That's almost $450k per "poor" person.
That's more than the median HH wealth in the US.
If you look at the "actual poor" - you're likely looking >$1M per person.
You simply cannot "steal" that from the "poor" (who have almost nothing to steal, by definition).
Even if you amortize that over decades - it is just not how it happened.
What about family-owned property? Lots of poor people live in multigenerational homes that might be the last step before not owning anything. Also, the fact that the housing market is this bad just means a large portion of the population will be stuck in rental accommodation for the foreseeable future, and that should be accounted for as a form of money transfer somehow.
And for those who will say, "Then the government should just build more houses", let me point out that we might run out of space before the appetite for real estate investment dies out.
By definition, you're not poor if you own a multigenerational million dollar house in Los Angeles.
The people who are ACTUALLY poor, don't have such things.
I mean, define what do you mean by ACTUALLY poor.
It's very common for people living in traditional working-class neighbourhoods to own a house and suddenly become paper rich when gentrification happens (e.g. Venice Beach in LA). They might find themselves in a situation where, in theory, they have a lot of wealth from the house but don't participate in the economy at the same level.
While we cannot predict the future, I found the movie Civil War (2024) really great and original.
It's like AOC'c comments to NPR the other day
"Everything feels increasingly like a scam," she said. "Not only are grocery prices going up, but it's like everything has a fee and a surcharge. And I think that anger is put out at government."
AOC is against taxes and other countries paying their fair share?
She realized prices are going up just now?
AOC needs to read "The Jungle" by Upton Sinclair. There is nothing new under the sun.
Is your argument really that because things were really bad in 1905 we shouldn't complain that after many decades of progress* that we are now rapidly sliding back to things being extremely shitty again?
Because that's a really strange way to look at it.
(* driven largely by increased regulation, unionization, etc... all the dirty words for modern conservatives)
>> Is your argument really that because things were really bad in 1905 we shouldn't complain...
No that is not my argument really.
You might care to specify what exactly your argument is then, as I'd formed a similar conclusion.
The Jungle led to an era of reform over nearly a century in which laissez faire and caveat emptor were displaced, largely to positive results, by appropriate regulation.
That regulatory turn had been opposed, increasingly dismantled since the Reagan administration, and in the past month and some has been outright dynamited. The consequences are beginning to show.
If that is your argument, it would benefit by more precise communication.
You're not really making an argument.
OK. If I'm not making an argument then we both agree that my argument is not that because things were really bad in 1905 we shouldn't complain that after many decades of progress.
Thanks for agreeing with me, kubb.
No objections from me, but also no need to thank me. I just stated the obvious.
>> I just stated the obvious
No, you did way worse that that.
You’re not saying anything substantial again, albeit in passively aggressive tone.
We need a way to both have the benefits of modern social organization without supressing the means to fall back to simpler but more resilient and decentralised societies which would come together to maintain the form of nations in times of crisis, which inevitably come again and again.
What we have is a social crisis that billionaire class used to exploit the nation for classist gains, with the collateral effect of damaging the nations memory, identity and values.
From https://news.ycombinator.com/item?id=43140675 :
> Gini Index: https://en.wikipedia.org/wiki/Gini_coefficient
Find 1980 on this chart of wealth inequality in the US:
> GINI Index for the United States: https://fred.stlouisfed.org/series/SIPOVGINIUSA
Are there additional measures of wealth inequality?
Income distribution: https://en.wikipedia.org/wiki/Income_distribution
World Inequality Database: https://en.wikipedia.org/wiki/World_Inequality_Database
USA!: https://wid.world/country/usa/
Economic inequality: https://en.wikipedia.org/wiki/Economic_inequality :
> Economic inequality is an umbrella term for a) income inequality or distribution of income (how the total sum of money paid to people is distributed among them), b) wealth inequality or distribution of wealth (how the total sum of wealth owned by people is distributed among the owners), and c) consumption inequality (how the total sum of money spent by people is distributed among the spenders).
Why is the only outcome 'a destroyed Europe and civil war in the US'? This sort of doomer thinking is more like to bring us to that point than anything else, it seems to me.
Maybe an alternative is we'll figure out how to change and fix these corrupt systems as more and more people wake up to how bad they really are.
> the entire system is corrupt
The universal dismay of humanity is that we actually built and held onto Democracy for a time.
Not perfectly, but better than suffering any dictatorship by "royalty" and oligarchs.
The transnational petroleum business was never going to go quietly into energy decline. Its component interests are flexing their influence.
Is not that they are seeking a transfer, but the incentives and system work is that it eventually converges to “poor get poorer and the money is transferred to the rich” as the most efficient way big biz makes money.
What I like about NFL, NBA, MLB etc is that they will tweek the rules to make things competitive so the rich don’t get too rich and win it all too much. We should have a “DOGE” system for rule tweeting to even things out once in a while
> the rich have been transferring money from the poor to themselves at a dramatic rate.
How does this work? Where do the poor get wealth, on a continual basis, for the rich to take? If the poor have so little, and have had their fraction of the wealth taken by the rich for three decades, assuming things have got worse for the poor since the end of the eighties, where’s all this wealth coming from?
I’m not singling out here, this is a question for the general audience.
I think there’s another possibility: people eventually accept inequality and lower their expectations and ambitions for life. A lot of energy is wasted on trying to make everyone equal when the scales have become too tipped. At some point they’re simply isn’t enough activation energy left to right the ship.
In the past (centuries ago), it seems like people simply accepted other classes were better and they could never be their equals. That’s how you end up with royal families, etc.
So in the future, people will simply work to the bone, find whatever pleasures they can when possible, and maybe just not wake up ever again on some morning before their shift starts. They will live in small simple residential units mostly for sleep, eating, bathing and watching some content on a screen.
The rich will segregate themselves away to enjoy a finer life somewhere that they can be shielded from the plight of the poor.
> The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
It blows my mind why pension funds continue to invest any money at all in PE and Hedge Funds. It's a straight up wealth transfer from the working class to the investor class. States should pass max fee laws for their own pension fund allocations.
Darn pensioners are living too long driving the search for alpha
it's always hilarious to see people in the west wake up to the oligarchy
no amount of graffiti and stickers will change what the numbers have always said since the days of theocracy and the deluge
luigi sadly is not a revolutionary but a substitute for the car crash in Oklahoma :)
Cassandra here.
This is what I've been struggling to articulate more succinctly since my college days, when I started really getting into macro-level systems analysis and long-term planning. Much of the Western world ceded pieces of its sovereignty to external entities without regard to the long-term consequences of said actions. Stuff like outsourcing domestic labor abroad, to countries like China (refining, manufacturing) or India (knowledge work) means those countries now have an outsized influence on domestic affairs that aren't easily clawed back. Ceding sovereignty of infrastructure (be it data centers, roads, hospitals, schools, etc) to private enterprise means those entities have dictatorial say over how those pieces of infrastructure are operated, maintained, and replaced.
In essence, the limited sovereignty the West retained was broadly centered around consumption and wealth, opposing ends of a larger economic system that are now grossly out of balance. It's at the point where there is no singular "silver bullet" to fix it, either. Taxing the wealthy will help, but absent meaningful reshoring of industry and jobs domestically, it won't actually right the economic ship. It's also not merely an American problem, but one largely affecting the neoliberal West that spent decades outsourcing, offshoring, contracting-out, and generally doing everything possible to min-max cost vs returns, quarter after quarter. I think the only country not substantially affected might be Germany, but there's still talk of automakers shuttering factories there in favor of using Chinese labor and shipping the vehicles back to save on costs.
We have created a global economy but without global regulation, which in turn has resulted in artificially depressed consumption prices (relative to actual local costs) and artificially increased wealth extraction through rampant exploitation. Absent a singular global currency and standard of living (which, let's be real is centuries away at the earliest), the only practical solution is a domestic rebuild of labor markets, supply chains, and industries, with a goal of refocusing national exports on what a country uniquely excels at rather than simply offshoring to whichever country has the optimal labor pool and exchange rate relative to your specific industry.
It's a hot mess to be sure, but not unsolvable. Reshoring industry gives us an opportunity to re-evaluate supply chains and resource management with a focus on closed-loops and renewables. Reshoring work will boost wages and living standards, which in turn will boost birth rates and economic growth. Diversifying the economy back into regions and localities will promote specialization and innovation, rather than the fad-copying of today. There's a lot of good to be had in facing the problem head-on rather than giving into fascist ideology and demagogues promoting "one easy trick" to fixing things, but all of it involves hard, honest work, which some folks will naturally be hostile toward.
Either way, we'll all find out together, I guess.
Or we could idk tax billionaires.
Corrupt and fair are key points. I believe it comes from a change in worldview.
The fundamentals used to be closer to the Bible's. They shifted to subjectivity, nationalism, authoritarianism (unchecked), and capitalism. Then, new groups around 1900 shifted to more subjectivity and atheism. Add pleasure-driven culture from the sequel revolution onward. Then, evolution, intersectionality, and feelings over facts.
As I look at these, I see a dangerous combo of not seeing individuals with inherent worth, thinking people are like animals, believe/do whatever without long term consequences, and do what maximizes selfish gain, money or pleasure. Our problems are inevitable under that mindset.
Let's look at specific examples in your post. The rich should take more wealth for themselves since that's maximizing selfish gain. The poor (or scheming) should also try to take their wealth by theft or welfare. If people get hurt, it's an unavoidable problem in a workd of conflict where the fittest survive. No objective morals even exist.
Fortunately, we're seeing a growing rejection of those values leading to life transformations. That's a huge part of Trump getting elected since his policies are appealing to such people. The Spirit of Christ is also causing revivals across the country with thousands to tens of thousands gathered trying to change at the core. Inner change leads to outward effects.
Right now, our college students are taught conflict theory, favoring specific geoups, subjectivism, work against our natural design no matter the losses, and pleasure/money/intellect are god.
What will happen when college students instead are taught objective truth, doing what's right above all, building on our natural design, loving others with sacrifices made, helping those in need onto their feet, unity despite our differences, and building companies that are profitable within those virtues?
I think the results will be beautiful. I've already seen places like that on a small scale. For big ones, Chic-fil-A and Hobby Lobby are pretty close. Part of God's design is some people will be rich and eventually generous. So, that won't change in most places.
The same Gary Stevenson whose memoir claims Financial Times debunked?
https://archive.is/DguLm
His whole narrative he crafted was really unbelievable. I watched a video of him explaining his story, expecting to hear some story of finding consistent signals that stayed alive for a long time or finding crafty wording in bond contracts, but the whole story was that he took a punt on the GFC being worse than the market expected, and he made low 8 figures. And somehow, because of this, by some measure, he was the best trader in the world.
I too was the best trader in the world when I got some skittles from my friend in the playground for free and sold them to another kid for a dollar making an infinity percent profit, but I didn’t feel the need to make a YouTube career out of it.
I too was intrigued to find him but it took 10mins of watching a few videos to be left feeling duped.
Felt like he's working out his problems on YouTube rather than therapy (after first trying to in a trading career). I really dislike his (and most progressive's) narrative that others are distinctly out to get you. It shrouds the real complex machinery, and papers it over with intent. Which impedes meaningful progress i think.
I find it surprising that someone who worked inside a banking corporation, and has seen first hand that nothing ever goes according to plan, is able to believe that somehow the machinery is perfectly orchestrating a privilege loop.
Grifters gunna grift. He is just another lippy barrow boy that claims to be the "best trader in the world" - actually surprisingly common in London bank dealing rooms.
The oddity is that it has taken so long for them to find YouTube.
He has found something of an audience in the social media oriented audiences, who are educated enough to grasp the general idea, but not specialized enough to verify his claims.
I've only heard of him because of this sort of Hacker News comments, and my general impression is that he is usually so off the mark that it is hard to have relevant conversations.
He makes money selling books and having an Youtube channel.
Right, he's just moved from taking people's money to stealing their attention. Grifter til the end.
Dude Gary Stevenson is so good, great to see him shouted out on these conversations.
I've long wondered why so many economists get inequality so incredibly wrong without any hint of self-awareness whatsoever, and the answer (in part 3 of that series) was mind-blowing. So, so well put together.
I won't give the spoilers here, but do watch it. It's an experience.
+1 for @garyseconomics
> a fair piece
Who defines what is “fair”? If it’s people, people are imperfect AF and centralized planning economies tend to fail spectacularly.
I would agree that a system can be unfair, but what changes to the system are sustainable while still incentivizing risk-taking and achievement?
Raise taxes to 80% after making more than a million a year? That's more than enough of a ceiling to keep incentives for 99% of the population. And any taxed income comes back to the masses anyway. Of course this depends on having good government programs so that the money is not wasted or stolen.
No one mentioned centralised planning until you brought it up yourself. This is just boring red-baiting.
No. If you bring up what is “fair” in a given economic system, there are only 2 options: Prices set by the system/economy, or prices set by people. Why should I leave out the latter? I’m not trying to red-bait anyone since even in the US capitalist system, prices are sometimes set by humans (see: helium!)
The idea that an average person, working hard, can eventually own part of a nation's land and resources, setting up their family with generational wealth, is derived from the pioneer days when land was plentiful.
This was never going to be able to last forever as long as the population keeps increasing. This is why settlers left Europe etc in the first place to seek fortune overseas. And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Working hard is necessary in its own right for many reasons, but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing. So is shaming anyone who fails to achieve it as "lazy", when it was never going to be possible for more than a fraction.
Land is not scarce in the US. My road trip through Nevada to Salt Lake City convinced me of that much. What is scarce is land people actually want to live in - with safe neighborhoods, good schools, restaurants, shops, etc. Restrictive zoning and NIMBYism is definitely making this worse.
I don't think the amount of "unexplored" or "undeveloped" land is a good metric for social mobility. Economic growth is. New "frontiers" are created all the time. They do not have to be in the physical world (e.g. computers, the web, biotech, the App store, social media influencer, crypto, and now AI). Even in the physical world, frontiers can sometimes expand. Desirable land can be created in the middle of a desert (e.g. Las Vegas), we just don't want to anymore.
Despite its many flaws, I think the US is still better than pretty much anywhere else in the world.
In much of the American West, water is the limiting factor. To build another Las Vegas, the water rights would need to be bought somehow.
Cities can outbid agriculture, but the water rights market is complicated.
A better example might be the California Forever project which seemingly had this figured out, but was blocked because they couldn't get permission.
There's tons of land on the east coast too, just far away from people and amenities. See: rural WV, PA, VA, etc.
Yes, and rust belt cities have lots of infrastructure that could be reused. Jobs are probably a limiting factor. Less so with working remotely.
This is one of the reasons I wish companies embraced remote work more, and which I wish the government encouraged more. Plenty of locations could be rebuilt and revitalized simply by moving working families there, and plenty of people would be happy to buy up the cheaper housing and contribute to the local economy if their places of work allowed for such flexibility.
Its a real shame that both state and federal governments do not see the advantages of this...
Most of that rust belt infrastructure from mid century population highs is actually at end of life. Some cities are having a crisis with things like their sewer systems right now. Its underreported because no one cares about the intricacies of stormwater and sewage movements, much less in a smaller midwestern city.
Agriculture, the Saudis get five harvests of alfalfa a year by leasing unlimited water rights in Arizona for practically nothing. The Az Governor could call the leases and stop that, but they haven't for some reason. Most water in AZ is for Manufacturing and Farming, very little is used for people.
Doesn’t BLM control chunks of land that are desirable but not allowed for settlement?
The point is San Francisco has tons of land (with houses already built on it) that is desirable but not allow for redevelopment.
Not really, no. The land the BLM owns is mostly scrubland suitable for cattle grazing and basically nothing else. I suspect whoever told you that has an ideological bone to pick with the BLM and is bullshitting you to try and make you equally mad at them.
No one told me that I’ve just seen a map and it looks quite extensive in a lot of the western US.
> the pioneer days when land was plentiful.
I think you mean to say "When we could steal land from the people who were originally on that land"
We can still steal land from people who were originally on that land, happens all the time in America.
- Land Appropriation for "Public Need" with Direct Transfer to Wealthy: https://fastercapital.com/content/Land-appropriation--The-In...
- Heirs property, property tax sales, and Torrens Acts (article focuses on black people, yet works equally well on all skin colors): https://inequality.org/article/black-land-theft-racial-wealt...
- Wealth City / Suburb secession to leave poor areas to pay bills, and then buy them in destitution: https://www.bloomberg.com/news/features/2022-02-11/atlanta-s...
- Rezone areas to make new cities, take all the businesses and good land, and leave the remaining "city" with the bills (another Atlanta idea): https://www.google.com/maps/place/Union+City,+GA/@33.6158433...
- Sell vacant land out from under land owners with false listings: https://www.fbi.gov/contact-us/field-offices/newark/news/fra...
- Purposely Induced Foreclosure, Bankruptcy or surprise tax assessments to cause a forced sale: https://www.businessethicsnetwork.org/forced-sale-implicatio...
Define "orginally". You might be interested to research how the Native Americans interacted, especially the Lakota. Rights by conquest was not a new idea.
I mean murder's not a new idea either but it's broadly condemned in most moral vibes
"Right by conquest" is sort of a cope, like "You might have a green light and the right of way, but Isaac Newton always favors the semi truck"
Well the obvious response is then "can I conquer your land by force too?". No. Because there is a construction of "lawful property rights" that starts with the appropriation of land by force but protects the new owner from the same.
Well technically the land can still be appropriated by force, only you have to apply it against the entire system which enforces "lawful property rights"
or just use the system which enforces "lawful property rights"
see: Adverse Possession
The most human thing ASI could do would be to have its own Manifest Destiny
There were a few hundred thousand of them across the entire continent. In the best case scenario, most of them still would have died to disease. Unless you believe a few hundred thousand people own should own an entire continent as their blood and soil birthright the land was always going to end up like this
There’s still a lot of land out there. The only problem today is nobody wants to start over with no plumbing, electricity, or other modern conveniences.
The numbers you mention don't match what I see here: https://en.wikipedia.org/wiki/Population_history_of_the_Indi...
You’re right, I mistook the Canadian numbers for all of North America. I know south and Central America had a much higher population but that’s not what this thread is about. It looks like a more accurate number is in the low millions so my point still stands.
I'm gonna go conquer Georgia, then. Genocide some country folks, burn every Confederate flag I see, end some bloodlines forever. There's not many people living there, right by conquest, etc., plus Reconstruction wasn't finished properly anyway.
Hell yea brother. Blood and soil. Georgia is for the Georgians and nobody else should be allowed to settle there
If the land had been the basis of North American prosperity there would have been civilizations there capable of resisting European colonialism.
The Americas had no horses before Europeans brought them.
Also no sheep, no dogs, no cows, no chicken.
There sure was buffalo though.
Native Americans did have dogs. They didn't have sheep, but the Incans did have access to wool-bearing animals in the form of the alpaca (though the Incan Empire was geographically isolated so these animals never reached North America). Guinea pigs were also domesticated in this region. There were neither cows nor chickens, but there were other forms of poultry such as turkeys and ducks.
[flagged]
You need pack animals for civilisations. Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement.
You've drawn this argument from Jared Diamond's Guns, Germs, and Steel. There are a few problems with the theory:
1) Diamond's argument rests on the idea that world historical developments are effectively determined by geography (and implicitly, by factors which precede the existence of a civilization). While I can't make a strong argument against historical determinism, the conclusions Diamond draws are strange. The chief problem is that Diamond is trying to make the case that the exceptional prosperity of Northern Europe and all of its colonies was effectively a fluke of geography. The problem for Diamond is that this pattern repeats over the course of about four hundred years all over the world, not just in the places where Europeans had the advantage of small pox on their side.
2) Native Americans had access to pack animals by way of the llama.
3) The Aztecs lacked access to pack animals. They still had specialized tradesmen and constituted a civilization.
The germs argument is the only one of Diamond's that I think holds any water with regards to the European conquest of North America, and perhaps I was being too brash in my original assertion (these civilizations existed, but were decimated by small pox). The issue with this argument is that it doesn't address European colonialism in Asia (where the disease factor is absent) and Subsaharan Africa (where the disease factor actually worked against Europeans).
The fact of the matter is that Europeans (and specifically Northern Europeans) happened upon a method of conquest that worked. This could have been an accident of geography, biology, or ideology, but it's absurd to pretend that the model didn't exist when it was the basis of a successful campaign to conquer the world. It had nothing to do with having access to pack animals.
The Llama is not a very good pack animal, you would know this if you ever looked at one. Pack animals are not necessary for any specialisation, but the are for the degree that brings technological advancement. If you want advanced society, you need to move lumber from forests to cities and ore from mines to furnaces. It's difficult to do this by hand.
> it was the basis of a successful campaign to conquer the world
I am referring specifically to the conquest of America here. You can see that there were several advanced societies at the time (China, India, Europe, Middle East) and it is essentially luck which of them won out. There are also many places which could not have feasibly conquered the world, America was among them precisely due to the lack of pack animals barring further societal advancement. By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
>The Llama is not a very good pack animal, you would know this if you ever looked at one.
They are pack animals with carrying capacities comparable to donkeys and slightly less than horses.
>America was among them precisely due to the lack of pack animals barring further societal advancement.
You never addressed the issue of Tenochtitlan, which was constructed without the use of pack animals, so this isn't a compelling claim to begin with. Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals (e.g. moose, caribou). Diamond makes some weak attempt to claim that the animals available were too temperamental to be domesticated, conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf.
> By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
You're making this argument because these places are islands. This was not a hindrance to the British. You'll then make the argument that you were really arguing that these places are isolated (which is maybe valid if we're talking about Polynesia, less so for Australia), to which I'd reply: "Isolated from what?" to which you'd reply: "The pack animals, the germs, and the steel," to which I'd inquire: "Why were these things found in Europe and not Australia?" and that is where we get to the root of the matter. Europe's conquests were not a matter of luck or an accident of geography. There was something in their method that simply worked better than the methods of those peoples that they conquered. I haven't reached a conclusion as to what it was in that approach that led Europe to becoming the dominant power of the last five hundred years, but there's no compelling case to be made that this method didn't exist.
> Jared Diamond
I don't know who that is and have never read any of his work.
> Tenochtitlan
> Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals
Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
> conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf
If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
> Why were these things found in Europe and not Australia?
Because Europe has horses and Australia doesn't, and horses cannot swim therefore could not reach Australia. The moon also doesn't have horses for a similar reason. In fact, you'll find that horses only really inhabited areas reachable by horses, until someone put them on a boat and took them to other places (which didn't happen for Australia until quite late). You have this strange assumption that all areas are secretly equal in geography and must be equally hospitable to human flourishing, but this is not true. Europe is more hospitable than Australia, therefore humans flourished more in Europe than Australia. All you need do is assume differences in geography exist and you'll reach the conclusion that humans in more amenable areas are more likely to conquer those in less amenable areas.
> Europe's conquests were not a matter of luck or an accident of geography
You say this with precisely no proof. The closest you get is saying "other people didn't do it, and Europeans did so it couldn't have been luck". The idea that knowledge is what held other areas back, as opposed to luck or geography, is ridiculous and trivially disprovable. Knowledge exists in equal quantities for all people (unless you believe certain races are inferior to others). The difference between regions is geographical or in fortune, which could include the fortune of having a particularly skilled leader or successful sequence of conquests.
> Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
They built their city on a marsh because an eagle landed on a cactus and they interpreted this as a sign from heaven. They subsequently conquered the city-states that already existed there. It had nothing to do with considerations surrounding the ease of transport as they were a nomadic people and were initially forced to settle in a marsh on the fringes of the lake.
Further, you are getting away from your original claim, which was: "Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement." This was not the case for the Aztecs. "Ah," you say, "but we can amend my claim to include analogs to pack animals which facilitate the movement of materials, such as Tenochtitlan's canal system," at which point I would draw your attention to the Cahokia, the Pueblos, the Mayans, and the Olmecs, none of which fit this pattern, all of which formed complex civilizations that soundly refute your claim.
> If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
Dogs were domesticated thousands of years prior to the arrival of humans in North America.
> Knowledge exists in equal quantities for all people
There is no evidence of this whatsoever and plenty of evidence to disprove it.
> They built their city on a marsh because an eagle landed on a cactus
I take it you also think the founder of Rome was the son of the god Mars and killed his brother after being suckled by a wolf?
> There is no evidence of this whatsoever and plenty of evidence to disprove it.
Do you have this evidence? Can I see it?
> Do you have this evidence? Can I see it?
Yes: You made the erroneous claim that Native Americans domesticated dogs. I corrected your error by pointing out that dogs were domesticated prior to the arrival of humans in the Americas. Thus, knowledge is not evenly distributed.
"I meant intelligence, not knowledge," you counter, to which I retort: The idea that intelligence is evenly distributed among populations has been soundly refuted. There are demonstrable differences in every metric of intelligence thus far devised both between and within populations. Incidentally, intelligence by itself is not sufficient for colonialism. The Han Chinese typically score higher on IQ tests than Europeans, and yet it was the latter that conquered the world, not the former. "You're proving my point!" you protest - I never made the claim that Europeans conquered the world due to their intelligence, I rejected the notion that this had anything to do with luck, because it kept occurring over the course of dozens of geographies and hundreds of years.
Let's suppose it was luck. Do you have this luck? Can I see it, have it defined? What would it mean for Europeans to have conquered the world by means of luck? Does it manifest out a magical aether like the pot of gold at the end of a rainbow?
I believe Sam Cooke wrote a song on the subject? Don't know much about geography ...
>I haven't reached a conclusion as to what it was in that approach that led Europe to becoming the dominant power of the last five hundred years
500 years is a blink. Anatomically modern humans have existed for 150,000 years, yet civilizations as we understand them are at most 5000 years old. You are comparing two continents that have been isolated during that timespan, with different geography, diseases, and domesticable animals, and which developed a virtually independent separate history until the 1500s. How can you assert that all of this is irrelevant and that it was pure "Northern European superiority" or whatever that meant European colonialism was successful?
> How can you assert that all of this is irrelevant and that it was pure "Northern European superiority" or whatever that meant European colonialism was successful?
Because the alternative is doing what James_K is doing and claiming that these events were essentially chance developments; that is, that there was nothing endogenous to European civilization (or, perhaps, as you're inferring, European peoples themselves) that led to these world conquests, but that they were instead either just a series of coincidences or a product of the environment.
This discussion can get quite philosophical because like I said earlier in the thread, I can't refute historical determinism - I don't know if there is any way that we can really exit the chain of causality and determine events for ourselves, so in that sense, the underlying claim that it's all just the environment (or more accurately, antecedent causes) is correct, but this doesn't tell the whole story.
The fundamental question at hand here is if European civilization had anything within it that led to its rise to power. What you, James_K, and decolonialists everywhere are preoccupied with is the idea that if this is true, it must mean that this "thing" (which I will refer to as the European method) originated as a result of European intelligence, or more broadly from its biological characteristics. It is then inferred that this will necessarily lead to normative scientific racism and subsequently a world-homogenizing genocide.
There is reason to be weary of these things. They do not refute the notion that the Europeans possessed something endogenous which allowed them to conquer the world. Drawing the conclusion that Europeans did possess this endogenous thing would not validate any normative moral claim; we can only do that ourselves.
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This article is saying the native Americans spread the horses faster than the Europeans spread. They still sourced the original horses from Europeans in the 1600s.
> Spanish settlers likely first brought horses back to the Americas in 1519
This seems very compatible with what I just said.
> The Americas had no horses before Europeans brought them.
> Long since debunked
I mean, the linked article says horses were introduced in the 1600s (brought by Europeans), and then spread throughout the Americas without requiring further European distribution.
Horses in North America are a weird one. I believe the current thinking is that horses started in North America, migrated to Asia, then the population died off after the continents split. So there were horses in the Americas prior to the Europeans, but also potentially before humans.
Humans and horses probably did that thing where you're looking for someone and you go to where they are then they go to where you are and you both miss eachother.
The article says the horses were in the Americas millions of years ago.
And then died out, before Cortes brought them back to the continent in 1519. Native Americans then discovered the horses before they ran into the Europeans and began spreading them across the country.
> Horses evolved in the Americas around four million years ago, but by about 10,000 years ago, they had mostly disappeared from the fossil record, per the Conversation. Spanish settlers likely first brought horses back to the Americas in 1519, when Hernán Cortés arrived on the continent in Mexico. Per the new paper, Indigenous peoples then transported horses north along trade networks.
Don't forget to read the whole article!
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Would you say this of the Jews during WW2, or do you have the understanding that it's a little less than tactful do describe the victims of genocide as "suckers"?
Others disagree.
https://www.smithsonianmag.com/smart-news/native-americans-s...
> Spanish settlers likely first brought horses back to the Americas in 1519
No they don't.
Yes they did, even if they were present in the continent before humans, they died out at least 10ky ago.
I uh, source?
https://www.smithsonianmag.com/smart-news/native-americans-s...
I think the issue was whether they were hunted to extinction or not
what
That's what YOU mean to say.
Most first nations at first contact had 0 conception of ownership, rather seeing it as some sort of stewardship (or if you put it in modern terms you could use the marxist notion of personal property where it's 'use it or lose it') as well as low enough populations that they figured there was enough to go around to share the land with settlers.
Even if the land was "shared", settlers still stole it for themselves.
Isn’t this the definition of a settler?
Source?
Some of the nations were large, such as the Aztec. And at least a few of them understood right by conquest. They also had extensive trade routes across the continent, seeming to disprove the lack of ownership.
You seem to be confusing the concept of "ownership" with that of "private property" (on immovables, especially). The "Marxist notion" of personal property still requires the concept of ownership.
And if there happened to be people on the land they “wanted” well then there’s guns and smallpox blankets to take care of those pesky details.
“The people there didn’t have the concept of ownership” but some pioneers sure as hell made sure to enlighten them by laying claim to that same land and then threatening anyone for encroaching on it.
Except it was not shared, it was almost a genocide.
Nothing almost about it. This and the smallpox thing the sibling brought up are what we tell ourselves to feel better about what the truth is.
genocide is an intentional act. Smallpox did 90% of the work and nobody lifted a finger, at the time nobody could have forseen the effect of smallpox on the native population.
After smallpox when the population of the Americas had been reduced by something like 90% they most certainly didn't need all the land.
> at the time nobody could have forseen the effect of smallpox on the native population
Are you really unaware that the colonials intentionally spread smallpox to the natives? This is not some obscure detail - it's in approximately all of the history textbooks in a fair bit of detail.
The few references to potentially intentionally spreading disease, all well after they were spreading in the Americas, are unlikely to be the cause of more than a tiny sliver of deaths due to disease. The timelines simply do not match.
I can't say I fully agree with the premise, but suppose we run with it.
If someone acted with clear intent to commit genocide, but the mass deaths would have happened anyway, does that clear them of the charge?
Put another way, if I stab someone, the knife goes in and all, but as I'm doing it a car also runs over him, am I no longer guilty of murder? Seems pretty questionable to me.
Sure, some tried, but smallpox and other diseases were doing a great job on their own. It didn't need a few blankets to make it a real pandemic.
It was an intentional act. They wrote about it being an intentional act. The violence was not an accidental nor rare event either, it was an intentional act too.
The east expansion took a lot of time, involved quite a few massacres and invonluntary relocations.
If the settlers had done what the first thousand or so invading cultures did and just exterminated the natives, they would have been able to cast them in whatever light they chose. Instead they gave them rather a lot of autonomous territory relative to their population, along with legal monopolies designed to prevent them from being forced into wage slavery.
Oops!
And yet we took 100% of it, and forcibly relocated the survivors.
The truth has always been and will always be that the people who are most technologically advanced will end up with the land, weather by force or purchase.
Simply due to the fact that it's more valuable in their hands. Driving out some campers to build a town is the rule, not an exception.
More valuable? More valuable… to whom?
In human affairs there is no such thing as absolute value.
The reason is simply that it is inevitable as much as gravity is inevitable.
Making a moral law against gravity isn’t going to get you very far.
> "When we could steal land from the people who were originally on that land"
That's every single society ever. This has been the civilizational algorithm. It predates our species.
That same tactic is alive and well today.
A gross oversimplification of anthropology.
> It predates our species
People will really say this and then still be mad when I want to marry just a couple of my cousins
European colonization of the world is a unique enough phenomenon to not hand wave it away as business as usual. Further, the industrial intensification and financialization of this colonization through the 18th-20th centuries alone is singular on its impact on human civilization with no precedent.
I don't think so. How many genocides can you think of on the scale of the Native American genocide? Such events seem rare to me.
Rare in absolute numbers, but not rare on a percentage basis.
That was, what, a 95% extermination? Native Americans probably committed 100% exterminations e.g. https://en.wikipedia.org/wiki/Dorset_culture
Apart from the Sentinelese, I can't think of one civilization that hasn't warred and taken over land and resources from others. And we really don't have proof the Sentinelese didn't do this at some point themselves.
History was full of violence.
You can think of many examples of war and conquest, but what happened in America is more than just war. Genocide is more than just war. Framing the atrocities upon which the US was founded as merely "historically normal" is a deeply revisionist view of history. Technological development at that time allowed for many great evils which were simply not possible before.
How do you know that what happened to the natives was so much worse than the hundreds if not thousands of similar fates that must have befallen other cultures over the last several tens of thousands of years?
Because the things you're referring to didn't happen. That's why you say they "must have happened" instead of "actually did happen". I can think of some examples of similar treatment, for example the British in Scotland, Wales, and Ireland around that time, but even then we see that there are many living natives in those lands today. America is unique in that the overwhelming majority (97%) of the population is non-native and has no native ancestry.
> overwhelming majority (97%) of the population is non-native and has no native ancestry
Em. First, numbers of "native ancestry" are almost all self-reported which has more to do with self-identified culture than genetic ancestry.
Second, trying to argue through the use current numbers of native ancestry is nonsensical given the US has been an outlier in terms of immigration for a very long time making it impossible to compare against. For goodness sake, around a tenth of the population has been foreign born for the better part of two centuries which has had a dramatic effect on ancestry (both genetic and self-reported).
If you steal something from someone who stole something, I'm not going to cry for the original thief.
Most of us were born into land that was colonized in written memory.
I would definitely cry for the death of the innocent grandchildren of thieves.
A big part of the problem is that too many people want and/or have to live in very tiny portions of the country: major cities.
There is a lot of cheap land and even a lot of cheap houses for those willing to live in a different place. Even many of my friends in Seattle, for example, have discovered that if they move 30-60 minutes away their housing costs plummet dramatically. This has opened the door to many of them moving even farther away, unlocking an entire new world of affordability.
There was a brief moment where all of this looked like it was a very real possibility for many of us, but the rubber band is snapping back with remote work and now many are being required to move back to those few cities again to find the best jobs.
> but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing.
I don't think most people believe that you can just work hard and then have generational wealth for your heirs. That feels like a strawman argument. Generational wealth has always been a difficult feat for the few, not something we promised everyone could achieve.
However, people also underestimate the power of compounding for retirement savings. Obviously not helpful to someone working at McDonalds and trying to pay rent in a big city, but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years. Not "generational wealth" or "setting up your heirs", but enough to make big contributions to education, helping kids with emergencies, possibly leaving some non-trivial inheritance. This happens all the time and continues to happen with millenials, as it will happen with Gen Z. Again, not literally everyone but to suggest that it's out of reach is really out of alignment with the reality of what we see people earning and saving.
> but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years.
You’re off by at least a factor of ten.
40 years of $100/month savings at a generous 5% compounding is $148,242. And that’s in future dollars. Drop it to 4% and you’re down $116,606.
The real formula to consider is what percentage of your monthly spending you are savings. If it’s 100%, then every month worked is one month of retirement. If it’s 50% then two months of working is one month of retirement. If you live frugally and save 400% of your spend, each month counts as four retired months.
It’s a simple fraction with the numerator as your net savings and the denominator your total spending. And lowering the denominator scales things much faster.
5% is not generous. 5% is conservative. 10% is historical for the S&P 500. 12% is generous.
7% is historical for S&P500, but that's with 3% average inflation. His point is that 5% real returns are, in fact, generous.
No he said 5% 'is in future dollars', i.e. not inflation adjusted to a present value... When in reality the nominal S&P500 returns are 10% leading to the same 'future dollars'. That is conservative.
Plus if 7% real returns (after a 3% inflation) is the historical average, how is 5% real returns generous? That's still conservative even if he meant to claim a 5% real return.
Especially generous if you account for official inflation numbers doing a terrible job at representing income to cost of living ratio
America isn't overpopulated. The pyramid scheme you're describing is not a Malthusian constraint but the product of bad monetary policy privileging non-productive investments in real estate. There's still no better place on earth for normal people to build wealth, unless you're playing the digital nomad game.
America has enough room to build many new cities in useful locations, yet it doesn't. Why is that?
I would contest the idea that this construction isn't happening - it's largely just resulting in sprawl at the periphery of existing cities. America has a lot of space available and a lot of space actively being developed.
As to why new cities aren't being built in completely empty areas, I would have to know where you're talking about to make a guess as to why they aren't being developed. Off the top of my head:
1) Environmental concerns 2) Expropriation concerns making projects politically untenable 3) The concerns of aboriginals 4) Cost of infrastructure development 5) Lack of market demand
To elaborate on the fifth point, I would posit that people don't tend to populate such greenfield cities unless there is a compelling reason to do so; either by being pulled (e.g. by resource extraction opportunities, a growing economy, educational opportunities, etc.) or by being pushed (e.g. fleeing a war, the effects of climate change, or political persecution). China is the example to look at here. They spent most of the 2010s buying up an enormous amount of resources to build cities that ended up just sitting empty before eventually being demolished. A lot of this was just fraud (the buildings weren't constructed to be habitable to begin with), but at least some proportion of it had to do with the factors I mentioned above. The cost of physically moving to a new city, as well as the loss of social capital resulting from such a move make relocating to a new city both undesirable and prohibitively expensive for most people.
Do you have another theory?
> Do you have another theory
I do (becuase I've heard it from a buddy of mine who's an MD at a Bulge Bank) - there is no capital to invest in consumer real estate anymore.
Large portions of that industry died out in 2008-12, and capital for large real estate projects like a housing community tend to be allocated 2-3 years before ground breaking, and then an additional 1-2 years to build.
So to build a brand new community by 2020, you should have done all the leg work in 2014-16. And to build a new one today, it should have been done in 2019-20.
Any pipeline that even existed is now dead, because manufacturing construction was the asset class of choice in the 2022-24 period along with high interest rates (making projects much more expensive) and tariffs on Canadian lumber, so the housing shortage is about to get even worse.
It does not come about magically from monetary or even fiscal policy. The demand for housing (and other construction) was and is real. People find use for, and like having much space, while being close together. What was and is lacking is supply.
It was never implied that this mechanism was magical.
If you reread the original post, the claim being made is:
> The idea that an average person, working hard, can eventually own part of a nation's land and resources, [...] was never going to be able to last forever as long as the population keeps increasing.
This is manifestly not the case. My response was that, insofar as a pyramid scheme exists, it has nothing to do with some fundamental Malthusian limit on how many people can fit in a given space; this limit exists, but is not the reason that the rich are getting richer, which instead has to do with monetary policy.
You make cheap money available to those with good credit. These people take out loans and use the money to buy real property with the expectation that they will be able to rent it out for more than the carrying cost of the loan. This causes the price of real estate to rise artificially beyond what it would if the cheap credit had not been made available. The key issue here is that this credit isn't being made available to everyone at once - you have to qualify for the loan first.
> bad monetary policy
Bad zoning policy, more like.
" This is why settlers left Europe etc in the first place to seek fortune overseas."
And why you guys are looking at Mars now.
Here in latam we haven't filled the land at all, you guys have been hard working and filled with riches. But our laziness might give us more longevity, we are playing the long game with the amazon
LATAM will get a lot of remote work if the wages stay lower than the US since they're in better-for-US-company-timezones than India or others overseas. That's what my company is outsourcing to.
Doubtful. Digital nomads, short-term rental tourism, real estate investors (prompted by the former two) are increasing housing costs and CoL in all the popular destinations. Costs in some regions like Barcelona almost got equalized with costs in major US tech hubs. The same is happening in places like Buenos Aires. So its unlikely that the trend in LATAM will continue as it is.
Also, this is very bad for not only the locals as they get gentrified from living in their own city/urban centers (and in some cases even rural zones), but also the local companies: The US and other rich Western companies dump their healthcare and housing costs onto the locals through arbitration while making it harder for local companies to keep up with the CoL increase through wages, therefore increasing their expenses and reducing their competitiveness. And the reduced taxes that the nomads etc pay doesn't help it. (that is, the ones who actually pay).
> The US and other rich Western companies dump their healthcare and housing costs onto the locals [...] And the reduced taxes that the nomads etc pay doesn't help it. (that is, the ones who actually pay).
Most nomads are going to be getting private health insurance. It's true that a lot of them are not paying their taxes, but if you're talking about Latin America that's true for a large portion of the domestic population as well. I looked into relocating to a country in South America a few years ago and had a lawyer tell me to not even worry about filling out the relevant visas because he had clients from China who had been living there for decades with no papers (I opted not to retain his services). The key here is that even if they aren't paying taxes, they are bringing money into the economy and are generally not competing with local laborers. This attitude has started to shift in places like Mexico City because a lot of the expats are not digital nomads but instead run-of-the-mill immigrants competing with the working population for jobs.
> Most nomads are going to be getting private health insurance
Those private health insurances are subsidized by the public healthcare because they piggyback off of the public healthcare system. That's why they are affordable, unlike the US. And as a result, those nomads end up congestion the public healthcare system because the private health insurers also send their own patients to public hospitals for anything serious. Im telling this from a place that is experiencing precisely this.
> It's true that a lot of them are not paying their taxes, but if you're talking about Latin America that's true for a large portion of the domestic population as well
The amount of taxes avoided by the poor majority in such countries don't compare to the taxes avoided by the rich white collars. Nomads earn 2 to 5 times more than the local white collars as well. Even in some European countries.
> The key here is that even if they aren't paying taxes, they are bringing money into the economy
They don't. People think that but neither tourists nor nomads nor short term-renters (whatever the kind) bring money into the economy:
The nomad doesn't buy 10 shoes every month, 2 cars every year, eat out 20 times every day or buy 50 loaves of bread every day. He consumes just like any other human being (obviously), and his consumption does not move the needle of the local economy much.
What nomad's consumption boosts is a few local/luxury shops that cater to the rich or nomads, and maybe one or two local shops or services that they also use. Those few businesses make bank even as other businesses in the same neighborhood rot. And those few businesses that benefit don't buy dozens of employees to make up for the added workload - they hire one or two and everyone works harder and that's it. So what nomads end up doing is enriching a few local, already-well-to-do shop and business owners. On the other side, they cause a 20 to 30% increase in rents (even in Europe), housing prices and significant increases in CoL.
> This attitude has started to shift in places like Mexico City because a lot of the expats are not digital nomads but instead run-of-the-mill immigrants competing with the working population for jobs.
It started changing in Europe too. In places like Barcelona, Madrid, Southern Spain, Portugal, some central European 'bohemian' destinations etc. Mostly because of the sharp gentrification the nomads are causing even for the white collars. But especially the English-speaking foreigner population concentration in some places became way too visible and they started outnumbering the locals. In Barcelona there seems to be a lot of cafes in the city center where the waiters don't know Spanish or Catalan, people having difficulty hearing either language being spoken in the city center etc.
In any case a strong reaction came to being against nomadism and its not looking good.
> Those private health insurances are subsidized by the public healthcare because they piggyback off of the public healthcare system.
Most nomads I know have insurance that is either global or based in their home country. If I had been injured in my host country I would have been required to pay full price for my medical services, which is why I bought insurance in my own country. If you're at the point that you've purchased insurance in the place you are living, are you really a nomad anymore?
> The amount of taxes avoided by the poor majority in such countries don't compare to the taxes avoided by the rich white collars.
Do you have any evidence of this, or are you just speculating? I've read about this with regards to South America and what I took away from it was that the informal economy is largely made up of low wage laborers, not white collar professionals. In either case, this is kind of irrelevant to the discussion because any taxes the nomads pay represent revenues that the host would not otherwise have had. As a nomad you aren't going to be consuming more in services than you're spending unless you're camping in a tent and end up breaking a leg.
> They don't. People think that but neither tourists nor nomads nor short term-renters (whatever the kind) bring money into the economy:
I spent more on rent in 3 months in my host country than most people spend in a year. I ate out at restaurants almost every night I was there, and took taxis every day. These aren't normal consumption patterns where I was living. Your point might hold if you're talking about Europe; but if we accept that it does, we would then have to ask how it's possible for nomads to be driving rents up.
> Those few businesses make bank even as other businesses in the same neighborhood rot.
Does the economy improve or does it not?
> And those few businesses that benefit don't buy dozens of employees to make up for the added workload - they hire one or two and everyone works harder and that's it.
This is pure speculation on your part and there's no compelling reason to think that it occurs.
Rent in Barcelona is still way cheaper than NYC.
Not in the city center. And of course, not compared to Manhattan etc.
Yeah, looks like the go to strategy, but I may have to pass on the gold mine and go for the higher payoff of a decent living but a more spiritually fulfilling trade diplomacy
In international trade there's complementary/productive trade, you have gold, we have silver, let's trade. And you also have redundant/substitutive trade, you have soy, we have cheaper soy, buy our soy.
I don't believe from the bottom of my heart in substitutive trade for similar reasons I don't believe in (most) inmigration. We've conquered the americas, now we have to populate it, god won't reward desertors who revert their ancestor's decision by running back to the old continent, and the excuse of "I was born in the wrong hemisphere" is also quite petty, we rolled the dice and this is what we got.
Substitutive trade isn't far from immigration, the poor want to go to the rich countries, and the rich buy the cheap labour. Where is the pride in that? In both sides. Leave your country for another with a different religion, leave your mother your brethren, and serve. Leave a war instead of fighting? Take a 1 hour bus to a fancy neighbourhood to serve coffee and wash dishes. Conversely, you can wash your own dishes, you can use a bottle of water and fill that up before you leave, we don't need a migrant washing our dishes, and we don't need to migrate to wash dishes.
So I'm trying to focus on trade that is not replaceable with local labour, hopefully countries start nailing down remote work and we start locking those behind visas.
And unfortunately india and philipinnes get that productive trade, they can cover night shifts.
We'll find stuff to export. There's not much, as Trump said "they need us more than we need them".
Local entertainment, sports and games will always be there, it's like cybertourism.
there might be an argument for redundant trade as a counterweight to an unbalanced productive export. But I don't think that works long term.
There's also localization services, in language and legal, but those are just costs of exporting really.
Lithium is probably the lesser evil, super extractive, but we gotta pay somehow.
Sorry about the super rant. Lately I've been more using forums as a way to write things that I already had drafted in my mind.
"is derived from the pioneer days when land was plentiful."
Land is still generally plentiful. The need to all live in one spot is more social/artificial and really accelerated in the late 19th and early 20th centuries due to rapid urbanization.
Land value tax would solve this.
land is still plentiful in the u. s. just maybe not where you want to be, similar to what a pioneer town might look like
And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Land use is a complex topic, but you’re basically right. Everything good—not just land but social opportunities—is spoken-for and what we’re seeing in South Korea and Japan is probably the best solution: peaceful natural attrition and non-replacement of capital’s reserve army that is unwanted labor.
The homestead act only ended in the 1970s. We were happily handing out land for free if people were willing to live there and work it quite recently.
If there had still been a big demand for it, the program would probably still be running. They granted an extension to Alaska for that reason.
I want to agree with you but I don't see the difference between land and any other kind of asset ownership.
This is a fairly simplistic/wrong view. If this were the case, say, you’d expect housing costs to be fairly reliably lower in low density European countries than high density ones. Spoiler: nope.
In practice housing costs are driven by shortages of _housing_, not land. And these are quite different.
The Puritans became settlers in the New World because they were hated and thrown out of Europe / England so they set up shop and managed to derange society to this day in the US.
In the US you can buy land at quantity for, say, ~$1k/acre in places where there aren't people/infrastructure/etc...
There is no shortage of land in the US. There is a shortage of land in a few high density areas. But increasing their density makes them more attractive.
I don't think it's reasonable to make the pioneer comparison-- if you want to do what pioneers did and build something from almost nothing in the middle of nowhere with great effort then there is still an analogous route open to you.
There is a lot of land for $100/acre. The main problem with that land is there is no water.
It always strikes me as bizarre that people can "own" land. It existed before you and will exist after you, so how can a short-lived being really "own" it?
It would make so much more sense if land "ownership" was related to whether you live on or work that particular piece of land rather than relying on arbitrary pieces of paper that were mainly decided before any of us were even born.
https://en.m.wikipedia.org/wiki/Title_(property)
It’s paying tax for owning something that is weird to me.
Isn't the tax paying towards a society that will respect your "ownership" so that you can have access to legal redress if someone prevents you using it?
Look at Georgism, and LVT. A 100% "tax" on the value of unimproved land would ensure the forces of market itself would push away from the situation you describe.
I wonder about the economics of places with declining population like Japan and South Korea. I always read that declining population is bad for the economy but feels like those countries will have more opportunities for the young in the future.
It does not have to be the "pioneer days", just saying this from Japan...
of course this was never going to last forever, we have more than 8 billion people in the world, if even 0.00001% of people wanted to do what you proposed, eventually own a part of a nation’s land, thats 80 thousand people.
that’s just not happening
From the article: "Building enough houses in the right place is the single biggest action governments can take to restore the link between work and wealth" No greater truth can can be spoken about what's wrong with the economy in rich countries today.
I think Austin, TX is just a great proof point for this over the past 5 or so years. We built a ton of housing over the past 5 years, and last I read rents have fallen 22% and house prices have also gone down considerably (though they were so insane during the pandemic I still think they've got a way to go).
I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
Looking at the Case-Shiller index for Austin[1], Dallas[2], NYC[3], SF[4], and LA[5], it doesn’t seem like Austin’s prices have grown any less in the last five years. They’ve basically all nearly doubled in that time. If there is any improvement it’s too small for my eyes to see. In fact, SF seems to have had the lowest price growth (perhaps due to fears about crime?).
[1] https://fred.stlouisfed.org/series/ATNHPIUS12420Q
[2] https://fred.stlouisfed.org/series/DAXRNSA
[3] https://fred.stlouisfed.org/series/NYXRSA
[4] https://fred.stlouisfed.org/series/SFXRSA
[5] https://fred.stlouisfed.org/series/LXXRSA
Austin had a big run-up at the beginning of COVID, but a ton of inventory came online in late 21, 22, and 23.
The linked article below has more details. Austin has had the largest declines in rents compared to the peak of any metro in the country: https://nypost.com/2025/02/27/real-estate/austin-is-seeing-t...
I can't edit this comment, so instead I'm replying.
>They’ve basically all nearly doubled in that time
This statement is incorrect. In another comment I did the math, and most of them had about 50% growth in the last 5 years, with SF being the outlier with 33% growth. Sorry for the mistake, my eyeballs are not as good as my math.
The amusing part is people arguing with your math rather than your point, which is very valid.
NYC keeps going up while Austin has clearly reversed the upward trend. It seems you may have not looked at the graphs you linked.
You're reading a lot into the wobbles in the plot, when you probably want to be looking at the total change over the last 5 years. Here's the change by city, Q4 2019 - Q4 2024:
Austin: 346 -> 510. 510/346 = 1.47
Dallas: 192-> 295. 295/192= 1.53
NYC: 203-> 318. 510/346 = 1.56
SF: 271-> 361. 510/346 = 1.33
LA: 291-> 443. 510/346 = 1.52
These numbers are all pretty close imo, clustered around 50% growth in the last 5 years. Austin in particular grew 47% over the last 5 years, for a annualized growth rate of ~8% -- that is some _crazy_ growth for real estate, when the long term average in the US is about 3% annualized. IMO SF is the only remarkable datapoint, with 33% growth -> ~6% annualized growth. Even that is still high though.
It would be easier to visualize if we can plot them all on top of each other, but I didn't find an easy way to do that.
The problem with such calculations is that they're very sensitive to the chosen starting point: compare the growths in the most recent 3 instead of 5 years:
Austin: 502-> 510 growth: 1.6%
Dallas: 263-> 295 growth: 12.2%
NYC: 255-> 318 growth: 24.7%
SF: 349-> 361 growth: 3.4%
LA: 384-> 443 growth: 15.4%
If we're looking for a trend that follows a specific city instead of specific year and city, then I agree. For that purpose I think I'd like to run this same calculation for the 5 year interval 2019-2024, and 2018-2023, and 2017-2022, etc, to see if there is a trend that is unique to the cities, as opposed to the cities in a certain year.
However, my interpretation of the original claim about Austin is "Austin house prices have grown less in the last 5 years than other places". That claim is pretty specific, and can be examined by looking at just the start and end points. Looking at the end points, it seems incorrect.
You're looking at the start and the end of the plots and totally ignoring what happens in between. If Austin had followed the linear trendline from Q4 2019 to Q2 2022 (increase of 22.7/Q) then it would have been at 800 in Q4 2024.
800/346=2.3
2.3 >> 1.47
That's not a wobble in the plot.
I’d wager sf had the lowest price growth due to having the lowest job growth in that time more than anything.
> We built a ton of housing over the past 5 years, and last I read rents have fallen 22% and house prices have also gone down considerably
You mean 22% in the last year? Definitely not 22% compared to 5 years ago.
22% compared to the peak. https://nypost.com/2025/02/27/real-estate/austin-is-seeing-t...
That means that over the last five years, Austin real estate prices could still be up more than other cities. It looks like they went from $400K average prices in 2020 March to $600K now, but the peak is $680k. Is that because it took builders a while to catch up with a sharp increase in 2020, and now they "caught up"?
I don’t understand how rents actually go down in a market. My landlord has raised rent every year save for when covid laws prevented that. It is their incentive to always raise rent even when articles about my city claim “rents went down 5%” or whatever this past year. Whose rent? Expensive commercial landlord new construction rents where they try and hide the price anyhow with two months free on the first year? The rent that therefore only matters for the bank to put a valuation on that property because people move in year 2 at these sort of properties to avoid paying that full rent? Maybe that is what they are referring to. No one I know has ever had a call from their landlord telling them to pay less money next month due to the declining value of their asset.
The landlord reduces the rent when a tenant moves out and they can't find a new tenant at the previous rate quickly enough.
This happens all the time.
Rents aren't based on the value of the asset. They are based on supply and demand in the rental market.
In a high demand market though? My landlord had like 3 tenants go over the last couple of years and they had a new one moving in that month basically to no affect on their cashflow. Whenever I applied for apartments in this town it was always tour the place and be prepared to sign a lease right there because you have no time to think before someone else bites. Maybe thats true when you have a failing local job market but that isn’t the case in high housing cost regions by definition.
We reduced rent during COVID both for a present tenant and for the following tenant. Generally those statistics are across all units while individual experiences can be wildly different.
[Edit] FWIW that was based on the rental market rather than anything related to asset value.
SFR had no decreases during those years in the US. Markets like the Southeast had 7-14% increases every year. SFR companies were doing “cash for keys” because rates were increasing so quickly that it was better business to buyout a lease from the current tenant and bring in a new one at a 14% increase.
It's not clear what you're trying to say. The GP said they weren't sure how rents went down. As an at-the-time-I-referenced landlord we reduced rents. Or tenants may have been privileged people who didn't need it but it seemed like the right thing at the time. Mostly because the impartial rent statistics source we repeatedly used indicated rents had gone down for the market local to the unit we offered. Maybe this is why we got out, because we weren't practicing exuberant total maximization of what we could extract. We got in because my partner was sentimental about the unit and felt we could hold aside a small part of the market to be a little kinder and more human. What triggered us getting out, in fact, was hostile policy enacted by Seattle that frequently poisoned the relationships with our tenants. That is, with the same behaviors we began being treated very poorly. I'm off the opinion that Sawant was in the pocket of large corporate holders given what I understand of the effectiveness with which she had consolidated the Seattle rental markets into a smaller set of hands.
> I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
? Private development is the heart of liberalism. We haven't had anyone but liberal leadership since, like, LBJ I think? And he was also a liberal acting out of character. Any alternative would surely imply public investment in housing. No, re-zoning is not going to make a dent in homelessness.
I'm aware that you're referring to liberal in the sense of "loyalist democrat" or whatever, but the reality is that both parties have virtually the same policy when it comes to housing: blame the market, act as though the market will still answer our problems even though it hasn't in the past, and feign helplessness that the government can directly influence housing in the first place outside of zoning. I.e., liberalism.
It's simpler than that. Government just has to legalize building housing, and the people will make it happen.
“The people” (local voters in the places that have the lomits in place) are the ones who want rules against building housing, not some external-to-the-people government.
Is that meant as a counter argument?
Even if a majority would vote for a construction ban, many people would build new housing if it was legal. Both people who would vote against and for a ban.
This is what the internet urbanists don’t get. Government is a mirror on its electorate. You want urbanist principles it starts by educating this electorate directly, not waiting for the government to do something to get itself unseated by that angry electorate the next cycle.
Well, or you change the level of government you target to one whose constituency is less invested in the policies causing the problem and more concerned with solving the problem, e.g., over the last several years the California State government restricting the practical ability of local governments to restrict housing.
This kind of thinking is why we're advancing significantly down the road to authoritarianism.
I don't think that when higher levels of government make it harder for lower levels to restrict individual freedom that is “the road to authoritarianism”.
In fact, I’d argue its exactly the opposite.
If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income from capital.
I hope we start there, a very simple and straightforward action to take.
Economist here.
If you’re looking for what to tax instead of income, the best things are: land, pollution and consumption.
Land is great because people will not use less of it, no matter how high the tax. Pollution is great to tax, because we want to produce less of it. Consumption (or purchases or spending) is good to tax because economic growth is good and this tax encourages investment rather than spending your wealth. The most common consumption taxes are the sales tax or VAT tax.
You may have heard of consumption taxes described as “regressive “, but that comes from looking at only part of the policy. For example, a universal basic income funded by a sales or VAT tax would see the poor better off than the rich.
I'm no economist, but wouldn't high taxes on consumption hold back economic growth?
Why should income from labor be taxed at all? Income taxes strike me as fundamentally wrong.
What is your preferred alternative to fund basic common services required for a modern society?
And what are the pros/cons and outcomes of your preferred alternative?
A Land Value Tax
https://www.google.com/search?q=is%20land%20a%20big%20deal&i...
just tax the bussiness's income, don't tax a human's income?
Do you know what happens to your income tax when you pay it to the government? They destroy it (if it's cash), or simplify nullify electronic values. The government literally prints money, it doesn't need your taxes to "make" money. Income taxes were invented before the creation of fiat (non-gold backed) currency.
Lots of countries in the world operate without income taxes.
> Lots of countries in the world operate without income taxes.
Okay, but "lots" feels untrue and saying "operate" is borderline deceptive - there are 21 that I can find from a random infographic [0]. Human rights superstars like the UAE, NK, Brunei, and Saudi Arabia; above-board corporate havens like the Cayman Islands; and places I can't come up with a quippy joke about like Monaco or Vatican City.
I'm no geopolitics expert, but it looks like one thing that "functional sovereign states meaningfully participating in the world stage without oil money or some clear outside source of capital" all have in common is income taxes.
[0] https://www.visualcapitalist.com/charted-a-handy-list-of-cou...
> Lots of countries in the world operate without income taxes.
Can you give some examples? Do you think you live better in those countries than those with taxes?
The government of Florida operates with no income tax. Its GDP is comparable to Spain and its population sits between Chile and Australia.
Less than one fifth of its revenue comes from federal sources. If its residents weren't paying federal income taxes, Florida could probably afford to increase its taxes to cover the difference.
In the US, local taxes—not federal taxes—pay for the majority of surface street maintenance, schools, emergency services, licensing regimes, health and safety inspections, unemployment insurance, etc. I.e., most of what one considers to be staples of the social contract in a well-administered society.
It seems as though you're implying income taxes are a prerequisite to some standard of living comparable to the US, but that presupposes that income taxes in the US actually pay for the things that make a place worth living in.
If all of those staples are paid for by local governments, then what do federal income taxes pay for? Retirees and military procurement, for the most part.
Can you imagine other ways to raise those funds?
> Less than one fifth of its revenue comes from federal sources
Over one-quarter (26%) comes from Federal sources according to the Census Bureau's Annual Survey of State and Local Government Finances.
Having 26% of your government funded by (Federal) income taxes sure sounds like Florida can't operate without income taxes. They simply outsource collection to another jurisdiction.
Which 26% though? I’ll bet dollars to donuts that if the fed cut off Florida right now, they would sort it out.
Here is my source, which uses the same census data in your claim: https://usafacts.org/articles/which-states-rely-the-most-on-...
Regardless, I addressed your point already.
Monaco is one of the nicest places on earth. Lots of wealthy people go there to retire or just live.
Labor is a near-universal ingredient for economic activity. If you refuse to tax anything with a labor component, you run out of things to tax at all.
Land value. Inheritance. Rental income. Dividend income. Capital gains. Sales. Resource extraction. Etc
my guess is because capital has more options than labor, and the decision makers since time immemorial are more afraid of capital leaving than labor leaving
This seems backwards to me. Labour can leave; someone can get on a plane in the UK where they get taxed 40%, and arrive in Dubai where they're taxed 0. Their buildings and assets can't come with them however. Capital that's not ethereal assets like stocks, shares, credit, etc, can't be moved. If you want to leave the country you need to become liquid, which means you sell off your assets and whoever is left in the country gets to buy them at cheaper rates.
The issue is when we allow people who do not live or pay tax in this country to make profit on assets in said country. A landlord who lives in the Cayman Islands should not be able to collect rent on UK assets while not paying the UK government tax in turn.
> This seems backwards to me. Labour can leave; someone can get on a plane
most labor does not individually have the means to leave like that.
also, you're talking about capital moving as in already-invested capital, while I'm talking about the people with capital making decisions to invest in the first place.
Look up "optimal taxation in theory and practice", where they suggest that capital income should be untaxed, at least in expectation.
The very often stated argument is that labour is risk free, while putting your own capital up to start a business is risky.
The noncogent and unrespectable argument is that labor is less liquid and more difficult to move around for tax-dodging purposes than capital. States have been reduced to opportunists in the realm of taxation and tax enforcement.
As predicted in Piketty's book "Capital in the Twenty-First Century". He posited that wealth trumps labour and the post-war period was an anomaly. His proposed solution is a wealth tax. I can't see those with wealth/power implementing a wealth tax, so the alternative is to invest to accumulate wealth and know that your children, who are not in a position to invest, will probably be relying on that wealth.
I'd prefer a land value tax personally.
Capital flight is a thing. Land isn't going anywhere.
Economists including multiple Nobel laureates on both the left and right have been screaming for land value tax for almost a century for this and many other reasons.
Same. I've been somewhat Georgist pilled lately.
Likewise. It’s effectively like a wealth tax with better incentives.
Is it basically saying to tax land that has productive assets? Like if you have land that has a factory, you're paying taxes, but if you have land with a house, you're not?
I believe LVT is the opposite. Tax land ignoring what’s on it. If you own land with tremendous potential but don’t improve it, that’s your loss.
Otherwise by taxing land based on what’s on it, it negatively incentivizes improving it. The nicer my home gets, the more my taxes go up.
I was thinking it makes sense to tax land with productive assets and don't tax those without. Housing is not a productive asset so it shouldn't matter how much you fix it up. If you tax productive land there shouldn't be an incentive to not do anything as there would be nowhere to "escape" to that has a greener financial pasture. The problem I see with this route is the tax payers with productive land will start making a case for them being the only ones who should vote.
The tricky thing is it’s taxing land on what your neighbors built in their land.
If you build something that makes my land valuable, I get taxed more.
I like the incentive structure, but I think part of the incentives are towards collectivization so you and I become one unit, which may or may not be a good thing.
Yeah one problem I still haven't seen solved is that when you build improvements on both neighbouring land, taxes on both of those lands will increase. It seems unfair for big developers who essentially built their own cities. I've heard something about rent system where the tax is frozen for 99 years, but this seems like an obvious rule patch that'll make LVT loses what makes it unique and relevant.
I think it’s probably good but I definitely agree that it’s not an obvious one and is worthy of debate.
the chief challenge is: how does one actually value land?
if I own 1000 acres in the middle of nowhere that holds an enormously profitable business, I could end up paying almost zero tax simply because I dont have any nearby real estate development
Like this: https://gameofrent.com/content/can-land-be-accurately-assess...
Also, LVT has never been proposed with taxing 100% of the annual rental value of land. This means you do not need to be 100% accurate with your assessment in order for the land to still be profitable to utilize. A 33% tax would mean you could literally be off by a factor of three in the assessment and it would still be marginally profitable.
I'm not sure about your example, but land of little potential value should be taxed little. Keep in mind that it is taxed according to its potential value though - not its current. 1,000 acres in the middle of nowhere is likely to cost basically zero in taxes if it can't be utilized for any purpose either now or in the future. If it has future value then you would need to do a net present value calculation.
The big problem with a land tax is that you'd have billionaires paying little tax. One may reasonably counter that that's fine if they aren't actually consuming much and it's probably correct. The majority of society won't go for it though.
What is this obsession people have with the taxation of billionaires?
There aren’t many billionaires. Expropriating all their wealth wouldn’t move the needle for any of our budgetary problems.
I’m all for closing the step up in basis on death, which is what allows billionaires (and of course only moderately rich folks) to avoid paying much tax over their full life cycle.
But LVT is a good idea, regardless of whether billionaires get some extra punishment for having the temerity to create successful businesses.
One of the largest drivers of social issues is the magnitude of the wealth inequality that is present. Taxing the high end should help to address this. Also, I think there's a general sense that they can afford it.
I'm with you. But that means little. Society has a warped view of "fair" an always has. Any tax idea that you want to put in practice has to account for it. Else you may as well be counting horse teeth.
> The big problem with a land tax is that you'd have billionaires paying little tax.
I don't think so. Billionaires consume quite a lot of real-estate, even if indirectly through their business enterprises. Consider the Google campus in Mountain View or the Microsoft one in Redmond.
Take the average person and how much they have tied up (either income or net worth wise) in their house. It's not even close.
I've seen some calculations that claim that LVT makes most people's property tax lowers.
I mean I guess you could scale the tax and make it that way, but at least on the surface that seems impossible.
except that capital flight usually takes place in the form of exchanging one asset for another (stocks for crypto or money, for example), an event that is subject to taxation (in the US at least) if a profit is realized.
>except that capital flight usually takes place in the form of exchanging one asset for another (stocks for crypto or money, for example)
What led you to this bizarre idea that capital flight entails a person selling or exchanging all of their securities?
I also enjoyed the comic book version of “ Capital and Ideology” by Picketty, Claire Alet and Benjamin Adam which follows the fortunes of a French family through the generations.
I haven’t read Piketty, but another book pointing in the same direction is The Meritocracy Trap, essentially explaining how non-meritocratic a lot of the economy is despite the common belief that it is. Wealthy parents spend a ton of resources developing the human capital of their children. It has basically eroded the middle class as a result. The author calls for an inheritance tax among other things.
Almost everyone I know got several hundred thousand dollars gifted for a down payment and most of these people are from typical middle or upper middle class backgrounds. I have a top 2% income (by Canadian standards) but the best I can do is a 2 bedroom condo or a bottom of the market townhouse with a long commute
I don’t know a single neighborhood in this city where the average household in that neighborhood makes enough to live there with current prices.
I genuinely don’t know why I even work anymore. I don’t have any achievable financial goals except save as much as I can until I move away to live off my savings in a cheap area
I see this a lot as someone that came from a solidly middle-class background (parents were a teacher and secretary) and went to a "highly-ranked" university with plenty of upper-middle or upper class students.
I work in the same jobs as my peers, but there is a clear wealth difference in how our lives are spent.
We have a nice house in a good neighborhood, but our peers have very nice houses is some of the best neighborhoods due in large part to down payment gifts, gifts for remodeling, etc. We can both afford the mortgage payment, but the down payment would take us probably a decade to save for.
On vacations, we'll drive a couple hours away with the kids, while our peers will fly to Europe and spend two weeks since they pay for the flights and their parents pay for lodging and food.
And then there is family support. Some of my peers have parents who bought second (or third) homes to be closer to their grandchildren, or will pay for the very nice private school, etc.
It's taken me a lot to not very bitter about this -- and I'm clearly still a little bitter -- but I also know that we will likely be in a position to offer some of this support to our kids in 20+ years.
This resonates with me.
Grew up in a very small house with two lower middle class parents. Frugal upbringing.
My wife and I out earn my parents by more than 10x. And so we can afford to do some things that I couldn’t as a kid like “ski weekend in Park City”
I’ve jealously looked around many times and frustrated myself with comparisons to wealthier people. They can do X and I can’t.
But as I’m getting older and raising kids, I’m continually reassessing the value of these high cost adventures. Am I happier, healthier, more refreshed, etc or is it instead my access to high-cost that fools me into feeling those ways?
I see the path forward similar to you. I’d like to help my kids however I can while not giving them a financial ticket for life. Want to do things that fulfill us without feeling too extravagant or costly.
> also know that we will likely be in a position to offer some of this support to our kids in 20+ years
If this is in the US, hope for no health issue or it could easily derail the dreams :(
All the more reason to do what you can for longevity!
I moved to the USA and got 2.5x my salary in CAD. Canada is fucked and I'm glad I left. I've lived in tiny apartments there and now I just bought my first house in an expensive city with 0 help from my parents. Am also starting a family here which is something I could have never dreamed of in Canada.
I suggest you look at historical trends for USD to CAD and trends for home prices vs income in Canada.
working on it :)
I like it here but I have no future and it’s seriously impacting my mental health
I bought a house here on ridiculous terms (believed in my job at the time). Then I got let go and I've been paying $4k/mo ever since hahahaha. I cannot wait to sell and get out.
I've got one friend who was gifted a house when he graduated from college. He works a similar type of job and makes a similar salary to the other members of our friend group, but the gift of the house, given from his wealthy parents, makes his financial situation drastically different from the rest of us.
I'm glad for him. But it's incredible how different one's life can be from their peers just based on their parent's wealth.
I don't have any wealthy relatives, so I'll never be so lucky as a lot of my friends. It's a struggle to even save up a down payment to buy a car, as our car is pretty old now - and I make 200k a year. Renting a house is really the only realistic way I'll ever get to live in a house, at least in the expensive city I've lived in most of my life.
Becoming? This may sound like a trope and a canard, but indeed this very publication, The Economist is partially owned and controlled by the Rothschild dynasty.
If you read the second paragraph the authors explain what they mean by "becoming".
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. This shift has alarming economic and social consequences, because it imperils not just the meritocratic ideal, but capitalism itself.
average and median inheritance is tiny, few thousand dollars
The article specifially acknowldges this.
>If you consider this as a whole, the growing importance of inheritance starts to become clear. In Britain one in six of those born in the 1960s is projected to receive an inheritance that exceeds ten years of average annual earnings for that generation. For those born in the 1980s, the ratio rises to one in three. The inequality of what people inherit, meanwhile, is startling. A fifth of 35- to 45-year-olds are expected to inherit less than £10,000 ($13,000), whereas a quarter are expected to inherit more than £280,000.
Moreover, how does this fact disprove the article's thesis? Is the implication that because less than 50% of people are getting giant inheritances, everything's fine?
Yeah wealthy families exist.
But also there is a lot of upwards mobility.
And they do not need to be correlated even. What if rich families maintain their wealth, and meanwhile other families create wealth and become rich. How is this incompatible?
Because as wealthy families produce offspring who do not need to work or earn income in order to compete for finite resources with those who do, the cost of those resources increases, while the burden of labor and stress falls increasingly on the employed.
Eventually the man dying while making an income and spending no time with his child will grow to resent the one making the same income through family wealth who has enough time for that and more.
Might you be conflating finite for static? Or more charitably, implying and assuming the growth rate is smaller or equal to consumption.
I'm not saying it is or isn't, but that would need to be the case for your argument.
Also the ratio of wealthy to non wealthy needs to be quite high.
Also wealth needs to be transferred and maintained, and not spoiled or lost.
I think those are the assumptions.
But yeah, under those conditions, the competition for resources would mean in order to move upwards someone needs to come down.
But it would need to be a zero sum economy
Thank you for passive-aggressively outlining the infinite growth mindset.
Falsely equating economic growth with cost of living metrics, and assuming that with more money everything can just continue happily. It’s been a very successful evolutionary niche for a handful of centuries.
when wealthy people have kids their wealth is diluted. Truly, one of the best parts of Elon Musk having so many fucking kids is that at least his fortune will be greatly divided and spread the second he dies
Generational wealth rarely lasts more than a generation or two. Families like the Rothschilds seem to be more the exception than the rule.
Though I am not wealthy so perhaps I truly don't know what it's like in the big club I'm not in
Sure, each one of his kids will probably only inherit a few 10's of billions. What do you think the effective difference between 10 billion and 100 billion is? You're rich AF either way.
Also it's not enough in my experience to just give the money, also time. And not too much money, gates famously gave 10m "only" to each child
> But also there is a lot of upwards mobility.
There's increasingly less in the USA. In fact, most people today will end up worse off than their parents.
https://www.weforum.org/stories/2020/09/social-mobility-upwa...
I think this is a statistics and definitions question
There can be a lot of upwards mobility (say 10%), and there can be a lot of statics (say 90%)
The datapoint I remembered is that a huge fraction of billionaires wer3 first generation billionaires.
But that may not mean much for the greater part of the population.
So we may be saying things that sound contradictory, but are congruent.
Your evidence is that there are more billionaires when arguing there is upward mobility? We are talking about completely different things. Many of those people started out as multimillionaires and then became billionaires - almost none of them started out poor. And you're focusing on a tiny percent of the population and extrapolating that to everyone as though it's representative of anything meaningful.
https://youtube.com/shorts/MqA-hUeYvb0
Millionaires too.
The last bit is sus though. "Only inherited after making a million". Sounds like it would include born rich, high education, basic necessities covered, can work on startups without worrying about earning a salary, many such cases.
[dead]
So why do rich families need to own all the media? All the think firms? Why do they lobby?
Avenues to upward mobility are blocked by these rich people through various methods.
Inheriting is the root cause of all corruption. We can never, ever, have a just society based on the principle of giving our children wealth that they did not earn nor deserve.
It's almost a self fulfilling prophecy. Many people who have owned a house for the last 20 years got in at a lower price compared to their salaries. The only way younger people can get a house now is to inherit their parents wealth.
Even if I work my ass off, I won't be able to afford a house the same as my parents did. My only hope is that I inherit their house when they pass.
What most people have yet to realise is that home ownership is a quite negative phenomenon. The dual of owning a home is the ability to deny others access to housing. People who are particularly attached to the capitalist system will suggest crazy solutions like a limit on the number of houses per person, but the real solution has always been government ownership of all land. There is no advantage to privately owned land except the ability to horde it and create waste, or rent it out and create inefficiency.
Problem is, homes have two functions: a place to live and a wealth preservation vehicle. As a result, many homes are owned by those who have no need to live in that particular place. Bitcoin can substitute some wealth preservation functionality, because it has the same scarcity property as the land, thus improving the housing situation.
Assets which purport to preserve wealth (outside of a bank account) usually end up as some kind of pyramid scheme. This is particularly unfortunate in the case of housing as the victims have no choice but to buy in, and take out increasingly large loans to pay off the previous generation's buy in. Bit coins are quite similar in structure, though they lack the forced buy in, which is why many of them are now attempting to target pensions funds and even lobbying to create official government reserves. (About half of all corporate spending in the last US election was crypto.)
I'll bite, why do you think a limit on how many homes a person can own is a bad thing? Let's clearly separate homes and other real estate here, so shop floors, factories, warehouses, etc are out of the equation. Since you mention inefficiency, how many homes can one person realistically reasonably use?
I think it is better than the current situation but worse than the optimal situation, that is government ownership. What's more, ignoring commercial land ignores that many commercial enterprises would benefit from the proposed solution in the same way people living in houses would, yet there is no mechanism by which you could limit one company to a single building of operation.
> how many homes can one person realistically reasonably use?
This question is why I consider the solution of a limit on ownership stupid. A person can reasonably use however many houses which they can afford to rent. It isn't up to me to decide what counts as reasonable use. It is simply a question of whether other people would be willing to pay more for some other purpose. Suppose someone wishes to purchase an entire abandoned town and can do so at a relatively low rate due to it being abandoned, I see no reason to deny them them this, yet a limit on home ownership would do precisely that.
One should also note that a land tax is another inferior solution to the problem. It is effectively a government lease on land which doesn't allow the rent charged to be determined by market forces. What makes total government ownership of land the most practical solution is that it most closely follows market principals. Usage of land is contingent on productive revenue from that land in excess of the revenue generated from alternative usages. Any other solution will fall short of the optimal allocation of resources which the market provides.
> The dual of owning a home is the ability to deny others access to housing.
How do you figure? Are we out of land? I would argue we are not, at all.
What is owning a home? It is having the power to legally demand other people leave it. Hence owning a home requires the ability to rent out a home, and to to rent out many homes and drive up the price. Likewise we have much land, but it has not been developed because people own it. In a system of government ownership, they would eventually be outbid on the lease for their land and it would be developed into a larger amount of affordable and higher density housing. Instead people own that land and are able to keep it underdeveloped at the cost to everyone else, then use this leverage to enrich themselves through the increase in house prices. There is no positive argument for the private ownership of land over public ownership.
Just say “ownership is theft” if thats what your argument reduces to. That said, I think the concepts around georgism and dynamic value based taxes are a bit more interesting and address the “land banking” concerns you inserted.
> dynamic value based taxes
I hate having to explain this to people, but a tax based on the value of something is called rent. Georgism is a system where the government owns all land and leases it out, but then the call the rent a "tax" to make it more palatable to people who are afraid of public ownership.
Thats a pretty reductive world view. I suppose “the monopoly of force and law implies control, and quote-unquote ownership, by the state.”?
So, mission accomplished? The state already compels me to pay annual taxes based on the value of my titled real estate, my car, my income, my foreign assets, etc… I guess Im just renting it all from the state?
Mind you Im no John Birch-man here. I actually pay 42% of my income in taxes, and think real property _should_ be taxed more effectively here in AU. But jumping all the way to “ownership is theft, and taxes are double secret ownership” doesnt seem particularly useful.
> Ownership is theft
You are trying so desperately to put those words in my mouth, but I will not say them as I don't know what they mean.
> taxes are double secret ownership
I'm not making an ideological point here, simply pointing out that the proposed systems are isomorphic in their objectives and execution. They both aim to increase the productive use of land by charging a periodic fee to the occupants of said land based on the market value of the land. There are two differences: the first is one of language (rent vs. tax), and the second on how the rate of this fee is determined. Under socialised land, the market price of land is the same as the fee charged. Under Georgism, the fee is charged by a bunch of politicians looking at the market price of land and trying to figure it out based on that.
Given that the two systems are essentially identical, but the second brings in undue political meddling, I see no reason to prefer it to the first solution outside of the practical situation that many people are afraid of public ownership and therefore would be more likely to vote for the worse option. Do you have any real argument for Georgism over public ownership?
Honestly, he argument you make is quite confusing as it seems to conflate ideas/terms[1], redefine language[2], and draw distinctions[3] at will. It's a bit hard to reason about something when it mixes interpretations of 'what is' with 'what could be'.
You're conveniently glossing over issues like price discovery (auctions?), periodicity (annual?), and what I suspect are some pretty large inefficiencies implied by requiring continual re-bid/repurchase of existing real property vs a small proportional tax. Im an amateur, no graduate degree in economics here, but I would wager there's a reasonable amount of literature around the benefits of surety of title and depth of markets for efficient discovery to support a distributed, private, ownership & transaction model.
WRT "scary" ownership, as I said I live in Australia. I understand what crown land is, title, registry, and how we've transitioned through those ~3 times in 200 years. That's actually another example where some proclamations[4] don't quite hold up; Land ownership in Australia _is_ owned by the crown already. I merely hold (indefinite) title, so maybe 'government ownership' isn't quite the panacea? I do find our current real property and capital rate mechanisms deficient, and would appreciate something a lot closer to an annual LVT.
When you say "... the real solution has always been government ownership of all land. There is no advantage to privately owned land ..." don't act surprised if you get lumped in with those who argue against private ownership of real property.
[1] "The dual of owning a home is the ability to deny others access to housing" [2] "a tax based on the value of something is called rent" [3] "Given that the two systems are essentially identical, but the second brings in undue political meddling" [4] "...the real solution has always been government ownership of all land."
> I suspect are some pretty large inefficiencies implied by requiring continual re-bid/repurchase of existing real property
You are incorrect to suspect that. The price must still be discovered in the Geogist system through market means, and the additional burden of rediscovering it to issue the tax means doing that work twice. You are on a software forum so I assume you understand computers well enough to appreciate that the effort required for this in practice is essentially zero. A system sufficient to serve an entire nation of people could be programmed by perhaps ten engineers.
> I would wager there's a reasonable amount of literature around the benefits of surety
You can't just assume someone else has made your point for you and expect me to buy that. The system of government ownership can provide any degree of surety depending on how its implemented, but in general the objective of both systems is to force people to sell land instead of hording it, i.e. to reduce the surety people have over their ability to occupy land indefinitely.
> a tax based on the value of something is called rent
This is not a redefinition of language, but a simple observation that the two things are identical in practice.
> don't act surprised if you get lumped in with those who argue against private ownership of real property.
I don't care how justified you feel in mischaracterising my views.
> so maybe 'government ownership' isn't quite the panacea?
Yes, clearly if you read my argument made thusfar it dictates that government ownership is only effective when it is leased back to people in a market fashion. "The government owns it but you have an indefinite lease with no charge" is another example of changing the language of something without changing the practice of it. In practice, you own that land.
Finally, I am going to ask that you no longer attempt to find differences between Gerogism and social ownership. When you look at the actual implementation of both systems, they are the same. Any policy in Georgism has a one-to-one equivalent policy under government ownership. In fact Georgism is equivalent to a government ownership system with the following setup:
1) Leases are indefinite.
2) A substantial upfront cost is levied against people who wish to acquire a lease, determined by the highest bidder.
3) The charge on a lease is determined by some fraction of the upfront cost on surrounding leases of buildings.
Having observed this, we can see that it could be improved by removing the upfront cost, and instead have the lease determined by the leases on surrounding buildings when those buildings are vacated and the lease is put back up for auction. Forced renewal of leases is not necessary under a government ownership system as the increase in lease prices should be enough to naturally remove under-performing businesses. However the opportunity to renew a lease gives you a positive advantage over a Georgist one: if you feel your rent is too high, you can subject it to market scrutiny by voluntarily ending the lease on the property and offering the highest bid in the resultant auction.
One difference is that the government can choose not to renew a lease on land it owns. Eminent domain exists but it is a lot more messy.
Nope. The government could own all land and have the same system for withdrawing leases as is currently employed for eminent domain. You might say the government could change that system, but it can also change eminent domain. This is not an inherent difference of the two systems. One could even envision a system where the government has no ability at all to withdraw a lease and thus occupants are more safe than they would be under eminent domain. On a practical level, the Georgist system might even be more likely to turf people out than a social land system, because presumably the land tax would increase to price people out at the market rate, where a lease agreement is more likely to have controlled increases.
> It is having the power to legally demand other people leave it
Renting gives you that power too
> What is owning a home? It is having the power to legally demand other people leave it.
A home is where people feel safe and secure with their family, or by themselves.
I reject the premise of your re-definition of owning a home.
Well as nice as the sentimental definition you gave is, the legal definition of home ownership revolves around a set of rights granted to you by the government over a plot of land. I could feel safe and secure with my family a t Pizza Hut, but I don't own Pizza Hut.
>but the real solution has always been government ownership of all land.
They have that in China. How's that working out for them?
Sounds made up .. how do you explain nail houses in China?
https://www.theguardian.com/cities/gallery/2014/apr/15/china...
Maybe take the BS elsewhere?
This is pretty basic knowledge, there is only State and Collective owned land in the PRC. Individuals can only obtain _leases_ of State owned land. Property rights of _buildings_ are distinct, but will generally follow land title/lease.
https://english.www.gov.cn/services/investment/2014/08/23/co...
Collective ownership isn't State or Government Ownershaip (negating the "all land" part) and in China "State Ownership" is an underlying ownership that doesn't carry the weight of immediate direct ownership, hence nail houses where individual lease holding rights that are automatically renewed trump the underlying state ownership.
Point being, it's not as simple as it's made out to be and it's not dissimilar to many other countries that have a notion of underlying ownership, seperation of surface and mineral rights, cave outs for eminant domain, etc.
In this specific context it's not especially clear what the GP's "how's that working out for them" is meant to convey.
Please do some research before accusing people of "BS".
>In general, rural collectives own agricultural land and the state owns urban land. However, Article 70 of The Property Law allows for ownership of exclusive parts within an apartment building, which endorses the individual ownership of apartments.
https://en.wikipedia.org/wiki/Property_law_in_China
>Individuals cannot privately own land in China but may obtain transferrable land-use rights for a number of years for a fee.
https://maint.loc.gov/law/help/real-property-law/china-real-...
Rural collectives own agricultural land is not "government ownership of all land" which you asserted to be true.
Moreover, the devil's in the details:
Which means that residential land use rights persist, as they do in the US, and while mineral rights remain with the state it's not the case that all land ownership in the US comes with mineral rights, these may have been signed awy by prior owners or retained by the State or Federal Government whe first transferred.Both countries are more complicated than you sweepingly make things out to be.
The desire to help your offspring is a very deep part of the human nature. Any way to prevent that is inherently inhumane. I don't think such system can last long (and coincidentally they never did).
Until the children of the have nots outnumber the children of the haves and kill them and take their stuff by force. That was also human nature in the past.
That's why we have wealth taxes to even the playing field and encourage children of the have-nots to putting their effort in work and contributing in the system instead of on way to murdering the children of the haves for their stuff.
It's sort of protection tax the wealthy have to pay to live in a safe society that benefits them since their wealth comes from the work of the poor.
I actually agree with that, even though it's not certain wherever the "revolt of have nots" could be held off forever or it's inevitable.
However my point is that there's a huge difference between demanding a wealth tax and the "inheriting is the root cause of all corruption" approach. Former is a measure to preserve status quo, latter is a dangerous utopia.
Yep, and the poor majority who don't benefit from it will fight to protect their right to do it.
I don't think that's true either. Indirectly everyone benefits because in a good system the total produced wealth is growing and the poor majority sees the improvement of living standards.
In a bit more details, the wealth can be created, preserved, redistributed and destroyed (i.e. failed to be preserved). Obsession with fair redistribution harms the creation and preservation of wealth, in the end there's nothing left to distribute. We saw that happen IRL.
In my view, creation and preservation of wealth is more important to get right. At least you'll have something to redistribute in the first place. And within that framework, inheritance is a good way to preserve wealth because passing it to the state inevitably destroys part of the value due to bad governance. Inheritance is also a very good incentive to create wealth, I personally wouldn't work 12 hours a day if I didn't have kids to set up in a new country where they have nothing.
So while inheritance is only a part of the whole system, I argue that it's not only humane part but a necessary one. Live country-wide experiments seem to confirm this so far.
What about gifts? Does it follow that gifts are a form of corruption, that exchanges need to be equivalent? Or how would you, for both practical law application as well as moral purposes, distinguish an inheritance, from a gift before death, from a gift in life, from providing shelter in youth and from giving a the gift of life through a part of oneself?
This isnt abstract, modulo reasonable thresholds Gifts are taxed as income by value in most countries. Inheritance (in the US) _is_ the weird wealth transfer exception.
Interesting.
Just checked and in argentina there is no federal tax gift, and in some provinces it's just much lower. We also have a wealth tax so that may address the gen wealth issue in another manner.
Tax is like that different in every country and hard to compare apples to apples.
Entirely fair point, and it always makes internet discussions more complicated without innumerable caveats.
A gift is one person giving something to another. An inheritance is ultimately someone else's kids giving your kid something.
I could only see this statement being accurate in a world where each generation of kids was synchronized into a discrete quanta. The continuous and arbitrary nature of birth and death in the real world makes this viewpoint somewhat incoherent to me.
> Inheriting is the root cause of all corruption.
The way the ultra-wealthy manage to make it entirely taxless; super evil for sure. Even so, it's not really the root - maybe a very large branch of it.
Nonsense. In order to focus on the supposed injustice of inheritance itself, suppose that someone becomes wealthy through ethical means. If they then turn out to have a mutation that causes them to be immortal, at what point does it become just to simply take their wealth away from them? If your answer is “never”, why is it any different if they gift their wealth to their descendants? Why is gifting wealth wrong?
The reason to let rich people keep their money is twofold: ethical economic activity is positive sum and rich people have shown an ability to generate these positive spillovers, and letting them keep it gives them an incentive to engage in this economic activity in the first place.
The former does not apply to heirs, and the latter only weakly applies.
One effect of wealth is the ability to dictate the direction of development over physical assets in the real world. I've come to realize that the personalities of those who are able to amass large amounts of wealth over their lifetime tend to coalesce around a certain mean that results in somewhat predictable development patterns everywhere I go. These patterns, which are concerned with maximum efficiency and return on investment, result in an overwhelming bland, commercial, "sameness" that is taking over the globe.
As it turns out, some of the most unique and interesting things I observe in the public sphere are owned by trust fund babies who took a different path to development (or just inefficiently left some ancient thing alone to decay). Either way, personally I appreciate this diversity in ownership of the world around me and this observation has changed the way I view the transfer of wealth through generations.
> suppose that someone becomes wealthy through ethical means
If you dig deeper and deeper at this point, your argument will eventually come to a halt, before even getting at crazy theoretical mutations.
Most of my friends who bought a house in Seattle in their 20s or 30s used inherited funds. When I worked in mortgage lending it was basically universal that anyone younger than 30 was getting a lot of help from parents. There's a massive advantage to owning a house when you're young, especially pre-rate hike.
Just getting into a home loan pre-rate rises is the biggest advantage, due to the fixed-rate nature of home loans in the US.
This article is another restating of the fact that wealth inequality is the greatest its ever been.
Why isn't the inheritance tax 100%? Or say 100% on anything that isn't real property? Inheritance made sense back when most peoples' estate was land, and you needed an orderly arrangement to keep land in the hands of the people who would work it. But why should the government provide legal means to transfer say stock ownership after death?
Housing is the obvious problem, only way to fix this is by making it easier to build houses and some kinda land value tax (higher property taxes would work but not as well). Problem is most western countries are gerontocracies and property taxes are the most hated tax. If you didn't get lucky you might as well give up on ever owning a house.
What value can most US educated bring to the economy? I count myself included.
They’re not hardcore enough to do meaningful research.
They’re too expensive to work in factories. (And not going to compete with Chinese slave labor)
What’s left? Hard to automate or offshore labor: service, or menial labor.
Surely you can’t become wealthy that way? I just happened to blunder my way into tech despite subpar education.
You are onto something but I would suggest a slightly different conclusion: that the best and brightest STEM students are attracted to the shiniest jobs, which right now involve programming computers to trade money (HFT) and teaching computers to do advertising (ML-backed ads). Neither of those are fundamentally useful.
Ads are waning. Due to ATT and centralization.
America is not hardcore enough to do meaningful research? huh?
Did you go to American high school? Most kids barely pass algebra 2. Even the “smart kids” can’t really compete in college. With standard American route there’s a sub 1% chance you can make it as a researcher in a hard science.
Yes, and what you’re describing is inaccurate. This is a meme promulgated by the for-profit education industry but it’s based on people not comparing like cohorts. The American education system is huge and includes everyone, so if you compare averages it appears to produce worse results than systems which track poor/lower-performing kids out into vocational education, exclude kids with special needs or limited English proficiency, etc. but if you compare matching cohorts based on socio-economic status, etc. the results aren’t bad. The trick is realizing that research over the last century has shown that the most accurate predictor for educational outcomes is the socio-economic stability of their parents at birth, and the United States has both a lot of poor people and done less to help them than many of our peer countries.
Regarding science, there are plenty of American scientists who graduated from public high schools. The problem there is that even highly-qualified students probably aren’t going to have a research career because the funding isn’t there to support it - even if you look at people who completed graduate school that was like 1/10 even before the Republicans’ savage cuts.
The original question was about what value educated people can bring to the economy. You are asking about most people.
And I reject your characterization of the capabilities of American students. There are plenty of incredibly bright ones.
What? I went to an American public high school, there were/are plenty of kids who are very smart. 8% of my graduating class were in the uber-advanced honors math track. This is in a flyover state outside a small city.
I also used to work in science, the reason there's so few chances to make it as a top researcher is that there is little opportunity. Look at jobs for a lot of life science majors after a BS, you will find a ton that is washing glassware in a lab, a complete waste of anyone with half a brain.
There's reasons why there is little opportunity that's not worth exploring here, but suffice to say there are a ton of very smart kids in America that choose other paths. Outside tech and specialized physicians, nerd careers are not lucrative on average. With little opportunity, smart people end up doing banal work. Why do banal work and have a mediocre salary predicated on jumping through higher than average academic hoops? Doesn't add up for most people.
What’s uber advanced here? I was in the calculus BC class and double majored in math and physics in college.
My performance in the Putnam (I got a 2…) and in grad school are all the proof I need that I couldn’t compete.
BTW I was the best student in my flyover state public school.
I'd say the reason there is so little opportunity in science is that science as an instiution is terrible at capturing the value it creates. Thus it instead relies on charity of which there isn't enough.
That’s better than a system where future janitors are still expected to grind math problems instead of having a childhood
There's plenty of work for educated people. And my understanding is that each dollar in education spending adds many dollars to the overall economy, an indicator of its importance.
What we need is wealth that's spread out more evenly so more of our educated (and just simply smart) people have the resources to apply that education in valuable ways. If you have a valuable education but the only way to make a living is to work for some tech company selling ads or writing increasingly sophisticated AI software then, yeah, you're being wasted.
Or if the entire economy is aligned to whatever whim Elon Musk or Donald Trump in their most gracious overlordship feels like funding. The a lot of valuable people will be wasted.
So my point stands? Nowhere in the American economy where to add value?
I don’t think there’s “nowhere,” but the wealth disparity is making it much harder than it should be.
[dead]
If you do not get the chance to go to or complete college at a young age then you will never own a home in America in 2025. You will be a cattle who pays almost everything you earn to the rent seekers of America. The American Dream is dead.
Relevant Calvin and Hobbes: https://www.gocomics.com/calvinandhobbes/1991/11/29
This is why I believe the Financial Independence movement is too rearward looking, if you have children. Parents now need to plan for the college (and graduate school) tuition and the house downpayments of their children, because the cost of both have increased by an order of magnitude in the last 50 years.
I reached the same conclusion. Ultimately I do not believe my children will own a house unless I give them down payments. Ensuring your children don't start life saddled with education loans + ensuring they can own a house are the two biggest legs up you can give them going forward.
The alternative is indentured servitude and variable housing costs keeping them impoverished forever.
Education can still be hacked by studying in Europe, even as an international student.
What do you mean "hacked"? Our universities are top-tier.
The solutions are simple, but the execution requires a radical change in the way we all see each other.
You don't cut off your finger when you get a splinter, or tell your earlobe it needs to fend for itself because it just hangs there and does nothing most of the time.
Pain in our bodies can make us shift our whole being to ease pressure on a stiff muscle or avoid a small burn.
Pain in our society falls on deaf ears and drives us to fight over scraps when there is abundance everywhere.
The solutions are simple. We all need our basic needs met, we should strive to end the suffering of others, and to help each other reach our true potential from where we are right now.
This article seems to contradict itself. It notes that tax system is flawed in favor or inheritors but goes on to suggest that taxing the inheritance or property will address this issue. Why would those not be tilted to benefit the inheritors?
History of mankind has been shaped by housing. It also is the most common and long lasting vehicle of investment, primarily because how easy it is to pass it down to descendants. It's not going away anytime soon.
Higher inheritance/gift/estate taxes + closing loopholes like step-up basis upon death at least in the USA seem like pretty direct ways to combat these issues as well - though nobody with money (read: nobody who benefits from the inequality) really wants to support that, which is reflected by almost nobody in the comment section here mentioning them.
If skills and knowledge matter less and less because technology and automation grow over time, what matters if not already existing wealth? Might be an hyperbole dictated by the current times, who knows.
https://archive.ph/kAVoo
We are building a new aristocracy where people are better than others just by virtue of being born into the right family. And if we don't limit the ability to inherit this process will just accelerate.
Same as it always was.
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP
this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
other nits, the baby boomers were an unusually large population group in an unusually prosperous and healthy period of history: we've known they would die for quite some time and we've known they would leave a lot of money. It's not "a trend" and it's not "news". It's a well known anomoly, a blip/bulge passing through the system. It's interesting but it's not alarming.
>this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
I get where you're trying to go with this (ie. "you can't compare stock vs flows!"), but you've patterned matched too aggressively. There's nothing wrong with using GDP of a country as a benchmark. Sure, it's comparing stock vs flows, but GDP of a country is nonetheless a valuable yardstick when comparing sums, for instance comparing debt to GDP levels. As long as they're not directly comparing the figures (eg. implying that the whole country is going to be inherited in 10 years time or whatever), it's fine.
A dirty little secret is that that over a third of Gen Z and Millennials get down payment help from their home-owning parents. In expensive cities, the percentage is even higher. When you add the number of parents who co-sign in order to secure the mortgage, the number could reach 2/3rds in expensive metros.
It’s the new feudalism.
https://investors.redfin.com/news-events/press-releases/deta...
> It’s the new feudalism.
In a sense that basic housing now is luxury - yes.
In the sense that there’s a growing class of landed gentry and nobody else can buy anything. People with houses today will be the aristocracy in a few decades
> People with houses today will be the aristocracy in a few decades
Not really. Peasants were mostly owning their houses, that did't make them aristocracy.
I genuinely do not see how owning a 1970s-built bungalow translates me into the aristocracy in a few decades.
Because you own land. It will make more money than most people make through employment. This is true in many parts of Canada over the last decade and the trend will probably spread
> Because you own land. It will make more money than most people make through employment.
I genuinely don't follow. Yes, the bungalow sits on land ( enough for BBQ for 5-6 people ) and I sit inside the bungalow. Neither of the them make me any money. I can't sold them and live in the stratosphere. I either have to buy something else or rent.
You’re just not living in a HCOL area yet. Eventually we all will. After that it will make sense
I think we need to shift from seeing inheritance as something we benefit from.
Every positive comes with a negative, nothing is created nothing is destroyed.
Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
I won't deny that you CAN ignore the responsibilities that come from inheriting wealth, yes you can sell your father's company and life mission, but you destroy your legacy, and your children will destroy yours.
Wealth comes with its own set of problems if taken. Sure we may argue about which problems are worst, but must we? Each is born into a place, each is born into a class. And the principle of balance shall bring equity in the form of responsibility (to paraphrase Spiderman's uncle).
I just feel it's a more appropriate response to tell your parent "I will take care of it" rather than "thank you" and selling it to go on trips and snort cocaine. I'm not saying I'm free of sin and don't indulge in the pleasures of hedon, be it in a coffee (brought to me by a less attractive waiter of a distinct race from other commensals serving a publicly traded company, and made with beans grown and brought under a veil I can assume hides even more injustices) or in the wasting of my intellectual and physical talents on the pursuit and satisfaction of short term audiovisual novelty, but I will do so in guilt damnit!
>Every positive comes with a negative, nothing is created nothing is destroyed.
>Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
This is a platitude that has no bearing on reality. Technological advance in the past 2 centuries has increase our wealth and standards of living by orders of magnitude. You can come up with token objections about how each advancement had some downsides (indoor plumbing is bad because... copper mines pollute the environment?), but it's certainly not the case that "nothing is created nothing is destroyed". Technological advancement has created untold wealth.
Are you trying to say it’s harder to inherit wealth than it is to be born low income, grind a construction job, and come home to the house your parents bought 40 years ago that homes your grandparents, parents, and your family?
There is a weapon that younger generations have virtually forgotten, but we re likely to see it making a big comeback in the short term: strikes.
What is opposing theory to this? I.e., idea that inequality bad
Maybe I’m in a bubble that I seem to hear this and while I do agree I would still like to know what the opposing idea is here.
I suppose it’s something like inequality is inevitable so you can’t remove it; instead you can try to make it comfortable for everyone and that due diligence can help.
Perhaps a well-run military would be an example; unequal by definition but without all the parts working well it falls apart.
The Economist agreeing with Piketty???
The world has truly gone mad!
This doesn’t hold up logically. To inherit money means the generation before you saved it, but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
For inheriting wealth to be important to your success, it would either have to come much sooner or you would have to have no kids of your own
>but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
At least in theory that's not hard to pull off. From the article:
>By one calculation, if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made.
The average inheritor might be too spendthrift to stick to the plan, it's not exactly impossible as you suggest.
I’m not saying it’s impossible for someone to invest inherited money, just that on average, the returns aren’t that significant and the money comes too late. I’m sure there are people who’s parents pass way early and they get a lot of money at 25
If we’re talking about an average population, the authors premise doesn’t make sense if you look beyond one generation. It sort of feels like the author is jealous of someone else’s inheritance, and wrote this article to complain about it.
>If we’re talking about an average population, the authors premise doesn’t make sense if you look beyond one generation. It sort of feels like the author is jealous of someone else’s inheritance, and wrote this article to complain about it.
Are you arguing that because the average person only inherits $100k or whatever, rather than the $20M+ required to build "generational wealth", everything's fine?
A groundbreaking 20-year study conducted by wealth consultancy, The Williams Group, involved over 3,200 families and found that seven in 10 families tend to lose their fortune by the second generation, while nine in 10 lose it by the third generation.
This study matches my anecdotal experiences. Second and third generations of wealth don't respect money and this manifest in all kinds of bad behavior that leads to wealth destruction.
This is an interesting concept that in its abstract form applies to far more than inheritance. For example, it's a pretty thoroughly studied phenomenon that if a part of an immigration population becomes radicalized, it's usually the third generation. The reasoning if I recall correctly off the top of my head is similar to your reasoning.
Seems like people saying "kids are dumb" for millennia, were actually right every time. Who knew?
We’re increasingly protecting rich folks from the consequences of bad investments, I wonder how much this moral hazard impacts mobility?
I suddenly became the poor person in my peer group that all went to same school and did similar jobs. Why? because they all got 'help' buying a home and now have a fancy homes. I live in a rental apartment. I am still the most judicious about spending money but its hard to hang out with a ppl who can afford to be more careless.
It all happened so fast in 2022.
If working is still a little more important than inheritance, it marks the advancement of the human civilization.
In the country where I was born, inheritance was way more important than working 100 years ago.
So wealth wasn’t all merit then?
Who would say…
Always has been.. that's why churches have old ladies and community to poach lonely old peoples stuff. Also Psychics love your dead husbands boat.
Taxing estates over 1B at 100% would move the needle a good amount. Rich people will insist that if you remove their incentive to earn more than a billion they’ll stop working and I’m ok with that. There will always be plenty of non billionaires left to pick uo the slack.
I think it would better to let them renovate/build public goods like schools/libraries/streets etc. If they pay taxes I don’t think it would help society. It would require politicians which don’t use tax money to improve their wealth on their own (I know they would be taxed too but then the money is just moving on paper and not really used).
Make it 99%. Then they will increase their wealth by $.01 for every dollar earned, which is better than $.00 for doing nothing. Logically they must continue using their special billionaire-skills because they are earning money for it. Probably at a faster rate than 99% of us.
Plain economics. Surely they will make the rational choice.
The rational choice would then be to move their economic activity and the jobs involved to another country with lower taxes.
If they think that they can be as economically productive in a different country without American citizenship, then they should indeed do that.
Do you think that punitively incentivizing the most economically productive people to leave the country results in zero consequences?
The US taxes non-resident citizens.
And citizens can abandon their citizenship if they feel it is worth it.
That would already be the rational choice, if it was. There are countries with lower taxes, yet the economic activity isn't flocking to them.
I can't wait until the rich start inbreeding so much they get deformed.
part of the reason marriage was invented as a social technology was intergenerational transfer of wealth. so, inheritance has been 'nearly as important' as working for millennia.
The middle class (in Europe at least) is now paying around 50% of their income to the state.
This is absurd and cuts any upward social mobility.
In United vs FEC, corporations were granted to the ability to be treated as persons - with all the rights - when it was good for them. And to enjoy the protections of being a corporation when that was good for them. This was a unilateral decision by the US Supreme Court.
The result is that corporations now choose who candidates are in the US and who gets elected. Once a candidate is elected they serve the master who got them elected. Not, We the people. Any even casual evaluation of the laws passed confirms this. Affordable medical care, which the People want and need? No. Obscene profits from corporations overcharging people for medical care? Great!
Regular people push addictive drugs? Jail. The Sackler Family, probably the biggest cause of drug overdoes deaths ever? Are they in jail? And what about the millions of stock owners who made a tidy sum? Did they lose their money, are they in jail? Nope.
We are not a democracy, we are a corpocracy. Because of a US Supreme Court decision. We need to fix this. And hint: is the word corporation in the US Constitution. Hint #2 does the 14th amendment prohibit unequal protection under the law.
In a democracy the representatives represent the will of the people. In a corpocracy they represent the will of the wealthy corpocrats and corporations. We have two corpocratic parties to choose from. Democrats and Republicans.
We need to fix this.
In a stable society where you dont tax wealth, this is the inevitable outcome.
We do tax wealth of course. We wealth is defined as primary residence. No need to remind me about 'services'. Countries tax plebs by constantly changing the definitions of income, wealth.
https://archive.is/M5kId
People don't seem to realize that the alternative to a democratic, egalitarian society is a violent one. For rich and poor alike.
People will strive to make their lives better. If that effort can be funneled into productive actions that provide benefits to society as a whole, then that's what people will do. If that effort requires stealing from and killing hoarders of wealth because there's no other way to get resources, then that's what people will do.
The hyper-wealthy seem oblivious to the fact that you can't both be a trillionaire that's causing societal economic desperation and live in a society where people politely do their business and leave you in peace.
We have lived in a stable system long enough for people to forget the horrors of instability. It is a certainty that a reminder is coming - what is uncertain is how far away it is.
When you look around at how expensive homes are in certain areas and continue to lose the auction because everyone else had a cash bid, realize a lot of people are getting a lot of money from their aging and dying boomer parents. Where I live nearly everyone had a lot of help from mom & dad.
Money flowing out from the real estate sales on the coasts are also a big contributor.
Californians have been flooding Idaho, Nevada, Utah etc. They buy their homes and 2 new cars then have money left over to invest in the markets.
Indeed. I don’t think people outside the coasts realize how much more the large set of top earners make.
The American economy can be explained very simply: We went broke in 1970, and so we went off the Gold Standard, got the world to agree to use USD as reserve currency, and then just started printing money on an as-needed basis to fund gov't spending, and also for banks to hand out [basically] freely to investors, which pumped up the stock market (and all other assets) USD valuation to crazy insane levels.
All this free money also caused inflation and so everyone holding assets saw those USD valuations rise accordingly. Basically the baby boomers indebted the nation by stealing $36T from all future generations, and every one of them will all be long dead before one nickle of this debt is paid down, if it ever is, and no one even thinks it ever will be.
As long as most millionaires are self-made, we are ok.
My dad worked at a gas station and I run a tech company.
Shit, I would have chosen richer parents if you'd just told me before I was born.
The purpose of a system is what it does. The system is working as intended. This is not a problem for capitalism, this has always been the goal.
In other words the rich are an increasingly large parasite that is increasingly impairing the functions of real society and subverting it to their ends. Two oligarchs are running the country right now in their own interest.
I'd be more worried about a swarm of smaller, less flashy oligarchs that have a choke-hold over large groups of American population through various for-profit schemes across myriad of industries who influenced lawmaking for over half a century or more.
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I like how they always forget to mention the elephant in the room, 8 billion in absurd amount of any living organism, by many estimates we already surpassed the number of rats in the world, but the responses about doing anything at all to reduce that number in the long-term are all emotionally charged and empty of any rational thought.
In the context of capitalism as we known scarcity increases value, such thing is true for number of employees available, the less employable people around the higher the wages and therefore the quality of life of the living.
Human population will decrease thanks to miracles of education and contraception. Give it a few centuries.
I'm a afraid it will be a bit too late.
Too late for what? There are organisms living in boiling water. Life will prevail.