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Comment by heimatau | Hacker News Reader

I hold a similar, not exact, position as you. Namely, the trickle down is bullshit part.

But reading your comment made me think and question. The mega-elite's capital is growing due to their investments and it's showing no clear signs of slowing down [1]. How are they continuously extracting income of the middle and lower classes (and upper too)? How are they feeding their wealth at a mostly positive rate? Insider trading isn't enough to answer this question. Nor is stagnant wages because some sectors are paying well.

I think if economists can state how the wealthy are getting wealthier, in a granular way, then maybe the masses can find a better way to fight back. I.e. there is excessive profits to reap and only the wealthy are finding it, let's expose it and use it to the masses advantage.

[1] The great recession is a clear sign where the mega-elites came out with MORE wealth than before the bubble.

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> How are they continuously extracting income of the middle and lower classes (and upper too)?

1. Through ownership of the means of production. Profit from said means largely goes to the very rich, or to the upper-middle class - almost everyone below them does not really participate in the stock market, and most definitely don't participate in ownership of non-public firms.

2. As such, as lower classes create wealth, it flows upward. When the economy grows quickly, that wealth tends to get re-invested into building more means of production. But at the end of the day, those investments are on aggregate, expected to generate returns.

So, through growth, you can postpone the trickle-up, but unless there's a huge societal shift, at the end of the day, even if the pie grows, the lower classes won't get any more pieces of it.

Caveats: (Yes - quality of life has gone up in the developed world thanks over the past century. That is due to technological advancement. Yes - quality of life has gone up in the developing world due to globalization. But how many people in Bangladesh making sneakers own shares in their employer? How much of the Western economy will the people doing all the work that keeps it running have come to own over the past 30 years?)

There is a recent and much discussed analysis of wealth concentration:

https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

I haven't read it so this comment isn't an endorsement of it and so on.

Great suggestion. It's on my to-read list maybe it's gone up a few notches now. I hope someone who's read it could give some feedback on it though.

Here you go: https://www.gatesnotes.com/Books/Why-Inequality-Matters-Capi...

> I think if economists can state how the wealthy are getting wealthier, in a granular way, then maybe the masses can find a better way to fight back.

Actually, I think the refusal of moderate, science-literate professionals to "listen to the people" unless it's parsed and vetted by a professional like an economist is part of the problem. It takes urgency away from the problem, makes it some interesting thing to ponder on breaks from working on an app for a yuppie consumer, rather than a big ominous issue that requires vast amounts of thought and dedication.

This Marxist academic (from UChicago I think) had an eloquent blog post [0] about, from which here I take some highlights:

> My problem isn’t with numbers, pie charts, and databases as such. My problem, rather, is with this celebration of a depleted epistemological ecology—not because I love epistemological diversity as such, either, but because I think poli.sci’s ongoing and dead-on impression of an epistemological wasteland functions as a prophylactic against the immediacy, urgent, and (as Bartels would admit) valid claims made in other epistemic registers.

> But that’s what liberalism is, really: the absorption of the immediacy of a political sense into the studied, slow time of useless intellection, the conflation of taking-time and having-a-(truer-)thought.

> I used to giggle at the scientism of early Marxism—Marx and Engels, Lenin and Luxemburg, Lukacs and Althusser, on and on. But now I’m beginning to think that this scientism wasn’t supposed to achieve any kind of scientific positivity, that Marxism’s valorization of the scientific didn’t intend a valorization of positive knowledges. (Stalin, we might say, wasn’t part of the plan.) What Marx desired in seizing hold of the term “science” was to create and defend a space in which plebeian forms of knowing could be entertained as knowledge—a knowledge that doesn’t require validation from positive or theoretical science, but rather productive transcription into it.

[0] http://clrjames.blogspot.ca/2014/04/ideas-whose-time-has-bel...

I think you could go through the Forbes 100 list and ask "where did that money originally come from?"

You'll find a lot of variance, but most of them boil down to: provided a good or service that people were willing to pay money for (meaning they preferred the good or service more than the money it cost them).

That only scratches the surface and I have done it. I think more through analysis needs to be done.

Who, at the front end actually did that work, and how were they compensated ?

They were compensated based on whatever they agreed to. What beyond that should they get? And who would decide such an arbitrary thing - what government panel of bureaucrats should that be left to?

At the very front-end is the founder, who typically works without pay as necessary, and typically works far harder than their employees, while shouldering far more responsibility. Millions of businesses get started under that exact scenario every decade.

Employees get paid for their labor. An entrepreneur doesn't have such legal protections or guarantees and is paid for their risk (it's critical to note that 95%+ of all new businesses fail over five years). When I create something, I do so without taking a paycheck initially - perhaps for a very extended period of time. Try convincing an employee to do that at a routine job bagging groceries.

If the employee didn't like it, they were welcome to go through the extremely difficult process of starting and building a successful business instead. It's dramatically more difficult to build a business to the point where you can earn $60,000 per year, than it is to get a job making $60,000 per year.

Sam Walton didn't start out being rich. If his 37th employee didn't like the terms of employment, they were welcome to compete with him if they could. He contributed a million fold more to the business succeeding than any given grocery bagger, and also took on drastically more personal risk. Beyond that, the morality of it is such that the property of Wal-Mart belonged to Sam Walton, and there's no need for entrepreneurs like him to apologize for that ownership, it belongs to them fair and square (the sole counter argument is to say that violence should be used to steal property and to mostly or entirely abolish private property rights). If an employee wants their own property, then let them create it, and let them provide the money to pay employees for their labor.

This would all be fine and good (just, even?) if nobody was ever coerced into agreement or agreed under duress. You seem to neglect the role of power in extracting preferable terms (and thus wealth).

There often isn't anything "fair and square" except in this idealized notion of some perfect environment you've painted.

You make an excellent and fair point if it stops at this. The problem starts when the successful business starts to take advantage of loopholes with their wealth(lobbying, offshoring income, jobs) to advance their ability to make profit at the expense of the labor that doesn't have this ability. So although the pact seems equitable in the beginning- it breaks down one side take unfair advantage of their position. German labor is an example of where the workers have managed to gain from the productivity of the companies mostly through organized labor but also because the companies realize its better to share the wealth. Hence- I'm only guessing we don't see super-rich German billionaires.

What would help equal the playing field in negotiations is if the potential employee had the backing of a union to enforce a fairer contract.

A single laborer vs a well-monied and well-lawyered corporation is not a fair negotiation. See Apple & Google colluding to keep wages down for software engineers.

Union contracts with employers could also ease the damage to the middle and lower classes done by automation.

> Sam Walton didn't start out being rich.

Sam Walton is an outlier. His actions are responsible for driving down the wages and benefits of a sizable number of people and making them dependent on government services for what should be be provided by their employer.

I don't doubt that most of them worked very hard and took a lot of risks to get where they are now. I respect these people immensely. But no human could work hard enough or provides enough of a service that they deserve to earn tens of thousands of times more than the people who actually do the labor.

Bardeen co-invented the transistor and the theory of superconductivity, yet even though his work was recognized with two Nobels, he didn't die a billionaire. Zuckerberg made a social network barely different from the others, but because he was able to market it better, or was just at the right time at the right place, he's now a billionaire. I respect Zuckerberg, but if he is able to earn 35e9 USD and Bardeen isn't, even though both did what they loved, the system is broken.

Well, it came from being the children of people who provided a good or service, and likely in large part due to illegal unfair competitive advantage.

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