Wealth isn’t created at the top, it is merely devoured there

The other big subsidy program for lenders is borrowing money from the Fed at low rates which can then be lent at much higher commercial rates. That's the welfare state for banks.

It doesn't have to be that way. Japan and China inject money into the economy by building, and sometimes overbuilding, publicly funded infrastructure. The banking system plays a lesser role in economic stimulation. This has its advantages; usually the infrastructure is good for something.

Especially in technology, does anyone really believe that if these particular individuals hadn't contributed their talents, the world would have turned out much different?

Would there be no operating systems without Gates? No social networks without Zuckerberg? No search engines without Page? No e-commerce without Bezos? (Granted, Bezos is pretty exceptional.)

Why should particular individuals capture such massive rewards when their success had more to do with circumstance than anything else?

(There's a connection here to the "great man theory" of history and its critiques.)

"We’re invited to believe that a CEO can somehow ‘earn’ £10m per year, whereas a teacher ‘earns’ £25k per year. That’s only possible if you divorce the word ‘earn’ from any of its actual meaning. No one can actually work enough hours, or create enough value, to equate to £10m."

I think this is the essence of the recent debate about inequality. I think most people would not have a problem with those who are genuinely producing more getting more as well. Think back to school, did you ever complain about your grades if you knew some other kid had worked harder? Me neither. Of course there were times when it seemed arbitrary as well, seemingly having no relevance to quality.

It's a big problem creating a notion of fairness when you move on from school, where everyone is the same age, in the same class, doing the same homework. To create software, for instance, what do you typically find? There's people of various ages, some managing, some selling, some writing code, some doing testing. You need all of them to get the job done, and the job has some sort of value, however vaguely defined, that is greater than the sum of its parts. Nobody on the team could do all of the team's work as effectively as the team.

So then we have the problem of attribution. There's no real way to say what fraction of the value someone created. The only thing we really have is negotiating positions. If you're able to say "Give me half or I'm taking my ball" convincingly, your teammates will give you half. They'll be thinking about a few things mainly: whether you'll really leave if turned down, whether they think they can replace you, and what deal they can put forth to other potential teams if you turn out to be irreplaceable.

This will have some interesting effects. If you're already making a lot, you'll probably need a lot to want to participate. You have more savings in order to hold out for a better offer. CEO guy "genuinely" needs more pay because why wouldn't he just retire now? Janitor guy will take any offer, because he needs to be running to stand still. Actually a lot of people will be in that position, even though their labour is generally seen as useful, like teachers.

Which is all just a long way of saying that the negotiating process does not in itself take merit as an input.

Facebook is a people market. Spotify is a music market. Airbnb a hotel market. Uber a taxi market Amazon and eBay... Well, literally markets, right? And so on.

Markets obviously do create wealth, as a lubricant for trade. It's a meta-level of the economy, just like money is a meta-good that makes bartering actual goods and services more efficient.

So saying that's it's all "rentier" without creating any wealth might be selling them short a bit.

Where I'm troubled is that they're not free markets, in any sense of the word. They are privately owned, and the owners try to control their markets for the sake of their own profit. That's where things get problematic, I'd say, especially when there is a monopoly.

The middle class is the class that feeds the unproductive classes at both the top and the bottom. And the unproductive have formed a political alliance where the bottom votes for the top in exchange for handouts, all paid for by the middle.

This is bullshit, but it's very pernicious bullshit because while it only takes one person to pull this out of their ass, no one person can refute it. No one person can articulate where all the stuff in an iPhone came from; abstraction is one of the true marvels of technology today

This has never happened in the past, but similar things have happened, always driven by violence. Can this happen without violence, I wonder?

Good lord, is this really true? I don't know about you people, but the basic pre-reqs for my undergrad had a single overview economics class where we covered among many other things the definitions of capitalism and profit and the idea that profit equals the difference between the sale price of a commodity and the cost of goods & labor used to produce it -- literally the definition of profit disagrees with the idea that wealth is created at the top, whatever that is even supposed to mean.

> When you think about it, it’s insane. We are forking over billions in taxes to help our brightest minds on and up the corporate ladder so they can learn how to score ever more outrageous handouts.

There's a lot about the world that gets completely insane if you think too much about it. Cars are insane. Jobs are insane. Politics and money are insane.

We have to have better options for smart people than highly compensated and interesting work at Facebook and Google. How do we create better options? I don't think pointing it out will cause better options to materialize.

> Yet it doesn’t have to be this way. Tollgates can be torn down, financial products can be banned, tax havens dismantled, lobbies tamed, and patents rejected. Higher taxes on the ultra-rich can make rentierism less attractive, precisely because society’s biggest freeloaders are at the very top of the pyramid. And we can more fairly distribute our earnings on land, oil, and innovation through a system of, say, employee shares, or a universal basic income.

> But such a revolution will require a wholly different narrative about the origins of our wealth. It will require ditching the old-fashioned faith in “solidarity” with a miserable underclass that deserves to be borne aloft on the market-level salaried shoulders of society’s strongest. All we need to do is to give real hard-working people what they deserve.

OH! That's all we need to do, eh? It's so easy! :)

It's not the first time this has been suggested. There are even names for this. And it sounds great. But the forces keeping our system the way it is are stronger than this. The narratives we need about the origins of wealth already exist, and they're not strong enough to turn the tide. I don't know what is strong enough to turn the tide.

"In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity."

Jobs such as waste collection will be completely automated away in the next decade. I suppose machines then will be the true mechanism of "social solidarity"?

"But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit."

It seems like the author believes that any gain to one group can only happen at the expense of another. Yet we know this to be false - the pie can and does get bigger.

"revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they gobble it up whole."

Agree, but curious to understand which industry the author doesn't define as parasitic? All companies want to expand and grow relentlessly, that's just the nature of capitalism. Cable/Telecom? Oil and gas? High Tech? All of them have become "parasitic" if that's how the author wants to define it.

"Higher taxes on the ultra-rich can make rentierism less attractive, precisely because society’s biggest freeloaders are at the very top of the pyramid. And we can more fairly distribute our earnings on land, oil, and innovation through a system of, say, employee shares, or a universal basic income."

Wrong. Higher taxes, though welcome, will not be the solution. Nor will universal basic income. How does one not understand that with the rise of automation, the rich are about to get so much richer, no matter how much you plan on taxing them. And basic income, though beneficial, won't fix class inequality either, in fact it might just exacerbate it.

Let's talk about something the author fails to even mention: Education. Class inequality is fixed by education equality. Period. End of story. The rich in the USA have access to far better education, and THAT is the true source of the rising inequality.

To call earning passive income on assets one owns "rentier" earning of income is to show unquestioned acceptance of socialist assumptions about the right to property, to ignore the value the person's assets contribute, and to totally neglect the role that delayed consumption (aka saving) and investment analysis, both components of investing and acquiring assets, have in wealth generation.

This is the quack economics the article is promoting:

>To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.

>But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.

"Family ownership" and transferring wealth to heirs tax free.