Uh, because we are all collectively being fleeced by a ruling class extracting obscene amounts of wealth from our work without doing anything useful themselves.
Never fool yourself into thinking you'll get anything back from these vampires.
Never fool yourself into thinking you'll get anything back from these vampires.
- global demand markets to sell to
- global labor markets to pick from
I guess saying that makes me a xenophobe or some such, but I guess I will have to live with it :-)
Globalization increases competition and consumer choice, which drives down prices and spurs innovation to compete. Tariffs do nothing but put up barriers to entry into certain marketplaces and favoring certain companies. Globalization seeks simply to level the playing field. Companies may benefit from increased access to new markets and cheaper sources of goods and labor, but the consumer benefits as well with better products at cheaper prices. Developing nations have benefited by being able to open their doors to foreign investment. Companies pay these workers a pittance relative to workers in the developed nation, but more than those workers would be able to make otherwise. Companies also invest money into infrastructure and education in these nations. The standard of living in developing nations that have entered the global marketplace has improved dramatically. And increased international trade binds nations together, reducing international conflict. Globalization can stop wars!
Globalization is not perfect, it has problems. It has hurt certain groups in the developed world, and things must be done to balance the situation. But it is still an impressive force for good that benefits a wide array of groups, and I don't like it when people just write it off.
Were I in the ownership class, I wouldn't exactly try to temper my avarice in absolute terms, but I would at least try to remain less conspicuously wealthy than my peers. As they say, you don't need to outrun the tiger, if you can outrun your friend.
Pretty please.
Don't get me wrong, I'm probably more anti bank than the average HNer, but this particular criticism is nonsense.
Don't forget you're on a site owned by wealthy people whose day job is giving money to other people to bootstrap their companies. You don't get much more creating value than that.
To add a little meat to this vampire of a political exchange. Nobody is interested in the usual defense mechanisms.. lets open the hard shell and look at the heart. And here it is:
"I know you are right, but i have just so much invested into the current system, and can with my family at debt-gunpoint mount no enthusiasm as i could once when i was a tweenager. Why should i throw my hat in a ring, who as history shows often tramples hats and wearers on both sides? And how many couch revolutionary's are there, who wave the banner on the internet, but would throw a fit, if somebody would occupy their parking lot in real life. "
- more and more capital is being tied up in parasitic activity (encouraged by monetary and fiscal policies), instead of being invested in startups, infrastructure, etc.
- all profits/capital gains are distributed to capital holders (out of proportion)
Maybe just as many or more people are being employed just not in the U.S., and the pays of the people working overseas are lower relative to U.S. wages, but higher relative to the wages offered in the location of that persons job?
I feel like people are looking at the U.S. exclusively but in reality since the 90s we have to consider the other countries on this planet, as an average to normal way of utilizing job allocation resourcing as opposed to it just being large corporations that do this like in the 90s.
I'm not saying this method is overall good or stating opinions or whether i think its "right" or "wrong" as opposed to economics and how things have always worked , but it is a fact thats happening. Theres 400,000 people in China who have Engineering degrees or otherwise niche technical skill that are unemployed, and another 400k in the pipeline in Asia that are 12 yrs old taking Calculus and becoming trilingual.
I always wonder why we don't wonder why the average highschool student in the average city in the U.S. is less valuable than the average highschool student in the average city in Asia or India, instead of assuming the only reason we don't have the jobs we feel entitled to is because rich people are taking it away from us, when in reality theres really qualified hardworking people all around the world who would benefit from a fraction of the pay provided by jobs we had previous relative to the current living conditions.
The current living conditions being 400k unemployed Engineers and tech/manufactoring workers in Asia.
outside of simply being American, why are we entitled to jobs more than them, if theres a limited amount of jobs, and they are willing to do it for less because its better than Having a Masters Degree in Engineering and being homeless?
That others couldn't?
You don't need to be ruling or vampire to create value. Just to be innovative.
not
"We need exploitative rulers in order to create that value"
History shows otherwise with a very high rate of bankruptcies from lottery winners.
(And lottery participants are highly likely to be less well informed about managing money, since otherwise they wouldn't be lottery participants.)
Put 25 million in the S&P 500 (qqq) in March of 2000 and draw 2 million a year on it. You are out of money inside of 4 years.
There is no 100% safe place to stick that much money and live off of it. The world is too dynamic and it takes real skill and work to make money work for you.
But in any case, I said you'd make that much on average, not that you could withdraw that much every year. In reality, you would draw down a smaller fraction of that (but still an immense salary for no work). And since your capital would be growing on average, you could increase your drawdown over time accordingly.
I need to draw 2 million a year because my Porsche, Hummer, NetJets subscription, mansion and constant vacations are expensive and you said I'd have 2mill on average.
I don't work and I need to pay these bills with my 8% average. So what do you recommend I do in 2001?
I'm supposed to be living large like you promised but the market tanked. Am I now supposed to live off of 100k when you said 2 million? I already bought this stuff on a payment plan!
Seriously, think about it. You have 25 million and someone tells you you'll make 8% on average, but you can't actually spend it?
Try to really think what you could do with 25 million and no effort. Not much.
I'm really not sure what point you think you're making here? Yes, if you spend too much, you'll lose your money. So don't spend too much.
If you were given 25 million right now what would you do?
Your initial claim was you could put it in the SP500 and "make an average of 2 million per year (8%) without doing anything".
But then I showed you that market timing plays a major part in how well that average will work out for you.
So, what are you going to do with that money to live the rest of your life with no work and how much will you spend per year knowing that huge income volatility isn't a realistic life style?
My point is, it's not nearly as easy as you've expressed.
You're sighting a lot of conventional wisdom that I've heard before. You won't find many success stories that followed your advise.
If you ever talk to people who actually live off their wealth don't be suprized if you find that they're not sitting back on the SP500 with a 4% drawdown.
They're most likely active investors working hard (not physically, as none of us do here anyway) to make money with money.
Edit: this was in response to a post that has been deleted.
>I guess "making" money and income are somehow different in your book.
I guess I should say consumption or drawdown rather than income. (My point is the capital still grows by an average of 8% even if you shouldn't spend all of that.)
>You won't find many success stories that followed your advise.
Do you have evidence that people who are doing this are failing, or do you just mean that I won't find evidence of success?
In the top 1 or 2% of households by income for pretty much doing nothing. Maybe not a literally obscene income though.
Sure, you could do that and maybe you would. However, most people who didn't earn their money don't.
Most of those same people think the rich "do nothing" and make money. It's this kind of ignorance that causes bullshit class warfare where it doesn't exist.
And making money on your capital in a perma-bull stock market (casino?), engineered by the Fed is not that complicated.
>"Perma-bull stock market".
Uhg. If it were only that easy.
Making money on paper is easy right? Any idiot can see through every little dip in the market over the last ten years and not get rattled and ride it all the way to the top and then have the 6th sense to see the next dip for what it is, a crash, and move all their money to another asset class just before it happens.
No, that's not what happens. People ride it all the way back down and often end up with less than they started with. Then someone who knows very little about investing tells them, at least you should make 8% on average historically as consolation.
Tell me when to yank my money out if it's so easy. It's not. A correction is coming, but when, how will I know, and what to do when it does?
You don't often hear wealthy people complain about other wealthy people because they know how hard it is to stay wealthy.
It is a skill to make money with money.
Now do we get to argue over the source?
Does it somehow not fit your world view that managing wealth is real work?
As a cousin comment points out, it is even possible to buy management services.
- Dump it into the SP500
- Dump it into CDs
- Give it to a money manager and hope for the best. If it doesn't work out at least you can blame him/her.
Who's advise to take?
It's really starting to astonish me the financial ingnorance on HN which must be attributed to younger folks who had no skin in the game in 2000 or 2007 and think investing is easy.
Perhaps you could live off 25 million with a drawdown of 1%. That's 250K. So you live like that's your salary. But then the market tanks and 1% of your portfolio is now 120K. That's a big haircut.
Do you take 2% now? You've got a 250K lifestyle but you said you'd only take 1%.
You've now watched 13 million dollars vanish. Do you stay in the market and hope it goes back up or cut your losses?
People here seem to suffer from historical bias because they know the market recovers, but when it happens to you the future will be totally uncertain.
Mo money, mo problems. Totally true.
Maintaining wealth requires understanding and discipline, but the amount of "work" required is minimal. Essentially, all you have to do is not spend too much, which is fairly easy when "too much" means "any more than 10x the average salary".
How did the "ruling class" get their money and what is their means of obtaining more in the future?
I certainly want in on it.