World's richest 500 see their wealth increase by $1T this year
theguardian.com
theguardian.com
Using the commonly accepted safe withdraw rate of 4%, if you inherit $3 million (which is not even that much), you can safely collect $120,000 of capital gains/dividend income every year without doing anything. This also frees you up to work on other things that will acquire you even more wealth. People whose parents didn't leave them a large inheritance have to rely on salary, which is taxed at a higher rate and more difficult to earn.
In effect, late stage capitalism becomes the anti-thesis of the spirit of capitalism - devoid of competition, free innovation, and upward mobility. In an ideal capitalism society, the most talented should earn the most, but the compounding effect of capital makes it so that whoever holds wealth the longest earns the most.
I still think there is a lot of upward mobility even in that scenario -- the smarter people I know earn good salaries and have nice lifestyles. Nicer than their parents, in most cases, mainly because consumer technology constantly gets better and cheaper.
And there is still opportunity for risk takers to start their own companies, and it's really not all that hard with some traction to get acquired by a bigger player.
Of course, people with a lot of capital get rewarded for holding onto it / being conservative with it, but that's just common sense, not throwing good money after bad.
It's like we're all supposed to say, "Yeah! Late stage capitalism is so awful!" and nod along, but it doesn't feel awful to me at all. I have a 2016 Mazda that cost $18k and it's just awesome for the price. I bought a brand new iPhone SE for $150. I bought a 50 inch TV on black Friday for $200.
My parents as kids didn't have running water in their houses.
I'm not all about materialism, but I'm really at a loss for what exactly I'm supposed to be feeling outraged about. I don't even really make that high of a salary, just average middle class.
> (Unless we specifically cause it to be so through political maneuvering and war, but I like to think that's crackpot territory...).
When you look at the history of the world and consider current geopolitical situation, what leads you to believe that's crackpot territory?
[1] https://www.theatlantic.com/business/archive/2016/07/social-...
Sure we have some nicer gadgets and personal comforts but the cost of accommodation and property has skyrocketed way out of proportion.
Which economic laws dictate that?
Declining wages are real, but populations are declining in the affordable but undesirable towns where property is cheap that my parents and grandparents bought into.
My mother's parents bought their first home in Minot, North Dakota and saved up for a tiny home in St. Paul, Minnesota. He was an engineer who put himself through school while living in a boxcar in Montana in the depression. She was a housewife. They scraped and saved, and did well for themselves despite hard circumstances (the depression, world war II, etc.)
My parents bought a starter home in Bloomington, MN. He was an attorney, she stayed at home. They moved to a wealthier suburb to find better schools when they could afford to.
Both sets saved aggressively, didn't go out, didn't drink, maintained cars themselves, didn't take elaborate vac actions, and lived in relatively low cost areas.
Me? I live in a booming tech hub. Prices aren't even comparable. I spend on food and wine and travel. I have a fancy phone I don't need and take my car to a mechanic for standard maintenance. I "can't afford a home" because I don't want to repeat the decisions of my elders. I could certainly buy a home in Minot with cash, and could get a mortgage in Bloomington without too much effort, but I don't prefer those options to what I'm doing now.
That's speaking for me only, but I'm pretty skeptical that prudent living doesn't have similar or better payouts than it did fifty years ago.
Do the super rich really should enjoy the wealth? Are those really justified? Do their employees has done proportionally smaller amount of contribution to only entitle to that much less wealth in salary?
Nothing is stopping you from venturing out into the world and setting up a business, and making your way into the 1%.
Most work is commodity work. And in a lot of cases, you have a significant amount of people who can solve a problem. This results in a race to the bottom in terms of compensation.
Well, that's the issue we were discussing: Is there a system that can move the society in a rate that is at least as good as what we have now, but at the same time does not result into the 0.1% problem.
Nothing except the 1%-ers who are pulling up every ladder behind them they can.
Pollution is the clear example, I think. The more money I have, the more money I can make by polluting. If I capture below a certain threshold of the benefits of pollution, then the personal cost to me of pollution outweighs any benefit I might receive, and I'm disincentivized from polluting. The more wealth inequality there is, the more frequently scenarios in which pollution is profitable to me occur. Compounding this problem, pollution increases wealth inequality on its own. It creates health burdens and lowers output. It's expensive for society. So I end up profiting while everyone else takes a loss, thereby increasing wealth inequality.
Democratic government helps a great deal with this problem (although simple majority is insufficient to offset it entirely, even with ideal information), but democratic governments themselves become polluted by exactly the same decision making processes.
A lot of smart, hard-working, college-educated people I know live in studio apartments or with roommates in their 30s, because otherwise they can't make ends meet. Many work in STEM jobs, but not at one of the high-profile web/advertising companies that are currently printing cash. Their parents at the same age owned homes, often while working in blue collar jobs with one parent staying home to raise the kids.
Regardless of whether we, as individuals, can afford an iPhone or a TV, upwards mobility on a whole is declining. Income inequality is increasing. And the political system is under the thumb of lobbyists and billionaires who frequently act out of pure self interest. The United States government has spent $250 million a day for the past 16 years on wars that most people don't want but are powerless to stop. These are trends that are upsetting to many people, despite the momentary gratification provided by of our iPhones and TVs.
This is because today's booming companies rely on brain power instead of manpower. What does the future hold for people that aren't smart or born into money? As we continue externalizing intelligence to machines, eventually smart people will start falling victim to the automation trend that killed "dumb" jobs.
As I see it, we really need to increase funding for higher education (including adult retraining) and revamp K-12 to make the most of intelligent people from all socioeconomic backgrounds, while also placing greater emphasis on trade programs and small businesses.
We'd also benefit from tariffs on imported Chinese goods, increasing domestic manufacturing (rather than waiting until free trade equalizes global quality of life).
> I'm really at a loss for what exactly I'm supposed to be feeling outraged about.
Personally, I'm deeply concerned but not outraged... I vote for sound policies and politicians that may avoid the next Great Depression, but I profit when the public votes for more unregulated capitalism.
The answer is, they take far fewer risks than I do and rarely mess up. And when they do mess up it's years of hard work to recover.
But yeah, there is definitely some social Darwinism currently at play in regards to intelligence.
I think this has been true for a long time. Maybe even the whole 20th century, if you average out the Depression. I think the main difference in the last 20 or 30 years is that the instruments for making that investment have gotten dirt cheap, in percentage terms.
The previous historic rate was 10% growth. That was revised down to 7% (you seem to indicate its grown). going forward, we are probably looking at 5% growth going forward.
developing countries have much higher rates of return.
its true you can collect a lot off interest if you have 3 million $. but if that is all you do, inflation is going to tear you apart. you might be fine, but the next generation you leave everything to wont be so well off. a few generations and its nothing to write home about.
so if you want growth in a developed economy, you need to be entrepreneurial, and you need to take risks. thats the spirit of capitalism.
The notion that competition, free innovation, and upward mobility have ever been the spirit of capitalism is not based in any historic evidence. It was evident as far back as Adam Smith's Wealth of Nations that the true spirit of capitalism is the eventual concentration of wealth, formation of mono- and oligopolies and creating barriers to entry through influencing regulatory agencies (government) with wealth.
The 3 notions you stated are mostly an idealistic lie sold to the naive, young, and temporarily impoverished millionaires.
My view may be a tad biased, since I'm only alive as a product of communism (without all the freebies my parents received, as far as education, free housing and benefits, I would likely not exist right now)
Want to reduce the incentive to inherit money and do nothing? Increase the estate tax and lower the threshold where it kicks in.
Want to reduce the disadvantages of earning a salary? Increase taxes on capital gains and dividends and decrease taxes on earned income.
Want to make it easier for everyday folks to take risks and increase innovation? You can start with a comprehensive safety net, and things like universal health care.
Unfortunately (at least in the US) the party currently in power is going in the opposite direction. But it doesn't have to be that way.
- http://econlog.econlib.org/archives/2017/07/do_you_really_w....
- http://econlog.econlib.org/archives/2014/04/theres_only_one....
- http://econlog.econlib.org/archives/2015/09/our_bizarre_sys....
- http://www.themoneyillusion.com/?p=26636
Unfortunately sensible economic policies aren't politically feasible. This is partly because of the economic illiteracy of most voters and the lack of incentive for politicians to adopt economically sensible policies, but also because economists themselves often misunderstand economic theory.
If the government taxed 90% of Warren Buffett's wealth, Warren Buffett wouldn't consume less, he would just have less investments. The government would have more money, but if it spent the money on giving food to the poor, the food would have to come from somewhere, and it wouldn't be from Warren Buffett whose consumption was already modest. If the tax doesn't reduce your consumption, someone else is paying the tax, not you. Taxing 90% of Warren Buffett's wealth and spending it on welfare programs wouldn't make the poor better off, it would mainly make capital markets less efficient (which would make everyone, including the poor, worse off).
Capital income does make Warren Buffett richer if he makes wise investment decisions that make markets more efficient, but as long as he doesn't consume the gains it changes nothing, and as soon as he or his heirs consume the gains they would be taxed by a consumption tax.
Income taxes have the same issues as wealth taxes, so you want to tax only consumption. And a tax on estate is just an additional tax on future consumption by heirs. It makes no sense to tax future consumption at different rates than current consumption, so it's better to just increase the consumption tax than to add an estate tax.
* I don't want to tax wealth at 90%, that's a straw-man, but let's use it as an example anyway
* In your extreme scenario, there would be an increased demand for food. Greater demand would increase prices. This would move the allocation of resources to food production from, say, Ferrari production. You would have more food production and poor people would eat better.
* The outcomes of taxation and other economic levers are never represented by monotonic functions. The optimal options are always somewhere "in between" the extremes, so saying "taxing at 100% doesn't work, so we should tax at 0%" is a fallacy.
My intent was only to use it as an example. You can change the percentage to anything you want, as long as it is low enough not to have an effect on Warren Buffett's consumption. And if it has an effect on Warren Buffett's consumption, then you could do the same thing with a consumption tax so that wouldn't be an argument for taxing wealth over taxing consumption.
> In your extreme scenario, there would be an increased demand for food. Greater demand would increase prices. This would move the allocation of resources to food production from, say, Ferrari production. You would have more food production and poor people would eat better.
Indeed. But this is just as true if the spending on food is funded by a consumption tax. This is an argument for taxes, not an argument for income or wealth taxes over consumption taxes. I also believe taxes are harmful in general, but that's a separate point from whether a consumption tax should be preferred over an income or wealth tax.
> The outcomes of taxation and other economic levers are never represented by monotonic functions. The optimal options are always somewhere "in between" the extremes,
I don't see why this ought to be true and you did not provide any evidence to support these claims.
> so saying "taxing at 100% doesn't work, so we should tax at 0%" is a fallacy.
It is, but not for the reason you stated. Saying "taxing at 2% doesn't work, so we should tax at 0%" would also be a fallacy if the optimal tax rate happened to be 1%. This has nothing to do with extremes.
The problem is that eating food IS consumption. For very poor people, food is the main consumption. That's the bad of taxing consumption - that it naturally taxes more the poor, making them even poorer, than the rich.
>> The outcomes of taxation and other economic levers are never represented by monotonic functions. The optimal options are always somewhere "in between" the extremes,
> I don't see why this ought to be true and you did not provide any evidence to support these claims.
Of course, if you think that there should be no State - and therefore no taxes - you won't believe that. But if you admit that some public services are necessary (eg police, defense from external threats) then it's obvious that a 0 tax rate is bad - 0 taxes mean 0 public services.
On the other hand, 100% taxation would mean that there is nothing left for people to spend. That can't be good.
If the benefit from taxation is 0 at the extremes (0% and 100%), and non zero somewhere in between, then the curve can't be monotonic.
Then tax consumption enough to pay for the food accounting for the consumption tax that will apply to the food. That the amount of money you need to pay for the food increases as the consumption tax used to pay for the food increases is not a problem as long as anything at all other than food is being consumed in the economy. (If it happened to be the case that nothing other than food was being consumed, that would just mean it isn't possible to supply enough food—an income or wealth tax wouldn't be able to change anything about this.) The consumption tax needed for the government to pay for the food will be lower than the income or wealth tax that would be needed for the same thing.
Taxing investment to pay for food is only going to work insofar as it reallocates resources from the production of whatever the investments were in to the production of food. A consumption tax can already do this reallocation more efficiently. If your goal is to make the economy produce more of food and less of other things, this goal can be achieved more efficiently with a consumption tax than with an income or wealth tax.
> That's the bad of taxing consumption - that it naturally taxes more the poor, making them even poorer, than the rich.
It only taxes the poor more in proportion to their wealth, to the extent a higher proportion of the wealth of the poor is consumed instead of invested, but not in absolute terms. In absolute terms, it is the reverse, since the rich consume on average more than the poor even if this consumption is less as a proportion of their wealth. The tax on consumption taxes your absolute consumption, not your consumption as a proportion of your wealth, so it does make the poor better off in relation to the rich.
> But if you admit that some public services are necessary (eg police, defense from external threats) then it's obvious that a 0 tax rate is bad - 0 taxes mean 0 public services.
Even if these public services could not be provided without taxes, the reason having no taxes would be bad would not be that it is an extreme. But public goods can be provided without taxes. For the police, courts and laws, chapter 29[1] of The Machinery of Freedom describes one way this could be done. National defense can be funded with dominant assurance contracts, as can many other public goods (even when they can't be made excludable), including lighthouses, scientific research, information goods such as books, software, or art, clean air, and free-to-air television. So even if some public services are necessary or even just desirable, it is not obvious that having no taxes is bad as they can also be provided without taxes.
[1]: http://www.daviddfriedman.com/Libertarian/Machinery_of_Freed...
There haven't been that many large scale attempts to revolutionize society in history and some have worked just the way some people expected without hindsight. So it is in fact possible to predict the outcomes of a large scale system through causal reasoning and to have a reasonable idea of their desirability.
Which ones worked "just the way some people expected without hindsight"?
That's argument from intimidation and not a valid form of argumentation.
> In effect, late stage capitalism becomes the anti-thesis of the spirit of capitalism - devoid of competition, free innovation, and upward mobility
Fortunately the world isn't in late stage Capitalism, because there is no such thing. As one obvious example, China has only begun to emerge from its backwards Communist shell, it's still in the first innings of its application of basic market economics. It's still doing trial runs market economic structures in things like asset ownership in general (eg equities), banking and real-estate. Its currency and bond markets are in the very early development stage. Other emerging economies such as Vietnam, Nigeria, Brazil, India are similarly going through their own very early stage experiments with market economic structures.
In the US, more people are moving up and out of the middle class, than are moving down and out of it. That has been the consistent trend for 50, 30, 15, 10 years.
There's zero evidence to support the notion that either the US or the world are meaningfully devoid of competition. It's competetion in fact that is terrifying so many. 20 years ago Google, Amazon, Facebook, Netflix, Apple, Priceline, SpaceX, Airbnb, Oracle, PayPal/Stripe/Square, Cisco, Uber/Lyft, Airbnb, Spotify, Tesla, T-Mobile, eBay, et al. were either non-existent or small compared to established corporate giants. That's just for the US, China has hundreds of business giants that didn't exist 20 years ago at all.
There's so much competition coming from the US tech giants, the EU is taking aggressive government intervention steps to begin restraining them from routing European competition. That's the exact opposite scenario of not having competition.
Leaders in AI? Not IBM. It's AWS, Google, Microsoft, etc.
Leaders in vehicle automation? GM had to buy its way back to the table, Ford is still running far behind. Companies like Google, Tesla, Uber, and dozens of smaller SV companies, have led the charge.
Leader in electrification of vehicles? Tesla has overwhelmingly led the charge, most everyone else (except perhaps for Nissan and partially GM) is running from years behind.
ULA for the future of space launch? No, it's SpaceX and Blue Origin.
GE? Dying.
Exxon? Dying.
IBM? 21 straight quarters of revenue decline.
Alcoa? Who?
US Steel? Who?
Sears? Dead. Walmart? Mortally terrified of a company that didn't exist in 1993. JC Penney? Dead. KMart? Dead.
Pfizer & Merck? Say hello to Celgene, Biogen, Gilead, Amgen, Regeneron, Vertex, Genzyme, et al.
Banking? Welcome to the online, payments, crypto revolution. Ant Financial is moving more money every year than most of the US financial giants; it didn't exist in 2003. Square, Stripe, PayPal, Ant, Google, Facebook, Apple, Samsung, et al. are setting the stage, not JP Morgan or Bank of America.
Travel? Priceline is more powerful than most airlines or large hotel chains. Ditto Airbnb.
Taxi industry? Largely dead, destroyed, bankrupt. Million dollar medallions? Gone. Say hello to Lyft, Uber, Didi, et al.
Food delivery etc? Booming. Dominated by Sysco, McDonalds, Procter & Gamble, Kraft Heinz? Nope. Companies like UberEats, Grubhub, Blue Apron, and dozens more.
Old media? Dying and desperate. Newspapers? Dead. Old radio giants? Dead. Cable? Bleeding out. Say hello to Netflix, Spotify, Amazon, Hulu, Facebook, YouTube, etc.
The list just keeps going.
Thanks for this post, pretty amazing to read through these.
"Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.
[...]
All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind."
https://www.marxists.org/archive/marx/works/1848/communist-m...
1. How many people worked in the old companies and how many work in the new ones?
2. How many non-IT people work in the new companies?
If both answers are what I expect them to be, they point to a huge social problem somewhere along the line.
You're going to need to provide a citation for this statement.
As for the rest, how many people are getting wealthy from these companies? Largely the same people who were getting wealthy from previous generations, and a few lucky individuals who managed to gain entrance into the elite class. But really, it's the VCs making all the money here. The same sort of "already wealthy" people who have been making most of the money for the past several decades.
On your examples, they are extreme hyperbole. GE dying? Their revenue is 123 billion and have over a _quarter million_ employees. They span everything from aviation to healthcare to things like lightbulbs. Presumably you think Tesla is killing them or something? They are at 7 billion revenue and only 33 thousand employees. In automobiles GE has already simply bought self driving and electric car technology and by the time it's mainstream all their cars will have it. Tesla is amazing, but giants like GE have so much wealth they won't be going anywhere that easily, which is part of the point.
Ditto for the taxi industry. Dying? They seem to be everywhere still meanwhile Uber and Lyft are getting more and more regulated, or outright banned in some countries and cities. No, the end game isn't the death of taxies here, it's simply a change in the industry. Taxi companies will need to become more like uber and lyft, meanwhile uber and lyft will be regulated to the point where they are little different than taxis. Self driving cars might change the game, but by the time they are normal lots can change.
Most of your examples are not example of fundamental change, but rather simply the same rich people changing technology. Cable didn't die, it became netflix, hulu, amazon, disney, etc. Channels become streaming companies. Ads become product placements and internet ads. Same old stuff in new clothes, with the same cast of people running the show.
And GP is absolutely right about some of these: it's hard to imagine bigger competitors than the likes of Sears, Walmart, IBM, Microsoft, etc. who, even if they aren't literally dead, have absolutely had their mantles of increasing dominance ripped away, contrary to the doomsayers of the past. Even if GM adapts as you say, they'll be producing electric cars with modern design at competitive prices with better features than ever, precisely because they were forced to by the market. The goal isn't to undermine any company's longevity; it's to force every company to bow to customer pressure via competition. Old or new, it's a win if products get better and cheaper.
Uber and Lyft are getting more and more regulated
This is a common thread across every industry we can discuss, and to the extent that you're correct about the same players wielding power and wealth across eras and trends, lobbying and regulation play a massive role. It's fundamentally a critique of government power, not capitalism.
Same old stuff in new clothes, with the same cast of people running the show.
I'm curious: in what sense is Netflix the same people as the cable companies (or for that matter, movie studios)? They're directly competing in many ways, run by literally different people, with different employees requiring different skills, and competing in new and different markets around the world.
By definition of the classes in a capitalist society, those who can fully take advantage of investment (capital) returns are the capitalist class. The petit bourgeoisie, or middle class, makes some return from capital, but that's limited (in the traditional definition, they are the ones who apply their own labor to their capital, though those dependent on selling wage labor who also have separate capital holdings that are inadequate without labor income for personal support are similarly situated.)
But the usual American definition of “middle class” isn't the Petit bourgeoisie, but some group around middle income, which is almost entirely composed of what are essentially pure wage-laborers without meaningful capital stocks who cannot take advantage, in any significant way, of investment returns.
How exactly do you define "middle class"?
Because by the popular definition of middle class, these folks can not take any meaningful advantage of any sort of investment returns.
Generally speaking, middle class people barely have enough money to house and educate themselves (they must take out large barely-sustainable loans to cover either/both of those, at high risk to themselves). The wealthier of the middle class might have a basic retirement account of some sort, which might barely cover basic food+shelter+medical for their own person.
Although this is in the midwest, the cost of living is much lower here. It's quite possible that you just can't do this on your typical "middle class" income in other places.
Ownership costs in Vancouver and Toronto are sitting well north of 75% of the median income for individuals in those areas.
This isn't a made up issue caused by young kids eschewing spendthrift habits and buying all them dang newfangled iPhones rather than investing in equity building houses. It is an issue with the ratio of home prices to local median incomes.
You just said, in effect, they had enough savings to spend them later to meet basic expenditures needed in raising children in their income level, which isn't really a sign of ability to accumulate excess capital after maintenance.
Through lobbying of laws that increase their wealth more than others. Tax breaks that give scraps to the poor while giving massive benefits to the wealthy. A legal system that only the rich have a chance of truly navigating.
Ideally it shouldn't matter. One person being rich doesn't make another person poor. But politicians have been for sale for some time, and even basic concepts such a free speech and the open exchange of ideas are strongly tied to wealth in a way that ends up being bad for the little guys.
The wealthy person (a) does not need a 9-5 job to subsist and can devote all their time to a launching a business, (b) has a lower tax burden via capital gains, (c) can afford to fail multiple times, (d) can buy their way into a top school if they don't get in on merit, (e) tends to have better family connections, (f) etc.
Then the question is then whether startups exist in a competitive environment, which of course is true. Tech, and the web especially, often approaches a zero-sum game.
Why do you think that? Since 2000, how many brand-new companies and brand-new industries have been created, from scratch? Doesn't look very zero-sum to me.
Search: Google
Online shopping: Amazon
Cloud: Amazon, Microsoft distant second
Rideshare: Uber, Lyft distant second
Social media and messaging: Facebook, Snapchat
Digital advertising: Google, Facebook
Music (Spotify, Apple, Amazon, Google) and video streaming (Netflix, Hulu, Apple, Google, Amazon) might be most diversified. Cloud (Amazon, Google
How does someone else controlling resources prevent you from obtaining resources?
Well, because they control the resources.
The entire concept of rivalry in economics is about this. Only in the case of resource that are not rivalrous does pre-existing wealth become a non-factor.
Wealth is a measure of assets. Assets are, for the most part, rivalrous goods.
Ownership's most fundamental quality is the exclusionary right to prevent others to use or occupy the asset in question. Owning lumber, for instance, has value because it lets you prevent other people from walking off and building their houses with it.
Accordingly wealth is exclusionary by nature.
Part B) You might think that wealth isn't constrained, but it is.
You can't own more lumber than the sum of all of the forests and cut planks in the world. You can't output more human labour than the sum of the population on the planet can provide, and you certainly can't build an object which is composed of more minerals than our race can obtain. Will those limits increase over time? Sure. But that doesn't mean there's no hard top-end limit.
Even if we jump to non-rivalrous goods and you say "but I can create intellectual property at an infinite rate - those rights and assets aren't bound to physical constraints" - you'd be wrong again. The capacity to create and define non-tangible assets susceptible to ownership requires human labour. If you wanted to produce ideas for comic books, for instance, you wouldn't be able to produce a database containing the brainstorming of 10 billion people in a year. Because you don't have 10 billion people on the planet.
So even at your value maximizing best, applying the best possible combinations of resources, labour and opportunities, you still won't be able to create infinite wealth for all asset classes.
If you mean that wealth isn't constrained because you can inflate the value of the denomination it is traded in, that doesn't change the value of the asset itself - that's completely orthogonal.
Wealth insulates the wealthy from it, at least until millions of people can't find work for long enough that revolution seems like a good idea.
Someone is going to make progress eventually and it's often just a worker who creates automation or other innovation to change their industry, and as a result creates massive wealth for themselves. This is exactly the competition that the OP seems to think doesn't exist. That's before getting into details like how many new ventures take investment from the wealthy to become viable in the first place, thereby helping everyone involved.
I fully agree that the pace of change and inadequate societal policies can create harsh conditions at times, but the perspective that that the wealthy have taken everything and nobody else can have it is just a simplistic, inaccurate, and unhelpful outlook on capitalism.
Through regulation and corruption.
Accredited investor regulation in the startup world makes sure you can't participate in the future, even if you see it coming. Income tax to make sure a good year doesn't let you stop working. Capital gains tax to make sure you can't outperform the stddev for your socio-economic class range.
Given that taxes on corporate income is a direct tax in investment, it's counterproductive, it reduces investment, and productivity gains that increase both wages and wealth. It would be far better to have a zero tax rate on corporate income, and tax capital gains* and dividends at personal rates. That restores not just investment incentives, but also progressively of our tax system, so that the person with $1M in dividends and capital gains is paying a higher rate than someone with $20,000 in income.
And this would probably raise more tax revenue in the long run. Corporate income taxes are a relatively small part of overall tax revenues, increasing dividend/capital gains rates offsets most of their loss if they are eliminated, and over time more investment will drive higher wages/income and increase tax receipts.
* If capital gains are taxed at ordinary income rates, they also need to be indexed to protect from inflation. If they aren't, we risk taxing phantom gains, i.e. if an investment is sold for 20% more than it's purchase price, but inflation was 25% during it's holding period, it was actually a loss, because it lost purchasing power. This is one of the reasons capital gains has special rates, but that's not a good protection. In the 1970s high inflation hurt investments because historical equity returns were money losers adjusted for inflation. Investors preferred high interest bonds to protect their principle.
The only difference is the “last mile” tax of when you receive the money from the company. For capital gains it’s 15% federal, for salary it’s 28%
I've seen this stated in a few prior debates I've had on this topic, but I'd ask the rebuttal: Why can't you make that EXACT statement but s/corporate income/personal income/? I never understood why capital investment was more a focus than consumer demand, especially given well understood properties of both marginal spend for low vs high worth individuals (low income salary workers will spend more by % on goods and services than wealthy investors) and the assertion that we are "swimming in investor money" right now. (I see the long bull market, P/E ratios, VCs over the last decade/ICOs/wealth gap as datapoints)
I'm 100% sure someone in the finance world has already thought this through but I don't know the words to search for, and my own intuition suggests that supporting demand-side consumption is going to be a far better driver for true efficient allocations of funds and market growth to support a virtuous cycle of consumerism and employment than investor money will.
If you have a village of a hundred of starving artisans and workers, but no crops because they have no seed corn, you have high demand, but no capital, and so no one gets fed. Consumer demand isn't enough.
To address demand, someone must invest in production. Lets assume that the entire village has earned seed corn by selling their pottery but has no farming land. The villagers can eat the seed corn, so they do. But one day farmer walks into town and offers to give anyone 10x their seed corn in return for it, if they can just wait one growing season.
So now consumption is converted into investment. The farmer must get investment to have production. If the villagers tell him to just farm his land and they'll pay him in pottery when his crops are ready for sale, it won't work.
Now if the farmer has lots of seed corn, but the villagers died of starvation waiting, he's got no customers. He needs demand to make his investment valuable, otherwise it can only feed him, and he'll never get pottery or any other goods from it.
Consumption is the benefit of investment, and it helps drive more investment, but it's not the direct creator of it. Now lets assume the village and the farmer reach equilibrium. He plants enough crops every year to feed all of them, and they make enough goods that it's worthwhile to him to do it. Everyone's standard of living can rise as the farmer more of his excess seed corn every year an reinvests it to farm bigger crops, and the well fed villagers compete to make better goods to earn more food.
Now the King decides to tax farming output at 99%. The farmer can plant enough to feed himself and keep all of it, or plant enough to feed everyone, and only keep the same amount. Obviously he's not going to work 100x as hard for the same benefits as he can working just for himself. So we have demand, and capital, but we've broken the incentive for investing. So the farmer just plants enough for himself, and in the mean-time he sells all that extra seed corn to villagers for goods, akin to a rich son spending his inheritance. By next year the farmer is surviving, but no longer wealthy and the village is starving.
Keynes-iasts always want to focus on the benefits of demand, but it's only part of the story. Friedman-ists want to focus on investment, but again it's only part of the story. Laffer gave incentives a bad name, he was the Elon Musk of economic overpromising, but he was essentially right about their importance.
Our economy functions ok right now even though our corporate tax system is among the worst in the world and makes for substantial impediments to investments. The Republican bill lowers the rate significantly and allows for one time repatriation, but still leaves significant disincentives (and doesn't address progressivity at all).
Our economy would likely function better, productivity and incomes would increase faster, if we eliminated corporate income taxes. But our entire tax system would become less progressive if we didn't also address dividend/capital gains rates when we eliminated them.
No: in a capitalist society wealth can create wealth - by definition of capitalism. That means the wealthiest will earn the most.
The fact that actual productivity is taxed at a higher rate than capital gains is our rulers just rubbing it in our face.
edit: Ability to pay grows with inflation, by definition. Unless you have a particularly unusual type of debt, the principle is constant and the interest is based on the remaining principle and is therefor a pre-inflation value. Wages grow in absolute terms (even though their purchasing power is otherwise constant), so the debt is easier to pay off.
Getting richer has a strong relationship with making others poorer.
This theory is naive, dismissive, and wrong. You have accurately seen some bad examples, and it has led you to incorrectly conclude that the bad examples are the bulk of what is going on.
And just because enrichment, as you call it, can happen other ways than exchange, does not mean it doesn’t happen via exchange too.
So you're saying that it would be better if everyone was poorer individually, as long as they were more equally poor?
Why are you creating this either/or? Are you proposing that if we don't allow people like Gates and the Kochs to hoard billions of dollars that everyone will be poorer individually?
No, it's not at all that simple; there's both disutility associated with inequality and utility associated with absolute material position; how those net out is more complex than either “everyone getting more is better regardless of distribution” or “more equality is better regardless of how much per everyone gets”.
That is, it can be true that I feel rich or poor by comparing myself to others, not based on my absolute wealth. It can also be true that I look at any individual transaction and decide whether to make it or not based on whether it makes me better off in absolute terms.
It's about overall position, but the outcome of every particular exchange is a change to overall position; now, if the asymmetry in exchanges were essentially random, this wouldn't matter, but when you have a system with distinguishable classes, and there is a clear relationship between class role and which side of the asymmetry of exchange you tend to fall on across exchanges—say “capital” having the greater gain and “labor” the lesser—then you can end up with a situation where the pattern of exchange, each seemingly mutually beneficial but asymmetrically so, ends up producing more disutility from increasing inequality on one side than utility from absolute gain.
Voluntary exchange is not capitalism. Voluntary exchange has existed since the dawn of society. Capitalism is a form of production that developed with the industrial revolution. I can't tell if you've fallen for or are employing a sleazy equivocation.
e.g. When an ancient king had land, and let poor people work the land in exchange for a part of their production, what would you call that? Sure sounds like, "the extraction of surplus value via property relations and wage labor" to me.
Same story if the lord has a mill and charges people to use it. Or a bridge and charges people to cross it. Technology was worse, so there weren't as many physical forms of capital, but it definitely existed.
Some people seem to have this need to see capitalism as this invention created by bad people. Because to admit now natural and organic it is would be to admit how much enforcement and violence their ideology really demands in order to obtain the real world.
> e.g. When an ancient king had land, and let poor people work the land in exchange for a part of their production, what would you call that? Sure sounds like, "the extraction of surplus value via property relations and wage labor" to me.
Ok, if you want me to be more precise, private property relations, which are very different from feudal property relations. In fact, since property is a legal construct, this aspect of the development of capitalism could be called an invention, and the idea that capitalist forms of property are particularly ""natural and organic"" compared to other forms is quite suspect-- at least without any argument provided for it. As a foot note, one of the processes that developed private property was Enclosure [0] which was by no means nonviolent.
But I'm not going to try to be as precise and rigorous as a history textbook in Internet comments I compose in between compiles. Feel free to believe that capitalism is natural and organic, or read a history book. Idk.
There is an extent to which it is true (well, the first part, not wage labor!), but it's a different set of property realtions than the ones which are the defining feature of capitalism.
> Same story if the lord has a mill and charges people to use it. Or a bridge and charges people to cross it. Technology was worse, so there weren't as many physical forms of capital, but it definitely existed.
Feudalism is also a system by which value is extracted by property relationships; a different set than capitalism, and (while some quantity of wage labor may exist within feudalism) not one where wage labor plays a central role.
Capitalism replaced the system of property relations underlying feudalism with a different set.
> Some people seem to have this need to see capitalism as this invention created by bad people.
Traditionally, that's not even how the socialist critics that first identified it viewed it; it wasn't “an invention created by bad people”, but the state resulting from a number of related changes to the model of property driven by a combination of opportunity created by physical and other social technologies and self-interested people seeking their own gain. (This isn't inherently bad, the same people saw socialism the same way, though they saw the class driving and benefiting the preservation of capitalism against further change as narrow and inherently narrowing with the continuance of capitalism.)
I'm not really sure, then, what people you are referring to, since neither capitalism's defenders nor it's main critics hold the view you are attacking.
I can tell that you've fallen for Marxist rhetoric.
That the labor theory of value is entirely bunk is trivial to see. If you present to a buyer two indistinguishable instances of the same good but describe how one was meticulously hand-crafted by skilled artisans and the other produced by machines in a factory, in the prospective buyer’s view the former is no more valuable than the latter. Value is imputed by the end consumer who is willing to pay only so much for a pair of shoes, a hat, a computer, a book, an automobile, a house, whatever. Marxists object that this is “commodity-fetishism,” but their many syllables fail to camouflage their deep confusion.
Even employers — rather than exploitative expropriators — are sellers of goods or services but buyers of labor, one of many factors of production. Consumers set prices with their willingness to buy. Producers seek to meet this demand at a profit. (Running a break-even operation is a bad model: at best you end up back where you started and otherwise book red ink.) To take profit, they must produce at a cost below what the consumer will pay, the prevailing price. Raw materials must be bought ahead of time. Employees expect regular paychecks. The employer must risk all of these costs by paying up front for a chance of turning a profit in the end.
Employees likewise are sellers of labor, a role that Marxists fail to recognize or else they’d have to slap expropriator labels all around. Employees shop their skills to find the buyer who values them most highly. When a better offer comes along, we usually congratulate the person for finding a better situation even though it is the same worker now supposedly “extracting” more value. The downside is sellers compete against one another. When the value proposition grows too rich, we buyers start shopping elsewhere. “Cheap labor” is nothing nefarious; everyone is looking for a better deal. Sellers of goods, services, and labor must all continue to improve their offerings.
From top to bottom, this is a network built on voluntary exchange with no extraction or exploitation. The ruthless player is the fickle consumer whose tastes, demands, foibles, and sense of urgently are always changing. There’s also Mother Nature, sometimes gentle and sometimes furious. We live in a world of scarcity with the future uncertain. Where will tomorrow’s dinner come from? How will parents pay for their kids’ college years down the road? How will I pay the light bill next month? Capitalism’s aforementioned complex network of voluntary exchanges — “the market,” for short — is a search process for how best to allocate what we have now in order to obtain what we need and want tomorrow.
> From top to bottom, this is a network built on voluntary exchange with no extraction or exploitation.
I mean, this is just preposterous. Are we going to ignore how capitalism developed with enclosure, forcible transformation of the commons into private property, and colonialism? Do you really want to make the claim that, say the Dutch East India Company's involvement in India was based on voluntary exchange with no extraction or exploitation? Or how about today, when the computers we use to write these messages rely on conflict minerals? Give me a break. Your analysis is ridiculous at face value. My only question is how you could type that out with a straight face.
In the year 1900 Global GDP was 1 Trillion. Today it is 77 Trillion.
https://en.wikipedia.org/wiki/Gross_world_product
In Layman's the Global Pie is growing. The number of people living in extreme poverty has fallen DRASTICALLY over the last 25 years. https://twitter.com/humanprogress/status/913901718823489538
So the people with the smallest piece of the pie are slowly getting a larger piece, but the people who already have the biggest piece of pie are getting even bigger pieces faster. But because the pie is growing, it doesn't mean that their larger piece is making someone else get a smaller piece.
The only people who have a proportionally smaller piece than they used to are in the middle class. Which is what happens when first world work more closely with developing nations. Taking more people out of extreme poverty but putting slight downward pressure on the middle class.
Inflation is a regressive feature of modern currencies. It transfers wealth from lenders to borrowers and away from investors. The degree to which it does so is a function of the amount of wealth one has.
Is it easier or harder to afford basic foodstuffs? Do they eat out (luxury) more or less? If they own a home, is it larger or the same size? Who travels more? Who has better healthcare? Who spends more on entertainment? How much do they spend on the family pet? Who spent more time furthering their education?
All of these are measures of wealth, and the modern "regular" person would be wealthier in every one of these categories. And that's not even factoring in advances in technology that make the quality of life of a person better even if there share of societal wealth goes down.
> Is it easier or harder to afford basic foodstuffs?
Processed foods are far easier to afford, but they are extremely unhealthy. As for other basics, many have gone up over the last 50 years.
> Do they eat out (luxury) more or less?
Women now work. 50 years ago they did not. Less time/people to cook at home. Not like everyone is eating at steakhouses. They just don't have the time so they go to Chipotle or McDonalds or Panera.
> If they own a home, is it larger or the same size?
Most people own legacy homes-they are the same size because they are the same homes. New builds are building bigger houses but what "regular" person builds new homes?
> Who has better healthcare?
This has more to do with advancements in medicine and technology than people becoming richer.
> Who spends more on entertainment? How much do they spend on the family pet? Who spent more time furthering their education?
Furthering education is largely on credit, so this is a bad measure.
> and the modern "regular" person would be wealthier in every one of these categories.
Nope.
It's impossible to separate people becoming richer from advancements in technology. We didn't grow GDP by 77 times, because we work 77 times harder.
Improvements in underlying technology are what help us create more wealth. The problem is that the new wealth being created and benefits of that new technology is being shared so proportionally.
Try to do that today in the same area. The foremen at the same sugar house could never afford a regular residential lot, much less the a house to put on it. It would take them 20+ years to save the money.
When you read stories that Apple (or whoever) has $X billion "in cash" it's not actual cash. They keep some around in money markets and the like for near term expenses, but the majority is in bonds that pay more than inflation. In fact, if Apple were classified as a bond fund they would be the largest in the world:
https://www.bloomberg.com/news/articles/2017-05-04/apple-buy...
This is defined as people living on less than a dollar a day. Yes, it has more than halved in 30 years. Congratulations. I totally see how this progress actually over half a century relates to the world's richest getting an extra trillion in one year. Yep, makes sense to me.
Your tone sounds sarcastic but I don't see the justification for it. The number of people who are actually hungry and malnourished has gone down significantly, and far more people are vaccinated today then 25 years ago, and far more children can go to school and literacy rates are up.
For example, a single farmer today can not only produce many times more crop compared to a farmer 100 years ago, but also safely and efficiently distribute this produce to consumers across the globe. In general, assuming everyone in the economy works equally hard, the total production (i.e., the global net wealth) can increase as long as technology is increasing.
Numerically, yes. Psychologically and socially it's completely different.
As inequality rises, people whose wealth increases more slowly are effectively poorer in relative terms.
Of course, this doesn't mean that everyone is better; there are always winners and some losers, and there are setbacks here and there, but the big picture is one of great progress.
For more, one should read the Human Development Reports:
http://hdr.undp.org/sites/default/files/2016_human_developme...
https://www.hopkinsmedicine.org/healthlibrary/conditions/adu...
But I guess actually looking at the econometric data to compare apples to apples isn't worthwhile because you can stay indoors while your tires are stolen and watch Jessica Jones, so things are better than they used to be, right?
And was really wrong about it.
In any case, their wealth is increasing at a much higher rate of 23% compared with the world GDP increase of 2.4% and US' GDP increase of 1.5% (https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2...).
They're all one tech bubble bursting from loosing most of their wealth.
Anyone with some capital could've invested in Netflix, Facebook or Google several years ago and would have achieved a good return on their money.
Even if some sort of global wealth tax would be introduced (that's a big IF) to fix the accumulation of extreme wealth, would people be better off? The amounts collected, spread out over the entire population, would be relatively small. And most of this new wealth is mostly paper wealth -- the headline next year could very well be: "World's richest lost $3tn of their wealth".
How do you decide who gets the work?
So, if there is any indication that wealth has been accumulating faster, it is not on the article. And as such, the article is valueless and a complete loss of time.
http://fortune.com/2014/10/31/inequality-wealth-income-us/
There is an economist called Thomas Piketty who has made his name by studying and measuring inequality over the years. Read his book and you will get a detailed analysis of how inequality has increased in our society.
If me and the rest the million other people in my city have $100,000, some billionaire in a city somewhere else making another 100 million doesn't really have any impact on me directly. Yet it increases this inequality metric and I'm supposed to be outraged.
If the billionaire was using this position to corner the real estate market I'm trying to buy a house in, then I might be upset. But, I could also pool 1,000 of my friends together each with our $100,000 into a corporation and corner a market as well.
So why exactly is inequality relevant? Shouldn't we be focused on just raising where the bottom of the income range is rather than cutting down the tall outliers?
It seems to me like trying to make yourself wiser by killing everyone with more education than yourself.
It's waaaaay harder for you to organize and mobilize your 1000 buddies than it is for 1 billionaire to decide he wants to do something you don't want, such as lobbying politicians to give him a tax break, for example.
If we want to stop regulatory capture, stop that. Don't worry if it's one person or 1000 behind a movement.
According to this article, though, there has been an increase of consumption inequality from 1980 to 2005 in the US according to various papers: https://web.stanford.edu/~pista/JEP.pdf. But the consumption inequality is far less outrageous than income inequality and can be estimated to have been in decline in the world at large through data from the World Bank's DataBank.
See “Measuring inequality: A three-headed hydra”[1] in The Economist and “Economics is all about consumption” by Scott Sumner.[2]
[1]: https://www.economist.com/blogs/freeexchange/2014/07/measuri...
[2]: http://econlog.econlib.org/archives/2014/07/economics_is_al....
But when you say "without visible contributions to society." why should an extremely wealthy person have to contribute to society?
If history says anything, it's that humans only see this when the structure collapse, not when it's still working.
And to be harsh and potentially thought as rude: all you have been saying is a dream, a dream of impractical theorist.
Regardless of how rich I am, I still need to eat and live and put clothes on my back. Are these not contributions?
Or are you suggesting that the wealthiest are parasites simply because they should contribute more to society than someone less financially well off?
Yes, parasite, and what happens to parasites which are too successful?
If my US company shifts labor to India, do we assume it is bad simply because the US doesn't receive those wages to stimulate the US economy? Does this benefit India though?
I think your argument depends on perspective, from US point of view this situation is bad, from India's it isn't bad. From the wealthy person's doing this, it simply benefits him/her.
I don't know how to solve this and completely agree with the argument but it is technically flawed.
No one said that it was, and it isn’t illegal to be a parasite. As to the rest, life is a competition.
Ideally, one should contribute as much as she/he takes. Of course, that's impossible and impractical.
I'd say the higher in the social rank, they ratio of contribution to taking drops exponentially, not linearly.
That's the problem.
You mean the richer people are, the ratio of their contribution to taking grows? That does not seem possible, because that will not make the person rich in the first place.
But the problem is the ratio of their taking far outpace the contribution.
If influence, specifically political influence, and wealth could be perfectly decoupled, no reason. That nexus, however, means an oligarchical class of rich idiots have the capability to project their stupidity onto national policy.
Society as a whole benefits much more when each generation has to earn the bulk of their wealth.
When Elon Musk becomes obscenely wealthy by creating affordable electric cars and space flight, everyone else gets the benefits of affordable electric cars and space flight. Not talking trips to mars, but constellations of satellites offering super cheap worldwide internet.
What the Koch's spent their money on is an entirely different issue.
To be exact, it seems to be saying that the richest 500 are x% richer at the end of the year, not that the 500 richest at the beginning of the year are %x richer at the end of it. These are two different things because they are two different sets of people.
In decades past the richest and the poorest people don't remain in that part of the income distribution very long; this is especially true in the US.
One of the best studies on intergenerational mobility in the US, using all IRS records (not sure how hard they had to work to get those) shows that mobility in the US has been fairly constant for 50+ years.
[1] http://www.equality-of-opportunity.org/assets/documents/mobi...
The sets mostly overlap. The top 10 of the richest people was the same in 2016 and 2017 [1]. These 10 people saw their net worth increase by $107 billion.
[1] https://en.wikipedia.org/wiki/The_World%27s_Billionaires#201...
I would say this is especially not true in the US where social mobility is notoriously bad.
"Several large studies of mobility in developed countries in recent years have found the US among the lowest in mobility." [1]
[1] https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...
https://hbr.org/2017/10/why-wages-arent-growing-in-america
https://www.vox.com/policy-and-politics/2017/8/8/16112368/pi...
https://qz.com/851066/almost-all-the-10-million-jobs-created...
(Personally I don't mind a bit of hardship if it helps everyone, but I understand not everyone can be frugal or that some people can be just plain unlucky)
If we attached proportional responsibility to part time work, or just provided benefits out of the public purse instead of labor law, part time work wouldn’t be such an obviously superior choice to employers.
% from 1820 - 2015:
https://ourworldindata.org/slides/world-poverty/#/declining-...
Distribution 1988:
https://ourworldindata.org/slides/world-poverty/#/Global-Inc...
Distribution 2011:
https://ourworldindata.org/slides/world-poverty/#/Global-Inc...
The middle class in the US had enjoyed the fruits of global inequality resulting from colonialism and WW2 during the second half of the 20th century.
As the gap in skills and education between the average American and the rest of the world have disappeared, the former US middle class will see their income gap with the rest of the world also disappear. A teacher, factory worker or a store clerk in the US isn't 20x more productive than a teacher, factory worker or a store clerk in India or China and there's not reason for that wage gap to exist any more.
The developed countries are still developed and their citizens will fight back.
It's the very first and most important step of progress. If people don't have enough to eat, even their brain won't develop properly. The lower layers of Maslow hierarchy are absolutely essential.
After that, more progress is needed, but having food, essential health and physical security is definitely the fundamental thing for any other types of progress, such as education.
The sources below are from a quick Google search. They mostly reference income stagnation and are about the US. But income stagnation leads to wealth stagnation and there are similar trends world wide. Thomas Picketty's Capital in the 21st Century is largely about this issue, as is Robert Reich's documentary Inequality for All. There are those who challenge the conclusions drawn in both, but few seriously contest the data they point to.
[1] http://www.epi.org/publication/charting-wage-stagnation/ [2] https://www.npr.org/sections/money/2014/10/02/349863761/40-y... [3] https://www.economist.com/blogs/freeexchange/2013/09/incomes [4] http://www.nytimes.com/2013/01/13/sunday-review/americas-pro...
ERADICATE EXTREME POVERTY & HUNGER
Target 1.A:
Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day
The target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline.
More than 1 billion people have been lifted out of extreme poverty since 1990.
In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015.
Maybe read up a bit on fiscal multipliers. Government spending (redistribution) is one of the better ones. https://en.wikipedia.org/wiki/Fiscal_multiplier
Also, worker productivity is through the roof. Perhaps we can talk about giving back some of those production gains, if it funds things we like.
Citation/explanation needed. I don't see it working out this way – that seems like a dramatic simplification of the economics at play.
GDP is a very rough indicator for a society's standard of living and well being. GDP is really bad at measuring things like health, household productivity, technology changes, education, leisure, environment, etc - all which may not show up in GDP.
How do we combat that?
Thought experiment: If we redistributed all the liquid capital that currently exists, one year later the people who own infrastructure will end up the 1% again.
You can see this through some basic economics. People have more money, they are willing to spend more money. Meanwhile, supply remains constant. What happens? Prices go up.
Everyone has to eat, everyone has to buy medicine, everyone needs to sleep, everyone needs the internet. Everyone “needs” to gamble. The people who own that infrastructure would be the richest again.
They have more power. Let’s say they get what they want. Double the working conditions and double the wage.
Now what?
Everyone needs to eat, needs to sleep. Ok let’s raise the prices. They can afford it. I.e they can no longer afford it.
Meanwhile, since food costs more so farmland costs more. Increasing barriers to entry.
So they strike and ... the cycle continues.
Basically, goods with the highest price elasticity of demand win. And they win by leaps and bounds.
We would first need to correct the monopolistic behaviors by corporations which is currently being encouraged by the US government. Then UBI would work.
OR
We could do a daily proportional wealth redistribution (i.e. UBI based on a percentage of total wealth, including assets, rather than a static number - and we could do this at a daily cadence). This system would hurt corporations which have goods of lower price elasticity of demand, but at least it would be good for individuals.
OR
We could have it as state run/sponsored, i.e. the government runs farms and sells food, or companies run food production and sales, but the government pays for it. This has quality concerns, especially when it comes to regional distribution. But hopefully, like the US schooling system, maybe a combination of both government run, and government sponsored (i.e. charter school), and privately run (i.e. for the ultra wealthy), would create a healthy enough environment. Ideally, since this doesn't depend on the quality of local teachers (i.e. food doesn't care if it is getting re-allocated to rural Arkansas), it would work out better than the US schooling system. Note: This doesn't work as well for housing.
"Why do you need a raise? You get $xxx in basic income." - Boss
Salaries (except maybe minimum wage) are set by demand and supply. UBI will do nothing to demand, will do nothing to supply of high skilled jobs and may actually reduce supply for low paying jobs by providing an alternative that isn't starving.
Even today I could spend 3x less on rent if I moved and endured a 30min commute. I don’t. Having a job is not the primary priority for why I’m paying high rent.
$2 bn / 7.6 billion = 0.263
Another way to think about it is that the 500 oligarchs of the world were able to capture a worldwide average of 26.63¢ from each person. In the course of 365 days it's as though each person in the world bought each of the 500 oligarchs in the world a full $0.26/$1.50 = nearly 1/5th of a single vending machine 20 ounce bottle of coke. Multiply that by 500 and you can have a very proper sit-down meal anywhere in the world.
Of course, maybe they generated $500, or $1000, or $3,000 in wealth to do so.
After all, the worldwide real income increased by well over twice that.
But it's that fifth of a bottle of coke that bothers me, personally. Why should bill gates get a quarter from me? He obviously didn't work for it as much as I did. If anything he should be paying me. Why, you ask?
What did I make that he uses? Why, I might as well ask: what do the 500 oligarchs of the world make that anyone uses - wait, don't answer that, I have a point to make here and it would kind of ruin it to know the answer.
My point is, the rich need to stop getting richer. It's just not right.
/s
[1] http://www.ilo.org/global/research/global-reports/global-wag...
That's an understatement. When revolutions come, the rich are always the first at the guillotine.
Of course, that's rather unlikely, but these people have so much money that they can afford to make that consideration.
I'm fiercely opposed to the regressive turn the economy has taken, but I'm just as fiercely opposed to hysterical garbage journalism. We won't correct the broken social contract by heaping nonsense upon injustice.
I'm all ears for constructive policies to tie earnings for the least wealthy to market gains, since the real problem is lack of ability to invest wages in the market, but I don't see that on offer here.
This is NOT something a capitalist country should be doing. It's not the job of government to make your investments work out. It's YOURS.
Binary winner-take-all, all-or-nothing markets?
There seem to be deeper natural forces at play; the proposed evil divide between the rich and poor just incidental symptom. Surface ripples in a powerful river.
The novelty is in the global nature of the competition, the physical and informational proximity that accelerate evolution of patterns. That's what makes them spread so quickly and prominently, across seemingly unrelated scales and disciplines.
Another curious manifestation is how humans are changing the way they treat each other, how they structure their (human) relationships. Did humans tame the computers, or did computers tame the humans?
This is regardless of how poor anyone else is.
No one should have this kind of money, it's really absurd.
I can't imagine anyone denying that lobbyists exist and that large amounts of money can buy you a lot of political power.
That is not true. Hillary spent the most money in any American campaign (nearly $1 Billion) and still lost. Strategy matters more than money
https://www.vox.com/policy-and-politics/2017/3/8/14848636/hi...
[1] https://en.wikipedia.org/wiki/Political_activities_of_the_Ko...
If we're going to be fair, shouldn't we control anyone at all who has influence?
He used his power to push shitty and proprietary software into my industry, thus limiting the impact that properly developed software could have created. I had no choice in this and he used everything from back-room deals to flat out lies to achieve this.
And a couple of well documented crimes.
Wrong. Inequality of wealth results in inequality of political representation and therefore power. And even though wealth is not zero-sum, power is.
When inequality gets high enough and power concentrated enough, Democracy decays towards oligarchy, social mobility grinds to a halt, what was a free and relatively classless system becomes an ossified aristocracy and freedom slowly devolves to a dystopian tyranny.
We're already seeing the beginning of this process in American society. Already, we have substantial evidence supporting the idea that Democracy has decayed into Oligarchy -- and it did so several decades ago. [1]
This matters if you value a free and just society. It matters a lot.
[1] https://scholar.princeton.edu/sites/default/files/mgilens/fi...
Just imagine how much influence these popular YouTubers have compared to regular folks, the impact they have on cultural and political life. Should we allow a tiny group of YouTubers to have such a massive subscribers_count and influence?
I say NO! Behind every popular YouTube channel lies a great crime.
Edit: you all that are down-voting need to learn how the economy works.
Edit: Don't passive-aggressively revel in victimhood. If you feel misunderstood, explain better - don't blame your audience.
I would counter that right now, money is ridiculously cheap. Interest rates are breathtakingly low. There are enormous amounts of money running around begging to be borrowed. As such, if this system you posit was accurate, then the very wealthy would be seeing the smallest returns on their money for decades, as they effectively competed to be the lender/investor to the people creating wealth.
But that's not what we're seeing.
It's also not what we see with investing in the stock market; that provides nothing to a company beyond the first time a stock is sold (barring a secondary argument that there is value in demonstrating that people are trading shares in the company which makes everyone feel good about the company and there's a value in that), but the rich are seeing some fantastic returns on their money in the stock market, extracting a nice steady stream of dividends and capital value increases, without having given a penny to the company named on the stock.
As an aside and speaking purely from my own experiences, I draw more each year from the stock market than my country's median salary, and I'm generating no wealth whatsoever for that (although I expect some would argue that by not selling all my shares, I'm providing value and that's what I'm being rewarded for). I could retire and get by for the rest of my life, entirely on the backs of others. The rich do the same to a breathtaking degree.