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Comment by wonderwonder | Hacker News Reader

The top 1% of American's own more wealth than the bottom 90% and this concentration is only increasing. Soon no cities regardless of size will deliver for low skilled workers as there will simply not be enough of the proverbial pie to go around. As wealth is concentrated and rents and property values rise the vast majority of this country will (does?) live paycheck to paycheck. This is unsustainable and will either need to be addressed or we will be living in a very real dystopia.

Add the very real prospect of social security collapsing and we have a good setup for the streets being filled with homeless and vast portions of the population failing simply because there was just not enough money to go around.

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“not enough money to go around”

Where do people get this strange idea that if someone else makes money it somehow precludes others from doing it? Bill Gates got rich with an invention that also generated probably a trillion dollars in economic growth for everyone. Including most people on this sites income.

Likely because money and wealth is a zero sum game. There is only so much land, food, and materials to go around.

  There is only so much land, food, and materials to go around.

True(ish). False. False.

I say "ish" for the first one because hopefully humanity will grow beyond Earth in the near future.

Generally, all of the above are false unless you are talking about a population which never stops growing, and in that case that would be the problem. Not wealth inequality.

If you have a population that did stop growing, but in which class divisions exist, and the upper class keeps taking larger and larger share of overall wealth generated by the society, you're going to have a similar problem.

Money is just a tool to represent value. Value is not a zero-sum game. If a person creates something of value, she is creating something that did not exist before.

For that item to have quantifiable value to others though, they must be willing to exchange their money for the new item. The money that is to be exchanged already existed and is supposed to be limited in supply via fiscal policy. If the majority of that supply is owned by a small group of people the value that can be exchanged for the newly created item is limited as well unless those with the wealth want it.

Assuming that the monetary supply is fixed, then there is a deflationary effect. Even those with less money are able to purchase more value as more value is created. This is why incentives for creating value are important to an economy as opposed to just increasing the monetary supply.

Non monetary value exists, look at entertainment or education, both gained free via YT

Its not free. You are the product. Advertisers pay google and google is then able to provide the infrastructure to provide your entertainment. Its provided to you in hopes that you will buy something based on the ads you are shown. It must also be effective advertising if people continue to pay for it.

Just one example. If I live in city A and all rental properties are owned by a select few wealthy companies and individuals, they are able to set the rental market. If they raise prices and I am a wage earner, I have no other option but to pay what they want, reducing my net income and increasing theirs. The vast majority of people are not able to spin a startup into being in their garages, they simply live and pay their bills the best that they can. I am not suggesting we vilify the wealthy but to suggest that one set of people earning greater portions of the total wealth does not negatively affect the less wealthy is disingenuous.

The same concepts can be applied to the wealthy having access to lobbyists and consequently the ability to reduce regulations leading to long term health care costs for those forced to live in now less regulated environments. Gentrification is another venue for this. People live in a neighborhood, wealthier people move in and property taxes go up. Poor people are forced out. The actions of the wealthy have ramifications on the lives and incomes of the less wealthy.

They can't really set price of the rental market, cant they? Salaries either have to keep pace with the rents, or renters get displaced. Displacement can only be sustained so long as there are transplants take their place, who can afford the rents, and there is usually finite supply.

I've read conflicting things about gentrification. But on the "gentrification is good" side, the theory goes that areas that tend to "suffer" the most gentrification, tend to be areas that have very high levels of displacement already. They tend to be poor, lots of foreclosures or dead beat renters. In other words, gentrification doesn't necessarily increase levels of displacement. Owners in gentrified areas stand to greatly benefit from gentrification. The renters... they get displaced - but that was happening whether the area was gentrified or not.

> if someone else makes money it somehow precludes others from doing it?

There is an easy way to see that and it is if the median inflation-adjusted hourly wage has risen in the US since the early 1970s. Or if inflation-adjusted weekly earnings have risen. They have not, with GDP growth, both have fallen.

That this even has to be discussed shows the deep control those heirs who expropriate surplus labor time from workers have over discourse, the media, forums like this (run and controlled by an accelerator) etc.

Workers create wealth at a mature company. Some of that pays the electricity bills etc., but then the rest goes to either dividends to the heirs, or to wages. That is the "preclusion". The heirs expropriate the profits of the surplus labor time from the workers creating the wealth. They are shorted on their wages. Sometimes this is explicit like the cabal between Steve Jobs, Eric Schmidt that came out in the lawsuit.

Insofar as Bill Gates and invention - it takes a hell of a lot of gullibility to swallow the fantasy you concocted. Kemeny and Kurtz created BASIC. Gates hacks into a military research computer at Harvard and steals computer time from it according to Paul Allen's book (and Harvard admin found out and had proceedings) - they port BASIC to the Altair.

Then IBM comes to Microsoft. IBM got wealthy with computers on taxpayer funded government contracts and a monopoly which was lightly overseen. Gates's mother is on the United Way board with IBM CEO Opel who helps makes this meeting happen. Microsoft sells Seattle Computer Product's Qdos to IBM (Gary Kildall said it was a complete ripoff of his Drdos). A purchased ripoff of another product, sold thanks to family connections. So much for "invention".

At times like the current one, with real wages falling since the early 1970s despite economic growth, that this is even discussed is a sign of how the heirs have bought and paid for the narrative as well.

If someone invents a tool and sells it for a profit - who was exploited? Is it not possible for everyone to be richer than they started and also create wealth??

The question was really simple. Your answer is the kind that inevitably ends with "you just have to read Das Kapital". That is not an answer.

>If someone invents a tool and sells it for a profit - who was exploited?

Nobody, and Marx doesn't say that anyone is in such a case.

>Is it not possible for everyone to be richer than they started and also create wealth??

In some way, it is possible - after all, the worker is richer than he was before (he has more money thanks to his wage) as is the capitalist (who has made money from the sale). Now what wealth is created? Arguably, social wealth in the case of new technology being developed, for example. But Marx doesn't deal with this concept of "wealth" or even immediately money, he deals with the concept of value, which works at a different level of abstraction to money. The value-form only becomes the price-form, they're not identical.

I'd suggest looking up theories of exploitation as they have been figured in Marxisms that don't rely on a labour theory of value. It's too much[0] to summarize in one HN comment, but you don't need to read Capital either (though it would be helpful).

[0] https://plato.stanford.edu/entries/exploitation/

> If someone invents a tool and sells it for a profit - who was exploited? Is it not possible for everyone to be richer than they started and also create wealth??

As I said, when, after the electricity bill etc. is paid, created wealth is split between dividends to heirs and wages to those who worked and created the wealth.

If in your hypothetical situation there is no split - if the person who worked and created wealth keeps everything - there is no expropriation.

The expropriation is the last few hours of work he does, of the wealth he creates - none of it going to him, the one who created the wealth and did the work. All of the profit going to the heir. But if there is no split, this expropriation does not happen.

I never understood why people are so casual about inequality. To put it bluntly a lot of people will eventually, if not already, be working something like three quarters of their lives for society, a company and a land owner. And only one quarter for themselves.

What was Bill Gates invention? Wasn't that PARC?

Microsoft.

I mean which invention that created a trillion dollars in economic growth. Microsoft's main thing was to retard the progress of web browsers for half a decade.

Really unfair to discredit Microsoft from anything but the web browsers issue. They massively pushed the idea of personal computers, probably more than any other company in history.

Commodore? ...Apple?

So you can’t see how a CEO being compensated 1000x more than whoever cleans their office is a problem? Money flows like a river, and when every executive diverts egregious amounts of money that they’d never spend in their lifetime into their little pools, theres less money flowing downstream along the river. Do you really think that Bill Gates needed to become one of the richest men on earth to proselytize ms dos? Beyond paying the man enough to keep him fed and working, thats millions and millions of dollars of compensation thats removed from the broader economy solely to generate Mr. Gates a comfortable dividend.

Do I care if someone has 1000x the artistic talent I do? Is there a shared river of inspiration we're all drinking from?

You seem to believe there's a fixed pile of money in the world that every human competes for (e.g., 16th century Mercantilism).

Go into the woods and turn a tree into a chair. Where did that value come from? Will it run out?

I think it is hard to make that into a constructive argument.

Either you care and the 'allocation' is unfair.

Or you don't care, which means that the market doesn't work since you caring is what is supposed to allocate resources fairly, and it is still unfair.

The word 'allocate' presupposes a fixed pie that we're expected to split in a zero-sum game. That works for redistributing the fraction of wealth captured in taxes. But the parent's argument is about the process of accumulating wealth itself being zero-sum somehow.

Thinking "someone earned money which would have gone to me otherwise" is like thinking "someone got in shape and that physical fitness would have gone to me otherwise".

Where does the dollar come from? A printer in a U.S. mint building. Every single one. No dollar can come into existance without being printed in one of these buildings. This is not like working out or singing a song, you can’t will money into existance and into your pocket, ultimately someone in charge of a larger pile of money wrote you a check. There is a finite amount of money in the world.

Banks will money into existence every time they issue a loan.

https://en.wikipedia.org/wiki/Money_creation

When I deposit $1k in the bank and you take a $500 loan, $500 is created out of nowhere. You are using my deposit yet I still have a balance of $1000 on the books.

Banks cant will money into existance. If you withdrew your money the bank has to pay you from other funds. During the great depression banks collapsed this way, the only thing stopping that today is banks have enough funding to buffer people withdrawing from their accounts.

I don't really matter if it is a growing pie or not, you are still getting a share. I am sure Uber creates a lot of new wealth, but the average driver most likely isn't seeing a lot of it.

Why doesn't the absolute share matter? If I give everyone an iPhone and a few people get an iPhone + Macbook, is that "bad"? Isn't everyone better off? (Yes, humans can be petty and jealous, but they are objectively better off.)

Uber created a lot of wealth. Some got more than others. Is that objectively bad if the wealth didn't exist before?

Eventually you will run out of wood to make chairs or people who want chairs, you can’t make infinite value as every product ever made requires commodities going in one end and customers with disposable income on another.

The problem is when a company makes x, ceo takes 0.1x in compensation, while everyone else on the payroll combined also takes 0.1x in compensation just because they didn’t show up to work with the same provenance as the ceo. For a company, there is very much a fixed pile of money that every employee competes for.

(As people use forests, others will notice and start making tree farms.)

I don't see how it's inherently wrong for a CEO to take 10% of revenue and employees split 10%. And why do companies have a fixed pile: shouldn't an effective CEO grow top-line revenue? What if employees are splitting twice the revenue compared to a year ago? (If the company isn't growing, replace the CEO for someone who earns their 10%.)

Money-making inequality, on its face, doesn't seem different than artistic inequality. Should I be angry that Warren Buffet gets 20% annual return on his investments while index funds only do 8%?

(As people use forests, others will notice and start making tree farms.)

Stories of countless species hunted to extinction show that this is not what happens.

Let's look at the physics(?) of the economy: where does wealth actually come from? It's either from transforming things into more useful things or increasing efficiency of processes. There are limits to both of those things.

We live on a planet that's in a rough equilibrium in terms of both matter and energy.

So we have a finite maximal amount of value that we can extract from a constant amount of matter - which means that overall wealth is limited - we're just moving it around and at a finite rate at that - somebody is getting a bigger slice of this pie than the others.

Is wealth truly proportional to matter? How many physical resources are used when making software, music, art, theater, writing? How much wealth did the internet create and how much matter did it use?

There may be a finite limit on potential wealth but it’s effectively limitless for human planning purposes.

(For the trees, we can certainly mismanage our resources; it doesn’t mean it’s a priori impossible to create a growing and sustainable form of wealth.)

How many physical resources are used when making software, music, art, theater, writing?

Actually a pretty decent amount over the life cycle of a person. After all those things require a functioning civilisation that educates properly to begin with.

The internet is mostly a means of making communication more efficient - that was one stupidly inefficient process ripe for an upgrade.

So yeah, no additional wealth really - just much less losses.

What "pretty decent" physical resources does making software consume? (Beyond energy, which is renewable.)

The internet and other tech doesn't create new wealth? Why has the size of the economy grown exponentially since the industrial revolution?

If wealth were fixed, as population in increased we'd be getting vastly poorer worldwide (1.6 billion in 1900 -> 7 billion people today). Have we gotten 5x poorer on average?

(These facts are easily googleable.)

> You seem to believe there's a fixed pile of money in the world

...there is. not in the sense of "money" but in the sense of "wealth" and ownership of private property. Wealth is not "created" it is diverted. If wealth grows in one place it's because it shrank in another.

Unless you believe that growth and resources are infinite, like many capitalist economists.

When you invent the wheelbarrow, stack bricks into a house, plant a seed, where is wealth diverted from? Who is losing? What shrank?

Potential wealth is ‘finite’ because humans are finite but there’s no practical limit. (Just like there’s no practical limit to how much art can be made. If art isn’t being made it isn’t because there’s only so much creativity to go around.)

Where did you get the land to grow your seed? Where did you buy the bricks to build your house? And the fence to keep the deer away? What of the police and army to keep people from killing you and taking your seedling? The water to nourish it?

You described one of the only scenarios in which wealth is "created" and the only reason it's created is because it derives "free" energy from the sun. But that is just one of the economic inputs of the seed, and there are many more (the labor to water it, the water to grow it, the land on which it grows).

The sun's energy in this case is a small portion of the actual economic inputs the seed requires. And those economic inputs are diverted from somewhere else. They do not appear out of thin air.

So yes, I agree, we should harness the sun's energy, or other "free" energy sources, as economic inputs.

That doesn't change the fact that the overwhelming majority of wealth already exists and is not created out of thin air, but diverted.

It's helpful to separate natural resources (land, woods, oil, etc.) from wealth (valuable possessions).

We take natural resources, often plentiful, apply labor + skill, and get a more valuable product. We're wealthier as a result.

Yes, natural resources are finite, but not the limiting reagent for most things. There's a zero-sum game in that land used for farming is not available for an entertainment complex. But we have so much used for "nothing" that switching it to "something" is a giant increase in wealth. You can buy an acre in Kansas for a month's worth of minimum wage work. Las Vegas was built in a desert surrounded by hundreds of miles of wasteland. Did turning land, earth, trees, and iron ore into Las Vegas add zero value? (Not saying it was the best use of resources, just that assembling buildings improved the value of the raw materials.)

As a counterexample, consider melting down a car into slag. Are you less wealthy with your charred steel than a working car? Of course -- charred steel is less valuable. The number of atoms is the same. In other words, is an assembled watch worth the same as a pile of gears? Are you indifferent to the two?

If wealth were fixed in the earth, we must be getting poorer as the population grows. A few thousand years ago we had 1M people on earth. Were those peasants 7000x wealthier than us?

Fair points in regards to my response. However, I believe part of your argument is still predicated on endless resources. Agreed, there are vast many (ever-shrinking) resources we can use while the population is growing, however at some point we will reach an equilibrium where there is no more vacant land and the creation of new wealth (barring space exploration, at least for this argument) will cease.

In regards to your watchmaker: a pile of gears might be marginally useful to a few, but a working watch will be valuable to many. Has the watch created wealth? No, because the people who were not buying watches are now not buying something else in order to buy the watch. The creation of the watch did not add the dollar-value of exactly one watch to everyone's wealth, allowing them to spend money on the watch. The wealth was diverted! The creation and selling of the watch certainly did create societal value but it did not create wealth, it merely diverted wealth from some other purchase each watch-buying customer would have made and sent it to the watchmaker.

My point is that the overwhelming majority of transactions are diversions, not creations, of wealth.

To your very original point: "You seem to believe there's a fixed pile of money in the world that every human competes for"

I suppose my argument should be changed to: Perhaps amount of wealth is not currently fixed (as defined by the shrinking number of resources one could use to create wealth), but those who create wealth (and not just merely divert it) are generally already very wealthy and are generally the only ones who have the means to create this wealth due to extremely high barriers to entry.

So, I would say theoretically, you're correct: there is a growing pool of wealth. But practically, any normal, everyday person cannot go around creating new wealth...they can only hope it is diverted to them by someone who already has wealth.

Thanks for taking the time to clarify, I mostly agree with your updated version. Global wealth can grow but is not necessarily (or often) distributed, and not everyone is in a circumstance to grow it on their own.

You may enjoy the elephant curve: https://www.brookings.edu/research/whats-happening-to-the-wo...

The very rich and moderately poor have seen wealth increase while the top quintile (E.g. many Americans) have seen wealth stagnate. Globally we’re richer on average but not everyone participated. Clearly it’s best if we can lift all boats and not certain subsets.

Many people think the economy is a fixed pie. Do a quick google: inflation adjusted gdp per capita is increasing exponentially(!) over time as we find new ways to create wealth. If the pie were fixed our living standards should decrease over time as there’s more mouths to feed.

https://www.google.com/search?q=world+gdp+per+capita+over+ti...

I’m not saying local deviations don’t exist - I can lose my job - but globally wealth has been growing continuously and poverty is being eradicated. This is only possible with wealth creation. Look up Hans Rosling’s work.

https://goo.gl/images/QejAcY

Gates succeeded by creating a 40 year monopoly which established and largely controlled the heartbeat of the computer revolution. That's about as exclusive as it gets.

Any monopoly tilts the playing field so 90% of the business sector's profits pour into the pockets of a tiny few, leaving others high and dry. And virtually all the notable tech successes of the past 20 years arose and thrived via monopoly.

So it's little wonder why VCs like unicorns so much. The profits involved aren't shared with others.

The whole purpose of a business is to capture the wealth they create. Business will create less wealth if they can capture more. Housing market being a prime example.

Because that's how our economy works, there is a limited cash supply dictated by the central bank, the only way for more liquid cash to be created is through central banks buying up securities and in turn introducing more liquidity into the economy (which then results in all other sorts of consequences).

The ability for new wealth to be created is predicated on the fact that we have an expansionist monetary policy, or else people would simply never invest and we'd have a society comparable to a feudal state.

When the statistics back it up?

Yes, it's possible for the rich to get richer while the poor also get richer. It's also possible for the rich to get richer by taking all the economic gains for themselves, leaving the poor to stagnate or to get poorer.

Over the past 40 years the bottom half of the economy in the US has seen zero growth. This despite massive growth overall. This despite rising house prices, growing student loan debt, etc. The rich have gotten richer and the poor and the middle class have been edged out. It doesn't have to be this way, but it is.

Why? Because of wage suppression, union busting, wage theft, predatory and usurious student loans, corporate welfare, tax cuts for the wealthy, and on and on and on.

I don't disagree, but the wealth disparity is different than the income disparity. On the one hand, a wealth disparity can be directly passed down, and repealing the estate tax will only deepen this trend. On the other hand, reducing income inequality may help with the here-and-now, helping families to BUILD wealth while not also living paycheck to paycheck. So, IMO, we should tackle both income inequality via progressive taxation, and we should tackle wealth inequality by instating a much stronger estate tax that prevents a landed gentry, a permanently wealthy and insulated class of millionaires and trust fund babies.

There is also something to be said for personal choices of the non-wealthy. I see many in my lower-middle class city with new luxury BMW or Benz ($30-50k) vehicles, who are living in $120k condo units. I see many people with shiny massively spec'd out trucks that they never used to haul anything and just park at their office job. What would the country look like if average people saved more and invested some of their lifestyle splurging?

So, while the tax structure and skill gaps are big, we can also say consumers need to be much smarter and more modest if they want to build wealth and improve their station.

> we can also say consumers need to be much smarter and more modest if they want to build wealth and improve their station.

Ture. But this is an interesting point. It becomes a "fool's game" like a casino, where everyone knows that the odds are stacked against them. So when they loose, they can internalize their fault. Yet there's an abundance of "shiny" going around so that people's choice becomes emotional and hope-based, instead of rational.

Therefore there's no incentive to change the system because it's so easy to blame those who lose out: "see they made poor choices"—nevermind how we bombard those people with a ton of fine-tuned marketing. Taking the massively spec'd truck as an example, consider what the car manufacturer is selling: the feeling of power. Now watch a popular game on TV and get that message drilled into you about 30 times each week, while living a life that is otherwise very constrained in terms of finances and opportunities... many give in.

> I see many in my lower-middle class city with new luxury BMW or Benz ($30-50k) vehicles, who are living in $120k condo units.

How the hell do you know the financial situation of strangers? What economic data do you have to back up this assertion that lots of people would be better off if they weren't foolishly spending your money? Or are you the local "leading authority on what shouldn't be in poor people's grocery carts"? [0]

[0]https://local.theonion.com/woman-a-leading-authority-on-what...

In some American cities the streets are already filled with homeless. For example in Miami and San Francisco.

Repeat after me:

Wealth is not a zero sum game.

That's, at best, extremely misleading; outside of the most extreme absolute deprivation, relative deprivation (or prosperity) appears to be much more of a contributor to experienced disutility (or utility) than absolute deprivation or prosperity, such that, in practice, and modulo alleviating the most crushing poverty (which isn't where marginal gains go in the developed world, even where such poverty still remains) and maintaining illusions which shield the less well off from the prosperity of th well off (consumer-oriented capitalism actively seeks the opposite), wealth is, in practice, zero sum [0] in terms of impact on ezperienced utility, even if it isn't in measures of absolute possessions or consumption.

[0] or, at least, rivalrous, in that for anyone to gain utility from wealth compared to an alternative scenario, someone else must lose; it's not real clear that utility can be meaningfully aggregated across individuals.

Should I just chant this as I drive past the food banks at the people in line?

It absolutely is. Western economies have been growing at about 0-4% percent yearly over the last few decades. That means if somebody's wealth grows at a faster rate the money has to come from somebody else. If the US was suddenly full of people like Bezos or Gates I don't think the economy would grow much faster. They would just fight for the same piece of the pie.

Repeating something 3 times doesn't make it true.

Sure, okay. What about inflation? If we have 1% of people with 90% of money and assets, either:

A.) The upper class are extremely rich and the rest are desperately poor, or:

B.) The masses have enough money to live comfortably and the upper class has 9x of that growth because that's how percentages work--thus this world has to have many times more total wealth relative to the world in option B. It works if that is feasible considering that world's industry.

But what about when inequality keeps growing as projected, and the 0.1% have 90% of the wealth? Then the 0.01%? For the rest of the people to have a similar quality of life, the total number of assets in the world would have to grow by 10,000x. Otherwise, some people have to get poorer for a perpetually smaller percentage of people to have 90%.

Wealth isn't strictly a zero-sum game, but at a certain absurd point the math doesn't work. At that threshold, cold hard physics kick in and physics is most certainly a zero-sum game. Physics is as zero-sum as it gets. Nature balances her books mercilessly. If wealth inequality is at reasonable levels and there's a reasonable amount of growth, it's perfectly possible for the middle and lower classes to be prosper while wealthy classes obtain much more money than they. But when the wealthy have an extreme majority of all assets--in order to keep the rest of society at a tolerable standard of living you'd be raising the total assets in the world by like ten thousand times. Obviously that wouldn't work. It assumes totally unrealistic rates of growth, which is a recurring issue for our civilization these days. Wealth does become a zero-sum game under specific conditions. Our civilization isn't a perpetual motion machine.

Wealth is absolutely a zero sum game depending on how you segment things. Increases in productivity and innovation are not zero sum, but things like land ownership on earth is absolutely zero sum.

> Add the very real prospect of social security collapsing

There is absolutely no prospect whatsoever of Social Security collapsing. A 0% chance. There is no factual basis, only flat-earth anti-vaxxer type scare mongering, for any claim to the contrary. Social Security is funded by payroll taxes. The only way Social Security could "collapse" is if people stop getting paid.

Collapse is maybe a strong word, let's call it an adjustment.

There are less and less workers having a job and paying taxes, while there are more and more benefits to pay for. This is especially applicable to elderly and pensions, in countries with a socialized pension system.

Imagine the situation where both parents are getting retired and were promised 80% of their salaries, while both their children can't get a job. It's all too common nowadays. There is no tax to collect.

This may not be too much of a problem in the US where there is limited pension, healthcare or unemployment. Europe will hurt though.

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