Comment by elamje | Hacker News Reader

Comment by elamje | Hacker News Reader

Are you upset r >> g? What if you had to retire on savings that were sitting in a bank account earning .1% APY?

If you make on average, $100k a year over a short 30 year career, saving only 10% at .1% APY, what are your savings? $314.5k. What if you invest instead and earn on average 8%? $1.2MM

How about over 40 years? $418k vs $2.8MM.

Compound interest has and will continue to be a major driver for wealth throughout the world. Reducing its benefit to a moral argument of the rich getting richer is sad.

Many of the richest Americans are taking part in the giving pledge, allowing their wealth to build and take advantage of compound interest over their lifetime and giving a large portion of it back. The alternative is giving 40+% to the government each year, who will not be earning compound interest with it. https://givingpledge.org/PledgerList.aspx

Compound interest coupled with the fact that people can’t take their wealth to the grave makes for a natural ability for money to both amass quickly and then be transferred back to the public or to heirs or wherever else.

Your compound interest is generated by the hard work of other people, and when you transfer it to your heirs you’re just creating aristocrats. I don’t see the public good here.

Aristocrats are able to focus on the arts, culture, politics. They are the next level of social evolution.

The joy of economic growth is that it enables more and more of us to live the lives of leisure that were the preserve of aristocrats in times past. If you want to live in what Wilde or Adams would have recognised as material comfort and devote yourself to the life of the mind you can get an undemanding part fine job, live in cheap housing and spend the rest of your time at leisure. We live in a world where the norm in developed countries is that people spend a significant fraction of their lives not working, between school and retirement, when people in the bottom decile of income take not just holidays, but international holidays. In many respects in the first world we’re all aristocrats. Most people waste the opportunity to cultivate themselves, to become excellent, but it’s not like aristocrats didn’t mostly waste it too.

> I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.

> John Adams

> US diplomat & politician (1735 - 1826)

> The fact is, that civilisation requires slaves. The Greeks were quite right there. Unless there are slaves to do the ugly, horrible, uninteresting work, culture and contemplation become almost impossible. Human slavery is wrong, insecure, and demoralizing. On mechanical slavery, on the slavery of the machine, the future of the world depends.

> OSCAR WILDE, The Soul of Man Under Socialism

Everything is generated "by the hard work of other people". And don't forget that by the time "the heirs" inherit stuff, it's already been taxed 3-4 times. The understanding of this, however, only comes when you have children and wealth of your own.

Until then the situation is best summarized by this meme: https://pbs.twimg.com/media/Dypf0KDWkAUyNdn.jpg:large

Where are you getting that the wealth has been taxed 3-4 times? Knowing someone who has inherited >1% wealth (>$10 million, but anything less than $22 million is exempt from inheritance tax at current caps), the principle has been taxed once so far as capital gains. When they do decide to cash some out, only the as-yet-untaxed additional capital gains will be taxed for the first time at, at most, 15%, because they aren't planning to cash out >$400k in a year anytime soon. If they take out $100k/year they only pay 9% long-term capital gains tax (first 40K is completely untaxed); the money will ultimately be taxed much, much less than earned income.

I’m not saying heirs are good or bad, some end up going on to make even bigger economic impact and some completely bust. Regardless, the giving pledge and other philanthropic things are changing the game for the argument against billionaires. Hard to hate someone that’s going to give 95+% of their net worth to cancer research, homelessness, etc.

For some of us on HN that work in Tech, we are making great salaries on the backs of the the people that built the building we work in, or the computers we use for our job. You could say that the factory worker in China that built our PC deserves some of the wealth that we amassed via our computers/servers/etc. Follow it down the rabbit hole and you will see that everyone on this forum has benefitted from the hard work of others, and those people benefitted from the hard work of those that built their factories, homes, etc.

The whole idea of people being paid different amount of money for their work is how much they produce. It's nonsensical to say low skilled workers should be paid as much as high skilled workers.

Yes everyone benefits from everyone elses hard work. We transfer value through money. People participate in a voluntary system where the prices are controlled by supply and demand.

Their hard work is enabled by you saving instead of consuming the product of your labour. When you transfer it to your heirs you’re giving them a temporary leg up which dissipates over time because people spend or invest money. If they spend it it’s not a long term problem, they don’t have it any more. If they invest it either they’re bad at it in which case their relative position will decline, so it’s not a problem, or they’re good at it, so they’re contributing to economic growth by efficiently allocating resources.

The public good is that secure property rights are a great way of increasing economic growth which enables human flourishing. Would you rather live in a world as rich as the 1910s USA, with equal wealth per person, or now, with antibiotics, air conditioning, cheap easy and safe travel and practically free high quality entertainment available 24 hours a day?

In 1904 one of the most powerful men in the world, the US President, Calvin Coolidge, has his son die of an infected blister. I’d be hard pressed to choose between living as an average Ukrainian today or Rockefeller or Carnegie back then. Economic growth does enormous good to huge swathes of people and confiscatory taxation jeopardises that.

I have no objection to the idea that capitalism is basically a force for good, and appreciate the gains and improvements in our standard of living over the last century. Property rights, to a reasonable degree, are great.

But all this is orthogonal to aristocracy and the insane wealth gap we see today. You argue well, with language like “confiscatory taxation”, but you really just are claiming we can’t have progress without embracing unlimited winner take all.

This is clearly nonsense. You can have one without the other.

What would happen if there was an almost 100% estate tax (assuming that loopholes could be controlled)? Would it be all that bad?

Well, I'm not sure if it would be bad per say, but essentially, you you be taking away the freedom for people to do with that money as they please after they pass. In many cases, people in the US agree that private organizations, such as non-profits, charities, etc. do a slightly better job than the US govrnmt at allocating large amounts of capital.

I would personally prefer a person passionate about cancer research to allocate $1B rather than short sighted, sometimes pork-barreling, legislators.

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