Hacker News Reader

Comment by logicchains | Hacker News Reader

>What are the benefits of a fortune 500? Who are the beneficiaries? The main ones would be investors and management, including a subset of employees.

Workers are also a pretty big beneficiary: look how well workers at recent Fortune 500 entries like FAANG are paid. Even after accounting for subsidised health and education benefits the average European developer is still lucky to earn even half of what the average US developer does. Sure it's noble for Europeans to want more equality but I don't think policies that reduce salaries are a good way to do that; better to lift the worse-off up than pull the better-off down.

View on HN

> Workers are also a pretty big beneficiary

FANNGS, by definition, are 1% of the Fortune 500. In term of headcount, it's even lower. They should not even be part of this argument. You can't base taxation policies around the personal experience of hyper-specialized, in-demand trained professionals.

Fortune 500 no1: Walmart. no2? Amazon.

Are you arguing that those kinds of companies have a upward pressure on salaries? Because at least in the case of Walmart and Amazon (excluding AWS), it's proven that it doesn't. And in terms of workforce, the low-pay employees that those companies hire overwhelm "well-paid" engineers from FAANGS a 1000-1. And that's not even accouting for all "red badge" contractors not lucky enough to get a cosy position at those FAANGS, who don't appear in the company's salary statistics, and are not in such a good financial situation themselves.

If I use the S&P 500 instead (easier calculation given available data for me), the the FANG is a huge portion. (Yes, 5 companies out of 500 are by definition 1/100.) No argument about headcount, though.

Take a look at the second chart (bottom of "Page 1", the third actual page considering the title page and contents page). [0]

Revenue may be small, but profits are huge, and market capitalization (aka "wealth") is absolutely massive. And that market cap is what feeds retirement plans & pensions. So while Europe is taxing people, the US is growing profits and wealth.

The World Economic Forum had this to say about Europe's tech giants in 2017: "In total more than a third of European tech founders are based in the UK." [1] That doesn't bode well for the future, when your economy is stuck in old industries, and the leader is leaving the party.

BTW, hats off to the Finns - not sure what they are doing with gaming, but they punch well above their weight.

When it comes to creating wealth, taxation doesn't do anything but redistribute it. In order to actually generate wealth, you need capital, and people who use that capital more efficiently & effectively will become richer. It is a virtuous spiral. And what's important is that every one of those high paying tech jobs is one less low-paying job. Most of the low paying jobs have existed for decades in various industries (esp retail), but most of those tech jobs didn't exist 20 years ago. I can only imagine how many high paying tech jobs there will be in the US in 20 more years, even though I expect low-paying jobs to still outnumber them.

[0] - https://www.yardeni.com/pub/yardenifangoverview.pdf

[1] - https://www.weforum.org/agenda/2017/10/meet-europe-top-tech-...

> And that market cap is what feeds retirement plans & pensions.

Market cap is a myth based on the fiction that is the share price.

> So while Europe is taxing people, the US is growing profits and wealth.

Tell that to 23 million Americans who can't afford their next rent, or can't afford to go to the doctor.

"Most of the low paying jobs have existed for decades in various industries (esp retail), but most of those tech jobs didn't exist 20 years ago."

How many low paying jobs are taken by e.g. a high paying e-commerce job? Hundreds surely. And if there are less low paying jobs you can pay someone less to do them because there are so many people looking for those few jobs.

> When it comes to creating wealth, taxation doesn't do anything but redistribute it. In order to actually generate wealth, you need capital, and people who use that capital more efficiently & effectively will become richer. It is a virtuous spiral.

Sure, it's a virtuous spiral if you're one of the minuscule number of people that the spiral is pointing to. Otherwise, you see it for what it is, wealth being siphoned from Us to Them.

Also, the level of political control that huge companies almost automatically exert greatly minimizes democracy, leading to things like the bottom 50% of Americans having almost no bearing on the political sphere, at least at the federal and state levels.

All you have to do to become one of "Them" is to buy a stock share. Never has been wealth creation more accessible than today.

Do you actually believe that? How much money will I get from 1 share? How much money would I have to invest before my fortunes actually rise with the real fortunes of any particular company?

That is the principle and it works. I know countless examples, yes, including me.

Not happy with 1 share? Save more, buy more.

Want cheaper shares? Found your own company and you’ll have infinite shares for free. You’ll have to make it successful afterwards, though, to raise each share's value up from 0. That’s what "They" did.

> Save more, buy more. > Found your own company and you’ll have infinite shares for free.

You seriously misunderstand how little money people at the bottom actually have, and how little access to the kind of credit you'd need to start a business. Like, saving for a car when their old one breaks down will probably take some people months or years. Saving to buy shares????

> That’s what "They" did.

A minuscule handful of them, if even that. For every Jack Ma there's a thousand Mark Zuckerbergs or Bill Gatess who were born with a silver spoon and will die with a silver spoon, as will 3 generations of their children at the very least. The descendants of the people who laid the railroad tracks, the large slave plantations, all of these people are the vast majority of the top. Even people like Elon Musk are still coming from a background of pretty high privilege. The people who were born in the bottom 50% that you have ever heard of (outside show-business) can probably be counted on at most a few people's hands.

How out of touch with the world must you be to put out such statements...

It’s the mindset I operate under and it served me well. What is your belief system and how well did that work out for you?

My belief is that not everyone has the same opportunities for a variety of reasons and even if something might work for me it might very well be impossible for others.

I also believe that it is our duty as society to make sure everyone can have a decent life even when not granted the same privileges others get for free.

Assuming everyone can put in the hard work and make it, you imply that everyone has or can learn "quickly" a markeatable skill, including the business acumen, the available free time and the mental/physical health required to succeed.

But the real issue is that even if everyone was able to try to get rich starting on an equally levelled field, our economic system can't allow everyone to succeed. We need poorer people to do employed jobs in order for their value produced in "excess" to be sent to shareholders and CEOs.

It just seems madness to me to have this global competition where the poor race against each other in order to be allowed to become one of the rich. We can do way better than this.

Best way to make raise employee's wages: competition between employers. For that we need more employers. For that we need more startups. For that we need more founders and entrepreneurs.

Competition is great, but at all levels.

Wealth creation is not zero-sum. Read PG's essay: http://paulgraham.com/wealth.html

Also some investment books: "A Random Walk Down Wall Street" "Rich Dad Poor Dad" "The Millionaire Next Door" https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_...

Have fun learning!

One way to encourage those people while also redistributing through taxation would be to reduce or eliminate corporate taxes but increase personal taxes, especially for the wealthy.

There would be lots of knock-on effects from this, such as more company perks to offset the large taxation of salary, but there are ways to combat that (tax benefits provided to employees as compensation). This would allow companies more capital to invest in R&D or expansion. Some of that money would go to higher wages (but if you distribute taxes more heavily to the wealthy along with this, it wouldn't affect median employee salary much).

A downside (among many, I'm sure) would be even more concentration of wealth in companies which might be used for non-free market operations, such as lobbying. It's all interconnected, so it's complex, but it also doesn't feel like we're in such a good situation socially, economically and politically that we should refrain from making large changes like that.

Agree. The most pro-Wal-Mart economists will tell you that Wal-Mart as a firm has boosted the US economy by at least 1% of GDP, by being more efficient, and forcing its competitors to be more efficient as well. Suppose for a moment that we accept that claim uncritically -- it is still very clear to see that these gains do not accrue through the vehicle of employment. Indeed, the non-logistics savings from Wal-Mart comes in no small part from reducing the number of workers involved in retail. As with many economic situations, the losses are simply concentrated and obvious, while the gains are diffuse and spread across many transactions from many shoppers. In this case, the gains accrue as part of every grocery-store transaction in the country (and particularly to the poorest in the country, who are most price-sensitive).

One can hold many opinions about the matter, and one can dispute that there is a net benefit at all, but it is clear that referring to this as "good for workers" is not particularly enlightening.

There's "good for workers as workers" and "good for workers as consumers". Walmart and Amazon are very good for workers-as-consumers, IMO.

Your point is often missed and I wish it was stated more often. However, I think the current sticking point for many is that, while their wage may allow them to buy more consumer goods, it is a lot harder than it used to be to pay for housing and health care.

Arguably that's a contributor to the increase in wealth gap, which is what the GGGP post was originally about.

> forcing its competitors to be more efficient as well

Right, must be good for those workers too!

Especially when being more efficient amounts to automating production and cutting the workforce / finding new ways to squeeze value out of workers while reducing expenses.

Even the most anti-Walmart economists will concede that Walmart has had a non-trivial positive effect on combating inflation for staple goods. When everything's cheaper, it's a bit like everyone gets a raise - the only people who get screwed are the workers.

As much as I support local, family-owned businesses on an individual level, I also recognize that for the vast majority of people, cheaper goods are much better for their lives.

I do wish we forced large corporations to pay for any government benefits that their workers collect, though, and continue to push for living wages that make sense at the local level.

Should only large corporations pay for benefits their workers collect? Why should medium, small, and micro businesses be exempted?

Transparently, I ask that question because I’m wary of creating a system where employers have a direct economic incentive to not hire people who would be likely to receive government benefits. Nearly the last thing someone on government support needs is employers not wanting to hire them.

If that means (as I think it does) that corporations are not individually tagged for their specific workers’ benefits, so be it.

I’m also opposed (though less strongly) to creating a taxation system where taxation levels are not reasonably predictable, given enough effort. If I don’t know whether Joe is going to cost me $30K/yr or $50K/yr and I’ve got 500K “Joes”, that’s $10 billion dollars of annual uncertainty. Even if you cap the uncertainty to between 25% and 75% of the range, it’s $5B. For $5B/yr, I can find a bunch of other arrangements that give me less exposure (most obviously using subcontractors who aren’t themselves “large companies”, but even if they are, it becomes “their problem” which is better than “my problem”).

European developers don't need to live in areas though, where they have to pay 2 million dollars for a house and they have social security and health care. This lessens your argument.

US developers don't have to live in those areas either, to still earn significantly more than EU developers earn.

Social security and healthcare is definitely awesome, but have you checked house prices near big German cities like Munich? They're much closer to Bay Area prices while salaries are very far away.

Europeans who keep tooting that "we don't need US salaries" tend to be the more privileged ones who will also inherit a house from their boomer parents and take it for granted, so they don't feel the stress of the rat race with skyrocketing house prices and income inequality.

So no, we DO want better paying jobs and lower taxes otherwise we'll go back to a feudalistic society where a select few own the housing and means of production through inheritance and everyone else and their offspring will forever be stuck working for the upper class so they can consume their products and pay them rent.

In most of the US, learning leet-code offers one a meritocratic lift up to the upper class while in most of Europe(except the East) it does not.

> have you checked house prices near big German cities like Munich?

People generally don’t buy but rent and the rental market is set in such a way as not to gouge people. Still expensive but salaries are relatively high and in all other respects costs of living is very reasonable

> while in most of Europe(except the East) it does not.

Wait, something doesn't add up here. I see many programmers migrating from eastern to western Europe, but not the other way around.

It is true that programming as a profession will offer comparatively higher standard of living in eastern Europe (when compared to other professions), but that's because the overall standard of living is lower than it is in the west.

A lot of people move from Eastern Europe to Western because the political (Russia, Belarus, Ukraine) and LGBT (Russia, Belarus, Ukraine, Poland) reasons, not money.

I'm aware, but that's not related to my comment, unless you're actually claiming that programmers have lower standard of living in the western Europe compared to eastern Europe (which I believe to be false).

Belarus, Ukraine, Russia have low taxation for the salaries in IT (https://en.wikipedia.org/wiki/Belarus_High_Technologies_Park) To have your own 2-3 room flat in Minsk (Capital) by the age of 35 is pretty common for Belarusian programmers and basically unheard in the West. So yes, I can argue that programmers can have higher standards of life at home than your typical "tech hub" like London, Munchen or Dublin.

Not at all. By far the biggest engine of emigration is money. In my country (Romania) there are millions of people working in western Europe (2 million in Spain, 1 million in Italy, probably something similar in the UK + Germany + France). A large number of them are parents who leave their children at home and work for most of the year there to gather money.

Even if you're talking about just software devs, people still move to the west for higher salaries, though I believe there is more movement towards the US, especially since the software industry has a lot of local branches of US companies.

But I can tell you from the ground that at least the common perception is that you are generally going to be wealthier as a software developer in western Europe than in Romania, even though in Romania software devs tend to be much better off than the majority of the workforce (and even though software devs in Romania don't pay income tax on their salaries, which is a nice 15% rebate).

How are there 1 million Romanian workers in the UK(since brexit happened)?

1m total, not (necessary) tech workers.

I was saying 1M between UK, Germany and France. Most likely today there are fewer, because of Covid19. Brexit hasn't lead to repatriations, so no large change caused by it I believe.

I live and work in Munich and I have to pay half a million euros for a 25m^2 box. EU is cheaper than US is a fallacy.

Wow, really? 20000 EUR per square meter, for small apartment in Munich? That's... more than I expected.

Even if it's half cheaper, a family house of 80-100m^2 costs beyond 600K which is way beyond affordability range of a couple both working as software engineers let alone people with non-tech jobs.

Why is that? Like, on the US west coast, ballooning home prices makes sense because their cities are in valleys with a fixed amount of land, but munich looks like it has a bunch of farmland around it that could be converted into housing increasing supply and thus decreasing prices. This coming from someone in chicagoland which has 9.5 million people but housing isn't crazy because the metro area sprawls 30-40 miles out into what used to farmland.

If we keep plowing over farmland to build suburbs where will the farming get done?

Build taller. Skyscraper has been invented long time ago.

In areas not close to Munich?

Because Germany is mostly old money, inherited for generations, that is very risk adverse so instead of investing it in new SW companies or buying stocks, they park it in real estate in desirable areas and prop up this bubble since it's a sure bet for a return on investment. That's why they call it Beton Gold ("concrete gold").

That doesn't explain the lack of new building though. Is it NIMBYism?

Munich has very strict limits on vertical height so that cathedral spires aren't drowned out by the buildings. On the edge of the city you do see some taller office buildings but not in the core, and certainly not to the extent you would expect in a major city.

I think it has more to do with world wide's low interest rate which is pushing asset prices to sky rocket.

You now get a fast shrinking middle class and dismal living condition in lower class.

Of course, they could have combated this with more supply. Not sure if they have done so.

Low interest rates certainly allow you to afford a more expensive home, but inflation adjusted price per square foot isn't actually skyrocketing for most of the US outside of the west coast [0]. For example, Dallas/Fort worth and Houston metro populations, the 4th and 5th largest in the US have both grown a whopping 19% in the past decade and prices aren't skyrocketing there. But they have plenty of land surrounding their cities that can be developed to increase the housing supply.

It just seems weird to me. Why are people paying such high prices when there is farmland so close by that you could buy and use to build some condominiums, townhomes, duplexes or even single family homes.

[0]: https://www.supermoney.com/inflation-adjusted-home-prices/

600K for a house in Munich sounds really cheap considering that that's how much a small apartment costs in the city center there.

With mortgages in the 1.5-2% range, a 600K house would cost you €750 - €1000 a month in mortgage payments, and that's not even taking into account tax benefits you may get. That's an absolute steal compared to what you would pay in rent in a place like Amsterdam or London.

little late, but not true. 600k equals to about 2000 a month in mortgage payment

Doesn't really make sense to buy at this price point though. Looks like one can rent an apartment of that size for 1200 EUR a month in Munich.

Yes, but renting doesn't give you that sense of security when you are thinking of having kids versus owning your own place. When you're renting the thought of the landlord kicking you out if the rental market should suddenly shift is a huge axe to child planning for most couples. Owning you own place offers a more secure feeling and belonging to a community.

From my experience there's plenty of 'sense of security' when renting, mostly coming from very strict pro-tennant laws: Limited rent hikes, no eviction unless the tenacity agreement is breached, etc. You can't just throw out of your home because someone wants to make a quick buck, you're protected as you should be.

This is pure make-belief. You should buy if a purchase is cheaper than renting. Guess what, it never is when interest rates are at zero.

Rent is determined by what people with jobs can pay, property prices are determined by what international investors with deep pockets and easy credit can pay. Which one are you? If you are the former, you will be paying down a mortgage that you can barely afford. You will be a slave to the property. What if you lose the ability to pay? How secure is your paycheck really?

Keep your cash, and invest it somewhere else. You can find a new place to rent. You can leave if your community turns to shit.

property prices are determined by what international investors with deep pockets and easy credit can pay.

The international investors with deep pockets own very, very, very few properties compared to regular people.

What if you lose the ability to pay? How secure is your paycheck really?

What if you lose the ability to pay rent? How does that make you any better off?

Keep your cash, and invest it somewhere else.

I have a mortgage with 75% of the principal left to pay, where the interest on the loan is somewhere between the third and the half of what I'd pay in rent for equivalent property. If I was renting instead of paying mortgage, I wouldn't have any cash to keep to invest elsewhere anyway.

You can find a new place to rent. You can leave if your community turns to shit.

You can also sell your house/condo and move somewhere else, at any time.

Not to mention, you'll still be paying those same mortgage payments (unless you refinance) a decade or two from now after the market has changed, and generally it goes up (even if it should only average going up by the amount of inflation).

I bought my house 6 years ago. Rent prices have gone up about 30% in that time. I used to think my payment was crazy compared to renting, not I know of people renting much worse locations that are paying more, and I'm about to drop the mandated PMI because I dropped below 80% of the principal left to pay, so my payment will go down be a couple hundred more.

> The international investors with deep pockets own very, very, very few properties compared to regular people.

Doesn't matter, a rising tide raises every boat.

The point is that property prices have diverged from rental income, because low-interest credit from around the world is chasing properties, while stagnant wages imply stagnant rental income.

> What if you lose the ability to pay rent? How does that make you any better off?

I don't have to foreclose.

> I have a mortgage with 75% of the principal left to pay, where the interest on the loan is somewhere between the third and the half of what I'd pay in rent for equivalent property.

Between a third and a half? That sounds like a lot.

> If I was renting instead of paying mortgage, I wouldn't have any cash to keep to invest elsewhere anyway.

So you're saying your mortgage payment, taxes, insurance and upkeep is equal to rent? Where the hell do you live?

> You can also sell your house/condo and move somewhere else, at any time.

At any time? Yeah, good luck with that.

Renters in Munich have very good protections. You effectively cannot be evicted without cause (and evidence), and most contracts are indefinite length (unless you are explicitly looking for <1 year).

That got me googling and I found this gem:

> Today, Munich is Germany’s most expensive city in which to buy property, with asking prices reaching €35,000 per square metre in some exclusive developments, according to Engel & Völkers. The average price per square metre in the city is €7,630, dwarfing the €2,993 in Germany as a whole. [0]

That's wild. In USD per square foot, that's $3,700/sqft, $800/sqft, and $316/sqft respectively. Meanwhile, San Francisco's median is $1,100/sqft, the metro area's is $500/sqft, and california's as a whole is $315/sqft, remarkably close to germany as a whole. America's is $123/sqft.

Thank god for SF salaries (apparently about 150% of munich salaries).

[0] https://www.ft.com/content/9ba4873a-60f3-11e9-9300-0becfc937...

... you're using a single city anecdote to say something about two huge landmasses...?

Yours is a fallacy, as Munich is certainly not representative of the rest of Europe.

A developer in low-cost Houston, Texas still makes double or triple of what a developer in Paris, France makes.

The causality is backwards. European developers are unable to bid 2 million dollars for a house, which is why they're still cheap (compared to the bay).

Give it time though! The Dublin NIMBYs scream and shout anytime anyone tries to build anything, and then wonder why only tech workers can afford to live in the city centre.

The US Bureau of Labor and Stats says the total number of Software Developers in the US is 1.4 million. Only about 475k (1/3) live in high COL states, California, Virginia, New York, and Washington.[1]

The median salary is about $106k a year which isn’t too far from €100k a year. I am not sure if these wages include non-salary comp.

[1] https://www.bls.gov/oes/current/oes151256.htm#st

They pay more in the Bay area. Once you get out of the Bay area the pay goes down. Facebook even said if you telecommute they'll take into consideration where you live and pay you based on that.

And if you look at the class disparity we have in the United States, the middle class is almost completely gone now.

last year I drove from Nashville to Miami. passed by many small villages. middle class is still there. maybe you should get outside of the city to see it yourself.

> better to lift the worse-off up than pull the better-off down.

Given a fixed amount of resources, this isn't a choice but a matter of fact. You cannot do one without causing the other. This then becomes deciding what the lowest level you're comfortable having your fellow countryperson living at with the requisite cost to those with the means.

>Given a fixed amount of resources

People don't consume resources, they consume goods and services. The IPhone is valued at a much higher price than the sum of raw resource components it contains.

Economic growth is what allows us to increase the amount of goods and services people can consume from a given set of resources. Economic growth is why a single farmer with modern equipment can produce more food than a hundred subsistence farmers could a few centuries ago. Economic growth is why we can have real-time high-definition video conversation with somebody anywhere in the world.

The more obstacles we put in the way of growth, the slower we improve our productivity, the slower we grow the amount of value we can extract from the resources we have.

Using resources as a blanket term to describe goods and services as fungible with a market that can trade them, it's probably a better descriptor of available goods and services that can be consumed instead of the fluctuating cost of said goods and services. True we could produce more goods than we have before with a lower cost, but it isn't true that this enables us to provide more to those without means as this would impact markets and thus profitability of the producers. This is a reason why farmers dump milk and eggs into fallow fields. If they wouldn't do that and instead provide them to those without, it would break the market.

I would counter that it isn't economic growth that enables the technology of today, but technical innovation that drives economic growth that enables either larger populations or a more wealthy population. Given unequal societies, economic growth is only beneficial for those who are already benefiting from the system and serve to increase inequality, but given an equal society benefits all. Therefore instead of worrying about economic growth, I propose that we invest in technical innovation that will drive economic growth as a byproduct and legislate for a more equal society to benefit the most amount of people.

> Given unequal societies, economic growth ... serve to increase inequality

that's not true. Especially if you view it from the angle of absolute poverty.

I wouldn't care that Bezos has another bazillion dollars due to economic growth - because with said growth comes more economic opportunities for the poor. Where once they had no economic value, there could be from being an amazon deliverer.

Where once there was no economic value as a subsistence farmer, the outsourcing of labour has generated economic value for underdeveloped nations. SO much so that China is now threatening the hegemony of the USA!

Economic growth lifts all.

The poor never had no economic value to begin with, the question merely becomes who is the latest in the line of exploiters. When they have no power and no leverage they are forced to work for peanuts in menial jobs that can just as easily replace them. In an increasingly automated society the lowest tier of human labor slowly resembles replaceable cogs; how much would a business pay for those?

Economic growth does lift all, but in an unequal society disproportionately lifts those who are already well invested in it. It will barely improve the lives those at the bottom with no equity in the market, perhaps with slightly better consumer-grade technology, but nothing in terms of income, social safety, or health that comes with climbing out of poverty.

Economic growth and technical innovation go hand in hand. As the economy grows the pie gets bigger, as long as everyones absolute amount grows thats good - most people thing that some are shrinking which is not the case. Right now, some peoples are growing at faster rate.

Sorry, I should've said `disproportionately benefits`. Economic growth in this context only serves to further increase inequality.

Firstly, one can have innovation with no economic growth and vice-versa, the two phenomena are distinct and separate. Much of econonic growth is about organisatuonal aspect's of society, rather than inventing new technology. Technology depebds on world of atoms, ans discoveries do not come on demand, nor are they particularly well rewarded. Einstein did not die a billionaire. Neither did most great scientists.

Lastly, some pies are not growing.

Einstein didn't develop technology, he was a scientist. Science != Technology, but Science and Technology and are linked. Often times technology precedes the science, and then the science is developed and advances the technology.

What does this mean? Are Computer scientists developing technology?

All technology is a science, i think you are trying to draw is the distinction between fundamental science that discovers laws of nature, and indutrial kind that figures out the best process for manufacturing stainless steel.

>> "Often times technology precedes the science," This can happen by freak accident, but generally science has to find and researched some law of nature before you can take advantage of it to develop some product or manufacturing process.

It is not. People judge their own wealth relative to that of others. Thus reducing inequality is a lot more important than increasing total wealth.

I completely disagree - increasing total wealth allows new things and is more important than how people judge their wealth relative to others.

People are not equal in many ways - I don't see why we always focus on wealth. What about influence, what about looks, what about education, what about family life quality, etc...

I completely disagree - increasing total wealth allows new things and is more important than how people judge their wealth relative to others.

You just restated your opinion without providing any new arguments.

> People are not equal in many ways - I don't see why we always focus on wealth. What about influence, what about looks, what about education, what about family life quality, etc...

Most of these things can't be redistributed.

>Workers are also a pretty big beneficiary

You mean all of the workers at foxconn benefiting from their innovative suicide nets?

Reply on news.ycombinator.com