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Comment by dalbasal | Hacker News Reader

> is pretty much the same question as asking if the aristocracy was bad for previous societies.

Well... that's stacking the deck somewhat. We were talking about how to add nuance. Nuance would be "what do we expect the economic result to be" or "this is a matter of right and wrong, not money."

>I find it ironic that the US which was largely founded by people who left their home because of entrenched economics

This gets abstract, but... The individuals most influential in the Revolution itself were mostly high ranking colonial officials from British nouveau aristocracy families of the empire. Granting voting rights only to property owners was the default position. "Universal" suffrage limited to european males was the radical position.

Not a criticism of them. Just... we can't solve these things with history. If you think billionaires are harmful, why? Equality? Economics?

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Contrast between a growing/innovative/free society and a stagnant/authoritarian one. Key difference is meritocracy -- can competent newcomers displace incumbents?

This is mirrored at smaller scales -- good leaders of healthy teams want newcomers to grow and learn and surpass them. Bad leaders are afraid of failure and don't want their people to fundamentally grow and change. Likewise good parents want their children to surpass them; bad parents harass and belittle and shame.

When Apple makes it painful to build sizable businesses on their platform, this is intentional stagnation to maximize profit.

When billionaires run think tanks, fund political campaigns, and rig laws to increase their power at the expense of the common good, this is intentional stagnation to maximize profit.

When you look at the data, most millionaires and billionaires don’t come from family wealth. Don’t misunderstand, I’m sure they’ve had “leg-ups” like going to private school, or having an SAT tutor, or having a professor at a top20 school as a family friend. So, we don’t really have stagnation of wealth.

I'd be interested in seeing this data. Do you have a source?

IIRC, this common refrain is based on a study that required wealthy participants to self-report whether they made their money or inherited it.

Every "millionaire" seems to think they're self made, after all.

The percent of totally self-made rich seems to be around 56%, and partially self-made is at around 30%. Note also that the proportion of self-made rich people is actually growing, even as the amount of wealth the rich has has decreased a bit[1] (methodology of the quoted study[2]). Also take a look at this intergenerational income mobility chart in figure 3 of a Pew study[3]; it says that people are "likely" to stay poor, but that's actually less than half, so I would say it's more like "unlikely."

[1]: https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-m... [2]: https://www.wealthx.com/approach/methodology/ [3]: https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_a...

That Pew study you cited is from 2012. It's an interesting read, for sure, but do you have any more recent studies? It seems that some factors that dampen economic mobility have been worsening since then[1] and the wealth gap has grown significantly since then, especially between the top 5% and the rest of us[2]

[1] https://www.pewtrusts.org/en/research-and-analysis/reports/2... [2]https://www.pewsocialtrends.org/2020/01/09/trends-in-income-...

35% of the Forbes 400 list was born into a middle class or lower household.

22% inherited up to $1m.

12% inherited between $1m and $50m

7% inherited more than $50m.

21% inherited enough for that alone ensure they are on the Forbes 400 list.

The first bucket is clearly self made. The last two buckets are clearly not self made. Depending on your definition of "self made" that would leave somewhere between 35% and 69% of these people as self made.

https://ips-dc.org/the_self-made_hallucination_of_americas_r...

>35% of the Forbes 400 list was born into a middle class or lower household.

Just to provide a little more clarity. Those numbers are from 2012. In 1997, 31% were in born "in the batters box"

However, there is a wide range of circumstances in the batter box. Defined as: "individuals and families whose parents did not have great wealth or own a business with more than a few employees."

Perhaps we differentiate on self-made, but some of those 35% I would not consider self-made either.

I think focusing on “self-made” is a red herring. No one is truly self-made. The point is, a good portion of the top wealthy people were not born into families of the top wealthy people, 1 generation ago.

It depends on definitions of "good portion" and "top wealthy people", but I don't think the numbers show the conclusions you are drawing from them.

The numbers vary by year as people enter or drop out of the Forbes list. However generally speaking you can probably divide that list into rough thirds. One third is the first generation experiencing any wealth. One third was born into enough wealth that they likely would never have to work a day in their life, except they decided to work and were able to compound that wealth into a obscene amount of money. The last third was already born with that extravagant wealth and may or may not have done anything to increase it.

Back to the topic at hand, a wealth tax would not have prevented those first two-thirds from earning their fortune. It would only negatively impact the starting position of that last third. The primary impact of a wealth tax would be to decrease generational billionaires which serves to increases the meritocracy.

Self Made is interesting. Does your family background have enough to cushion you if your startup fails.

It costs at least 20k a year to live (rent and food). You can gamble if you have 100k of funding, but that's setting you back a lot on things like 401ks and property ladders. If you have security from your family then shoot for the stars, great.

Same applies in many cases, it's not always as simple as how much wealth has been transferred from one generation to the next.

One example want to get a traditional 'good job' in London, lawyer, jouranalists, finance, etc, you need to take an unpaid internship and low paid start to your career for 5 years, all while maintaining London expenses. If you live with parents in commuterville you can do that, if you 're from Newcastle you're screwed. After 5 years of rent free living with parents you're £60k better off even with no cash injection, that's enough buy a house which means you're paying far less than renting, you start building your wealth.

But taht assumes you get the entry level jobs on merit, and not because of parental contacts, which happens a lot. Work experience at your Dad's squash partner's firm will get you rolling, yet wouldn't factor into your 'self made' list.

No man is an island, no man is self made. Those who 'succeed' do so through grit and luck and are often blind to their own advantages. Those that fail do so despite working hard.

The American dream of 'work hard and be rewarded' is bollocks. So much relies on advantages you don't even realise you've had.

As an aside, the poverty line for a 1-person household is $12,700/year.

You are of course right, but lets not conflate someone saving 5 figures by living with their parents for a few years with people who inherited 8+ figures which seems to be roughly a third of the Forbes 400 list. I don't know exactly where the appropriate place is to draw a line between these groups, but it is clear that these are vastly different scenarios.

> The American dream of 'work hard and be rewarded' is bollocks.

It is indeed bollocks, because it is "work smart and be rewarded". You have to work on the right things. Working hard at digging holes and filling them in again will get you nowhere. Looking around for an unfilled need, then starting a business to fill that need, will get you everywhere. Preparing yourself to become a valuable employee is another path.

Nope, it's work on the right things and be lucky

If you keep in the game, you're going to get lucky sooner or later. Quitters, on the other hand, ensure that luck can never find them.

Many successful entrepreneurs had a series of failures before success.

You'll never get lucky by doing nothing.

A big chunk of US politicians are also self-made.

Self-made what? Politicians? Do you have the numbers? I expect the percentages to be more or less the same as for and other affluent profession

Clinton and Obama for modern examples. Congress is full of them, like AOC, Jayapal, Murray, etc.

To the sibling commenters, even if 100% of billionaires did not come from family wealth, that doesn't mean they should exist.

A tiny rotating ruling class is no different from a hereditary one from the point of view of everyone else in society.

A "rotating" ruling class is a lot more contestable than a hereditary one. That makes it at least potentially more meritocratic. (It could also theoretically be less meritocratic, depending on how power is contended in any given case. But typically, the "hereditary" case involves battle-axes, dark intrigues and treacheries, which is the polar opposite of actual merit.)

It’s not very democratic. Someone was in the right place at the right time as much as they earned it, do they then deserve to have basically 100s of orders of magnitude more influence for their life? Just doesn’t add up.

Shorter timescale than generational. Once anyone becomes a billionaire incentives push them towards extracting rents rather than creating wealth.

Rich founders who get pushed out often start new companies (Pixar, SpaceX, Square, etc..)

Rich founders who stay waste their talent & access to capital on moat digging.

Why did Gates, after inventing personal computing, spend the 90s killing Netscape and stagnating browser standards?

The trend of wealthy founders leaving their companies to become mentors/investors for the next batch of startups is likely the biggest contributor to the ongoing success and prosperity of Silicon Valley.

> after inventing personal computing

Not hardly. Gates just astutely got on the bandwagon that was already moving.

> If you think billionaires are harmful, why? Equality? Economics?

They already answered that:

> The existence of billionaires clearly undermines the core principles of democracy which is that all people have essentially the same political power. The existence of many laws which clearly aim to benefit billionaires only is enough evidence that this power balance does not exist when there are billionaires.

OK, fair enough.

I don't understand this. Clearly not all people have the same political power, regardless of the existence of billionaires.

AOC, as a party firebrand, has more political power than Jeff Bezos, although it manifests differently. You can argue that the power was "earned" (in the sense that AOC won a primary), but how is the power that Bezos has any less earned? The same argument applies not just to politicians, but literally any influential public figure (artists, authors, journalists, actors, etc.).

AOC has to actually work for her political power. Billionaires can sic 1000 lawyers and lobbyists at whatever initiative they want, without lifting a finger.

And that's just an example :-)

Activists do it as their day job, for billionaires it's just one of the many side effects of their wealth.

> AOC has to actually work for her political power.

Meanwhile, Amazon was gifted to Bezos by God himself at the age of 15.

Ummm... are you misreading my comment?

Bezos had to work to found a successful business. Which came with a ton of benefits.

Political power is a (un?)intended side effect of owning that successful business. That side effect is the problem.

I'm not sure how this is apparently a controversial point. There's vast and obvious evidence that this is the case. More Dunning-Krugerism from the tech industry.

Good thing you're immune.

"Political power" is an unavoidable side effect of having power, simply – this almost reads like a tautology, but it's worth keeping in mind that the former is effectively an extension of the latter.

I argue money is power in a free market society. I'm not sure there is a way to fix the first part of that sentence without completely modifying the latter.

It was actually gifted to him by his parents, in the form of a $300,000 loan. How is it so difficult to accept that the vast majority of the wealthy were helped by having wealthy parents rather than pulling themselves up their bootstraps?

https://en.wikipedia.org/wiki/Jeff_Bezos#Business_career

How many people with $300k go on to build Amazon? Nobody is saying he didn't have any help, and that's frankly not the bar we want to measure people by.

Statistically, people with wealthy parents are far more likely to be wealthy than those of poor parents. Bezos would have been far less likely to create Amazon did he not get that loan. Do you dispute this?

I don't dispute that, but also don't want to write policy to change that. It isn't really an informative fact. It's almost obvious, really.

Maybe. So what? No one is an individual. “He” is also a product of his parents’ DNA mixing to produce an intellectually healthy and superior brain. His parents also stuffed copious amounts of useful information into that brain. As did people around him growing up. And his parents used savings, likely derived from many generations of people passing on their wealth/culture/knowledge, to aid in the continuation of their DNA’s importance to humanity.

$188,700,000,000 - $300,000 = $188,699,700,000

This is exactly the same level of mathematical sophistication as in Paul's original post.

I don't exactly give a shit, I googled Bezos current net worth. I'm savvy enough to know it's not liquid cash, if you're trying to make a snarky remark. Or you could just say what you mean.

> loan

People borrow $300,000 all the time to buy a house.

Actually there is significant research that successful people significantly overestimate their skills/contributions even if they rely largely on luck or advantageous starting conditions. There is also significant research that shows that even in a relatively "fair" trading scenario wealth distribution very quickly becomes completely unequal, just based on luck in the first couple of trades [1]

[1] https://www.scientificamerican.com/article/is-inequality-ine...

AOC's power stems from democratic support. Jeff Bezos' power stems from monetary wealth. It's the difference between oligopoly and democracy.

No, there will never be absolute equality of power. Certain people will always have a louder voice in the culture than others. But cultural power is fickle and comes and goes easily unlike wealth.

Jeff Bezos' monetary wealth stems from billions of Amazon customers voting with their collective wallets. Six of one, half a dozen of the other.

AOC's power will vanish the moment she breaks with the interests of her constituency. Bezos' wealth does not represent a continuing endorsement of his actions.

> [Politician]'s power will vanish the moment s/he breaks with the interests of his/her/their constituency

This is almost never the case. Power corrupts.

How would AOC continue to have power if people were to stop voting for her or caring about what she has to say?

How would Bezos continue to have power if people stopped using Amazon? Most of his wealth is in Amazon stock. Sure, he'd have a few billion left over, but his real political power comes from his companies, not his money.

"A few billion" places his wealth in the top .0001%. It's telling that even in this far-fetched scenario where Amazon and Bezos' "real political power" are destroyed, he's still much more powerful than the vast majority of US citizens.

You seem to be equating wealth and power. Wealth and power are certainly related, but probably on a logarithmic scale. Someone worth $20,000 isn't twice as powerful as someone worth $10,000.

The primary source of political power Jeff Bezos has is his control of a very large employer. Employing lots of people gives you some power over local politics in the areas where you employ those people, and it gives you some level of influence with politicians who might be interested in ensuring you continue to employ lots of people, because it's good for the economy.

Your run of the mill billionaire heir/heiress that doesn't really do any useful economic activity doesn't have a huge amount of political power, in general. They probably have more than you or I do, but not a ton more. Certainly not more in (linear* proportion to the wealth difference.

Once you realize that the relationship between wealth and power is logarithmic, it's not really a super concerning relationship. There are other sources of power that are much more important, and much less transparent.

I would guess that most of Bezos' wealth is stilled tied to the stock price of Amazon, and thus actually represents an endorsement of his actions at least a bit more than if it were all in cash.

if amazon's stock price plunged 95% (basically unthinkable) bezos would still be a billionare.

I don't buy from Amazon because I agree w/ Bezos' politics. Commerce is not an election; we don't live in a corporatocracy.

Buying from Amazon does not imply endorsement of Jeff Bezo's politics and economic interests. Your equivalence between that and AOC's grassroots support is completely nonsensical.

That's strictly not true. People vote for Amazon the product (over Walmart's web experience), they don't vote for Amazon the Jeff Bezos Political Agenda. Those are two totally different things. For instance, there's plenty of right-wing folks who shop on Amazon while simultaneously hating the Washington Post.

As mentioned upthread, this is the difference between democracy and rule by wealth.

>they don't vote for Amazon the Jeff Bezos Political Agenda.

Plenty of companies take a hit on their wallet when the CEO has political agendas the customers don't like.

Sure, but I think that's conflating two things.

You're welcome to take a hit to your wallet when you don't want to enrich a certain business leader. What you shouldn't have to do is take a hit to your wallet because you don't want to politically empower a certain business leader. This is especially true as there's less and less competition, and a few huge players control a disproportionate amount of the market (which is an issue on its own, albeit a separate one).

The idea behind a democracy for better or worse is one individual gets one vote. When you start having to figure out how you're voting by proxy through the leadership of each company you do business with, I'd wager, that wouldn't be within the spirit of the system.

Companies should compete for individual walletshare by merit, and it really should be apolitical. It won't always be, of course, but I think we're better off if we try and limit it. Conflating the two weakens both imo.

The CEO of Crossfit as a recent example.

Excellently put. And put differently: even if people actually thought that Bezos was just a brilliant businessman, why would anyone think that he's a brilliant social strategist? Or resource planner? Or commander-in-chief? Just because someone knows how to build and run a company that's great at selling stuff tells you absolutely about their qualities as a political/national leader.

Amazon tried to unseat a couple Seattle City Council members in the last election. It backfired, and Amazon faces a Council that has voted a huge payroll tax onto Amazon in revenge.

So if Amazon can't even control local elections, I wonder where all this supposed political power is?

Also, AOC was instrumental in preventing Amazon from establishing a second headquarters in NY. As a freshman Congressman.

One failure does not disprove a hypothesis.

It's a pretty big failure for Amazon and a big score for AOC.

His monetary wealth shouldn't give him power over anyone but his own company, nor should it allow him to exercise his right to speech that are denied others for reasons directly related to wealth.

It does in both instances. They're not orthogonal.

What about famous people? Beautiful people? Charismatic people? People with the right family name? Bush, Clinton, Kennedy?

What about the power newspapers have over shaping the national dialogue? what about tv stations? What about unions? What about film makers, authors?

How do we limit their power? or is it only money that we're concerned about?

Actually your example of newspaper and TV stations exactly examplifies why billionaires have such a vast political power which is unhealthy for society. No single TV station, newspaper by itself would ever yield so much power as to be able to shape public opinion in one direction. However take the media empire of the Murdochs which yields a disproportionate amount of power in several countries, very directly pushing the ideology of it's owners.

I'd say the New York Times is far more influential than murdoch's tabloids and fox. But that's just my opinion.

What do all of them have in common?

Recently I've found myself voting for Walmart, and Best Buy, and Newegg, rather than Amazon. Mostly based on price…

I think you have some very distorted concept of democracy. I don't know any definition which includes voting by where you shop.

Also I note that the strategy to paint the political class (as opposed to e.g. the business class or some "new" political class) as all corrupt is a common strategy by totalitarians to undermine democratic processes.

And the power of previous societies aristocrats stemmed from all the peasants voting with their feet and not leaving the "kings/Lords..." land?

I can't believe that we are seriously discussing that using some online retailer is somewhat a voting process equivalent to democratic elections. This really shakes my faith in humanity and the HN community.

This is totally misleading.

A capitalist-ish economy is designed to create winners. If it wasn't Bezos, it would be someone else. What matters about Bezos' wealth (in this context) is not that this specific person controls it, but that we live in a society/economy where there will always be people who accrue this level of power and wealth. The problem isn't that Jeff Bezos is this rich, it's that we live in a society designed to concentrate money in this way.

ps. I was the 2nd employee at amazon, and worked closely with Bezos for 14 months.

Democratic support of a vocal minority and remember her power is predicated on violence, where bezos's power is based on voluntary interaction -- a big difference.

Bezos's power is entirely predicated on violence, as the ownership of any assets he holds are marked as belonging to him through the backing of violent institutions. This is arguably moreso than AOC as she has no executive authority.

She won with 57% of the vote in her district. By definition not a minority. Are you objecting to her winning through a democratic process?

She, as most politicians, compete in a primary - that is where the real election is. Her district was going to vote for the Democrat candidate no matter who was selected in the primary. Lastly 57% may seem like a lot or whatever, but it's ~16,000 votes out of a potential ~700,000 for the district. Hell, 16k out of ~100,000 that voted last time isn't a huge amount.

REF: https://ballotpedia.org/New_York%27s_14th_Congressional_Dist...

But that's just a minor point, overall.

Wealth can disappear, too. Look at the Hearst family. Large corporations routinely go bankrupt, which vaporizes all the value of the stock it had.

I believe Jeff Bezos has more power than AOC.

Bezos has vastly more power than AOC. His decisions affect the lives of 840,000 direct employees and at least as many again - I'm not sure the figures even exist - "freelance" content suppliers, small businesses, and casual workers.

His tax avoidance policies have a significant impact on the budgets of the larger Western countries.

AOC has a media profile, but - so far - almost no influence at all on US policy. That may change in the future, but given that the Dem Establishment seem to consider her a dangerous extremist, it's possible she'll be sidelined into becoming her generation's powerless token left-leaning icon.

AOC effectively prevented Amazon from establishing a second headquarters in NY.

> the Dem Establishment seem to consider her a dangerous extremist

They invited her to speak at the Dem convention. That makes her mainstream.

Certainly in some ways. But AOC (with others) arguably shifted an entire mainstream party's platform. I think that the "hard power" that Bezos has is larger, but the "soft power" wielded by political and cultural elites is massive and easy to underestimate.

Is AOC either politically or culturally elite?

What kind of power, though? Political power and economic power are fundamentally different.

Forms of power are fungible in nearly all societies.

That's not actually true. Why didn't Bloomberg win the primary this year, for all his money?

He didn't, but with his donations to the DNC and the creation of Hawkfish, he'll have an inordinate amount of power in the direction of the party for years to come regardless because of his money.

I said that different sorts of power were fungible. I did not say that a specific sum can be used to acquire a highly specific office by any particular individual. It's entirely possible to use vast wealth inefficiently and fail to acquire political power or influence.

It's possible to use the same wealth efficiently to pay individuals to study the problem of which individuals to contribute to in order to acquire increasing and undue influence.

Your argument is that you shot at someone five times and failed to injure them thus guns doing kill people.

He still got more votes and media attention than any private citizen of average wealth possibly could expect.

How did Bloomberg get into the primary this year, as opposed to say, you?

Why do you think AOC has any actual power at all?

AOC does not have more political power than Jeff Bezos and to suggest otherwise is tremendously foolish. Political power is far more than just the ability to change federal statutes, it includes things like being able to get faster approval for the zoning of your particular projects or getting your company tax breaks.

I would like to introduce you to a family which is called the Murdochs. This family alone has probably yielded more political power than most elected officials in many western democracies combined. You don't even need to look at Fox news, but only look at Australien politics, where Rupert Murdoch (who isn't even an Australien citizen or taxpayer anymore) has had the most intimate access to politicians. I encourage you to look at the repeal of the NBN (which was very popular) and the role of Murdoch newspapers in getting the labor government voted out.

Every person has the same political power, though. One vote is one vote, one voice is one voice. Why do politicians pander to the wealthy and influential? Well, precisely because they are influential and connected to many of the people in society.

Isn't it because the wealthy and influential can donate/raise huge sums of money for politician's superpac and help them win elections term after term and stay in power for decades?

To get rid of that incentive you need to advocate for separating government from economy, in the same manner and for the same reason why state is supposed to be separated from church in a modern secular society. No lobbying from economic players and no government intervention into economics.

If government is responsible for running common infrastructure, just by their choice of which infra to grow or let decay, they are affecting economy. If government is responsible for social welfare (for the poor), they are affecting economy. If government is collecting taxes, by their choice of what to tax how much etc, they are affecting economy. If you take economic affections away from the government, what remains with the government?

> If you take economic affections away from the government, what remains with the government?

Enforcing civil laws and contractual obligations, court system, police, and army.

You contradict yourself. You literally just said that everyone has equal political power, but rich people have more political power. Rich people aren't influential because they have a lot of friends. Rich people are influential because they have a lot of money.

With gerrymandering of districts votes are diluted or concentrated specifically to create imbalance of each vote being equal.

They pander to wealthy and influential because they will receive donations in unlimited amounts for such pandering. If they don't, they'll be primaried out by that spending being directed toward another candidate willing to pander.

You say clearly, but it isn't clear. I would argue the existence of billionaires is a symptom and not the root of the problem. This country was founded with all people created equal under the law, but the system of kickbacks and corruption allows the wealthy to commit all manner of civil, financial, antitrust, and even criminal acts without any repercussions. How many people were charged in the financial crisis that wiped out half the wealth of Main St? 1 person? Google is larger than all of it's search competitors combined and yet Congress rolls over when Pichai says it isn't not a monopoly? Give me a break. It will only get worse, whether UBI and Universal Healthcare are implemented or not. There's a reason Big Tech CEOs are all card carrying Democrats. Modern Communism won't see the seizure of the means of production by the State. Instead it will consolidate the working class under a smaller and smaller group of larger and larger corporations that work in concert with politicians. Progressive regulation and taxation schemes support this. We even have on-campus housing for employees now so you can dedicate your whole life to a company. All that's missing is childhood education and you can be birthed into Amazon employment, get educated and trained, and live your life inside the bubble.

Anyway, I hope I'm wrong.

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