>Perhaps we need a linear meritocratic function.
So basically, some way to prevent wealth from being passed across generations?
So basically, some way to prevent wealth from being passed across generations?
Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said anyone will see a massive push back from basically all strata of the society.
Zuckerberg is worth >3x the annual income of all surgeons in the US. It is implausible that his net worth reflects his replacement cost. Even PG has said (to Zuckerberg) that if it wasn't him, it would have been someone else.
> It is implausible that his net worth reflects his replacement cost.
Why should it? His net worth reflects the expected value of the portion of Facebook that he owns. Why would it have anything to do with his replacement cost?
As a society, the only thing that we take out of Zuckerberg is his labour, so he shouldn't get anymore than the replacement cost of his labour. In other words, if someone would have done Zuckerberg's work for less compensation - and the GP asserts it is the case - then we as a society lose by having Zuckerberg do it instead of the lower compensated alternative.
In other words, when someone gets paid more than their replacement cost, there is a market inefficiency that causes loss to the vast majority.
Zuckerberg is not employed by society. We're not all collectively paying him a salary.
If you're saying we should completely abolish private property, that's a different thing altogether.
We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.
Shares of stock, the secondary stock market - these are also arbitrary constructs which have been created to serve some purpose.
There’s some magical thinking regarding capitalism - that it practically runs itself; that is ensures efficient allocation of capital.
Capitalism may tend to decentralize economic decision-making, and it may tend to align production incentives with actual demand. But, that doesn’t mean it’s efficient. Efficiency would mean that incentives would nearly match the minimum to ensure satisfaction of demand. What we in America have is a system which highly rewards people who control the labor of others. Our society values wealth, not work.
Outside of it, capitalist ideology also has the idea of the divine invisible hand of the free market, which is certainly an exageration, but in the real world markets with the proper conditions and regulations are pretty good at allocating capital.
You only really own something if enough people in society ("we") agree that you do own it. If enough of "us" change our mind (for instance, if your ownership is no longer useful to us), then you don't really own that thing anymore.
The fact that most people are not doing that should tell you that you are not as much a part of the dominant "we" as you think.
> The fact that most people are not doing that should tell you that you are not as much a part of the dominant "we" as you think.
You missed the point that I was making entirely.
If someone found a way to motivate people to do those kinds of labour properly - and force doesn't work well for many reasons, so it would have to be non-violent, but without having to allow ownership of capital and wealth concentration, why wouldn't we consider it? The Communists of old thought they found a way to do so and were wrong, but if someone today found a way to do it that doesn't cause many drawbacks, it would be foolish and dogmatic not to consider it, and if it works well, implement it.
However this also means that as long as we keep the resource allocation thing mostly intact you can manipulate all other aspects of it, like adding lots of taxes, giving aid to the poor etc. None of that messes with the main feature of resource allocation, which is why Scandinavian countries still have good economies.
Which is pretty much what I said :). Organizing production was a proxy for capital allocation.
That is one important definition, but it's just a statement of ideology.
Was Instagram only worth $1bn when they sold to Facebook in 2012. Are we supposed to ignore the fact that Instagram's options were sell for $1bn or face "Zuckerberg destroy mode"?
(Note: I'm not saying the funding from parents was sufficient, or even necessary in Bezos' case.)
Again, Bezos got about $300k from his family (both his parents were doctors), which, I think, is far below the level of "unjust inherited fortune" or what is usually people suggest to tax into oblivion.
Yes, when your parents help you, it's helpful — it's nearly tautologically true. This is why I as a parent do help my grown-up son sometimes. Limiting this behavior is not quite realistic, and would be met with a huge backlash (justly, to my mind).
It's a lot riskier to be an entrepreneur when you're living paycheck to paycheck and don't have a family fortune to fall back on.
Extraordinary people also often have extraordinary childhoods. Most teenagers can't borrow their dad's private jet to go sell emeralds to Tiffany&Co, but I imagine that sort of experience comes in handy for a businessman
Indeed some childhoods of billionaires are special, like that of Steve Jobs, a highly problematic adopted child who suffered at school so much his working-class family decided to move to get him to another school district.
OTOH, neither Mark Zuckerberg, nor Jeff Bezos appear to have had extraordinary childhoods, or family wealth above a normal middle-class level.
Many of them, though, were exposed to electronics and computers early, and their parents were wise enough to encourage it, or at least to allow.
[Edited: typos.]
The same is true about that drivel about Tiffany.
And I think you're way off with that hundreds of millions number. I doubt there are that many people that can fully support their adult children, including footing the bill for all startup costs.
>> So basically, some way to prevent wealth from being passed across generations?
> Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid.
But, there are others who did. For instance, just off the top of my head: the Koch brothers, who combined inherited wealth with extensive political activism.
Also, the fortunes of most "self-made" meritocrats can be traced to building exponentially on some elite inherited opportunity, then that kneecaps a lot of the moral reasoning used to justify that those people deserve full control of those fortunes (and thus shouldn't be subjected to heavy taxes).
How can we better incentivize those with wealth into investing it productively.
Or perhaps, how can we incentivize the wealthy into investing in increasing the rate of growth of the real standard of living for everyone.
Coincidentally, we've got a covid relief bill, and you can see what the wealthy and power fear above all else -- blanket grants to the people that make them less beholden while increasing inflation.
Nobody actually cares about the deficit, it's all about maintaining hierarchy.
The issue is a falling share of productive growth going to the not-richest. That is the problem, not the "size of the pie," as it were. In this sense, "incentivizing wealthy into investing it productively" is nothing more than "attempting to con the wealthy into giving up a portion of their share." The alternatives are that nothing changes, or that the wealthy receive an even greater share of growth going forward. But those are prima facie counter to the goal, if you take the findings of the OP to be concerning. In any case, the wealthy are not going to fall for it. They want to maintain or expand their holdings and influence. If you're okay with that - essentially, if you subscribe to trickle-down economics, however misguided that may be - then I supposed that's fine. But either way, we have to be clear what the goal is, and who is going to be helped and and who is going to be hurt by achieving it.
That wouldn't help much. The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth. By the time they are in line to receive an inheritance, they have already had more opportunities for success than the general public.
what about the children of parents who has good genes? If a child is athletic/healthy/good-looking, because their parents had good genes (and the good luck for a good combination), do you also resent that the child has a head-start?
parents helping the children get ahead is natural, and should be encouraged imho.
IMO our goal shouldn't be for everyone to be objectively equal in all ways, but rather to be provided enough resources and opportunities to live a good life.
Like on the opposite end of your example, if I was born with a congenital condition, or became injured, I should still be able to live a good life with my needs met and opportunities to do good work. The fact that we don't have that today, due to lack of a social safety net and accessibility, is a problem.
That's an absurd comparison. Children of parents who are poor and don't have connections can still compete, but simply cannot benefit from their parents trafficking influence.
If you really want to go with a sports metaphor, your example is like barring children from having a fair shot at sports because their parents aren't rubbing elbows with the coaches.
children of parents who don't have inheritance can still compete economically. So no, it's not an absurd comparison between inherited wealth and inherited genes.