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Comment by pydry | Hacker News Reader

>the folks who earned

It's quaint that there are people out there who believe that income at the top strata of society is primarily earned.

Those dividend payments, rents and capital gains (realized) that make up the bulk of top earner incomes happen while they sleep.

A minimum wage is earned. A doctor's wage is earned. A golden parachute after a CEO ruins a company? Somebody with a trust fund? A person living off dividend income? Not so much.

It's one in a series of ways the .1% try to rhetorically conceal themselves. Another is that article the other day that complained about an overproduction of "elites" (referring to college degreed starbucks baristas).

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Worse - those dividends are primarily "earned" by interest rates being lowered.

The frustrating thing is that this kind of rhetoric actually works. They call themselves "the makers" and "job creators" while all they are doing is leveraging their upbringing in a wealthy social environment that provided them with the necessary connections to get a comfy job.

Their actual added value is minimal, but they sell it so good that (almost) everyone actually believes the myth.

Sad.

I think your logic is flawed in the part where you consider "added value".

Obviously, managers never actually "add" value. All they do is organize, so that value can be generated in the first place. And obviously they are the ones who gain the most profit if succeed and loose the most if not.

Anyone can verify it by founding a startup, but surprisingly people prefer comfy jobs.

Try organizing something and it will be immediately evident how hard it is to actually make people work effectively towards the same goal. I have actually left a position of a team lead in favor of a linear software development job -- it's just SOOOOOO much simpler and less nervous than any kind of organizational stuff.

A manager is a laborer like any other. A CEO being paid a wage is not bad. They are doing labor too. The problem is when people are obtaining a large amount of their wealth through means other than labor.

A CEO is doing very hard labor. It isn't easy figuring out that the future will be and positioning the company to be there. Everyone would like the salary of a CEO, few would actually like that work (it isn't as easy as it sound), and even fewer are good at it. Many companies have failed after a bad CEO took over, or improved greatly when a good one took over. If a good CEO wants millions to do the job they are well worth it. (Yes I know Steve Jobs took $1 - but that doesn't change the point)

Note that figuring out who is a good CEO is left as an exercise to the reader. (meaning I don't think anyone knows how to tell in advance)

I don't disagree that a CEO is doing very hard labor. As mentioned, I don't have a fundamental problem with CEOs being paid for the labor, even being paid very large amounts. I do think that there exist overpaid CEOs, in large part because it is very difficult to evaluate a CEO, but that isn't the root of inequality.

The problem is the income generated by their wealth, not the income generated by their labor.

Please. This conveniently leaves out all the CEOs who run companies into the ground and get golden parachutes.

CEOs are not special, they are not a different breed, and they most definitely do not in any way deserve to sit at the top and be paid more than 1000% the earnings of the people who make their businesses run (ie laborers).

So if I worked as a doctor for 20 years, invested most of my income in that 20 years in to dividend paying stocks, then at age 45 or so retire to live off my dividends that my hard work paid of, I did not earn any of that?

A lot of people have retired on a large S&P nest egg, spent relatively frugally relative to their wealth and ended up even wealthier after 5 years. It's not that uncommon.

How would you say that money used to support them and grow their wealth was "earned" if they didnt work?

The truth is it was earned. Just not by them. It's glaringly obvious if you think about it for just one second but we maintain a polite fiction all the same.

I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offering company, and after 20 years, the doctor is just living off others work because he 'earned it'. Plus, of course, in this perfect market scenario, no crashes or corrections can ever occur.

So say the doctor fronts someone money so they can invest in a business, say buying more garbage trucks for their garbage truck fleet or something. Surely the return on that is earned income?

Throwing the money at your preferred wall street instrument of choice is the same thing but with half a million layers of abstraction and redirection all of which involve middle men who either take cuts or otherwise get paid for sorting and bundling, matchmaking, providing liquidity, etc, etc.

>Surely the return on that is earned income?

No. Why would it be?

Those layers of abstraction cut out the risk such that in many cases cash is the riskier instrument.

>No. Why would it be?

Because the doctor had to evaluate the investment opportunity and risk what they invested.

>Those layers of abstraction cut out the risk

And that's why you only make pennies on the dollar doing it that way vs the risky way of picking specific things with high growth potential to invest in.

>Because the doctor had to evaluate the investment opportunity and risk what they invested.

Unless it's the doctor's hobby somebody usually does this on the doctor's behalf in exchange for a %. This is one of the functions of a well oiled financial industry.

If nobody was willing to do this for < expected rate of return then yes, that suggests all the money is earned.

>And that's why you only make pennies on the dollar doing it

Can you guess the average yearly S&P return over the last 30 years?

So many issues with this.

If the doctor et al - the investing public - don’t own the dividend-paying companies, who will? If you say “a broader base of people” I agree. If you say “the state”, I’d urge you to read some history books.

Ownership is an economic concept that is fundamentally misunderstood. It’s a skill you can be good at, and a good owner has a massive positive impact on society. It’s not a golden ticket to sit on your ass and switch off your brain like some others imply.

When you own something, you have to look out for everything that can go wrong with your property and have strategies in place to deal with it. You have to consider every possible use of it and decide on the one that adds the most value. You have to consider the long-term flow of resources needed for various projects and invest either your own or borrow someone else’s. You have to hire good managers and then manage them.

Owning something is a LOT of work if you do it right because you own the entire outcome, no matter what it is or who’s fault it is.

>It's not a golden ticket to sit on your ass and switch off your brain

Buy $5 mil in S&P and that's exactly what you can do. Comfortably.

The fact that you can mix work with wealth and earn a higher return is proof of little more than you can mix work with wealth.

If you have wealth that is.

If an investment works well and is well known (S&P), it’ll only work for so long.

The PE ratio’s in the 500 S&P co’s have been heading ever upward (https://www.multpl.com/shiller-pe) indicating some sort of self-reinforcing effect.

70 years?

Very, very few investors have the vision and nerve to hold their money in one thing for 70 years through the ups and downs. In the case of the S&P500, this would have worked out, but in 99.9999% of other investments, you’d simply have ended with $0 (or less…) and high blood pressure. It is not obvious ahead of time what strategy will work best.

You're not familiar with buy and hold?

Well, thanks for ignoring my entire point. I hope you get your hands on $5m one day and try the very easy "buy and hold" strategy and see for yourself

Are the workers slaves? Are they forced to work for the offering company, or do they choose to do so?

They're essentially forced. If you dont for one you have to work for another that is essentially equivalent.

With a basic income/free housing your comment would be valid though.

> I did not earn any of that?

>> A doctor's wage is earned.

Your wage is earned.

> invested most of my income in that 20 years in to dividend paying stocks

Whether that one is 'earned' is debatable. From a neoliberal economists perspective you probably 'earned' it by risking your income. Although I always have to chuckle a bit of someone says that speculation is 'investment'. Investment is buying machinery, investment is specialization training of workers, investment is research and development. Playing roulette on the stock market is hardly 'investment'.

From a moral perspective you probably didn't 'earn' it. You didn't work for it and - since you were able to put it aside for a later use - you didn't actually 'need' it. So from a moral and societal point of view, that money should have rather gone to pay for teachers wages, for infrastructure or anything else that was of immediate necessity. By investing in the stock market, it probably just went to some banker's bank account.

At its core companies sell stocks to buy machinery and other things to invest in their business.

>>You didn't work for it and - since you were able to put it aside for a later use - you didn't actually 'need' it. So from a moral and societal point of view, that money should have rather gone to pay for teachers wages

wow. just wow. So morally a person should only be paid what the need to live

that is your honest position.. If so I certainly hope people that think like you never attain any real power

> wow. just wow. So morally a person should only be paid what the need to live

Do you want me to hold that strawman while you give it a real good bashing? It can be satisfying, strawman bashing. It would however be more productive it you honestly tried to understand the argument I'm making. What do you think, do you want to give it a try? [0]

> If so I certainly hope people that think like you never attain any real power

Well, don't worry. The con-artists, faudsters and moochers from the swamp have everything under control and from what I see the populace-at-large is not interested in mitigating the pain and suffering and damage that crony-capitalism is brought upon us in or in correcting the course towards societal collapse which that entails. The hucksters meanwhile will continue to squeeze every last dollar of profit everyone else while their bought-and-paid-for politicians make sure that nurses and teachers and - well, everyone else, there a theme for you - pays a higher share of their income in taxes than their masters, while they themselves gorge on the ill-gotten gains their corruption, leaving behind the soiled and despoiled corpses of land and people.

The only alternative is raising taxes, the horror.

But hey, all power to you.

[0] https://constantrenewal.com/steel-man/

"wow. just wow. So morally a person should only be paid what the need to live"

GP isn't saying that the good and upstanding thing is be paid only what you need to live. GP is saying that if we're looking at the moral essence of what "earning money" means, then investing in stocks is not "earning money".

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