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Comment by maratc | Hacker News Reader

A reminder: take any sum operation of wealth with a huge grain of salt.

https://www.reuters.com/article/idUS228821959920140404

He's saying that this is a misleading figure because a lot of people have a lot of negative wealth.

That's apparently supposed to ameliorate how bad this looks but as far as I can see it only serves to emphasize how bad the problem is.

It’s not just that though. It’s also because a lot of people with $0 or subzero wealth have reasonable incomes, and a lot of people with a small but positive amount of wealth have very little income (China in particular). The overall well-being depends more on income including the imputed value of social services, not the stock of wealth.

Wealth comparisons generally are fraught even besides this. The most valuable asset of the average human, by far, is their human capital. These and social services and purchasing power parities can be measured and compared for a more meaningful result, and highlight the truly poor, but this piece isn’t it. It’s just agitprop.

>The most valuable asset of the average human, by far, is their human capital

Yes, and if you are a doctor saving lives with a high income and high negative wealth that human capital is being parasitically extracted via the rent you pay, via student loan repayments, via eye watering malpractice insurance rates and laundered via the financial system to make somebody else even richer.

Dont you see how this makes it even worse? The greater wealth inequality grows the less you get to keep the output of your own human capital.

And yea, maybe you can still do all of that and live a decent enough life. That isnt the point.

This isnt a revolt against productivity. It's a revolt against parasites.

> The overall well-being depends more on income including the imputed value of social services, not the stock of wealth.

That's an assumption that needs to be backed up.

Many high-net worth individuals have almost zero nominal income - yet they are still extremely wealthy, enjoy a high standard of living and have significant influence. This can make income-only "wealth" statistics look a lot more balanced than the reality is.

On the other hand, debt absolutely has an effect on your quality of living and the degree of freedom you have in your decisions. E.g., if someone barely manages to pay off a mortgage, they will have little disposable income for other expenses, such as medical emergencies - even though, on the face of it, they may have a decent middle-class income.

Just take expected value of everything including work, just like you evaluate assets. That is the most balanced approach. So a guy making 100k a year has a higher expected networth than a guy having 500k in wealth, but the guy with 500k in wealth still has significantly more than a person with 10k a year in income.

This is somewhat beside the point since income inequality is also very high and growing.

Combining them and crystallizing future income into a theoretical asset wont materially affect the picture.

Newly graduated doctors American doctors are then one of the poorest groups in the world according to this measure. This doesn't doesn't seem to make much sense to call them poor though, since the wealth of rich people includes expected future income of their assets you need to also include the expected future income of workers, and then young American doctors would no longer be considered poorer than anyone in Africa which makes sense.

More relevantly, there are a lot of people who have negative wealth and excellent quality of life.

Can you give examples of people in that situation?

Take an average American CS grad who got a job a year ago. Great quality of life, high income, but among the poorest in the world wealth wise. But you want to make it look like he is worse off than an African sheepherder.

When you count % of income spent on SF rent and student loan repayments they're probably paying a greater net % of their productive capacity to financial leeches than that goat herder.

This is the outcome we're supposed to be celebrating? Sky high productivity having huge chunks taken out of it and being handed over to non-working landlords and creditors?

Yes this is true, but also we'll have trillionaires added to our spellchecker dictionaries in a couple years. We really do have a huge problem on our hands.

As I said in my comment I just made in this thread, I think concerns with wealth inequality are often based on understandable and reasonable concerns. However, I do always wonder what the actual issue is. Would it matter if there are ultra-wealthy people if the non-ultra-wealthy had a good standard of living? Personally, and maybe this is a wrong outlook, I don't care that someone is a billionaire as long as I'm able to live a fulfilling life myself. What do you think?

I think I’d be ok with that. Trouble is, right now, plenty of people don’t have a good standard of living, and the wealth accumulated by the ultra-wealthy could make a dent in that.

This is my philosophy as well. First off, inflation exists which is one of the factors in creating a "trillionaire"

Second, the amount of wealth is not fixed. Someone having more doesn't mean that others have less. I think many people don't understand where money comes from, lending to their fears of a large wealth gap.

> Would it matter if there are ultra-wealthy people if the non-ultra-wealthy had a good standard of living?

Do you think that is possible? Because I only see the situation getting worse and worse from here.

What we should ask ourselves is, is a system where 10 people can own six times more than 3.1B compatible with the goal of solving poverty and granting a decent life standard to everyone?

> Do you think that is possible? Because I only see the situation getting worse and worse from here.

Of course it’s possible. The material standard of living of the poorest people has consistently been making huge gains since the beginning of the industrial revolution and continues to do so, despite wealth inequality. This is backed up by every objective metric you can think of.

That is a consequence of technological progress and not of capitalism. Don't conflate one into the other.

Nowhere did I say it was a consequence of capitalism.

It’s next-order effects over time. In and of itself, someone having more resources than you or I doesn’t affect our lifestyle, happiness, etc. But wealth in our society leads to concentration of power, and fear of loss (among others, some speculation here on my part) leads people of means to pursue policies to preserve their positioning regardless of the consequences for others in society. These self-reinforce over time unless Something Is Done About It.

Last century, Something included unions, progressive taxation, and wealth redistribution, and that seemed to work for a while. Previous means were much bloodier.

It does matter: wealth represents resources. Huge wealth inequality allocates resources, and therefore decisions of how to allocate those resources, into a small number of hands. Take Bezos' rocket and mega yacht. Is that a useful way to to apply the huge amount of materials and labor it took to create? What could we have done instead?

To play devil's advocate, we could tax 100% of the wealth of those individuals which would cover the cost of another US invasion of Iraq.

The sum cost of the worlds luxury projects like yachts or super mansions or personal jets etc is still a tiny fraction of the economy, taxes are a much bigger concern than those.

And other than such projects the wealth of wealthy people are resources used wisely investing in production capabilities of products people want to buy, like new CPU generations or new warehouses etc. This is how most resources governed by the wealthy is allocated, which seems entirely reasonable, having a small fraction of that get lost to their personal whims seems like a very cheap price to pay for the efficiency of capitalism compared to other systems, we already pay like 40% in taxes, why not pay 1% or so tax to capitalism?

No one can earn a billion. You only get that rich by being in the right position to siphon off money from the work of others. If you make a great inventions, its still the thousands of employees doing the actual work, you are just in the right position to take a bit from each and get really rich. If you invest your money, you are in the right position to set the terms, and you will choose terms that even after accounting for the risk and opportunity costs and so on some additional money ends up in your wallet.

So even if everyone could live well because the amount of money siphoned away is not to much, there would still be some unfairness in the system that I would want to see go away.

Your income from jobs is never based on your moral worth, only what society thinks is monetarily valuable.

I am not sure what you mean with moral worth, but of course no one will pay more than what they value something. If producing something does not pay the bills because no one values that thing, then you should not produce that thing.

If there were no arms races in our economy and no negative externalities to vast wealth (including power imbalances) then I would have no issue because there would not be negative effects on the lives of others.

But the issue is that every billionaire mansion creates real waste. Real plastic in the ocean. Real strip mines. Real greenhouse gasses. The land they occupy is land others cannot occupy.

And besides all that, they poison our discourse with media companies that are run at a loss and they lie to us with fake scientific studies.

The problem of having trillionaries in our spellchecker dictionaries? Seriously?

I think we have quite more pressing problems than that right now.

I'm not convinced. The article makes a valid point that including debt into the statistics makes it harder to make comparisons between segments. But then it uses that point to claim that we should not attempt to make any comparisons at all because everyone is a unique snowflake etc etc:

> The second lesson of this story is broader: that when you’re talking about poor people, aggregating wealth is a silly and ultimately pointless exercise. Some poor people have modest savings; some poor people are deeply in debt; some poor people have nothing at all.

That seems like just muddying the waters to avoid some uncomfortable conclusions.

By the way, buried in the center of the article, the author actually admids that the essence of the findings - highlighting the extreme wealth inequality - is correct:

> Now $1.7 trillion is undoubtedly a lot of money: there is an astonishing amount of wealth inequality in the world, and it’s shocking that just 67 people are worth that much.

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