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Comment by randyrand | Hacker News Reader

Having a billion pieces of paper does not matter. Literally paper. Digits on a computer. The supply of this paper is not even fixed.

It only matters when billionaires convert that paper into food, housing, jets, etc, for themselves does it actually affect anyone.

But, by a huge margin, the largest expense billionaires have is investment in other people and companies.

If billionaires squandered their wealth on short term self indulgence that would be one thing, but they don't. They typically give it all away.

I don't see the big policy failure here, or why that is a currently a problem that needs solving.

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This is a presentation of money that assumes there is no problem with other people not having that money.

The major issue is systemic instability and unnecessary poverty.

It is popular to presume that everything is not zero sum, but this is not the case.

I don’t see any good reason we should allow excessive potential energy to become the property of a class of people who want nothing more than excessive potential energy.

There is not some fixed amount of money in the world, though, and there hasn't been since at least the point the world abandoned the gold standard. We don't have to worry about someone sitting on all the money and stopping the economic activity that it would enable by doing so - governments and banks can literally create money out of thin air as necessary to keep the economy supplied with cash. The big limiting factor in how well off ordinary workers can be is the capacity of the actual, real economy of factories and stores to supply them with goods and services. That's why it's not a bad thing that people found successful businesses which are worth a large amount of money: by doing so they are, in general, directly making everyone better off by coming up with better, more efficient or higher quality ways of satisfying their needs.

Sure, they didn't do it alone, they had employees and the whole rest of society, but all those workers and the rest of society was there before and yet the business was not. Successful business enterprises don't just instantaneously spontaneously assemble because the world is capable of supporting them, they have to be created and if they cease to exist the world is worse off even though all the workers and buildings and so on still exist. (Also, the parts of society that enable successful businesses - and even basics like food and energy - are much more heavily made up of other businesses than I think people appreciate.)

This is the point. What’s important is how ownership and management of economic production is allocated. Who runs businesses? In capitalism they are largely owned and managed by the people that built those businesses. In communism and nationalised industries they are owned and managed by a government bureaucracy. In this case the owner transferred that control to a charitable trust.

Personally I believe each of these can have advantages in various situations. Some critical shared infrastructure and services I think do belong with government. Defence, healthcare, emergency services, perhaps some utilities. Charitable trusts have a place. But I also believe private citizens that demonstrate the ability to build and run businesses also have a place, a big place in the system. Private capital investment is a massive and highly productive and efficient force for economic good. Typical billionaires don’t spend billions on themselves. Millions yes, but most of those billions exist as shares that represent control of productive businesses that provide goods, services and jobs. If they spent it all on themselves they wouldn’t be billionaires for very long.

I don’t think it’s generally in the public interest or beneficial to society to confiscate businesses from their owners, and what? Give it to who? There is a legitimate concern that such control can lead to negative effects like exercise consumption or political influence, but the way you deal with that is to address those problems directly.

> exercise consumption

Did you mean 'excessive'? Or is this a term I'm not finding on Google?

I meant excessive. Sorry, typed it on my phone.

> In communism ... they are owned and managed by a government bureaucracy.

That depends on the degree of centralization of any given variety of socialism. The other option is that they are owned and managed directly by the workers.

True, and I have no problem with that. In fact such ownership structures are possible and do exist in many capitalist countries as well. There’s no law against it. Ultimately capitalism is founded on individual economic freedom, and that includes the freedom to enter into cooperative ownership structures and the sort of charitable trust structure Patagonia now enjoys.

The main reason I think we don’t see cooperative worker owned enterprises very often is that employees generally are not interested in assuming the level of financial commitment, responsibility and risk that goes with ownership.

>The major issue is systemic instability and unnecessary poverty.

Jon Stewart once put it in a different frame: he called better policy "revolution insurance". At least that frames it in a way as to what the rich have to gain instead of solely focusing it on what they have to lose.

The Fed is housed in a building named for a former chair, Marriner Eccles. He said something similar to Stewarts' formulation:

"It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they can not save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying. It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment." [0]

[0] https://www.nakedcapitalism.com/2011/09/marriner-eccles-on-t...

Without billionaires, the net result wouldn't be that their money would be distributed among the populace. The result would be that this wealth simply wouldn't exist at all. This is why the Soviet Union stagnated after they reached a certain standard of living. There is no incentive to take on risk when you aren't entitled to a proportional reward.

> There is no incentive to take on risk when you aren't entitled to a proportional reward.

This doesn't really reflect reality though. Did Bezos take on more risk than anyone working in a high risk job? What does $100 billion worth of personal risk look like, for a person who doesn't already have $100 billion in assets?

Bezos didn't take on $100 billion of risk from the start. He took on the risk of not having a job like any other startup founder. It just so happens that this risk created over $100 billion of value. If there were an artificial cap placed on wealth, Bezos would have extracted profits from Amazon earlier rather than reinvest money back into the company. Every other rich person would do the same, including his competitors and investors, so in the end, we'd all have less wealth.

This narrow argument depends on a total lack of opportunity cost and alternatives. The assumption is that it is somehow optimal for Bezos personally to extract maximal personal wealth constructing a pseudo-monopoly before exiting. A secondary assumption is that Bezos personally is globally unique in his ability to do what he did.

Plenty of investors exit early, and the benefits accruing to a monopoly could theoretically just as easily be distributed to a collective as opposed to an individual, circumventing the billionaire issue.

It’s SV’s whole game to construct a NPV of a future monopoly, cash in, and move on, before the regulators come in. This has nothing to do with wealth generation.

>The assumption is that it is somehow optimal for Bezos personally to extract maximal personal wealth constructing a pseudo-monopoly before exiting

I don't understand what you're saying. It's undeniable that Amazon revolutionized e-commerce and cloud computing. Otherwise nobody would be giving them money.

>the benefits accruing to a monopoly could theoretically just as easily be distributed to a collective as opposed to an individual, circumventing the billionaire issue

It does get distributed amongst a collective, and it's called equity. Theoretically, Amazon's first warehouse workers could have agreed to be paid in equity instead of cash, and then Bezos wouldn't have to take as much outside investment. If they had held on to this stock, they would easily be worth tens, if not hundreds of millions today. Obviously, this isn't practical in real life, so instead, this wealth got went to the investors that took on the risk.

A billion is a very disproportionate reward for, well, just about any kind of risk taken. I mean, people in highly dangerous occupations get paid way less, even as they risk their very life.

Dubious claim. I seem to remember certain mega-corporations driving independent retailers out of business in a race to the bottom in the last couple of decades.

There is a huge spectrum of possibilities between communism and capitalism with individuals controlling $100B in assets.

The only issue with wealth/income inequality in countries like America is that some goods are artificially constrained or positional (mostly housing).

A mediocre salary of $40,000 is enough to buy so many goods from competitive markets (phones, cars, anything you can get off Amazon/AliExpress). This becomes very apparent when you go to lesser developed countries.

The major costs in people's lives do not come from the billionaire class. If you tax them into oblivion and give that money away, it will be soaked up by housing anyway (look how sharply housing costs have risen after the growth in real income the past 2 years).

It seems to me that your argument against taxing billionaires reduces to “we shouldn’t tax them because if the commoners have more money then residential housing will be more expensive.” I would argue that is more indicative of issues in the housing market rather than a good reason to continue to allow the extreme aggregation of wealth.

The sharp rise in housing costs in the past two years in some areas is down to complex confluence of factors, real income being one, artificial scarcity being another, the entrance at scale of corporate interests into residential housing being a third. Add historically low interest rates and fears of flooding, lack of water, and fire, and I’m not sure the increase in prices is such a simple relationship as indicated.

I’m also not suggesting we take the money and rain it down as stimulus checks. That was a desperate response —- we can do better.

What’s your proposed fix? Like if I create the next Star Wars, am I not “allowed” excessive “potential energy” somehow? How would that even work?

This idea that a single person creates Star Wars is one gap in understanding of a healthy system. A person does not exist in my or your present state or create anything but for the work of millions if not billions of other people.

The solution has been repeatedly demonstrated and isn’t complicated. The benefits should accrue to the system that creates them in a balanced way. Limits on the return of capital, implemented as either voluntary donation or taxes and progressive income taxes.

People scoff at taxes vs representation but right now, today, they can avoid those taxes by donating that money.

The choice of "Star Wars" as an example is pretty ironic. There has been so much discussion about how Star Wars was a result of the work of so many people. And how George Lucas, who would be the candidate for "single person", when left to his own devices made worse quality Star Wars films.

In particular, there was: - Marcia Lucas, credited for "saving Star Wars in the editing" - John Williams

Not to mention all the people working on the special effects, the sound designer Ben Burtt, the list goes on.

The reality is that a "single person" doesn't create things like that. The "visionary/great man" ideal is just good PR.

> The "visionary/great man" ideal is just good PR.

I reject that proposition. It's how record labels (investors, etc.) gaslight their artists (founders, etc.) into signing bad deals.

The businessman ("anthropomorphized lawnmower"[1]) has excellent PR. What interests him is an ownership stake in your vision and execution.

> “From the beginning of [Dischord Records], people have said that the way we do things is unsustainable, unrealistic, idealistic, and we were just dreaming,” he said. “Well, the dream is now 35 years old, so they can go fuck themselves.”[2]

-- Ian MacKaye (2016)

[1] https://news.ycombinator.com/item?id=10040429 [2] https://www.avclub.com/buttholes-and-lawyers-how-a-lawsuit-t...

Both can be true, depending on the regime of operation.

A credible relationship (such as an individual bringing value) can be (and has been) exploited by individuals who want more money for themselves.

Another credible relationship (that the network is the value) can be exploited by individuals who control the choke points.

Your examples are where individuals control the choke points, introducing artificial controls and preventing the healthy accrual of benefits to the whole structure.

I think you're pointing out that sometimes the jerk with leverage is not a large enterprise.

I can stipulate; this is why running companies is hard.

Adversity exists. I don't think it diminishes my assertion that visionaries do, too.

The proposed fix usually amounts to some type of wealth and estate taxes.

They typically give it all away.

They do? The Kennedys, Rockefellers, etc certainly haven't. Those families have been massively wealthy for several generations.

> largest expense billionaires have is investment in other people and companies

that's not an expense, but an investment, on which they (usually) get a return, increasing their net worth

> if billionaires squandered their wealth on short term self indulgence that would be one thing, but they don't

they do, just not enough to make a dent in their wealth because once it's grown so large, it's hard to spend it faster than its growth. If you have $1B growing at a modest 6% / year, that's $60M / year.

> They typically give it all away.

they don't (unless by "all" you mean "a small percentage"). Even the few who have pledged to give 50% away in their lifetime have not (since their fortune has continued to grow). There are exceptions of course (and MacKenzie Scott will probably be one of them).

Money is a representation of resources, those with more money can control more resources. I think it is undeniably a problem for any individual to have control over such a large portion of resources.

All of this wealth they have accumulated gives them immense power and control over our society. Billionaires largely use their wealth to create even more wealth for themselves or to influence people, they don’t “give it all away”.

Your framing is extremely disingenuous.

> They typically give it all away.

To their children, perhaps? Or to a non-profit they control, for tax reasons? Sure.

But in general, I believe, actual philanthropy is a relatively small part of the typical billionaire’s portfolio.

> It only matters when billionaires convert that paper into food, housing, jets, etc, for themselves does it actually affect anyone.

Fair point. One thing noting is that overall asset value isn't always directly converted to product/services but rather it's used as leverage. Sometimes this leverage is intangible ("don't f with me, I'm going to sue you"), other times it's very REAL tangible leverage - see Peter Thiel and Gawker.

spits out drink

What universe do you live in???

Those billions give them a lot of power and influence.

Look up regulatory capture for something that might change your mind about that.

Also the money they “give away” is given to their next generation typically not the public. Bill Gates would be the exception.

Opting out of fiat money (crypto is fiat in disguise) means living a rambo-like life of basic survival. Therefore a billion dollars sure means something. Not just paper.

> They typically give it all away.

If they give it away (many don't) they specifically choose where it goes, and often it's some legacy BS, like overpaying to get their name on a university library. Alternatively that money ends up going to their children and it stays in the family for generations.

Billionaires will not save us.

They call it a “gift” but such large donations always come with some strings attached— sometimes social, sometimes economic, sometimes it’s just an implicit IOU. Huge “donations” are the way uber wealthy people covertly wield their soft power.

It's not paper or digits it's a social contract i.e. 'power'.

spoken like a true temporarily-embarrassed billionaire.

As others have commented on, the real issue is that, in order for someone to accrue that amount of money in the first place, there has to be such a systemic societal inequality in regards to access to resources that economic mobility is effectively a dream for a significant swath of the population.

People here talk about billionaires simply being rewarded for their effort/risk - a proposition that is simply laughable (so, unless you are promised riches beyond your wildest dreams, you won't invest in the economy and community? Seems to signify sociopathy more than anything).

And, yes, that is the implication: in order to have the propensity to accumulate that much money, far more than any one human would ever need to survive comfortably, you have to exhibit a significant amount of sociopathy and antipathy towards your fellow man; a willingness to usurp resources far beyond any natural need; if only because of some arbitrary internal itch.

Chouinard may be the exception that proves the rule -- a billionaire despite his intentions and efforts -- if only because the market happened to align with his convictions, rather than any intention to capitalize on any product for financial gain in and of itself. Even a broken market is right twice a day.

> spoken like a true temporarily-embarrassed billionaire

Until quite recently, the quip was "millionaire." What forced the change was American socialist icons embarrassed to find themselves on the wrong side of the barricade.

> in order to have the propensity to accumulate that much money, far more than any one human would ever need to survive comfortably, you have to exhibit a significant amount of sociopathy and antipathy towards your fellow man; a willingness to usurp resources far beyond any natural need

It isn't money; it's net worth. An old-fashioned market crash could vaporize most of the inequality in a week.

In any case: wealth isn't "usurped resources."

https://en.wikipedia.org/wiki/Zero-sum_thinking

What kind of sociopathy and antipathy did JK Rowling have in creating her Harry Potter books ?

They don't give it away. They leverage their money to sway politics to their interests in ways that normal people have no hopes of.

Chip Wilson for example recently kickstarted a right wing political group in Canada with some seed funding of 350,000. Complete and utter pocket change to him, but well beyond what a regular person could hope to ever spend on their political interests.

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