Growing income inequality is driving public mistrust
ft.com
ft.com
More generally, I highly recommend any of Thomas Piketty's books for detailed discussion about the history, causes, and consequences of inequality. They are exceptionally well-researched. And while you may not agree with all proposed solutions, they are well-written (and well-translated into English) and provide a great historical overview.
Sure there's data from before, but society hasn't been "at scale" for very long. It sure seems like the recently emerged mega-economies have a few star powers, ever consolidating their hold.
Squeezing out other wealthy families isn't helping the total distribution, if that is the case. Companies keep getting bigger and bigger & the ultra rich get ultra-richer. Families could keep falling like flies, but wealth could still be ever more owned by ultra-wealthy.
Inheritance in a republic is disgraceful.
https://qz.com/301150/this-is-the-proof-that-the-1-have-been...
In Europe I have heard it is more common, although perhaps not a norm, to practice a meritocratic form of primogeniture. One child, who is not necessarily the eldest son but who is seen as the best steward, is chosen to receive most of the fortune, and is trained how to maintain it. Other children may receive much smaller amounts.
The fortune is much more likely to persist if not divided, preventing the liquidation of large holdings and more importantly managing expectations among the gaggle of heirs about how much they'll get.
Inheritance is extremely unmeritocratic yet is somehow completely acceptable even among hardcore libertarians. Why?
Most 'tax the rich' talk revolves around income. But real rich people don't make an income. They make capital gains or take loans against assets. It's a complete red herring.
Gifts and inheritance should be the target of any fair-minded individual. As with any power passed down by familial connection, it leads to a less efficient use of resources. We have all of history to tell us it's a bad idea.
People who earn their wealth in life have, as good as any, a justification to know something of how to allocate it. That is, in the ideal society where wealth is a reward for growing the economic pie. We're not there yet. But this is the closet thing we've got.
People who inherit their wealth have no such justification. Let wealth die with the person.
A common area of concern for libertarians is the balance of power between citizens and government. In this case, the power of the government to take your (or your family's) stuff after you die, despite you already having paid taxes on it.
Through a libertarian lens the government "stepping in to make everything fair" can be viewed as unwarranted interference. Especially when a politician's idea of "fairness" might not square up with yours and be subject to political winds.
(I have some libertarian leanings but wouldn't call myself one, overall I believe wealth and inheritance taxes make sense, the big question is "what rate").
I believe the reason that income is taxed is mainly because it's much easier than wealth for governments to determine and is generally more liquid.
I guess my issue with inheritance is less economic and more moral. It just doesn't seem to fit with modern values yet is untouched as a debate topic. I'm curious as to why that could be.
Family businesses, family farms, family homes - if you hit people there you have to expect an emotional reaction.
People who think "bigger than individuals" - their families, their communities, their churches, their businesses, how to build up productivity and abundance in those spheres. Some people view economic activity as a multi-generational effort and the government stepping in to take everything just because an individual happens to die is kind of a norms violation.
[I get that none of this justifies generations of economic parasites never having to lift a finger, which is why I think the implementation details matter a lot].
It is indeed emotional! This multi-generational effort kind of view is key to many people. And to them, building wealth for their children is the most moral thing they can think of. You're right to point that out and you saying it reminds me of a friend who said something similar about the topic.
My critique on this side is that the receiver of the wealth seems often to not be happy with it. I'm sure that is not true up to a certain point but past that, the trope of the meaning crisis in some way seems to be accurate from those I've known. I think the giver does not follow the logic to the end that indeed the giving is a gift to themselves and not to their children. They are granting their own dream at the cost of their child's. This is where I think the moral failing is.
I certainly believe in contributing what you can to your community and that those whom have the wealth should indeed allocate it as they see fit. I guess my question is in the wisdom of some specific allocations.
The generational economic parasite is not happy to be so but is made into the unhappy abomination. It costs both them and society.
Ensuring that your kids are well taken care of is a core biological imperative, let alone a "modern value".
I am suggesting a 100% inheritance tax. As impossible to enforce as it would be. Why should someone have wealth by accident of birth? Children of the wealthy already have advantage from the upbringing bought by the wealth.
I only make this argument as a point of philosophy. It's completely infeasible because the values of society are warped here. Inheritance is virtue. Maybe the overtone window could shift a bit, though?
I think you grossly misinterpret the philosophy of serious libertarians. It's not simply about meritocracy, it's much more about being free to control what's lawfully yours such as personal and business assets (including your body and voluntary economic agency). This of course includes having the right to decide who gets your money after you die.
>it leads to a less efficient use of resources. We have all of history to tell us it's a bad idea.
Do we really? Inheritance taxes are a minority of government revenues, and they fall well into being offset by the sheer waste of resources and money that most governments routinely practice. You consider them being handed down into often useful foundations worse than this?
>People who inherit their wealth have no such justification. Let wealth die with the person.
How about letting the people who created their wealth decide what's a fair use of it? They're in a practical sense more justified than anyone else in having that decision. You or some bureucrat are somehow more justified than the creator of a body of wealth in deciding what should happen with it? How so pray tell?
Because the whole point is that they are unlikely to have been the person who actually created that wealth, the majority of wealth is inherited or created because they inherited wealth in the first place to be able to create their revenue streams.
If I died and left my heirs $10001 that I had made from my business but I inherited $10000, to be able to set up my business did I actually create any meaningful wealth?
Should I be able to decide what happens on anything more than the $1?
I'm in favor of a wealth tax, but a strong proponent of any inheritance tax (and income).
A wealth tax is more fair. Avoiding it is way harder than for inheritance taxes and it's a constant spend for any estate (avoiding issues around a one time big taxable event, easing planning).
If we as society want(need!) to redistribute wealth we should not wait for people to die!
After this past year of layoffs it seems as though CEOs despite being paid 344x the average worker aren't actually taking 344x the risk.
> This year’s World Economic Forum at Davos is focused on the theme of “rebuilding trust”.
That this would be the theme chosen for Davos in 2024 speaks volumes about the state of institutions post-2020.
I was thinking about this over Christmas break. My wife and I live in Hammond, IN, a poor town near Gary and we were visiting my in-laws in Boca Raton, FL.
Until then, I had thought of income inequality in terms of billionaires and outliers. But as I walked the beautiful sidewalks along the pristine manicured landscapes between the gorgeous library I was working out of to the nearby Starbucks and Jamba Juice as BMWs, Teslas, and even a couple Ferraris passed, I realized there's definitely a lower level inequality as well. Where everyone in the town is just a bit richer than everyone in my town.
We don't have spectacular libraries and great walking paths. It was just kind of weird where everyone is "rich", even if no one is a billionaire. (There very well could be billionaires, too, but I don't think they would change much of what I was thinking. Billionaire inequality issues are like having too much power, that sort of thing.)
There's really not much of a difference between the lifestyles of Hammond, IN vs. Boca Raton, FL. I mean, there's a difference, but the difference is tiny compared to the difference between them and the people whose next 5 generations can buy anything they want, have any lifestyle they want, and never have to work a day in their lives. The Hammond and Boca people both have to work for a living, they both haven't saved enough for retirement, they are both leveraged uncomfortably, they both are worried about the future for their kids. None of that is true for the billionaires. Just because one has Jamba Juice doesn't mean they're very different.
But that is inequality, too.
Just as a thought experiment, if you were to take the global GDP and spread it perfectly evenly over every person on the planet, you'd have less than $13k per capita. That's around half of the income per capita in Hammond.
I think there's a perception that there's this massive hoard of wealth at the very top, and if only we could distribute it more fairly, we could solve a bevy of social ills. It's not that simple.
It's absolutely true that there are some unbelievably wealthy people, but they are also small in number. If you were to magically disgorge, say, every American with $50M+ of 90% of their wealth, you'd be lucky to be able to use the proceeds to raise all the Hammonds to the living standards of all the Boca Ratons, which as far as you're concerned here, does not really change their lifestyles.
Honestly I'm much more disgusted that billionaires exist while there are infants dying of malnutrition than I am disgusted that billionaires exist while there's people worried about their kids and their retirement. Those sorts of things are really unavoidable as long as we're grappling with scarcity.
I assume you're talking about salaries in the USA, and this is largely because global salaries have risen to take more of their fair share of the pie. At the same time, this has put a lot of pressure on US labor.
The postwar period from 1945 to around 1980 in the USA was historically aberrant. In 1970, the USA's share of global GDP was 38%. In 2023 it was around 15.5%.
Globally, living standards have skyrocketed since the 80s.
https://ourworldindata.org/a-history-of-global-living-condit...
1. A large immigrant family moving in with one family to a room, sometimes sublet to several families, with no maintenance being done and the house falling apart.
2. An upper middle class family typically with Teslas moving in and doing a full remodel of the house.
3. An upper class family tearing down the old house and building a 6,000-10,000 sqft+ mansion for the husband, wife, and zero to two children.
In the first case above, the poorer section, city services, roads, shopping continues to decay, with ever more liquor stores, massage parlors, pawn shops, tire repair, and used auto lots. This is by and large the largest area and population of the neighborhood.
In the second case above, roads are repaired, a few new restaurants, but largely a decaying infrastructure. A large area but not as big in area or population as #1.
In the third case above, all new roads. New full rebuilt shopping. A new school. A new public library. The smallest area by far, but once you enter it, it's a different world. Literally one side of the street is nightly robbery dilapidated midrise, and the other side behind the walls with their own police force are new mansions that start at $3m.
Note what's missing from the above: the middle class. They don't exist here. They die off and are replaced, largely by the lower class. I've seen this happen on the ground, over the years. Inequality at the ground level. And it's still going on: absolutely no new building or improvements for the poorest, a little renovation for those with salaried jobs, and continuous rebuilding of luxury mansions for the upper crust.
Doesn't seem sustainable from the Piketty perspective. I only hope it can be resolved peacefully. I'd even be fine with we all get new things but some get nicer ones than others. But this, you get the same thing, worse even, every year, and we get more and more and more, doesn't fit well with human sense of decency.
Narrative violation for the "progressive" left: The American Dream is alive and well.
12% of American Families are now Millionaires "Perhaps most noteworthy, there really are a lot of true millionaires. About 16 million American families—just over 12%—have wealth exceeding $1 million, up from 9.8 million families in 2019. Nearly eight million families are multimillionaires, i.e., their wealth exceeds $2 million, up from 4.7 million."
Who are mini-millionaires? "They generally earn between $150,000 and $250,000 a year. Rather than being left behind as all the gains in the economy accrue to billionaires, they have in fact seen bigger wealth gains over the past three years than the top 10% of families."
Who saw the biggest gains in wealth? "Indeed, the biggest wealth gains between 2019 and 2022 were among the approximately 13 million families in the 80th to 90th percentile of the income distribution. Their median wealth jumped 69% from 2019, adjusted for inflation, to $747,000 in 2022." https://twitter.com/chamath/status/1718016818118553622
here is a snippet from the allinpodcast thats related.. https://www.instagram.com/reel/C1VXuOAyBqz/
definitely worth the 2 mins
It's income inequality _itself_.
Well, notify Interpol and get a warrant! :|