Hacker News Reader

Comment by mtlynch | Hacker News Reader

>Buffet could lose 99% of his net worth, and still be one of the top 5,000 or so wealthiest people in history. He could then lose 99% of that wealth, and still be comfortably inside of the top 1% of wealth holders. He could invest that 1% of 1% of his money in a broad index, and comfortably live off the hundreds of thousands of dollars in annual returns.

This didn't seem true, but I think you're right.

Warren Buffet is worth about $90B. If he loses 99% of that, he has $900M, which is probably still top 5,000 overall. And then if he lost 99% of that, he'd be down to $9M, which he could invest conservatively for a 4% return and live off $360k/yr.

View on HN

> $900M, which is probably still top 5,000 overall

I was interested in this as well. For what it is worth, Wikipedia has a page aggregating a few "billionaires per country" lists. These have roughly 2600-3000 billionaires worldwide, so top 5,000 seems like a good estimate.

https://en.wikipedia.org/wiki/List_of_countries_by_number_of...

Technically the parent said wealthiest people "in history". I think comparing wealth over even modestly short time spans is ludicrously tricky but that said Im not even sure he's currently among the top 5,000 in history.

> If he loses 99% of that

He also made ~99% of his wealth after age 56.

Which is unconscionable

That’s 90B of stolen value from employees who should be the owners of the stock

Let's rewrite that to work in some real world requirements.

That's 90B of value which could have gone to employees had the capital needs of those growing businesses been met by debt (often requiring coincident equity injections or personal guarantees), by bootstrapping, or by those same employees.

Perhaps now there's space for a conversation. What might a world need to look like for it to be made up of those businesses in place of one where ownership can be traded for capital at risk?

Good idea

My answer is anarchistic syndicalism:

https://theanarchistlibrary.org/library/george-woodcock-what...

In short, labor has to organize our own capital to create syndicates that peacefully outcompete existing unethical structures

Its going to take hundreds of years of organizing and reduction in the pervasive sense of social terror and fear which leads people to hoarding behavior

12000 years of this structure won’t end by force or overnight

It can only be done through steady peaceful direct action to transfer wealth from existing hoarders to individuals

We then disincentive personal consumption and vanity the same way we got here, through Bernays style propaganda (marketing) and building infrastructure that incentivizes community development over personal consumption

You should choose a different name, because anacho-syndicalism will forever be linked most closely with a Monty Python scene.

Arthur: Then who is your lord? Woman: We don't have a lord! Arthur: (spurised) What?? Man: I told you! We're an anarcho-syndicalist commune! We're taking turns to act as a sort of executive-officer-for-the-week-- Arthur: (uninterested) Yes... Man: But all the decisions of that officer 'ave to be ratified at a special bi-weekly meeting-- Arthur: (perturbed) Yes I see! Man: By a simple majority, in the case of purely internal affairs-- Arthur: (mad) Be quiet! Man: But by a two-thirds majority, in the case of more major-- Arthur: (very angry) BE QUIET! I order you to be quiet! Woman: "Order", eh, 'oo does 'e think 'e is?

I mean…it’s one of the better sendups of capitalism that persists today

Hard to argue with the logic

> labor has to organize our own capital

But then labour becomes the business owner – exactly what they don't want to be. Labour chooses to become employees because they don't want the headaches of owning and operating a business. They just want a steady paycheque and let someone else take the risk.

What risk is being taken? Financial risk? Opportunity risk?

Employees take the most risk because they gave the fewest options in the market

The risk a PE or bank takes giving a loan isn’t the same risk a loan holder takes by collateralizing their home.

While certain estimations can be made, it is impossible to truly know if work is worth doing until after the work is already done. As such, workers have to make a choice:

1. Do the work and find out. If the work was worthwhile, they'll reap the benefits in spades. If not, they are left with the detriments.

2. Sell the work at a discount to someone else who is willing to find out.

Most workers opt for #2 because they don't care to find out. They want the guarantee and are happy to let someone else suffer the consequences when things go wrong, even if that means letting someone else indulge in the rewards when it does work out.

Specifically, one of the businesses Berkshire Hathaway invested heavily in is the BNSF Railroad. Railroads take a lot of capital - tens of thousands of miles of track, thousands of locomotives (at $2 million each), railroad cars, and so on. Were the employees going to buy all that? No, they were not - they didn't have the money.

So you need some people with money - some capitalists. Do you expect them to work for free? If so, good luck - you can expect all you want, but they aren't investing in your business.

We can have a conversation about how much of the rewards should flow to investors and how much should flow to the workers. But "anything that doesn't go to the workers is theft" shows a complete lack of understanding.

If labor can get the money and buys the tools, then sure, they get the rewards that flow to labor and the rewards that flow to capital. That's perfectly fair. But at that point, they're not just "labor" any longer - they're at least petit bourgeoisie.

Oh, I fully understand it.

You just seem to think that there is no other way for some reason

How can you just wave away the narcissistic psychopathy of capital return requirements?

On what philosophical principle are you basing your position on?

I’m not really sure how you can stand on any kind of principal here when all you’re doing is capitulating to the existing power structures

“It’s just the way it is” isn’t a branch of ethics

"I demand that it be this other way" isn't a branch of ethics either. And labeling some aspect of the existing way as "theft" doesn't make your argument any stronger. Neither does labeling it "narcistic psychopathy".

If we're going to live a better life than in the stone age, we need tools that are better than stones. The more sophisticated tools are beyond the ability of one person to both make and use them - they take too much time to make. So we wind up with a specialized economy where different people make the tools and use the tools. And they both deserve to be rewarded - the tools enable much more to be produced; those who made that possible deserve to share in the rewards.

But we're a money economy rather than a barter economy, because barter doesn't scale all that well. Well, in a money economy, if someone is going to use a tool they didn't build, then someone has to buy the tool - either the tool user or an investor. If the tool user doesn't have the money, then it has to be an investor.

Do you demand that the investor do so for free? That doesn't sound fair. (It also doesn't sound like it will actually happen - why should the investor invest if there is no expectation of a return?)

So now we have three people who need to share in the rewards - in tool maker, the tool user, and the tool buyer. And it is perfectly fair that all three share in the rewards. It is unfair to expect the investor to invest for free.

Like I said, we can have a conversation about the amounts that different ones receive. But that's a completely different conversation from "everything that goes to the investor is theft".

Your response doesn’t make any new claims or derive any new principles, you’re simply regurgitating capitalist propaganda.

In fact this trope about the “stone age” tells me you have a eurocentric idea of the history of humanity - eg:

“people are fundamentally selfish, things were bad, then society developed and now things are better”

Which is just a totally fabricated history

All your questions will be answered by reading, chapter 4 of Prudhon “What is property?”

Except in extremely rare cases, hoards of wealth come from inequitable deals - that is, someone chooses a bad deal for themselves under duress

If you want things to be better than the stone ages then stop acting like “might makes right” is an ethical position, its “stone age” philosophy that needs to end

https://theanarchistlibrary.org/library/pierre-joseph-proudh...

> All your questions will be answered by reading, chapter 4 of Prudhon “What is property?”

Here's one question that it won't answer: Why should I believe Proudhon? Sure, he may sound correct. Lots of other people sound correct, too. What is your basis for saying that I should listen to Proudhon rather than all these other people?

> If you want things to be better than the stone ages then stop acting like “might makes right” is an ethical position, its “stone age” philosophy that needs to end

I did not advocate that as an ethical position - you're imputing that to me. I deny you the right to tell me what my ethical position is. And you should stop trying, not just because you don't have the right, but also because you're lousy at it.

I'm done with the conversation, since you seem quite clearly to be uninterested in listening. I will leave you the last word if you want it.

>What is your basis for saying that I should listen to Proudhon rather than all these other people?

My suggestion is to read them all and come to your own conclusions

I said I was done with the conversation, but: Good answer. Credit where due.

> “people are fundamentally selfish,

People ARE fundamentally selfish in any groups above 150-200 where the social net breaks down. Most groups of animals don't stay group-serving in giant groups, we are no different.[1] In groups small enough to be inside the social net, tribe survival dynamics work great.

> things were bad, then society developed and now things are better”

Things are not great. Technology makes them better though. Man can't easily escape technology today, but it is the fundamental trade-off society offers at the cost of social health.

[1] https://en.wikipedia.org/wiki/Sociality#Eusociality

>It is unfair to expect the investor to invest for free.

Ok, but in the case of negative market returns, the expectation is that you get no returns. If the investor randomly demands not having to get market returns then who is going to make up the difference if not the investor? The tax payer? That is the answer the average citizen has chosen and they like it.

Can you give an overview of labor would obtain the resources to buy and operate a railroad?

Some way anyone raises money: Go ask people with money

The difference is that the people you ask will be the people who are doing the work and as a result they become the owners

I haven't started a railroad so I can't tell you how to fund that

I have started a residential trash cooperative which is 100% bootstrapped by the employees and needed ~100k to start

I have also started multiple software startups and those are cheap as hell to start and run if you're not trying to waste money on marketing

I'd love to know where people get the confidence to speculate how much money a company should spend on labor or capital investments or how any of that money should be raised.

I mean good for you but personally I'm barely sure how I should do the above for my own finances much less on the kind of scale you're talking about.

I'd guess that in this forum a number of people will have had some experience both raising equity and being in positions of significant ownership and control, but still you're right.

Like most opinions, they're an often unknowable mixture of genuine aptitude and naive bravado and it's good to try to stay humble.

The same way they can say “we think you should stop abusing your workers”

How intriguing!

I wonder what would happen if we tried a system that didn’t allow private ownership of companies?

Oh we have, you say? Many times? Famines, poor economies, mass genocide, dictators? Well, surely none of those experiments were _real_ communism. We better try it another dozen times just to be sure.

Pray tell:

How much ownership of the means of production did a slave of the USSR or PRC own?

Who “owned” the property in these cases?

This is such a stupid argument, capitalism has also failed everywhere it's been attempted. The US is a mixed economy and the socialist bits have saved our asses multiple times. China is also a mixed economy so the only thing that really matters is whether you market the ideas you took from capitalism or the ideas you took from socialism.

No one is left arguing for Socialism as a centrally planned entirely state controlled economy, just tweaks to our current system to add additional interventions to combat markets' natural propensity to consolidate wealth. Making it so that only employees are shareholders isn't some crazy radical thing, the current system is to levy heavy taxes to recirculate wealth back down from the top. But come on capitalist, do you really think that centrally planned government spending is the best way to do that?

> Making it so that only employees are shareholders isn't some crazy radical thing

Have you given any thought what that would look like in practice? If you and me started WidgetCorp and needed $5 Million to buy a WidgetMaker, where would we get the money?

What you highlight is the precise problem I’m addressing

10 richest men in the world owned more than the combined wealth of the bottom 3.1 billion people

That means that in order to utilize that “wealth” it needs to be liquidated and no longer accreting value

The people who own that have no interest in liquidating that capital for anything that doesn’t personally benefit them. Since a company is a zero sum pie for total ownership whomever controls the distribution of equity controls the pie - unless you’re in a coop or a strong union, your ownership is simply at the will of the richest person in the company

If it’s the case that you need capital to make more, then by the power law the only people who can “create wealth” already have it and have no intention of using it for public good

So then how do non owners start something? They convince the ruling economic lords that they will do better with their money to give them more back

You can’t get money unless a ruling lord guarantees a rate of return. How’s that possibly a good system?

Seems a lot like greed based vanity dictatorships

> That means that in order to utilize that “wealth” it needs to be liquidated and no longer accreting value

This is objectively wrong. The great majority of owned wealth is capital, and capital is operated. Most of Buffett's net worth is in businesses which he owns: those businesses operate at a profit, creative value for the world at large, some of which accrues to Mr. Buffett. Which he promptly reinvests in more (hopefully) productive businesses.

No it simply means he artificially controls the liquidity and thus velocity of the company value

Please cite your argument that the world is better because the workers of the companies are not controlling the value they create

Is your argument thusly: “because buffet can maintain control, he should because so far he has benefited his shareholders”

> your argument that the world is better because the workers of the companies are not controlling the value they create

I made no such argument.

What I said is that this:

> That means that in order to utilize that “wealth” it needs to be liquidated and no longer accreting value

Is objectively wrong. Most wealth is actively utilized as investment in productive businesses. Perhaps this is easier to see with the example of Jeff Bezos: most of his wealth is ownership of Amazon, which is a productive and profitable business. It doesn't need to be "liquidated" to be utilized, it's being utilized at rest. This is true for Warren Buffett as well, but I already went over that.

Something even more puzzling about this idea is what does it mean to own something you can't sell? If only employees of a company can own stock I suppose they could trade the stock between themselves, but the stock's market cap is necessarily limited by the aggregate net worth of all employees plus the company's assets.

I think it was a mistake to use the word shareholders to try and explain it in terms people are familiar with because in this world what would even be the point of stock? What would market cap even mean? How you divide up ownership among employees I'm sure would be the source of much bike-shedding but let's just say it's 100% split weighted by salary.

(I'm using the numbers for AT&T) Say you work for a big company so at your salary it translates to 0.0004% ownership. Just as before fiduciary duty and all that the company as a whole has the solemn duty to make it's owners as much money as possible and you make record profits to the tune of $72B. Great job really fantastic. Now instead of a $4B stock buyback it's a dividend paid to the owners (which is you) and you just made a cool $1.6 mil. Sure as hell beats that 2% bonus.

You can't sell ownership as a way of raising money anymore and you have to get loans or issue corporate bonds like all those plebeian small businesses do but the value of your work is returned right back to you as an employee/owner. And you're the board -- let's go (representative) democracy at the workplace! It's gonna make it really hard to push through truly unpopular decisions.

This kind of thing isn't without downsides or a magic solution to all of our problems, but like, employee ownership of business / labor owning the means of production that doesn't require state controlled industry, gulags, or whatever, and roughly lines up with current corporate governance.

I get the way a (worker) cooperative works in an imaginary world. The real thorny issue is that in this world where there is nothing else, it becomes almost impossible to start a business that requires real capital investment. Corporate Paper and bank loans are pretty much impossible since you have almost no revenue and not even a history of revenue. If you can get a loan, it will have a double-digit interest rate. You could impose a capital requirement on your first employees, but then you wouldn't find many. The way new companies in the primary and secondary sector start is always with an investment by passive partners. It has been this way since before the industrial revolution.

The worker board will also have the same perverse incentives current boards do to a lesser degree. Why wouldn't they make terrible decisions in the name of short-term shareholder value? What is the crucial difference between a company who sells shares on the public market (where anyone could get a profit share) and a worker cooperative (where employees [re-]invest their wages to get a profit share)?

> Corporate Paper and bank loans are pretty much impossible since you have almost no revenue and not even a history of revenue. If you can get a loan, it will have a double-digit interest rate.

These two things can't really jive in the same world. There can't be a bunch of investors willing to blow huge sums of money on a business with no revenue in exchange for equity in pursuit of above average returns but no investors willing to buy corporate bonds or a new to be determined IOU structure from a business with no revenue in pursuit of above average returns. The only necessary condition in my view for this kind of investment to not shaft workers in the long run is that the amount paid to fulfill the IOU can't be indefinite or unbounded.

When did the stealing happen? There was mutual agreed exchange between parties over and over again.

Capitalists call it “dilution”

Go find a startup right now that is on the Series A-F pathway

Each new investment incurs ownership dilution. Based on what? Did the employees vote for this? Never

PE broadly and dictatorially controls the flow of capital as a class - they also mostly collude for deals - so early employees have zero say about these dilution actions

If the only solution is to not play (eg “well then go somewhere else/start your own”) then the structure is fundamentally flawed and needs to go away

> the structure is fundamentally flawed and needs to go away

What’s a structure that improves upon this flawed structure?

Here's two:

https://en.wikipedia.org/wiki/Public-benefit_nonprofit_corpo...

https://en.wikipedia.org/wiki/Mutual-benefit_nonprofit_corpo...

Dilution happens when the majority of share holders agree to a issue more equity. Again, this is a fully agreed to and is part of the standard rights of share holders. Early employee are given documents that explain this and sign. Can you explain this is illegal taking of property?

In a venture backed startup, the majority of shareholders aren’t employees

Also even if they are at Seed, they increasingly won’t be

So unless the founding team is a bunch of syndicalists - which almost be definition they aren’t - they won’t ever structure the organization to reduce their own power on behalf of future workers

Thats by design and origination with the modern firm. Capital will not fund companies that don’t prioritize returns on capital

You see how the entire structure is built to prevent even challenging the structure

Companies founded as dictatorships are the only option people think is available and yet it’s not.

However there is no money for expanding this message because it does not benefit the people with money to invest in reducing their own power

To fix this problem, you should stop consuming and buy only high-returning assets, including the stock of the company you work for. Or simply start your own company, you’ll own 100%. Surely this will produce another Buffet.

You seem to be missing the point:

There should exist no single person with the amount of economic power that Buffet has.

That is economic power that someone else DOESNT have that they are creating but not capturing

With the only argument being “but they have a contract” - totally ignoring that contracts are based on laws and capital writes the laws

I don't get where the stopping point is. When does using your resources to gain more resources start to become immoral? You concede that the nameless workers ought to be capturing some economic power, which acknowledges that it's a basic human right to accrue economic power. What you won't seem to entertain is the possibility that an investor is fairly accruing economic power by using his existing economic power to fuel another profitable enterprise. If you keep repeating that process, your capital compounds, but there's no principled reason to say that any step in that process involved extractive / exploitative gains.

Why don’t we start with just raising the floor on expectations for care such that it’s impossible to be involuntarily homeless or die from a preventable disease

We can probably figure it out faster once the majority of the population is not grasping for air

This is imminently possible today but the social will isn’t there

Buffett has earned economic power by proving he uses it efficiently. He clearly has a good sense of where to put money such that it creates disproportionate value for society at large, where 'good' here means better than millions of others attempting the same. His investments encourage and empower companies to think in longer terms. He has pledged to give it all to charity and has already made good on a record breaking 50B of that pledge. He's not a great foil to use for criticizing capitalism.

>There should exist no single person with the amount of economic power that Buffett has

Why not, then? From a consequentialist utilitarian perspective, we seem to be much better off with Buffett being allowed to do what he wants with his money. From a deontological rights perspective, we reach the same conclusion.

Should anyone be allowed the political power of a US president or senator or mayor?

>contracts are based on laws and capital writes the laws

This seems to lack substance. If I agree to do task X in exchange for reward Y, enforced by the law saying I have to honor what I agree to, and you think I should be getting Y+Z, is your issue really that the law was written by capital? AFAIK, most contract law restricts what I'm allowed to give away and guarantees that I get a minimum in return. Is there a particular law governing contracts that, if removed, would move things in the direction you prefer? Because otherwise I'd think you'd be quite happy with the 'you can't trade your basic rights away, you can't sell yourself into slavery, you must make at least minimum wage, etc.' that we've already got (and that you allege capital is resposible for) and seeking an additional 'you must capture at least 75% of the value you create' or something. Unless you're fundamentally opposed to contracts in general?

I’m opposed to economic systems where people will make decisions based on a massive power imbalance and fear of destitution

We have more than enough resources for that to be true, it’s a matter of will and reckoning how the deck is stacked structurally to actively fight anything that reduces the power of the luxury class

Seems you’re assuming this premise. Who exactly do you think would or should muster economic decisions? On what basis would they act?

The line of argument you’re developing is a well-explored garden path. I encourage you to continue developing the idea but do not embrace advocacy, for that is where you will lose your way.

This is libel! You should go to jail!!

It isn't, obviously. But nor was that value stolen. Words mean things.

Reply on news.ycombinator.com