Wealth Distribution in the United States
righto.com
righto.com
That said, I don't think people like Elon are actually worth 250 billion or whatever the estimate is, but at that level of wealth, it almost doesn't even matter.
The diagram makes the point but misses subtlety.
> We have thus confirmed the (cardinalist) assumption of nineteenth century economists that marginal utility of income declines with income.
https://cep.lse.ac.uk/pubs/download/dp0784.pdf
People say stuff that needs evidence then say "according to economic theory" like its a source.
(fwiw I agree that this isn't a good argument for a log scale)
The graph of monetary utility may look like a logarithmic graph at first glance, but that's just because it's more like a C1 + (x-C2)^3 graph where you haven't followed x far enough to the right.
Remember when Michael Bloomberg spent 500 million dollars to be on the Democratic debate, and Elizabeth Warren burned that money down with a single zinger?
The former is easy to answer. It's a hot, emotional topic and getting comments way faster than it's getting upvoted.
Now I'm pretty sure we will see the first trillionaire in the next decade
Not if we do the right thing and switch to labeling our large numbers using the "long" system. Then they'll merely be back to being "billionaires" (instead of milliardaires) despite having the net worth you were discussing.
In 1999 Bill Gates was worth the equivalent of ~187 billion dollars today. 25 years later Elon Musk is worth ~269 Billion and Zuckerberg is worth ~206 Billion.
None of these guys gets close to the robber barons in terms of share of total assets though.
Fraction of GDP doesn’t translate that well when talking about different countries for obvious reasons but for billionaires global GDP isn’t a bad metric.
I have no dog in the race, personally, but historians routinely put Rockefeller up as the top or among the top richest Americans in history. I do disagree with your assertion that GDP is invalid. You could indeed move to Tuvalu, and you'd be the richest person in Tuvalu by fraction of Tuvalu's GDP. Unless Bill Gates also moves there.
In that sense, comfort is about the odds of staying the winner for any length of time, or being unthroned by someone else because you have all your game pieces in one basket.
From the perspective of actual comfort, I assume most of us could be quite comfy with a net worth of a few million. Especially the bottom 90% or so.
A few thousand state and federal officials, rich businessmen with influence, lobbyists, union leaders, …
At the far right you’d have governors of large states, Supreme Court justices, Congressional committee chairs, the President.
Nobody seems to get too worked up over this, it’s the system we’ve chosen. But as a group the folks on the far right of that distribution exercise and have exercised way more critical leverage over the state of my life—during Covid, say—than Larry Ellison and the Walmart heirs.
My point is we worry a lot about outliers in a wealth distribution but not the outliers in a power distribution (some people, of course, being outliers in both!)
And that seems misguided to me for the reason I mentioned: The unfortunate exercise of political power at least anecdotally seems to be more of a risk to the average person’s health and happiness than the misuse of dollars.
> don’t elect a lot of the people with power, either
A republic only works if the people with public political power are accountable to the public. Any employee or officer of the US government at any level is accountable in this way: most are accountable to the institutions they work for, which are themselves accountable to Congress and the President (or state/local elected officers), with elections as the ultimate accountability to the people. The courts are also supposed to be accountable to the public, but in recent years a profoundly corrupt and self-serving Supreme Court has expanded its own power, run roughshod over norms of civility and propriety, and all but erased its own accountability. This imbalance will be addressed sooner or later by Congress and the President, who will rein in the corrupt Court and hopefully make structural fixes preventing future corruption, but it is jarringly anti-republican in the short term.
There are of course many people with power who are not directly part of the government. Such people are only accountable to the people to the extent the people's representatives make and enforce laws affecting their behavior. As an example, it would make a big improvement to many parts of the economy if anti-trust laws were enforced in their original spirit to prevent large firms from using monopoly power in anti-competitive ways, etc.
> we worry a lot about outliers in a wealth distribution but not the outliers in a power distribution
This is certainly not true of a general "we" meaning residents or citizens. To the contrary, there is consistently significant worry about unbalanced political power, which is a running theme of US politics.
A President has limited power for 4 or 8 years, and that’s it. We don’t put 22 year olds on the Supreme Court or let them act unilaterally. Sure laws stick around but that’s the result of what hundreds of people and other groups of people not changing the rules in a few years.
So far! (I would add)
i think the next presidency may be very very different and I give that about 50/50 odds
Would also be interesting to compare to other countries maybe Norway one of the most egaliterian and a poor country like Sudan.
Is it possible that the people figuring up "wealth" for these articles have multiple reasons to exaggerate the totals? Perhaps outweighing their impulses towards scientific and journalistic credibility?
This is not a serious argument. You're telling me that if shareholders see a founder divest entirely from their companies, they aren't going to take that as a bad signal, and also choose to divest? Bullshit. The size of the total market is completely irrelevant.
But you know, if this was a serious argument, the author would've been able to have it published SOMEWHERE and it wouldn't just be a gist
Don't know why I wasted my time clicking that link. I knew it would be what it was.
ad hominem and appeal to authority fallacy
> Don't know why I wasted my time clicking that link. I knew it would be what it was.
If you already had your mind made up, why did you bother clicking and reading the link?
Other investors would choose to divest because ownership of those shares signals control and power over those institutions. Someone with a massive set of shares selling their stakes signals some lack of confidence, perhaps. But more importantly, it injects serious uncertainty and risk into the future of the organization. Who will buy those shares? How will they vote? Will there be power stuggles on the board? How will that filter into the effectiveness of executives, and down from there? Uncertainty and risk come at a premium. Redistributing ownership of a huge institution introduces at least uncertainty and probably risk. Therefore, stock price goes down.
But there's an important corollary to that. This isn't just a graph of how wealth is distributed. It's also -- perhaps primarily, to your point -- a graph of how power over other people is distributed.
I don't particularly care about how money is distributed; call me selfish or lazy or stupid, but I have plenty of money to live my relatively simple life in the countryside as I wish, and that's enough for me.
But I do care deeply about how power over me and others is distributed.
When I look at this graph, I see the consolidation of power in the hands of the few, and in that I see a threat to my freedoms and way of life, regardless of whether I have enough cash to sustain myself indefinitely.
I don't think the author was trying to argue what would happen if the assets were to be sold, what they were arguing is the downplaying of billionaires wealth, largely people's belief that the extent of the wealth is exaggerated because it's just "on paper".
I posted this link to respond to this assertion:
> Is it possible that the people figuring up "wealth" for these articles have multiple reasons to exaggerate the totals
Can the other 99%?
Let's say I had all the same holdings as Musk or Bezos, just in much much lower amounts, proportionate to the difference of our net worth.
Use Amazon stock as an example. If Bezos indicates a desire to liquidate his Amazon holdings he has to file paperwork with SEC, and the very act of him selling his stock would impact the price downward. People wondering if he knows something would also start selling their shares, and just the sheer volume would take hours or even days to unload.
If I wanted to divest my proportion of AMZN I would click a few buttons in an online portal. 10 seconds later, my stock would be sold off at the then-current price, and I'd have a cash balance in my account. In the typical hourly trading volume of AMZN my transaction wouldn't even stand out.
Even if my entire net worth, and the net worth of all my closest friends was in AMZN, we could sell it for market price and the transactions would be settled in a few seconds. Nobody would even notice.
This amount of assets cannot meaningfully move the market equilibrium, so the person will realistically sell all of it for 100% of what it's worth, with say a 2% margin of error.
The higher up you go in wealth, the less it is the case. But it's not black and white, just a scale.
Let’s assume that the article is so off base that it literally got everything wrong by doubling the true value in their estimates which is a completely ludicrous assumption.
This does almost nothing to that graph. The wealth gap is still completely out of this world.
Of course, if someone like Elon liquidated his TSLA holdings he'd be worth nowhere near the estimate. I don't think it matters though, because he can use those holdings as leverage for cash that makes him effectively as liquid as his estimated net worth.
Would the richest people WANT to liquidate holdings for the value that Forbes estimates their worth at? I doubt it.
The marginal value of millions of dollars to these billionaires' lives is close to zero.
However, those holdings constitute control and power over important institutions at the heart of the power structures of the most powerful country on earth.
I don't care about how much money other people have. But I do care about how much control other people have.
Ergo, I am much more concerned about the power-distribution effect of a few people controlling large stakes in institutions significant to the operation of society, than I am about the estimated dollar value of their stake.
If anything, the hypothetical value of these assets under-estimates the amount of social power for which those dollars are a proxy.
There's a reason billionaires buy money-losing newspapers and social networks.
my only conclusion from TFA is "someone has emitted some horseshit with chunks of numbers in it"
your point is far more central to the discussion i feel the people compiling the figures wanted to spark. And while its a worthy argument i hafta say "why didn't they put it in those terms, then?"
Thank you; that's very kind.
> your point is far more central to the discussion i feel the people compiling the figures wanted to spark.
I tend to agree.
> And while its a worthy argument i hafta say "why didn't they put it in those terms, then?"
Writing is difficult. Persuasive writing is even more difficult. And persuasive writing to a large and undefined audience, in a way that will make that entire audience happy, is basically impossible.
All those frog$kins are good as far as they go.
Jonas Salk, inventor of the Polio vaccine, chose not to patent his creation or seek any profit from it. Imagine the alternative where Jonas Salk patents the Polio vaccine, sells each dose for the profit maximizing price, and becomes one of the wealthiest people in the world. Which scenario led to more overall wealth?
The facts can be true. The narrative isn't necessarily true, and isn't necessarily the best interpretation of the facts.
The Waltons have a completely different kind of wealth than Musk - In many practical and theoretical ways.
So even within this subset of insane wealth hoarders, there is a difference in kind, type legal structure, ability to liquidate, etc…
We have thousands of examples where someone’s “wealth” disappears overnight because a handful of “analysts” downgrade future expectations of what their percentage of equity is worth in a secondary market. That’s not really going to happen with Buffet, Gates but very possible with Musk and similar.
On the flipside arguably Musk has the most political influence within the right wing (See: recent Trump stuff) compared to for example, the relative influence of the Waltons on the “liberal” wing.
Similarly I could point to a ton of people who aren’t on on this list but fall into the >500M$ category who have a lot more influence on power and economics than some of the people in the top of this list.
The fact that this is not calculated within this framework, means that this ranking is pure vanity and says nothing about economic, power, political power, or anything other than an arbitrary, monetary leaderboard.
The fundamental goal of neoliberalism is to place all capital in private hands and eliminate any governmental control over capital - and that means eliminating the middle class and creating a two-tiered society of serfs and aristocrats, as existed in 19th century Russia, Britain and Germany.
The methodology is roughly threefold - (1) destroy domestic unions by exporting all well-paid unionized manufacturing jobs in the USA to sweatshop zones in offshore client states, and (2) import as much cheap labor as possible to fill jobs that cannot be exported (construction, services, agribusiness etc), ideally undocumented so that any unionization efforts can be resisted by deporting union leaders and organizers at will. This ensures starvation wages for the serf class. (3) Establish large homeless and prison populations as a constant threat to the serf class - no matter how bad your situation is, it could be worse!
Okay
> and that means eliminating the middle class and creating a two-tiered society of serfs and aristocrats, as existed in 19th century Russia, Britain and Germany.
No, that simply does not follow.
Republicans learned one lesson in 1993 and learned it well: "Read my lips: no new taxes" should mean no new taxes. Since then government responsibilities have grown as private industry has shirked it in the name of profit transfer to shareholders. There's also of course been wars of convenience.
The gap has been funded with money printing and deficit spending. Now we sit here and say "but all of their money would only fund things for eight months!" and forget why there's so much interest on loans to pay in the first place.
Not only that, but we consistently manage to forget who that interest is being paid to. The economy is complex, but we keep treating it like a larger version of a household budget.
They're also the people racking up all of the debt.
When someone actually uses their money, like to buy a mansion, we do indeed tax the shit out of it. We tax the corporation, we tax the dividends, we tax the gains, we tax the seller of the property and we make the buyer pay various fees. We tax the property yearly, and we increase the assessed value of it upwards to get more tax every year. Tax tax tax.
The only place to get more tax is to just seize the paper straight. And I think that’s a terrible idea.
A more reasonable way is to seize it is through taxation, either by a wealth tax or tax on unrealized gains, but it would be very difficult to implement.
Plus, the US government could just implement capital controls overnight (or better yet, in the night before), then the money would have nowhere to go.
That's not true, right now there's lots of incentive for the ultra wealthy to not sell their stocks, and instead use the buy/borrow/die strategy. This results in less tax revenue, allows them to capture gains, and can then pass down that wealth on a step-up basis that wipes out capital gains for the recipient.
Policies could be changed to incentivize selling assets without actually seizing them.
I don't think ownership and stewardship is the problem. The fundamental problem is still there: whether they have 1T dollars, or 300M people have their share of 1T dollars, the dollars in the system will increase the second they spend it. Their "stewardship" is a tenuous position - commanding enough capital to cause massive inflation. Politics aside, it's lose/lose for a single person to command that much power over an economy. If every billionaire decided to liquidate their assets all at once the financial system would absolutely fold. The fact these people can accumulate this level of wealth is not only an income equality problem but a symptom of a cancer in our financial system. The Fed's policies and the existence of lobbying have, by and large, created these people. It's less a money problem but rather a political problem.
I agree with you that the idea of charging capital gains on unrealized capital is financial and political suicide. Even if you suppose you only do this for people worth, say, 500M or more history has shown that this never sticks. Eventually, the government will continue to get more hungry and continue to make abhorrent financial decisions. Eventually, it will effect everyone. As you stated, the investment from regular people over the next 30-50 years would trend towards 0 - and then a new way to tax would need to be made. Negative interest rates on bank accounts, perhaps.
That's not to say however it's ok that these people are allowed to possess >= 80% of a countries net wealth. The money isn't the problem is the power it brings - and that's a huge problem. The safest way is probably a progressive inheritance tax but it still has the same problem. How long before Joe Plumber is effected by it? 50 years? There's no simple solution.
This applies to small business owners way more accurately than it does to billionaires riding the startup rocket to the moon because all the gamblers with money decided they looked like the best way to make a quick buck in the stock market.
Overall I am not persuaded, I think rich people are a good thing for society.
I'm not focused on the person, nor how deserving they are individually, I care about how this benefits society.
Let me put this another way. I think that the majority of billionaires essentially won the lottery, and that a typical small business owner brings more real, actual value to society. For every one Musk or Bezos or Gates, how many equally intelligent people tried but were in the wrong place at the wrong time? I think the collective value of a lot of really intelligent people is much higher to society than the guys who got all the right things lined up at the right moment. Does Bezos have skill? Yes! Does he have skill proportionate to his wealth? Not a chance.
Hell, I'll even admit that Musk is clearly skilled in business. Luck can't necessarily explain all of it. But he rode the wealth rocket on the back of TSLA, a company he did not create. It wasn't his idea to build electric cars, but maybe we can credit him for figuring how to make them a sexy and sought over status symbol.
Would it? Or would it come roaring back stronger than ever? If there are real assets, then I'd expect good results. If it's just on paper backed by nothing but good feelings, maybe we're better off burning that paper.