U.S. Economy Being Powered by the Richest 10% | Hacker News Reader

U.S. Economy Being Powered by the Richest 10%

wsj.com

9 pointslxm13 comments

[citation needed]

And maybe it's the richest 10% who have a subscription to the WSJ and can afford to read this article... It's paywalled and it looks like the WSJ is blocking archive tools.

The subtitle says "The highest-earning 10% of Americans have increased their spending far beyond inflation. Everyone else hasn’t." The underlying assumption is that increased spending powers the economy. Low income people are much more likely to spend an extra dollar that they get (see the top-left figure on p 50 of [1]). So, what should we do? Do redistribution down to the low-income people, who will spend it, and that consumption will end up in the pockets of high-income people in the form of increased share price of assets held by high income people. Sure, we could do too much redistribution, but the US would benefit from more.

[1] https://www.paecon.net/PAEReview/issue95/Roth95.pdf

The bigger we grow the pie, the bigger the disparity between top and bottom, because those at the top of it have capture most of the gains. So the only ones with an interest in growing the economy are the top few percent. Everyone else turns out to be at their relative best with the current size, or figuring out how to take away mismatch.

> because those at the top of it have capture most of the gains

Only if you ignore consumer surplus. It's the mistake everyone makes.

Consumer surplus could easily be multiple times the amount of revenue of tech companies.

Consumer value to "those at the bottom" almost by definition exceeds the amount they spend - the question is by how much?

From the top tech stocks I definitely use an iPhone (AAPL), YouTube and Gmail (GOOGL), DuckDuckGo (MSFT), and a tiny tiny amount of WhatsApp (META). The value to me would easily be many thousands per year, yet I only pay hundreds per year. So I would guess my personal consumer surplus is easily greater than 10x my spending. My business depends on other tech companies (the value for which would be on top of my figure). I don't know what tech stocks I use indirectly. My sister has Starlink (because she's rural).

Disclosure: Much less than 10% of my total assets are retirement savings in US shares: AMD (bet against Intel), BRK.B (hedging market), BKNG (bet for them because I've used them and against AIRBNB which I've had poor experiences), MA (US exposure and maybe because they've been marketing me well recently - but I'm not really sure why I've chosen them).

It does get a bit more tricky to guess at producer surplus (maybe approximated by profits?).

Do you happen to depend on any US technology?

Those have value, sure. We exchanging here are in the upper percentages already. I use US-based tech, and it's cool.

You are talking about technical advances that lower the price of services and enable the production of goods, all well and good.

Can you explain how those close the gap? The wealthiest enjoy those just as much as the rest of us, while their accumulated control of resources is greater than the accumulated control of resources for the less wealthy. Real wages have declined for most while all the goodnesses you describe have been introduced.

> The wealthiest enjoy those just as much as the rest of us

You are thinking about it the wrong way around. The less wealthy get to enjoy many things as much as the most wealthy.

Can the ultra-wealthy get better iPhones, iPhone Apps, gaming consoles or games? Movies? Can they get better friends? The ultra-wealthy might get 10% longer life (mostly due to preventative measures available to all but they get better advice; somewhat due to better healthcare).

There's a lot in modern society that the most wealthy get little improvement over what the middle class get. The very wealthy can pay for improvements (better ping time, better training, better live seats, more choice).

Many investments are available to the hoi polloi e.g. stock market on Robinhood. But often not private shares. Crypto is available to virtually everyone equally (a wild ride).

In the past only the wealthy could enjoy the intellectual output of civilisation: music, theatre, art, science, even books for a while. Now the best works are often available to even the poorest in the world (pirating is cheap).

The areas I think where the wealthy have advantages are: 1: avoiding time wastes, 2: spending their time however they choose, 2: customized services provided by people, 3: complex status games (owning a football club), 4: privacy, 5: private jets. I'm not part of the set so I'm not particularly sure. Elon rabbiting on about playing a game demonstrates that he isn't much better off for that particular measure than some poor basement dwelling cheating gamer.

There are human areas where they get little marginal improvement over the middle class. Bad taste is difficult to fix. Wealthy status symbols don't help much, and often they want popular status symbols available to all.

And it seems to me the wealthy proportional waste their money on their status games as much as anyone else. Superyachts? Property overcapitalisation? In-game diamonds or skins?

The most important status symbol is association with high status individuals. There are many elite (regardless of their wealth or political status) that would be shunned by many celebrities.

Personally I think having more money would mostly give me better booby prizes. I'm not chasing more because I have enough to do many human things that matter to me. In New Zealand my friends with less money don't have radically worse lives: they travel but travel less, they eat out but much less often, they waste more time dealing with financial issues. The working friends have to spend time working but they often seem to get heaps of personal satisfaction from their work. Some friends don't work (retired, jobless, sickness beneficiaries) and they mostly spend their time on whatever they want but perhaps can't afford enough hobby/sports supplies.

The wealthy tech elite fawning over Trump publically demonstrates that the US government still has power over them. We're not yet ruled by those with the most money. I hope the US pulls finger and gets their government working more for the common good. It would be nice if it was the common world good (from the outside the US seems to trend towards sociopathic levels of selfish behavior - sorry for the label misuse).

I don't particularly disagree with this, but it is notable you mention the "middle class" and not "the poor" or "the working class". Most of my friends are poor, and they're not dumb, although they are immigrants who are better educated than much of this country. They can see much clearer than the rest of us how inconsistent the US is at reflecting merit with compensation and recognition. In this context any marginal extra money you can bring home brings tangible, memorable quality of life improvements and lower stress. Living paycheck to paycheck and off credit is enormously stressful. Furthermore the "middle class" is more aware than ever that they're much closer to being poor than they are to being "upper middle class".

Like, I just paid off a car for a friend out of pocket. He burst into tears and cooked me a three course dinner. This man isn't even below the poverty line, but he still struggles to budget rent, food, car payments, healthcare payments, and support his family. Saving is simply not possible most months of the year. Money very literally represents completely different value when you have none. It's.... survival. It's what prevents you from being as happy as the people on tv.

Meanwhile, when I am around tech friends—all of us upper middle class or simply comfortably rich—money flows like cheap champagne. I don't begrudge them this, but I also don't expect them to work to fix the issues causing the rest of my social group great stress without some kind of pressure or incentive to care about them like I do. I certainly don't see them as inherently better with money or more deserving of it. Even us tech workers who grew up without this money and privilege understand a life closer to lifelong tenants than we do to being truly wealthy. I wish "we" could agree that "we" should include, and arguably work behind, poor people.

(Which is not to say all poor people are so insightful—in my experience, illiteracy is a massive problem in the poor communities in which I've lived, which is fertile ground for youtube propaganda and manipulation and scapegoating people and demographics to explain why you aren't rich and why your son is bisexual.)

Granted, I don't think you were trying to exclude them, and I think the insight is valuable and well-articulated. Consider this a continuation thought rather than a specific response, I guess.

Thank you for your eloquent discussion, worthy of upvote. I'm thinking about it, I'm not convinced by your description alone, but it's a really good description.

You're describing a mix of hedonic and practical matters. Hedonically, if someone is attuned to their situation appropriately, they can enjoy any economic level. Some people are probably earnestly thankful for one meal of meat or fish a week. Spending time as one chooses is noticeable. Also, in large part, where one chooses. Being able to entertain more than four guests at a time, perhaps eight, and being able to host a visiting family, requires more resources. Being able to simply own a home near family or friends requires more.

Practically speaking, being able to have your local constabulary or maybe the state police take your side in disputes is only available if you work for them or have a lot of money. I'm sure you've noticed that having over USD 100mm gives you a different set of rules to play by, when you're not spending on the highest-quality interpretations of the rules. Wealth lets you influence the politicians. With Trump, ego matters a lot, but without your money or influence going towards his priorities, flattery gets you not far at all. I'm not sure how we can agree that we're not ruled by the ones with the most money- the one with the most money is definitely telling the executive departments how to run. We are not going to see this administration working for the common good of most of the citizens, of the world or of the US, and our citizens in the US have been successfully poisoned against each other.

Parenthetical: I think we miss Norman Lear, Johnny Cash, Fred Rogers and Mel Brooks very much. They were relatively successful uniters. I don't see equivalents in the modern landscape.

> I'm sure you've noticed that having over USD 100mm gives you a different set of rules to play by

I've heard about that.

I do notice my less wealthy friends also use different rules. They tend to be more hands-on solving traditionally police matters. They also sometimes seem to be rather careless of liabilities. I've definitely considered using money to solve some of my worst problems.

Not so many people in NZ with US100MM so I've never had much to do with them. We have 3 billionaires here.

I have little knowledge of the people you mentioned.

>Many investments are available to the hoi polloi

Caught ya. Didn't you say it is just hoi polloi?

Mostly agree, couple points on a few.

> 2: spending their time however they choose

Had a friend who read through one of Andrew Carnegie's books (biography) and his take away from it (paraphrase from discussion) was that Carnegie didn't seem like he actually did all that much from a lot of his life. Definitely not "however they choose."

Large portions of the book were effectively descriptions of dealing with the markets, wrangling with other wealthy over business empires, and trying to manage his own business. Friend's view at least, was it seemed like he mostly only really got to spend his money in retirement, having spent most of his "leisure" time on work related activities for decades.

> The wealthy tech elite fawning over Trump publicly demonstrates that the US government still has power over them.

Relative scale of the "ruled by them." (personal view) It's not so much of a fawning as buying access that's simply not available to most without the ability to dump money. Average Americans simply don't have the ability or connections to dump $10,000,000 on the inauguration, like Amazon or Disney. Beyond the range that banks would laugh at to even provide a loan in those numbers. "You make how much each month?" A lot of the "ruled by" is also in the laws and rules implemented that then reinforce behaviors and ability to interact.

Personal post from earlier about stealing land from people with laws and money attacks: https://news.ycombinator.com/item?id=43214948

And in the tools that can be brought to bear to punish those who resist. If Amazon, Microsoft, Google, Nvidia decide they want to hurt a specific member of American society, it's relatively easy to set up a chatbot that does nothing other than bombard that individual's every waking moment with endless spam, nonsense posts, irritating mailings, and other waste to punish them for resisting.

It's far easier to gain access to world banking and ruin someone financially than it is for a normal citizen with normal people money access. Bezos literally burned the entire diaper industry to the group to buy Diapers.com and get his special diapers.

How are journalists to get out of the lower earnings percentile if not paid by their employers?

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