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Comment by mempko | Hacker News Reader

Inequality continues to rise rapidly. Everyone but the most well off living conditions continue to decline. The wealthy elite need to make stories that distract people from this problem. So they will blame immigrants and "bloated inefficient governments" for the problem. And will push anti-immigration and "personal liberty" and "more free markets" as the solution.

Instead of the obvious problem that Inequality is rising and we need to substantially raise taxes on the rich and reduce them for everyone else to close the runaway gap.

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Living standards have absolutely been rising for just about everyone, and continue to do so - for example in terms of income growth[0]. People in all income tiers have seen their incomes grow consistently, albeit not equally.

[0] - https://www.pewresearch.org/race-and-ethnicity/2024/05/31/th...

> albeit not equally.

That's the crux. It's the same in almost all developed countries, we all have been getting more income, but most of us are not getting richer. The widening of the scissors is becoming more and more obvious, because even middle incomes suffered hard during the cost of living crisis, and continue to suffer.

This is mostly because of housing prices, not unequal distribution of income gains. If you gave everyone more money house prices would just go up more, because houses are being built far slower than the population is increasing.

Rising inequality increases asset prices as the wealthy look for more places to invest and extract rent. Gary's economics on YouTube explains this very well, with credentials.

We don't give everyone more money. Just the people who don't already have too much.

The people with "too much" (everyone with more than the person saying the phrase "too much", presumably) aside, giving everyone more money will mean house prices will be bidded up and rents will rise, because there is an oversupply of people vs accommodation.

Think about it now, if you are bidding on a house and the other bidders are multi millionaires and billionaires, who do you think will win the bid? House prices are going up because those with a lot of cash are bidding them up. Many of those are being converted to rentals. This is why inequality matters.

The rich are demonstrably less discerning of every marginal dollar. They will pay more for the exact same asset than someone who is only middle class or lower. This means the rich own everything, and therefore just keep getting richer, because the US abandoned any form of redistribution.

For example, Kennebunkport is a very fucking wealthy town in Maine, including having a large vacation property for the Bush family. My father's entire business as a half retired contractor is predicated on rich, gay, techbros moving here from California and just throwing money at him until stuff is built. He can literally double a project price overnight, and they give him a bottle of $200 wine for it. The same is true of many businesses in the area.

This is one of the reasons nobody builds lower class housing. Profit is usually percentage based. Why would you build ten starter homes, and work your ass off pleasing a bunch of poor people who have to be careful with their money because even getting a loan nowadays is stupidly difficult, when you can just build a couple mcmansions for the same output effort, where a bunch of rich fucks will come in and buy it in cash, for above market price, no questions asked, so you don't even have to build it well because the rich people are buying vibes and dreams, not an actual house, and they will happily eat a much higher profit margin per product.

Large income disparity means that people stop serving the lower market, because Wall St won't invest in something that doesn't make line go up as much as just treating rich people as idiots that will pay stupid prices for things.

This "makes sense", or at least is obvious when you remember that at a certain point of wealth, you have more money than you know what to do with, and you still cannot buy even a single extra second of time with infinite money, so spending time being discerning with your purchases is explicitly a waste.

Being "gay" has nothing to do with it, you are simply exacerbating homophobia by such an ignorant comment. MOST rich tech bros are heterosexual, just SOME are gay.

Your link does not support your claim or in fact mention living standards at all. The fact, widely evident to every American not in the upper 20%, is that your paycheck is bigger, your house is worse, your food is worse, your healthcare is worse, your life expectancy is worse, your children’s education is worse, you have less free time, you can take fewer vacations, and you can buy less of what you want.

The US was #1 on the Human Development Index in 1995, and is now #20, sandwiched between Slovenia and the UAE.

What your link does show is widening income inequality.

Link says the numbers are adjusted to 2023 dollars and a three person household.

I saw that, yet all the above remains true. Income, even after inflation adjustment, isn’t the same thing as living standards.

According to Wiktionary, the standard of living is "the level of income, comforts and services available to an individual, community or society."

Levels of income have risen. Comforts and services available are not as simple to measure as income, but consumption (a decent proxy) is also trending upwards.

https://data.worldbank.org/indicator/NE.CON.TOTL.CD?location...

Most of that is driven by the top 10%. The top 10% now make up 50% of all consumption in the US. Again demonstrating that inequality matters.

Income can grow (even inflation-adjusted, real income), while standard of living falls.

Your link shows inequality growing. There is income inequality and wealth inequality and both have been growing. Incomes rise while everything around you gets much more expensive, especially assets.

> So they will blame immigrants and "bloated inefficient governments" for the problem. And will push anti-immigration and "personal liberty" and "more free markets" as the solution.

This trope is getting tiring to be honest. There are very clear issues with immigration in many countries. The issue is that for the last 20 years when these issues where brought up, the main parties just dismissed them and ostracized anyone who dare bring up the subject.

This failure to address the problem is what is fueling the rise of the far right everywhere except in 1 country, Denmark. Why? Because they actually decided to listen to their constituents and do something about it. Is it perfect no? But if you look at the result of their action, the far right in Denmark is comparatively low compared to many other European countries.

It's time for the leaders of many countries to stop pretending that problems don 't exist and acknowledged that the way the immigration issue was handled for the last 20 years is an utter abject failure.

What specifically did Denmark do?

They implemented tighter immigration controls, they spread the new immigrants around for better integration amongst other key changes.

There is a very interesting article that can be found here: https://dnyuz.com/2025/02/24/in-an-age-of-right-wing-populis...

Like I said, it's not perfect and even they know that.

What specifically isn't working in what concerns immigration and how has the way immigration was handled in the last 20 years been a failure? Please provide specific examples.

I live in an European capital and haven't seen any of these issues that immigration is supposedly creating. AFAICT theses issues only exist in the minds of people, and thus in the media.

Regardless, let's say I'm wrong and immigration is indeed creating some issues. Are these issues really so important relative to other problems a state might have that they command the amount of attention immigration gets?

I call bullshit, it's purely a wrong skin color problem.

Immigrants are not why living standards are declining though. Yes, there are obviously logistic problems when populations grow quickly. However the real issue is inequality not immigration.

also the culture war is perfect for this, it gets people who would otherwise agree on many issues to fight over trivialities and nuances etc...

Yes - the strategy is to get the people who care about doing what’s right to fight amongst themselves.

Then the people who care only about money and power can divide and conquer.

  > divide and conquer

like they say: oldest trick in the book

>we need to substantially raise taxes on the rich and reduce them for everyone else

The problem with these solutions is that the math doesn't add up.

Either there are too few rich people in reality, and even if you can collect 200 percent from them - it won't affect the overall picture (and in the end there will be even fewer of them, and you'll have to raise taxes for everyone).

Or, if we expand the category of rich - a poverty funnel is created, where taxes on the "rich" protect the "super-rich" from competition. What difference does it make that you have to pay 90% if all the money is yours, because no one will invest in competing with you, since success will bring them 10%, and failure will take everything?

Everywhere in the world, the rich pay less. Even in countries with formally progressive tax rates, there are a huge number of subsidies and programs that in the end of the day boil down to the fact that the effective tax rate for the rich is lower (even if this means simply reducing their competition so that they get more money and pay a "progressive" tax on it).

Because the problem is not inequality, the problem is poverty. And any measures that discourage production in the end of the day increase poverty. For this reason, any construction of socialism always ends in hunger. Because what difference does it make what just and fair distribution system you came up with if your production fell ten, a hundred or a thousand times because of such a system?

You are being just as dogmatically blind.

While there is truth is what you say about simply redistributing money is going to directly get people the goods and services required since that is not directly production.

It does have second order effect of changing the weighting of what society produces. If people are too poor to afford food why would you bother to grow it.

Taxing should be about keeping winner take all effects in reasonable check to keep markets actually functional for a good proportion of the participants.

>If people are too poor to afford food why would

There is no such thing in economic as "people are too poor to afford food". Growing food - is like in the start of economic chain, if people can't afford food - they starting to grow it themselves, and unaffordability disappears. Food can be unaffordable only if you hinder the production of it with your "smart" and "fair" taxation system, for example like socialists do.

Being poor + a natural disaster absolutely causes famines with real deaths.

Certain areas are too densely populated to produce food.

Typically, you need land to grow food or keep livestock, many poor don’t own land.

That said, it is unlikely to dip that far.

You just literally stated that people can be too poor to buy food on the primary market so they have to set up a secondary market in order to get food.

I probably should have been more clear in my statement and put "farmers" instead of "you". It wasn't really a statement about food but about market access and participants ability to signal demand.

You second statement is just boringly stupid.

Why would you need to raise taxes on everyone in that scenario? That's not clear.

Many of the problems we face stem directly from inequality itself. For example, the rich have dramatically greater say in our "democracy" due to their ability to fund politicians and lobbyists. They are above the law due to their ability to hire expensive lawyers and shield themselves through corporations. They can use the law as a weapon due to their ability to sue people who can't afford to fight back. Some of them are rich enough to avoid the consequences of destroying huge swaths of society (i.e. Musk with Twitter).

what level of income and/or wealth constitutes rich and how much should they be taxed?

What percent of your money comes from labor vs capital appreciation? Which is the hand that feeds you?

Below $1M NW, you are probably labor. Above $10M NW, you are probably capital. These thresholds come from asking the question "does a conservative estimation of the passive income from these assets replace a wage?" -- below $1M, no, above $10M, yes, feel free to adjust by playing with the assumptions or plugging in wacky edge cases. The point is that incentives determine so much about politics and the incentives of each individual tend to heavily favor one side or the other which tends to translate into politically relevant policy preferences that favor one side or the other.

The tax code is comically tilted in favor of capital. We should fix that. Unearned income shouldn't be taxed less than earned income, for a start. Also, if I can pay property tax on my house, mega-billionaires can pay property tax on their stock pile. But these are details, and focusing too much on details can be a distraction from the root issue: the tax code is comically tilted in favor of capital, and we should fix that.

This is a great answer, thanks!

A hard line between labour and capital seems a bit reductive. My pension is capital. I have some shares, which are capital. I also have the security of a permanent job, paid by someone else to take risks.

E.g.

> These thresholds come from asking the question "does a conservative estimation of the passive income from these assets replace a wage?"

Net worth doesn't necessarily generate any passive income. You could own a lot of shares in your business that are temporarily spiking, but you can't sell them for some reason. Net worth is a bad way to think about this, because it makes people think billionaires have billions of dollars in cash ready to be taxed away. When in fact if you want people to pay tax on their stock pile, you're talking about taking their property away from them because of how much the market happens to value it right now. Unlike property tax, which is to pay for the services weight of your property on the local area.

> A hard line between labour and capital seems a bit reductive.

What hard line? The hard line I didn't draw with the "what percent of your money" formulation?

> Net worth is a bad way to think about this, because it makes people think billionaires have billions of dollars in cash ready to be taxed away.

If it's not cash it can't be taxed? I brought up real estate as a counterexample to the entire stable of "it's tooo haaaaard" arguments, and that's the weakest of them. I was expecting something taller, like the liquidity argument. But real estate comfortably refutes them all and you didn't even try to deal with that.

> you're talking about taking their property away from them

The government wouldn't hesitate for a second to take my property when they are taxing me waaay heavier than mega billionaires. Why the fuck should I be the slightest bit sympathetic to the sanctity of their literal entitlement?

Some people put property rights on an altar and treat them as a fundamental principle, but here's the thing: property rights (at their worst) have been used to institute and defend literal slavery. If you want to put them on an altar, if you want to treat them as a fundamental principle rather than a tool to economically link investment with return, I'm going to make you own that and defend it. Do you want to go down that road?

Real estate (or more precisely, the land on which the real estate sits) is a completely unique case due to being a resource in inherently limited supply, and arguments which apply to taxing it do not necessarily apply to any other form of wealth.

> I also have the security of a permanent job, paid by someone else to take risks.

So you believe, if a company is failing (owners took the risk and are failing), your job is secure? How? You do realize they can fire you at any moment. Job security is a myth. You risk taking a job just like a investor betting on a company.

Of course. But you at least got paid for your time. That's all you can hope for. Someone who owns a business might well lose all the money they ever put in. That's the risk.

Owners typically don't run a business. Those that do pay themselves a salary. If they don't run a business they are called "investors". Investors typically understand they can lose all of their investment and are in a position where if they do they are fine. This is not true of most people working. Most people working are living paycheck to paycheck. If they fail they are risking far more than an investor in the sense that their life changes. An investor on the other hand already "lost the money" when they wrote a check, and don't need it to survive.

> Owners typically don't run a business. Those that do pay themselves a salary

But they still risk all their capital as well. If you take a loan and use it to open a restaurant, are you taking more risk than an employee who's paid?

This doesn't seem that complicated.

> what level of income and/or wealth constitutes rich and how much should they be taxed?

There doesn't need to be a crisp threshold. Progressive taxation without treating labor income as more heavily taxed than generic income which in turn is more heavily taxed than capital gains would be a good start.

This! Serious economics papers are always about studying different progressive tax functions. Nobody cares about specific thresholds to separate "the rich" from the rest. It's a moot point because wealth is a continuous variable (approximately Pareto with tail index between 1 and 2, to be precise).

> Everyone but the most well off living conditions continue to decline.

This is objectively false.

https://fred.stlouisfed.org/series/MEHOINUSA672N

> Instead of the obvious problem that Inequality is rising

I'm old enough to remember when progs all shrieked that poverty was the big scary problem. Capitalism solved that with minimal expense. You know that scary 15% in poverty figure you hear during election season? That's based on census income data, which excludes ~90% of all welfare programs, even CASH programs like refundable tax credits!

So with poverty overwhelmingly sorted, they've moved on to inequality! But even calculations of income inequality are doped up--high earners incomes are counted BEFORE taxes, and low earners BEFORE benefits. Keep that in mind whenever progs advocate for more welfare spending--even if you give it to them, they won't count it! They exclude it from the very calculations which they use as evidence of the need for ever more spending!

That's now how you measure inequality. Look here.

https://fred.stlouisfed.org/series/WFRBSN40188

And

https://fred.stlouisfed.org/series/WFRBST01134

And

https://fred.stlouisfed.org/series/SIPOVGINIUSA

You aren't looking at the right data. This is why it's so hard to educate the public about this, even intelligent people on HN get it wrong.

The GINI can be measured before or after taxes. The link you shared is after--this one is used in defense of the metric. A 'before tax' version[3] is invariably used when on offense.

Sure, wealth inequality is growing, but this isn't a problem, it's merely an emotionally resonant issue. The left love it for the same reason they lofted the 'poverty' banner for so long--it's a Philosopher's Stone. This particular stone hails from a failed German novelist and promises to transmute other people's money into votes!

Regardless, median income[0] and median net worth[1] are rising and poverty is in the doldrums--points which make it difficult to make an honest argument that we are in need of radical change.

[0] https://fred.stlouisfed.org/series/MEHOINUSA646N [1] https://fred.stlouisfed.org/series/BOGZ1FL192090005Q [3] https://ourworldindata.org/grapher/gini-coefficient-before-t...

Ok, so you agree inequality is growing and but don't recognize it as a problem. Let me ask you something, when you are buying a house, and you are competing with multi-millionaires and billionaires for the bid, who do you think will win? There are limited amount of real assets available at any given time and wealth inequality means regular people hold less of the assets each year, making them poorer. If the vast majority of people are losing wealth every year, how is that not a problem?

Not him, but I will reply on his behalf...

>There are limited amount of real assets available at any given time

This is correct.

>and wealth inequality means regular people hold less of the assets each year, making them poorer

This is not. New wealth is constantly being created. There isn't a fixed amount of pie on the table.

Don't disagree that new wealth is being created, what matters when talking about quality of life and inequality, is who are the beneficiaries of this new wealth? Is it the already wealthy? If so, that's part of the positive feedback loop to drive inequality further. More assets, Yay. Held by fewer and fewer people over time. Boo.

The new wealth is being created BY and FOR the already wealthy. That's literally what capitalism is! New wealth creation is certainly not driven by poor Steve who does not have money to start a new business or market his new IP.

How much of the money made by the Harry Potter Franchise went to JK rowling vs her publishers? Supposedly she got a 15% royalty rate, which is considered "High"

That should be revealing on it's own.

Yes, wealth is constantly being created, however let's look at the facts

- Market prices: ~15% annualized increase over the last two years

- House prices: 5-7% annualized increase

- Gold: 10-12% annualized increase

- Compared to GDP growth of only 2.1-2.7% annualized

If GDP growth is only 2.7% while the wealth of the top who own assets is up 15% annualized, where is the 12.3% coming from? It's coming the bottom.

We live in an economy that has wealth redistribution. It's being distributed from the majority to a small minority.

In other words, yes the pie is growing, but the slice of a the top 10% of the pie is growing much faster.

Adding to @mempko's comment, in the most recent tax filing season data available, there were tax returns of:

                                        Top 1%       Top 5%      Top 10%       Top 25%       Top 50%   Bottom 50%  All Taxpayers
  Number of Returns                  1,535,899    7,679,495   15,358,991    38,397,477    76,794,954   76,794,954    153,589,908
  Average Income Taxes Paid           $653,730     $187,468     $108,251       $50,963       $27,891         $667        $14,279 
  Adjusted Gross Income (Millions)  $3,872,395   $6,182,180   $7,745,525   $10,613,602   $13,191,209   $1,531,038    $14,722,247

If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income

                                             1          2-5         6-10        11-25        26-50       51-100
  Number of Returns                  1,535,899    6,143,596    7,679,496   23,038,486   38,397,477   76,794,954
  Income Taxes Paid (Millions)      $1,004,063     $435,594     $222,966     $294,234     $185,068      $51,225 
  Adjusted Gross Income (Millions)  $3,872,395   $2,309,785   $1,563,345   $2,868,077   $2,577,607   $1,531,038 
  Average Tax Rate                       25.9%        18.9%        14.3%        10.3%         7.2%         3.3%
  Average Per Capita Income      $2,521,256.28  $375,966.29  $203,573.91  $124,490.69   $67,129.59   $19,936.70

There are 76,794,954 making $19,936 on average. The filing thresholds are "single, under 65 = $12,950" and "head of household, under 65 = $19,400". Many of the bottom 50% of America would "barely" even qualify to file.

One simple chart to rule them all.

https://archive.is/ZFnAT

Not sure where you’re from, but here in the US, the wealthy elites love immigration and inefficient governments. Easily exploited workers and a weak government incapable of helping them is a billionaire’s dream. It’s uncanny how similar the past decade has been to the start of the Gilded Age.

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