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Comment by runako | Hacker News Reader

This was not true in the immediate postwar period. The turning point was roughly the 1980s.

Wealth concentration has been a deliberate US domestic policy for decades. This is, to a large degree, separate from the stability of our currency or military protection. It's the stated intent and logical result of relaxing taxes on the rich while enacting policies designed to hurt the working classes (e.g. reducing union power, not indexing minimum wage to inflation, refusal to address healthcare & housing costs, increasing fees at public universities, cutting existing safety net programs, etc.).

Concentration of wealth is a choice. America is a very rich country and has not always chosen to distribute our wealth this way. Other countries make different choices. We are also allowed to make different choices.

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> Wealth concentration has been a deliberate US domestic policy for decades.

Wealth is not concentrated in a market society. It is created. Some people creating more wealth than others is not "concentrating" wealth in their hands.

Another way to put it is it is not a fixed pie, where if one gets more another necessarily gets less. If I buy some art supplies for $20, and paint a masterpiece I sell for $100,000, wealth was not "concentrated" in me.

When people talk about wealth concentration, they're not talking about artists with high-variance paydays. They're focusing on all of the captive-market middlemen that have been allowed to set up shop playing negative sum games via regulatory capture, externalities, lack of anti-trust enforcement, etc.

When people like Sanders talk about wealth concentration in billionaires like Musk, how did Musk make his money with negative sum games, regulatory capture, etc.?

Oh boy. There have been tomes written on how Musk's companies are set up around capturing government subsidies. If you're earnestly interested, such analyses are not hard to find.

The stock market itself is a shining example of regulatory capture - a perma-bubble due to fake "fiscal responsibility" political marketing that causes massive streams of newly printed money to be handed out to banks to dump into the asset bubble (that newly printed money representing the gains from technology and offshoring that would have otherwise caused price deflation)

But sure, I'll also agree that some of Musk's riches are due to actual wealth creation - before the crippling social media addiction and subsequent spiral into lunacy, anyway.

But that's all focusing on the problematic ways wealth concentration can arise (the context it was originally brought up in). The other critique (likely what you're referencing about Sanders) is about the corrosive effects that concentrated wealth tends to have. And surely you can see how that applies pretty strongly to Musk...

So how much subsidy did Musk receive for SpaceX? (The answer is $0.)

SpaceX is worth around $390 billion.

> some of Musk's riches are due to actual wealth creation

Very generous of you! LOL

> So how much subsidy did Musk receive for SpaceX? (The answer is $0.)

Wut? SpaceX's largest customer is the government. If you're just looking to play semantic games where that revenue isn't a "subsidy" then I don't see how it's possible to have a conversation.

You also didn't address the other point, which is especially salient given that Musk has now spent a chunk of his concentrated wealth lobbying to gain significant control of the government that gives him funding. But I guess revolving doors, corruption, and grift is just normalized good behavior in 2025 as long as the person is wearing the right color hat?

> Wealth is not concentrated in a market society.

Respectfully, you should do some reading of basic economics. Absent of external forces to correct for it, wealth absolutely concentrates in unregulated markets.

For economics, I prefer history to academic theory. (But I have read Friedman's "Monetary History of the United States", and books by economist C. Northcote Parkinson, "Capitalism" by Reisman, etc. My dad also had a degree in economics from MIT and an MBA from Harvard and a doctorate in economicis and taught finance in college. We had many many long talks about economics. And yeah, I did take econ 101 at Caltech from a Marxist professor. My dad would have had him for lunch.)

> wealth absolutely concentrates in unregulated markets

The US had more or less unregulated markets for well over a century since its founding. The result? The most stupendous wealth creation, pushing scores of millions of people from poverty into the middle class and beyond.

There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth).

"There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth)."

You're ignoring value created through labor. The poor may not have wealth but they have their labor to sell on the open market. The returns on that exchange have been steadily declining since the post-war period thanks to flat wages and inflation. Meanwhile increases in productivity (as demonstrated by increases in GDP) by definition have to go somewhere. Since it isn't going into working folks savings accounts then it's accumulating somewhere. Also worth considering, the middle class has been declining for the last 40 years.

> have to go somewhere.

Consider the vast increase in government spending and entitlements.

As for the declines, the US free market has steadily become less and less free market.

Taxes as a % of GDP have been relatively flat over the last 60 years, and on average have been lower over the last 25 years so claiming the government or "entitlements" are the culprit doesn't scan.

https://www.ceicdata.com/en/indicator/united-states/tax-reve...

Claims that the market has become less free are perfectly baseless and a non sequitur here as even if that claim was true and verifiable it does nothing to explain the decline of the middle class or why increases in GDP aren't reflected in either household buying power or real wages.

Have you counted state & local taxes, as well as the deficit? All those count. Washington State has heaped on a lot of new taxes in the last few years. California has done even worse.

> Claims that the market has become less free are perfectly baseless

So the mountains of new regulations have no effect?

Consider all the thousands of burned out houses in LA. So far, only 4 building permits have been issued.

In Seattle, constant burdens by the City Council heaped on the rental business have driven out a lot of landlords (things such as free lawyers for tenants), resulting in a shortage of affordable housing. Those don't show up as government spending, but they retard the market anyway.

The same goes with minimum wage hikes.

The deficit should count, but since Federal taxes haven't been increased to service it it doesn't, so there is that. Likewise, CA and WA are what they are, but I think it's a bit of a stretch to suggest they're so central to the US economy that their local tax structure is driving tracked changes to household income and savings, real wages, inflation, etc. metrics on a national level. Additionally relatively recent changes in these states do nothing to explain flat wages and the declining middle class over the last 50 years.

"So the mountains of new regulations have no effect?"

Difficult to say until there's a few specific examples to examine. I've just spent the last half hour digging around for evidence that suggests there's been a spike in enforcement actions by the government at any point in the last three presidential terms and I'm not coming up with anything so until some evidence surfaces I'm going with probably not.

As for local goings on in LA and Seattle, neither are "the market". This isn't the first time I've been exposed to the apparent self-absorption of West Coast politics but I gotta tell you, y'all aren't the singularity around which the US economy or global markets pivots around. That'd be the oil and gas industry.

> The deficit should count, but since Federal taxes haven't been increased to service it it doesn't, so there is that

Inflation is the result of the deficit, and it is the equivalent of a tax. This is why politicians work so hard to deny that inflation comes from the deficit.

Want more examples of burdensome regulation? Try Lina Kahn of the FTC with her frivolous (but very expensive) lawsuits. Regulation is why the California high speed rail failed to be built, and why Biden's big spending program to install car charging stations resulted in zero chargers being built. Nearly every aspect of a car is subject to regulation, which is why they pretty much all look the same (unlike the variety in earlier years). EV regulation have been resulted in massive costs for the auto industry.

As for oil and gas, Biden blocked the pipelines that would have saved a ton of money.

The only unregulated market in the US is the software industry. And look how spectacularly successful it has been!! Prices have been driven down to literally zero! I'm in the software business, and I do not need approvals, permits, licenses, or any regulations pertaining to the software I write and sell.

(Other than laws against fraud, theft, etc.)

> Inflation is the result of the deficit

This is extremely myopic.

Price inflation is the result of the explicit government policy that says price inflation must happen, and that enough new money will be created (monetary inflation) to make it happen. The part of the deficit that is debt owed to non-government entities is those entities wanting the large-scale equivalent of a savings account, and is not any more inflationary than a savings account. The part of the deficit that is "debt owed to the Fed" is monetary inflation. The other nongovernmental "debt owed to the Fed" like home mortgages is also monetary inflation. If the monetary inflation from that part of the deficit did not occur, then the Fed's technocratic mandate would be to lower rates even further to send even more new money to the banking industry so that price inflation would still occur.

This is the dynamic we've been suffering for the past 40+ years of fake "fiscal responsibility", that has seen the government starved of being able to spend for deliberate purposes like mitigating the damage to our industrial base from offshoring. Meanwhile all that monetary inflation still had to occur, so most of that money was just dumped into the banking sector. This mainly bid up the asset bubble, but to close the feedback loop that new money still has to get back to the consumer price index. This happens through consumer goods that can be financialized (housing, cars, insurance, education). Which is why those things have shot up in price - to bring up the average while manufactured goods have continued to go down in inflation-adjusted terms.

I've engaged with you on economic topics in the past and I've just read this thread. Suffice it to say you have some relatively unorthodox perspectives on economics and regulation so I was wondering -- What regulations if any do you consider necessary?

Why?

Two societies. In each one, someone buys $20 of art supplies, paints a masterpiece and it sells for $100,000.

In one society, a marginal tax rate system taxes the artist with an upper rate of 92%, and they end up retaining about $50,000 of the income, with the rest flowing back into the control of the society (via its government).

In the other society, a margin tax rate system taxes the artist with an upper rate of 28%, and they end up retaining about $70,000 of the income. In this society, the artist retains control over twice as much of the income as flows back into the control of society.

"Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.

> "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.

I agree with most of what you say, but the pre-tax results of income are not some single natural outcome, but the results of policies about business, economy, education, healthcare, international relations, trade, immigration, monetary policy (of course), regulation, government budget, etc. - pretty much everything.

Those things can be adjusted to result in less or more wealth concentration.

They also depend heavily on capital gains tax in particular.

While the fact that the artist ended up selling a piece of art for $100k is absolutely reliant on the full totality of the social context .. what happens next is where wealth concentration does or does not happen. And that is (to a good approximation) almost entirely the realm of tax policy.

That is why I gave two different societies as examples - both have managed to construct a social context where this happens, but what happens next is different in each of them.

Put more crudely, wealth concentration is about not taxing high levels of income at high marginal rates. It is not about the specifics of how those high levels of income arise, who they happen to, etc. etc.

In the first society, the probability of the artist completing and selling that masterpiece is correspondingly lower, since money is a strong motivator and even artists have bills to pay.

Thus the first society tends to create less value overall, since value creators are demotivated by punishing taxation. Because of that, prospective buyers for that piece of art will be overall poorer so they will bid less for it, pushing the artist's reward even lower.

The first society ends up poorer than the second, from its own policy. And that’s how you get inequality between nations, which you can’t “redistribute” away. Which inequality sooner or later leads to wars, as we can clearly see these days.

> In the first society, the probability of the artist completing and selling that masterpiece is correspondingly lower, since money is a strong motivator and even artists have bills to pay.

I live near the (supposedly) largest art market in the USA, and I know a large number of artists here for whom two things are true:

1. they cannot make a living from just their art. 2. they will create art whether they make a living from or not.

Thus, the claim that taxes on their art income act as a disincentive to create just holds zero water for me. In fact, less than zero. It betrays a fundamental lack of understanding of why all the artists I admire actually do what they do.

This also applies to most of the people I admire in almost every field. I don't know of any example where the motivation was such that increased taxation would have acted as a disincentive. That's true even for Bezos @ amzn.

Taking advantage of self-driven people and stealing the results of their hard work is something communist dictators tried quite hard. Also brainwashing people to work their asses off for some other reason than the selfish one.

It didn’t work. The society produced less and less value, crappier and crappier quality, uglier and uglier and grayer and grayer.

Also, none of my artist friends would say that they were being "taking advantage of". I have no idea why you'd try to connect the situation I've described in the US art world to communist dictators, other to make some facile point that isn't relevant or even correct.

If you think that Bezos was motivated to create amazon because the taxes were just-so, you're delusional.

There are numerous books on this topic. Obviously not everyone agrees with them, but Alfie Kohn's "Punished by Rewards" is an excellent starting point for reading about what we know about the connections between motivation, creativity and rewards.

The example is bad because nobody thinks of $100k as "concentrated wealth" and your argument has some purchase at those numbers.

At $100 million, $1 billion, $10 billion, or $100 billion, the argument you put forth does not make sense.

There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th.

Incidentally, most of the people who might be considered to be concentrating wealth do not and have not done so primarily on the basis of their labor and creativity like in the example. There is no credible argument that Jim Walton ($119 billion net worth) ever built or created anything of value anywhere near commensurate with his wealth. His path from $30 billion to nearly $120 billion had nothing to do with rewarding him for value creation.

> There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th.

That's probably correct. However, if you tax $100b at 40%, then the person has only $60b to invest in creating more wealth.

But in the meantime, the state has $40b of wealth under its control to invest.

And while the $100B winner may have had some insight that contributed to the $100B, there also had to be a $100B winner in an economy structured the way ours is. Consequently, we don't really know whether there's a reason to prefer their investment choices over the ones the state will make.

It currently remains unclear, for example, whether what Musk or Bezos have done with their vast wealth thus far will, in the medium or long term turn out to be a net benefit to society (it certainly has not been so in the short tem).

The belief in the business genius really is overblown. Yes, some folks are better at it than others, but when we run the economy like a casino, there will always be big winners no matter what personal qualities the players bring to the game.

> the state has $40b of wealth under its control to invest.

Defense spending is not an investment in the economy, neither are entitlements.

The returns on government investments that are legitimate investments, however, are quite a bit less than the returns on the investments of rich people. The reason is simple - people who get rich off of investments are very, very good at it. Government bureaucrats are not.

Government investments are socialism, which have an inglorious history of poor returns.

> The belief in the business genius really is overblown

4 out of 5 business ventures fail. The survivors tend to be pretty good at it. You'd be very hard pressed to find a dummy who grew a business to a billion dollars. The ones who have done it more than once are very, very rare. (Like Steve Jobs, who did it 3 times.) If you want to argue that Jobs, Gates, Musk, Bezos, etc., just fell into it, go right ahead!

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