Anatomy of US inequality
nber.org
nber.org
We seem to love creating stories about why so-and-so is rich, but, I suspect the most common answer is “time, patience, and no major bad luck”.
Also, to start compounding, you have to have enough to compound. Most people instead start off significantly in debt (student debt, mortgage/rent, etc.). Then they try to save enough to be able to raise their children and retire before they become too infirm to work, at which point they start compounding in reverse. All the while, they are competing with everyone else trying to do the same thing for how much they are willing to pay for scarce resources and how little they are willing to receive for their employment. Having your compounding achieve escape velocity is the exception, not the rule, and it has to be that way.
Teaching the next generation(s) about how to invest (in self and in markets), not spend time nor money to frivolous excess, and delaying gratification are other critical parts of sustainability of family wealth. I think those were as big a factor as any other in the 5 generations from my kids back to their great-great-grandparents.
The values you mention are timeless & should be taught to all.
Hopefully technology continues to be a thing that rises all boats & that more people can get said boat.
I fear the current tax laws, political contributions & financial regulations favor those with more wealth so much that when you factor in compounding, their wealth will continue to grow at extreme levels compared to those with less wealth. Retail needs to start pulling their money out of stocks until large companies reduce executive pay to reasonable levels. Otherwise we just blindly keep supporting this current chaos. I believe we also need to start taxing margin loans, instead of going down a wealth tax road.
Agreed, with the related note that I think that facts/knowledge can be taught by strangers, but values must be taught by family or another tight community structure (church, respected elders, or similar). Schools can prattle on all they want about delayed gratification and it won’t move the needle in behavior.
I daresay the label of the community is irrelevant, what matters is some other aspect effective ones share - and of course, the child in question (:
A private school with 20 per class and 60 per grade has a fair shot at it. Maybe a small public district could as well, but I’ve never seen it happen there.
Sports teams with strong non-athletic aspects to their program are another possible source of values transmission.
I agree that it’s not the sign on the building that matters, but the content and consistency of what happens inside it.
Middle class / poor people generally know how to build wealth through interest but make the fatal mistake of keeping their wealth largely tied up in on-paper assets in their name, this means they're ripe for the taking from every judge / wife / healthcare creditors / random guy with a lawsuit as soon as something in their life goes south. Of course once you get to a certain segment of underclass people who are basically unbanked you get back to horse-shoe theory and you'll never be getting their $50k gold chain they keep around their neck.
I think you may be coming into this conversation with a different definition of "rich" than most people.
Start with $100 and compound it at 10% per year for 30 years and you end up with about $1,700. Improve that return by just 1% to 11% and after the same 30 years you have about $2,300.
That small 1% edge produces roughly 35% more money in the end. Compounding is extremely powerful, and even marginally better money management leads to vastly better outcomes over time.
That means an inflation adjusted doubling every 12 year.
It also means that if you manage to live on e.g 1% of the wealth annually, your wealth will double(inflation adjusted) every 15 year.
So yeah, as long as you don't get too many children (branching factor not more than 4) you 'just' need to get filthy rich, and none of your descendants ever need working.
I don't know if the S&P500 will grow at the same rate the next century, but I am willing to bet a beer that stocks in wide index founds will grow faster than both inflation and average salary for the next century.
I’m not saying it’s not possible, but I suspect the vast majority of grandchildren of a wealthy couple have meaningfully less than the original couple did, as well as less than their parents did.
If you manage 1% then the real value doubles after 15 years. If you need 2% annually, the real value doubles after 18 years. The moral of the story is the same, with enough wealth you can live comfortably while your wealth grows.
And you wouldn't feel as good spending 1m on a house or 100k on a car with a 200k salary and zero in the bank.
So the inequality of income of poor white people and rich white people has the same causes as for poor vs. rich black people.
Am I understanding it correctly?
just realize that poster is more than a century old and it will probably still be being explained a hundred years from now.
Something about convincing the lowest white person that they're better than the best black guy.
I don't see that ploy failing to work in the US for a long, long time. So maybe the elites will lose control and thus, the "war"? But I doubt it.
"To keep a black guy down in the gutter, you need a white guy there with him"
> If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you.
> Lyndon B. Johnson
https://www.goodreads.com/quotes/9150190-if-you-can-convince...
https://www.snopes.com/fact-check/lbj-convince-the-lowest-wh...
The bar that you get to grow up in a relatively safe place, with non toxic friends or parents is quite high already. I haven’t been lucky to have grown up in a safe place or in a good family, but I did manage to make good friends, and if I had not been lucky enough to have positive experiences with some real smart resourceful people, I probably wouldn’t had been alive today. Not to sound too dramatic.
Every time I visited the US it was mostly to visit people who were in a very privileged position. They either rented an expensive apartment in new york city in an ok neighborhood, or they owned a 3 story house in the suburbs. When we drove to walmart I could already see in the parking lots the stark differences between people who called this country home.
Next to us parked a family, 3 kids, a car that looked like it was falling apart next to my friend’s huge modern SUV. I wonder if any of them will ever br able to afford an SUV, I wonder how many of them will be able to go to college. The father and mother were yelling a lot at those poor kids. Everyone looked overweight(no offense), the father literally obese. And we went on with our day. I bought a bunch of random stuff I didn’t really need and ate a lobster sandwich. And I kind of forgot for a long time that family ever existed, except for the couple of times I randomly remember them. Hope they’re alright.
If you compare income mobility between parents and adult children in the U.S. versus Denmark, it looks quite similar for the top 80%. https://archive.nytimes.com/www.nytimes.com/interactive/2012.... Someone raised in the second lowest income quantile in the U.S. has about the same chance of ending up in the top income quantile as someone in Denmark. It’s the bottom 20% where Americans are twice as likely to get stuck there in comparison to people in Denmark.
The word "privilege" and especially the phrase "white privilege" is at the top of that list.
There really are some privileged individuals who are entitled and could use some bringing down but if you're speaking to a group you really don't where people are coming and frequently when I talk to an individual I find my expectations about their history and point of view are completely wrong. In particular I know a lot of white people who have black problems including the meaningless-but-fatal confrontations with the police. For the most part [1] black people are more concerned about racism in America than white people, but know many black people who resent the idea that they are first-and-foremost descendants of slaves and victims of racism and it's such a strongly held feeling for some that if you give them a choice of a strident "anti-racist" and a flagrant racist they'll pick the latter.
[1] I've met exceptions!
How's your self-object breakthrough? Okay, I might be jealous that you found a foolproof(?) way to have it published :)
Ofc I'm still mostly bouncing between the top 2 boxes here... (Being aware of it maybe makes that less concerning?)
(Pleasantly) surprised-- but maybe shouldnt have been-- that Chandrasekhar opened with thermodynamics
Heads-up. Regarding the self-obj. Might try to set up a three-way to sync with aeb* when I can tria(ge/ngulate) the relevant emotions better (modulo whatever mental resources my own PRE-breakthroughs require)
https://thehonestsorcerer.substack.com/p/the-end-of-reason
and i think communicates the sense of urgency in terms of the current crises such as the crisis of object relations, crisis of energy and the environment, crisis of political legitimacy, etc.
I do feel the urgency, so a thorough read is warranted.
Thoughts after the first pass, though, "rationalism fails because humans learn that fast-think responses are better for dealing with chaos", what's your succinct summary of the "crisis of object relations"
Instead of relying on real science, magic has become the sole foundation of expertise for the technocratic elite and the professional managerial caste—culminating in the legendary powers of the High Mages of the Central Bank, the Priesthood of Think Tanks and the Sacred Policy Institutes.
There's this sock-puppet on HN who I might have otherwise written off as a conservative but the way he writes is stimulating so he seems to be just one of these technocratic elite according to the above (albeit I credit him for the "insight")
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
In higher ed we are already facing a crisis because people slowed down having kids 20 years ago. The hysterical right is talking about the crisis, the left cares about the welfare state which needs working-age people to fund it but it still fantasizes that billionaires can pay for it all without the recognition that billionaires need working-age people and an expanding economy to be billionaires.
Young men immediately around me are desperately struggling in various ways, which makes the problem intensely personal to me.
20-30 years from now though the hysterical right will seem prophetic, but for now the responsible right and the literate left share in the "individual uber alles" ideology that problematizes everything.
There's a take that revolutions only happen right after things get slightly better, like spring for the suicidal.
(Have been trying to link "individual uber alles" to the macro-nihilistic core of liberalism but nothing has been clicking, including https://news.ycombinator.com/item?id=46346958 [0])
At the risk of overgeneralizing, women tend to make a healthier (more functional=better moral-injury-compensated) tradeoff between value or values. For men, the "trades" come close to women's Goldilocks zone, but "trading" (finance) will always be the devil. A man will rather be seen in the company of high-class "Trading" than be married to "the Trades".
(Within the technocratic elite, VCs try to make a better tradeoff than Jane Street/RenTech etc, but the national ideology is such that followers of Warren Buffet can still accuse them of leaving value on the table. PG used to talk of "rapacious" finbros but he & Jessica doubling down on Altman is your "supply-side socialism")
[0]top comment: high risk high formal value politics ("war") beat high _informal_ risk high _informal_ value building, family, community ("love"). like how Taleb only gets love (sycophancy, but not really?) from low-bros of the global South-- too much testosterone to make a healthy tradeoff.
As Dumas* would retort, « Tous pour un, un pour tous. »
lagniappe: https://www.youtube.com/watch?v=WO5wpeYSotg
* https://fr.wikisource.org/wiki/Les_Trois_Mousquetaires/Chapi...
Here just to note that we seem indeed to be getting somewhere,
(+according to Arnol'd, Varchenko discovered?/invented? mixed Hodge* structures so he could deal with oscillatory integrals. those lowly monsters that feature in many a baby phyker's trauma..
Pp12-13 https://m.mathnet.ru/php/archive.phtml?wshow=paper&jrnid=rm&...
So, independently of Deligne, which the francophone VIA didn't want to offend? )
More later!
*Hodge as the Grassmann of XXI?
(just looking at the figures, for some reason it reminds me a bit of René Thom and catastrophe theory)
TIL VIA's title is a shout out to [Hamilton1828]
ANV isn't even Erdős-metabolically-challenged; have you been in contact?
(Hodge would surely be XX, no? [nice Hodge star, though!])
Hodge star can be ID'd as "i" on the plane
some versions of Gemini have no idea of the Whitney tuck..
(Prigogine didn't put a name to the concept either?)
Pedantic exception: "Text" is good; "hypertext" is better
In the case of Meisner you go into the repetition exercise having done an emotional prep and your "guru" observes how it affects your behavior and can tell you "that was amazing, that really worked for you" or "that fell flat" and the one thing they'll tell you is that you have to imagine something rather than recall an experience. You aren't expected to talk about what you used, you're getting feedback about the effects.
The other thing I want to suggest is the Bandler/Grinder kind of content-free exercise where you are told to evoke an image but not expected to describe it, I think that's less effective than the Meisner training because it is presented as something you can do out of a book or in a large group and you don't have the closed loop that monitors behavior and physiology.
>imagine something rather than recall an experience.
Try to laugh at a joke you tell yourself?
(will do the homework for the sibling thread later)
I cannot help but think of https://youtu.be/Pj-D0jc17D0?si=BiEGWr9aacGdAkGW
When I lived in poor areas, I've literally been shaken down by gigantic bouncers in the parking lot for "stealing" (but not) a bag of $5 cat litter. Why on earth this is even worth the liability of sending bouncers is beyond me. And everything even remotely valuable and easy to steal is behind locked showcases, but no one gives a fuck to get it out to help you buy it.
In rich areas, it's lobster sandwiches and no one even bothering you for your receipt on the way out, and maybe someone might even help you find something in the store. Nothing you want is behind glass, except maybe something unusually valuable by walmart standards and miniscule like an SD card.
I read the post as involving seeing the other family at Walmart, but the buying of things not needed and consumption of lobster as happening elsewhere.
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
Sort by median and compare to average wealth to see the issue the USA has right now. The USA's median wealth in 2007 was $173,151 in inflation adjusted teams for some reference, it dropped in 2008 and never really recovered. It's now well below many other Western nations.
When housing prices are high, anyone who can't afford a down payment is completely screwed, because they're paying the high rents which inhibits saving, but the high rents they're paying aren't turning into principal. So the savings of most of the people who can't afford a home end up being ~0 or negative (in debt). But this will be worse, i.e. more inequality, in the country with the higher housing costs.
It just doesn't show up in the median when the median is a homeowner and then the higher housing costs increase their number.
But the "extra" wealth is mostly on paper because you have the house but you also need somewhere to live. If you sold it to get the money you'd have to pay the crazy rents, so all the value really does is give you the capacity to borrow against it, which is only useful if you wanted to borrow more than a smaller amount of equity would have allowed you to, which most people wouldn't. And if they did they wouldn't have that "wealth" anymore because they'd have borrowed and spent it, and would then be paying interest on the debt.
I found this nice visualisation: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
But it’s totals, and not inflation adjusted.
It's inflation adjusted to 2022 though, not 2025 (hopefully at least that's still in ballpark though). There was a slight spike upwards for median wealth during the pandemic fwiw. This seems to have entirely corrected though.
See the "CPI-Adjusted to 2022" column https://dqydj.com/net-worth-by-year/
I guess the stimulus checks and stock market movements during the pandemic brought the median and average closer together for a year? Regardless it didn't hold, it's back below 2007's level again today by any measure.
I think the reason why the social contract of democracy evolves from natural law is that the basic assumption is that we all have about the same fighting power, and voting is representative of this. This assumption does not hold when some minorities have 1000x the economic power but 1x times the voting power: the majority of people will vote to redistribute wealth, while the rich will be motivated to destabilize the peace and take advantage of their disproportionate fighting power directly (killbots? [1]).
Additionally, special interest groups will lobby to protect their cash cows. An increasing amount of the economy flows through government expenditure (including tax incentives, nationalization, etc.), for example palantir, flock, openAI and others. We live in an increasingly planned economy. In the USA, we import pretty much everything and we only build for the military and real estate.
The state of inequality is also concerning considering the recent technological improvements that threaten to totally devalue all labor. There's this notion that the lives of the 1% don't matter as long as we raise the standard of living for the lower class as you suggest, but what is happening now is more like a doomsday situation where we are pulling the ladder up and consigning the working class to the chasm of liquid hot magma below [0]
[0] https://www.youtube.com/watch?v=yVo1S52xdpI [1] https://www.youtube.com/watch?v=O-2tpwW0kmU
> I moved into a poor neighborhood of a rich country and...
And what?
> no matter how you organize the society, a certain percentage will always either be incapable of participating in it, or flat-out refuse to do so.
And what percentage of "the poor" that you're maligning are you claiming this to be?
Well, what I saw around me in post-Soviet times was that as soon as people got any kind of wealth they would just spend it all on luxury cars, fur coats for their wife, expensive vacations and building a mansion-like dacha. Only the last asset on this list has any potential to appreciate.
> But then I moved into a poor neighborhood of a rich country and... no matter how you organize the society, a certain percentage will always either be incapable of participating in it, or flat-out refuse to do so. You can give them all the chances they need, they will stubbornly keep making wrong decisions.
Western left agrees with you, they just won't spell it out like you did. But their current policies are basically:
1. Just give money for free to the poor, both explicitly and implicitly (social housing, rent control, etc.).
2. All kinds of equality of outcomes policies, diversity quotas, etc.
Equality of opportunity got out of vogue because it didn't produce results the left was hoping for.
It seems likely that you're just seeing the highly visible purchases and assuming that that's all that they're buying. What's not so visible is the difference between always eating cheap, poor quality food and then being able to afford fresh vegetables etc.
> Equality of opportunity got out of vogue because it didn't produce results the left was hoping for.
That doesn't seem accurate outside of the U.S. - there's plenty of countries that are still attempting to redress the balance after rich white men skewed the odds so that only them and their families could get access to quality education/healthcare/financial services etc.
It always bugs me when people point out diversity quotas whilst ignoring the centuries of white-only quotas.
The diversity discussion is always funny to me in the context of a country built by 99.9% white people. It's like... imagine arguing about the role of black americans in the history of Japan and why they deserve a piece of the pie.
It seems to me like a country built on theft of labour (as is the UK where I am).
My country lost its independence in 1795. It regained independence after WW1, but then Germans and Russians attacked us, starting WW2. After WW2 we became a puppet country of USSR, which lasted until 36 years ago.
The only nation that felt invaded by us were Lithuanians, long long time ago. We had nothing to do with colonialism, we did not import slaves from Africa. We never murdered local population. The past 300 years of my country's history was being invaded and then miraculously coming back to existence. Our capital city was completely destroyed by Hitler just to set an example.
> But you have the same amount of melatonin in your skin as the British, therefore you're guilty of everything that the British did
This, sir, is pure fucking racism
However, I don't think your comment is at all in line with the guidelines on commenting on HackerNews so I shall not engage you in any further discussion if you cannot be civil.
In the US stock wealth inflates inequality measurement. No way a billionaire can liquify millions of stocks in a stable current price. Most are multimillionaires. Although there is a lot of room for improvement based on the recent history of strong democratic national tradition.
Stop whining.
Building a shack with nothing but bamboo and no paperwork in US is illegal almost everywhere, transporting kids this way would get you pulled over, and you spend a fortune to get healthcare to the point of getting Phillipines tier healthcare.
Nominally we're richer, with the freedom to have cops bring violence to us if we're not and we try to keep our unpermitted urban shack. It feels like you have to earn a fortune in the USA to do the things poor countries almost take for granted.