After a 30-Year Run, Rise of the Super-Rich Hits a Wall

Technology equalises styles of living more than it equalises monetary income.

On a tangential note: All the money in the world can't buy you better Coca Cola.

The question is: in which country? The title of this article should really be appended with "in the USA", because the data doesn't consider foreign wealth.

Technology will continue to make people in Asia and India incredibly rich. Meanwhile, our markets are drowning in debt, the US middle class is shrinking, and the regulatory system is increasingly biased toward entrenched players in areas like intellectual property and finance and international trade. I wouldn't be surprised if it's getting harder to make money in the US, and easier in other places.

I'm not sure exactly what new information we're supposed to get from this article: obviously, when the stock market busts, those with the highest exposures to it are going to be hurt more in percentage terms than those with very little exposure. That this has happened does not indicate any systemic change that's likely to alter the overall concentration of wealth.

There are potentially some such systemic changes occurring, of course - the middle-millionaire worker bees in the finance industry (particularly the gamblers...oops, I mean traders :) ) are probably going to see a leaner few years ahead. But the more normal pieces of our economy, where wealth is gained via production instead of positioning, are not changing in any fundamental manner.

Re: your comment, I just re-read http://www.paulgraham.com/gap.html, and it brought up a very important point regarding distribution of wealth, one that I'd not considered before. It's a real shame that we don't have any numerical way to measure overall wealth level across time periods, all we can do is measure relative distributions at a single time. Trivially, there's got to be an ideal distribution of resources at a given time that will maximize the expected value of total wealth as we move forward (this is true even if that "total wealth" number is calculated with some penalty for massive inequality).

But what I hadn't considered before is that this optimal distribution may change significantly as the baseline rises.

The usual assumption, one I've been guilty of in the past, is that a constantly shifting distribution of wealth implies that even if we hit that optimum, we're going to move right past it. But it's quite possible that with the leverage of technology coming into play, the distribution that optimizes overall wealth could continue to concentrate a higher and higher percentage of said wealth in fewer hands, and the "steady state" equilibrium that the physicist in me is desperate to solve for is actually shifting upwards over time.

I wonder if there are any existing economic models that explicitly account for this effect (not an economist, so I'm not sure); it would be very nice to have a realistic model to see concretely the means by which an income gap might not be such a bad thing for everyone, and to be able to see the relative effect of controlling that gap via taxes. After all, if the net effect of chopping half the income of the top 0.01% of earners is only to reduce the net economic output by .5%, many people would find this to be a fair tradeoff, since there is some societal utility in equity. But if it's going to reduce overall output by 5% to do such a thing, forget it, we're all going to be worse off in the end.

The article points out that variation in wealth began to increase when the top personal income tax rate dropped under Reagan from 70% to 35%, thereby making it far more feasible for individuals to capture great personal wealth. (If you think 70% is high, during the great expansion of the middle class post WW II the top tax rate was 93%. Coincidence?) There have been a number of signals from the Obama administration that they wish to increase the top personal income tax rate. If they increase it enough, then wealth variation WILL come down. Increasing power of technology or no. The only questions are how high they would have to raise taxes to do it, and whether they will do so.

That said, the economic value created by the increasing power of technology is a great driver of wealth, and will remain so for some time to come. But government policy can certainly create a "headwind" that is sufficient to reduce the number of great fortunes created.

You would need to show incredible evidence for this -- the distribution of America's wealth has fluctuated greatly over the last century, and can be clearly linked to government policies, social trends, etc., and certainly has not been constantly shifting towards the wealthy, nor were the 40s to 70s devoid of technological development. (You could argue the last three decades eclipsed them, but I would have to see that argument.)

More generally, throughout history, the growth of the middle class has clearly been a key driver of consumer technology.

Completely agreed based on the fact that we are seeing new technologies and new uses of technologies impact the amount of wealth available. Think of all of the money that Google is generating? Where did it come from? Did it exist before Google? Is that money being taken from somewhere else or is it new money?

Fair comment, but just how tangible was that $100mm valuation? McAfee anti-virus software appears to have grown primarily through paying for pre-installed trial version placement on new pcs - not through being a 'better product'.

because everyone in the fucking world still believes in zero-sum mercantilism. people are only a couple hundred years behind. maybe in another 50 years the marginal revolution will finally seep into the public conscious.

the concept of everyone getting richer or everyone getting poorer is completely alien to most people.

I don't think people are down voting you on the basis of perceived correctness. Hacker News and politics just don't mix well, thankfully.

I think you make a good point, though it seems to me that Congressional Democrats (and their voting base) are more enamored of handing the bill to the wealthy than the White House, which has a good few pragmatic people in it.

Sadly, factual statements on political matters often alienate both sides in the debate - without context, they may assume the worst about your motives.

They're voting you down, at least in part, because you're personalizing and over-simplifying the debate. Had you said:

"This is bad for the current health care proposals that are working their way though congress, because they tend to rely on taxes on upper-income citizens"

you would have communicated the same point, and sounded much less like a troll.