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Challenging the myth that the rich are specially-talented wealth creators

blogs.lse.ac.uk

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Re: Challenging the myth that the rich are specially-talented wealth creators

#111

Post by adwhit »

vixen99 wrote: post #103
adwhit wrote: post #35

HN tends to be extremely reactionary to posts like this. Perhaps because the tech/startup scene is all about getting rich quick, or perhaps because HN has come to partially reflect the personal views of PG. There will be a reckoning. The world is 'unsustainably unequal' at the moment. There are huge problems on the horizon - superbugs, climate change, resource depletion, environmental degradation, overpopulation. The…

For nth time can we please stop talking about 'tax-avoiding' as if it's something we should not do? Every sensible individual so arranges their affairs so as to avoid tax as much as possible within the law. Governments of whatever stripe set the tax rules. We citizens obey. Government is always free to change the rules to suit its tax raising objectives. Tax evasion is of course illegal. As UK Judge Lord Clyde stated…

Can I lobby the government to change the law to lower my tax bill? No, I'm not wealthy enough.

Top marginal income tax rates in the UK during the 60s were 98%.

Re: Challenging the myth that the rich are specially-talented wealth creators

#112

Post by Joeri »

mbfg wrote: post #41
adwhit wrote: post #35

HN tends to be extremely reactionary to posts like this. Perhaps because the tech/startup scene is all about getting rich quick, or perhaps because HN has come to partially reflect the personal views of PG. There will be a reckoning. The world is 'unsustainably unequal' at the moment. There are huge problems on the horizon - superbugs, climate change, resource depletion, environmental degradation, overpopulation. The…

i understand your sentiment here, and in the view of history this is true. The problem is that now, or very soon, we are/will be in a state where the 1% can easily put down the 99% politically, socially, financially and yes militarily. So there may be a reckoning at some point. But it will and badly for the 99%. This was mostly true throughout history as well, it's just become a more certainty now.

100.000 british men simply cannot control 350 million Indians, if those Indians refuse to cooperate.

Throughout history it has been the case that sustained perceived inequality inevitably leads to revolution. We're nowhere near that point, but if trend lines continue and the middle class gets wiped out, it will happen. Democracy is supposed to prevent things from getting that bad, but we have seen that free elections are easily manipulated when you control the money and the message people hear, which is why these presidential elections will once again be a vote for either of two pro-super-rich candidates.

Ironically it is in the super-rich's best interest to raise taxes on themselves to stop this from getting out of hand.

Re: Challenging the myth that the rich are specially-talented wealth creators

#113

Post by force_reboot »

maxerickson wrote: post #90
MichaelBurge wrote: post #82

Earlier quoted context omitted.

I think capital allocation is sometimes too abstract for people to see the value in. If I bought some land, built a windmill with my bare hands out of stone and wood that I cut and shopped myself, and became the flour producer for the entire region, people tend to say it's a deserved reward. If I bought that company, paid people to do all the work setting up a dozen more windmills, paid people to manage the new bigge…

Rent seeking is jargon. It doesn't refer to running a business. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Economic_rent It refers to the economic consequences of things like regulatory capture and corruption.

You are are applying the standard definition of rent/rent seeking used by economists. But MichaelBurge's post is using the language of the original article, which claims that renting out an apartment, or making capital gains from a business, "rent seeking".

So MichaelBurge is making a valid critique of the original article, whether or not the article was correct in using the term "rent seeking"

Re: Challenging the myth that the rich are specially-talented wealth creators

#114

Post by nickpsecurity »

hectormalot wrote: post #75
ParrotyError wrote: post #37

Earlier quoted context omitted.

"In the example of home rental, making homes available for rent enables families to live in accommodations that they would not be able to purchase. These accommodations are not without cost to the owner: Taxes, utilities, maintenance, security and administration are all associated costs that rent payments offset. What the rentier provides in most cases, is a better quality of life than the family could have if they w…

> the competition for rental property is so fierce now that in many places, monthly rent to the private landlord is higher than a monthly mortgage payment would be to buy a similar property. This is not a malfunction of the market. Economically renting is always expected to cost more than buying. Renting has advantages over buying: * No need to have a significant amount of cash to deposit * Flexibility to move out in…

Two of these aren't true in the U.S. as I was reminded during a recent eviction where we had to find a new place in 30 days. Let's address them.

"No exposure to the risk of changing housing prices (which don't always go up, and can be hugely impacted by policy)"

In our case, the homeowner thought the home was undervalued or marketable rent wasn't good enough. Just wasn't enough ROI. So, he sold the house out from under us to put the money in a better investment. Many years of on-time rent payments meant nothing. So, yes, renters have to worry about that stuff with quick, dire results when a problem happens.

" Flexibility to move out into a larger or smaller house that better fits your needs"

Most renting these days is done by agencies with formal procedures and tactics to maximize value for them. So, we had to fill out lots of paperwork, get credit checks, and otherwise go through the ringer. They were also all pushing us to accept a higher rate or trying to include stuff in the contract where we fix any problems in $80-200 range. All sorts of stuff. Fortunately, a friend at an agency that knew we were good tenants luckily pulled strings and got us a place just in time.

I imagine that if we were homeowners we'd have had that flexibility of moving into houses that fit our needs. We could shop around, identify the best deal, and move in at our own pace. Unfortunately, we were renters. That meant we had to act on homeowner's short timetable plus fit within the needs of renting agencies who were so picky we wouldn't have had a place.

Suddenly, renting doesn't sound so rosy, eh? ;)

Re: Challenging the myth that the rich are specially-talented wealth creators

#115

Post by ommunist »

futureiswithus wrote: post #97
praptak wrote: post #85

Earlier quoted context omitted.

"I can hire one half of the working class to kill the other half."

We can boycott the rich. And when we cant, we can just choose to buy from the least rich

Try. Boycot banks by giving them no money, maintain social lending in your local area, see what happen then.

Re: Challenging the myth that the rich are specially-talented wealth creators

#116

Post by aoeusnth1 »

whamlastxmas wrote: post #79
hectormalot wrote: post #75

Earlier quoted context omitted.

> the competition for rental property is so fierce now that in many places, monthly rent to the private landlord is higher than a monthly mortgage payment would be to buy a similar property. This is not a malfunction of the market. Economically renting is always expected to cost more than buying. Renting has advantages over buying: * No need to have a significant amount of cash to deposit * Flexibility to move out in…

>No exposure to the risk of changing housing prices Except when your 12 month lease expires and they jack up your rate 20%. If anything renters are at greater exposure to changing housing prices. Renters don't benefit from drops in pricing, and they only have detriment from increases. At least home owners benefit from one side.

Rents must be tied to drops in pricing in the long run. If rents don't drop with the price of houses, investors would swoop in to buy the high ROI housing, and existing renters would make home purchasing a higher priority as opposed to buying stocks, paying off other debt, or spending their disposable income.

Also, having a uncertain monthly expense is not nearly as much of a risk as having 100% or 200% of your networth tied to a volitile and usually zero-sum housing market. The counterfactual of owning a diversified portfolio of stocks and bonds is much better from an investment perspective.

Re: Challenging the myth that the rich are specially-talented wealth creators

#117

Post by narag »

adwhit wrote: post #35

HN tends to be extremely reactionary to posts like this. Perhaps because the tech/startup scene is all about getting rich quick, or perhaps because HN has come to partially reflect the personal views of PG. There will be a reckoning. The world is 'unsustainably unequal' at the moment. There are huge problems on the horizon - superbugs, climate change, resource depletion, environmental degradation, overpopulation. The…

I hope we can reign in the rentiering, tax-avoiding, propaganda-publishing rich and reclaim democracy before Something Bad happens.

Frankly, I don't believe anything really bad happens to very rich people. A nice perk of becoming super-rich.

Re: Challenging the myth that the rich are specially-talented wealth creators

#118

Post by nickpsecurity »

onetimeusename wrote: post #110

There are a few things I disagree with. 1) Income from rent is not unearned. The reason it is called unearned is because nothing new was created. However, many services are this way. For example, fees paid to lawyers, or insurance fees and so on. Income earned from rent is income that comes from providing a service which is shelter or land for other uses. 2) Investment income is not parasitic. A share is a portion of…

" The prices of the shares are largely based on the value of the company. "

The perceived value of the company you mean. This site regularly discusses companies that make almost nothing with huge valuations. Like with shares, once they're sold they generally benefit a few financially who play the game yet again. Very little is created in the process.

Whereas, the instances that have capitalists investing into new businesses or expansions in old ones do typically create some value for the economy. The capitalists also stand to make money, too. World of difference.

Re: Challenging the myth that the rich are specially-talented wealth creators

#119

Post by dnautics »

smt88 wrote: post #57
dnautics wrote: post #54

Earlier quoted context omitted.

Why does government have to do something? Don't you suppose it's part of the problem? We have an economic system imposed on us that is unsustainable and redistributes from the poor to the wealthy in the name of economic stability, "growth" and "creating jobs" as if optimizing those metrics will necessarily be to the benefit of anyone but the top.

If something has to be done on a large scale, government has to do it. Massive change has to be through a medium that is culpable and transparent. That is, in theory, a position only a government can or should hold. US government needs thorough reform, but the mechanism of change has to be a government in the end.

Since when are governments "culpable and transparent"?

Re: Challenging the myth that the rich are specially-talented wealth creators

#120

Post by jsprogrammer »

onetimeusename wrote: post #110

There are a few things I disagree with. 1) Income from rent is not unearned. The reason it is called unearned is because nothing new was created. However, many services are this way. For example, fees paid to lawyers, or insurance fees and so on. Income earned from rent is income that comes from providing a service which is shelter or land for other uses. 2) Investment income is not parasitic. A share is a portion of…

Shelter and land are not a service but a physical resource.
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