20 year study of global wealth demolishes the myth of ‘trickle-down’ • Hacker News Board

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#181

Post by pydry » Wed, Dec 08, 2021, 1:38 PM UTC

throwaway0a5e wrote: post #120

Werewolf255 wrote: post #73

Earlier quoted context omitted.

I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offering company, and after 20 years, the doctor is just living off others work because he 'earned it'. Plus, of course, in this perfect market scenario, no crashes or corrections can ever occur.

So say the doctor fronts someone money so they can invest in a business, say buying more garbage trucks for their garbage truck fleet or something. Surely the return on that is earned income? Throwing the money at your preferred wall street instrument of choice is the same thing but with half a million layers of abstraction and redirection all of which involve middle men who either take cuts or otherwise get paid for…

>Surely the return on that is earned income?

No. Why would it be?

Those layers of abstraction cut out the risk such that in many cases cash is the riskier instrument.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#182

Post by rbanffy » Wed, Dec 08, 2021, 1:38 PM UTC

EarlKing wrote: post #172

romwell wrote: post #116

Earlier quoted context omitted.

While I want to agree with you , it so happens that your comment is just hyperbole/rhetoric and no substance. The substance of my comment is a simple model that explains why trickle-down doesn't work. If it helps, I'll add some references to support my argument: [1] TFA Thank you for the effort you put into providing your feedback.

No, parent was right, your comment lacks all substance. It supposes that 'the rich' simply hoard wealth like a mythical dragon in a cave, scrooge mcducking through it while the poor, tired masses starve to death. The truth is that they conserve their wealth by investing it, which means that money recirculates into the economy to provide for the continued prosperity of others. If they just sat on their money they'd ac…

> If, however, someone puts their finger on the scale and effectively ensures that the stupid-rich (literally) can't lose then the rich get richer and the poor get poorer. Solution: Stop doing that.

When we get to the point money is easily converted in political power, you can see not only the finger tipping the scale, but a whole foot firmly planted there. Good luck convincing the rich, who actually convinced themselves they earned their money fairly, to stop doing it.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#183

Post by romwell » Wed, Dec 08, 2021, 1:38 PM UTC

JackFr wrote: post #149

romwell wrote: post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

> as the billionaire holds on to whatever financial product they bought forever as long as it appreciates faster than inflation. Another word for that is investment. Where do you think that money goes? You don’t earn returns on money that isn’t doing anything.

>Where do you think that money goes?

Offshore. I think that money goes offshore. I even said it in the previous sentence, which you didn't quote.

>Another word for that is investment.

Well let's entertain the fantasy that the money doesn't flow away into offshore accounts for a second.

So you're saying that investing is good? Then instead of giving money to rich people (e.g. by tax cuts), the government should do what rich people do and invest. Domestically.

What do we have here? Ah, stocks and real estate. Got it. The government should buy companies and houses, the way the rich people invest.

Didn't expect HN to argue that we should socialize housing and nationalize corporations, but I'll take it.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#184

Post by tchalla » Wed, Dec 08, 2021, 1:38 PM UTC

naruvimama wrote: post #65

Speaking from a historical perspective. The East India company/ies pretty much won much of the world for Britain & Europe. Europe was neither wealthy nor technologically more advanced than India. But the Church with its christianising mission and doctrine of christian discovery allowed the pooling of resources. Concentration of wealth is important and the wealth did trickle down to other countries of Europe. A modern…

You're basically saying - In a country of 100 people, concentration of wealth is great. Concentration like for every 100$, 5 people taking 95$ and the rest 95 taking the 5$ is fine. Your rationale seems to be the fact that the 95 people have more than 5$/95 than before. Now, you keep accelerating this and you'd notice a 99-to-1 ratio eventually.

It's interesting that you call this dignity and well being. You're basically saying that the time spent by the 95 people is orders of magnitude less valuable than the time spent by the 5 people.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#185

Post by Jensson » Wed, Dec 08, 2021, 1:38 PM UTC

This is just the effect of extremely low interest rates. When interest rates goes to 0 it means that the cost of any productive asset goes to infinity. That doesn't mean that all that value was actually created the past decade, Tesla for example hasn't created even close to a trillion worth of value, that is just the expected future value produced by Tesla including inflation. Do you think that Tesla will produce a trillion worth of value, not adjusted to inflation, in the next 50 years? Yes, I do, Tesla generated billions of operating profit last year, accumulated that over 50 years and Tesla is already worth more than money. Then Tesla isn't over valued.

So the lower the interest rates the more "wealth" actually means future wealth. If interest rates were 5% today as it was steadily 50 years ago then future money gets valued much less and asset valuation would go down. It would cause inflation of course, but I don't think that is a bad thing.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#186

Post by SamoyedFurFluff » Wed, Dec 08, 2021, 1:38 PM UTC

Emma_Goldman wrote: post #137

foverzar wrote: post #97

Earlier quoted context omitted.

> A sovereign wealth fund could raise funds from wealth taxes and assign a share to every citizen in the country. It could then use its interest-bearing assets to pay out a dividend to all shareholders every year This assumes responsible spending, which is not the case IRL. And what about shared infrastructure projects?

No it doesn't, the case for such a scheme depends on two kinds of arguments: (1) intrinsic arguments that people have a right to a portion of collective wealth, to the means of life, or to the means of being able to freely spend their time as they see fit; (2) and instrumental arguments that it would rebalance the power of capital over labour, lead to various positive social outcomes, and tame the plutocracy that is…

Another wrinkle in the notion of responsible spending is that we know that giving money to the poor gives back a greater return on investment than giving money to the rich. Poor people have immediate needs to spend that money on, such as repairing their homes, investing in healthcare, purchasing appliances.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#187

Post by leto_ii » Wed, Dec 08, 2021, 1:38 PM UTC

rbanffy wrote: post #165

skywal_l wrote: post #147

Earlier quoted context omitted.

Absolutely. Piketty showed that wealth inequality peaked right before WWI and was very low in the 60/70s. The amount of wealth between these two periods does not even compare.

Could the low inequality be a cause for rapid wealth expansion?

Personally I wouldn't be surprised if that was the case. I strongly suspect less inequality is positively correlated with a host of beneficial outcomes (more access to education and healthcare, better quality if life etc.) which can in turn lead to a virtuous cycle that would in turn increase wealth.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#188

Post by ansible » Wed, Dec 08, 2021, 1:38 PM UTC

verve_rat wrote: post #79

q1w2 wrote: post #34

Earlier quoted context omitted.

I haven't seen a politician advocate for trickle down since the early 1980s. Why is this strawman still the target for low-effort articles?

"Job creators" is the same old horse shit in newer, more marketable, clothes.

Yes.

If there is economic demand (millions of homeless buying food) even a marginally efficient market will invest in the businesses that service that market.

A business servicing that demand doesn't really care if the investment money comes from one billionaire or thousands of small investors.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#189

Post by JKCalhoun » Wed, Dec 08, 2021, 1:38 PM UTC

GDC7 wrote: post #167

Trickle down was never about monetary wealth . It’s about quality of life . It does trickle down considering that nurses are taking overseas trips to Europe every 2 months and 800$ purses can be bought for 5$ and the only thing which makes it noticeable is a small hologram which nobody will check . Of course people only look at yachts and mansions because when everything becomes equal the stuff which separates the ri…

Sorry, you're comparing $5 counterfeit purses to $40M yachts?

I'm unaware that nurses were popping off to Europe twice a year (unless you meant nurses that already live in Europe).

Meanwhile I see more and more homeless living along the freeways.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#190

Post by paulryanrogers » Wed, Dec 08, 2021, 1:38 PM UTC

xondono wrote: post #166

romwell wrote: post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

> give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. That’s not a return, the economy doesn’t work that way.

It enriches food producers, distributors, and servers. Assuming those functions aren't already consolidated into a megacorp I'd say it has been more beneficial than pushing up numbers in some billionaires account.