Billionaires amass more through inheritance than wealth creation, says UBS • Hacker News Board

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#331

Post by berniedurfee » Sat, Dec 02, 2023, 3:59 AM UTC

gretch wrote: post #86

Qem wrote: post #53

Earlier quoted context omitted.

We are devolving to the status quo from the nineteen century and before. A couple owners of inherited wealth and huge dispossessed masses.

This is true if you view the world from a zero-sum perspective. If the rich are winning, then the poor must be losing. But I would argue the world is not zero-sum. Modern life for middle class or poor class people is a lot better than the vast majority of history (the 2 notable exceptions are post WWII USA and post Cold War USA, when America was punched through as an undisputed global superpower). We are a looooonnng…

It’s true that we’ve come a long way as a society (in many places), but just because we’re better off, doesn’t mean we’re in a good place.

I hope we can look back 100 years from today and reflect on how bad things were in these times.

Global society is a zero sum game until we get to a place of over abundance. With such limited (often artificially limited) resources, when the rich are winning, the poor in fact are losing.

I think the feeling that this imbalance is accelerating is real. The ever widening technology gap enables the wealthy to leverage powerful tools that simply aren’t available to much of the world population. It’s far easier to game the system than it has ever been.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#332

Post by [deleted] » Sat, Dec 02, 2023, 5:26 AM UTC

beaeglebeach wrote: post #182

kelseyfrog wrote: post #136

Earlier quoted context omitted.

The alternative of last resort is always violent revolution[1]. Wealth redistribution is the olive branch. There seems to be an open question among the wealthy and political class of how far inequality can go given the modern police state and effectiveness of technology in accomplishing the goal of maintaining or exacerbating the current political economy. 1. See historical populist grivences against aristocracy that…

Good luck with that in USA. I'd rather die some billionaires minimum wage security squad protecting his gold plated yacht than let some violent freeloaders take my shit and install some cuban-tier communist hell-hole where there's no incentive to produce even basic grain stocks.

[deleted]

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#333

Post by somenameforme » Sat, Dec 02, 2023, 6:35 AM UTC

godelski wrote: post #315

rufus_foreman wrote: post #294

Earlier quoted context omitted.

>> Defining "self-made" is not a straight forward issue Forbes has an interesting (to me at least) self-made score that assigns ten categories from "Inherited fortune but not working to increase it" to "Self-made who not only grew up poor but also overcame significant obstacles", https://www.forbes.com/sites/gigizamora/2023/10/03/the-2023-... .

Yeah this is the major issue and I think there's a big difference in how people internalize the notion of "self-made" vs how others actually utilize the terminology. Definitely part of this is due to human psyche where we (generally) place importance on our actions rather than our environment (which makes sense due to this is what we have (more) direct control over). There is also a significant number of people who h…

On the Musk/Bezos stuff, I think one read of any comments or interviews with Elon's estranged father (who amongst various acts, has fathered a child with his own step-daughter) indicates pretty quickly that the guy is a bit off, at best. This [1] is the article Wiki chose to cite to justify the claim that Elon grew up in wealth. Here are the combined comments from his father from the article:

"We went to this guy’s prefab and he opened his safe and there was just stacks of money and he paid me out, £80,000, it was a huge amount of money. He then gave me the opportunity to spend £40,000 on an emerald mine. I said, ‘Oh, all right’. So I became a half owner of the mine, and we got emeralds for the next six years. We were very wealthy. We had so much money at times we couldn’t even close our safe. One person would have to hold the money in place with another closing the door. And then there’d still be all these notes sticking out and we’d sort of pull them out and put them in our pockets."

In a normal world, this is about the time you turn off the recorder and thank the guy for coming in, not citing it as established fact. Of course we don't live in anything like a normal world though.

[1] - https://www.independent.co.uk/space/elon-musk-made-money-ric...

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#334

Post by lawn » Sat, Dec 02, 2023, 6:56 AM UTC

TacticalCoder wrote: post #262

lawn wrote: post #107

Earlier quoted context omitted.

This is a common sentiment, but surprisingly it's quite easy to start a business in a country with a more developed social net because the failure consequences are much less severe.

Which is why the FAANG and Microsoft and all the tech really comes from France right?

"Easy to start a business" does not mean "produce FAANG level".

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#335

Post by somenameforme » Sat, Dec 02, 2023, 2:54 PM UTC

jhp123 wrote: post #254

kasey_junk wrote: post #69

Earlier quoted context omitted.

This is a stat that is never sourced and is mostly cited by the wealth planning industry that have an ulterior motive for making people believe it. I’d love to see a rigorous backing of this stat.

A study of British surnames found that those families descended from Norman nobility (e.g. D'Urberville) from the 11th century Domesday Book are wealthier than those with common names (e.g. Darbyfield) today , almost 1000 years later. https://www.theguardian.com/society/2011/apr/03/social-mobil...

That is not quite what your article says. The researcher found that if you look at the period of time after 1850, people with rich surnames earn about 10% more than people without, although the differences narrow rapidly each generation.

He then observed that if you go back to the Mid-ages and before, such convergence to the mean took a comparable amount of time. The example he uses is "Smith", which tended to be the last name of blacksmiths from simple villages in the 14th century. Yet by 1450 the share of "Smiths" at Oxford University was equal to their proportion across the general population (suggestive of upward mobility). And by 1650, there were as many Smiths in the top 1% of wealth holders as in the general population.

So his big discovery is that social mobility in modern times is, more or less, comparable to social mobility in ancient times, which most people would not guess. Personally I view this discovery as framing the past in a more positive light, rather than framing the present in a more negative light.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#336

Post by danaris » Sat, Dec 02, 2023, 3:30 PM UTC

gretch wrote: post #156

akprasad wrote: post #103

Earlier quoted context omitted.

There are two separate concerns here: - increases in material standards of living - decreases in class mobility and increased concentration of social power It is perfectly coherent to appreciate one and condemn the other. The parent comment seems to focus on the latter.

> decreases in class mobility and increased concentration of social power > The parent comment seems to focus on the latter Okay but it's still not a very good argument. Like really? That's when you literally had to be _born_ noble, like your blood ancestry. That's why a bunch of people died in the French revolution, Russian revolution, etc

The Gilded Age, the stereotypical example of a time with high inequality (which we have, in fact, now surpassed by any reasonable measure) was in the 19th century in the USA.

We had no hereditary nobility (not in name, anyway). The robber barons were all (to the best of my knowledge) "new money"—their families made their fortunes right here in America by getting in on the ground floor of brand-new industries (very much in the same way that startup founders are trying to do today) as the Industrial Revolution was ramping up...and then becoming monopolists and extracting all the money they could (very much in the same way that startup founders are trying to do today).

You may need to review your history.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#337

Post by tylersmith » Sat, Dec 02, 2023, 7:14 PM UTC

SketchySeaBeast wrote: post #88

Zambyte wrote: post #31

Earlier quoted context omitted.

I think with the "distinction without a difference" bit they meant that if you look like you have $2k instead of looking like you have $1m, what is the difference in your life than just having $2k? The answer to that is: you have $1m of peace of mind to live your comfortable lifestyle of someone with $2k. Now living the lifestyle of someone woth $2k might not be particularly desirable to most, but living the life of…

Yes, exactly. If you live like you're making minimum wage as a millionaire that's obvious, but if you're living like a multi-millionaire instead of a billionaire how could you even tell?

You could tell by the 1000x difference in spending.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#338

Post by AnthonyMouse » Sat, Dec 02, 2023, 10:26 PM UTC

ryandrake wrote: post #307

AnthonyMouse wrote: post #209

Earlier quoted context omitted.

> And naturally, this needs to be funded by taxes on the very wealthy. This is the part where the math never works out. If you look at the richest people, they have something like tens to low hundreds of billions of dollars. Which is less than the amount of money the federal government already spends every week. If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (an…

> If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (and no new programs) for about a year, and then there would be nothing left for next year. The point to taxing billionaires is not that "the government needs their money to spend". The government will spend the money anyway regardless of whether it has it. The point to taxing billionaires is to even things out an…

> The point to taxing billionaires is to even things out and nudge society to be more equal counter to market forces continuously concentrating wealth. I'd fully support a tax on billionaires where the money just gets burned in a furnace.

Then you're going about it the wrong way.

The main thing having billions of dollars gets you is the ability to choose who runs a large corporation. If you take away the money but not the corporation, all you're doing is transferring the power to run that corporation to some Wall St assholes instead of the founders. The corporation is still just as big and whoever is put in charge of it still has just as much power.

The thing that actually concentrates wealth is large corporations. The solution, then, isn't taxes, it's antitrust and fighting against regulatory capture. It's to make corporations smaller and more numerous, so they each have less power.

Which would not only solve the actual problem, it would also solve the nominal problem of billionaires having too much money, because the way you get billionaires is by having corporations that are too big. It causes the people who got in when they were small to have "too much money". Don't let them get that big and that doesn't happen anymore.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#339

Post by AnthonyMouse » Sat, Dec 02, 2023, 10:28 PM UTC

andrewjl wrote: post #304

AnthonyMouse wrote: post #209

Earlier quoted context omitted.

> And naturally, this needs to be funded by taxes on the very wealthy. This is the part where the math never works out. If you look at the richest people, they have something like tens to low hundreds of billions of dollars. Which is less than the amount of money the federal government already spends every week. If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (an…

The math doesn't work out by design due to favorably shaped policies. A sizable amount of wealth is hidden away extra-jurisdictionally or consists of intentionally undervalued assets or isn't captured in statistics.

Lots of very wealthy people keep wealth in tax shelters, but that reduces their tax burden, not their net worth. Bill Gates doesn't secretly have a trillion dollars.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#340

Post by AnthonyMouse » Sat, Dec 02, 2023, 11:04 PM UTC

abeppu wrote: post #266

AnthonyMouse wrote: post #209

Earlier quoted context omitted.

> And naturally, this needs to be funded by taxes on the very wealthy. This is the part where the math never works out. If you look at the richest people, they have something like tens to low hundreds of billions of dollars. Which is less than the amount of money the federal government already spends every week. If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (an…

Of the criticisms to Piketty, not having done the math isn't really one of them. I don't have Capital and Ideology close at hand, so I can't check how he worked it out, but consulting some other sources: - the top 1% in the US apparently have around $45.7T in wealth [1] - there are around 22M people in the 20-24 age bracket and 23 in the 25-29 age bracket [2] So suppose there are 5.5M people turning 21 every year. Gi…

> the top 1% in the US apparently have around $45.7T in wealth

"The top 1%" mostly isn't billionaires, it's cardiologists and lawyers and programmers. It's people who labor for money, not people who inherited it. Most of that wealth is their homes and retirement accounts.

This is the problem I have with these proposals: They get sold as applying to dynastic wealth but in actual fact end up applying to many people who sacrificed years of their lives to go to school or start a business.

> So literally, 99% of the population could pay more in taxes, the 1% would be taking a hit, but honestly so long as long-term average returns are more than 1.2% above inflation, you could still have inter-generational wealth that gets bigger over time.

That's the point. There is no reason to use a wealth tax instead of the existing taxes that we already have unless you're going to use a confiscatory rate.

Existing taxes could -- and already do -- generate enough revenue to fund that kind of program, if we would stop wasting the money on less efficient existing expenditures.

But a confiscatory wealth tax would be self-defeating. It would generate less money, because it would give the wealthy a perverse incentive to spend rather than invest, depriving the government of all the future tax revenue on their investment activity -- which long-term exceeds the amount of the principal.

You have to get at the problem from the other end. What you want isn't to make it harder for wealthy people to make money, it's to make it easier for ordinary people to make money. Reduce barriers to entry so anyone can start a business -- and that business can compete with dynastic incumbents, and dethrone them. Increase competitiveness of markets so capital gets lower margins and more of the surplus goes to customers and workers.

Just taking the money doesn't fix it. You have to address the structural economic conditions that led to that result to begin with.