Money and wealth • Hacker News Board

Re: Money and wealth

#41

Post by drharris » Fri, Jan 10, 2014, 4:16 PM UTC

jerf wrote: post #31

This is also why wealth redistribution works far less well than people who imagine it as money redistribution think it will. Part of the wealth is tied up in the owner, and that can't be redistributed without loss, sometimes great loss. Let's take a concrete example. Suppose that class warfare rhetoric utterly wins, and as its first scalp The People decide that the filthy rich Bill Gates needs to have 100% of his wea…

This is a really salient point. I would go a step further and ask whether or not that $100 is better in the hands of a wealthy person (in the context of this article - a person who would put that money to work in the local/national economy to make more of it), or in those of the poor person. Certainly the latter can put it to great use buying necessities of life, but in the hands of the former it might increase the latter's ability to find a productive job. I'm not really a fan of trickle-down economics, but I think it's more realistic than Robin Hood economics, for the reason you espouse.

I agree that in theory it would be awesome if wealth redistribution worked the way we think it might. I'd love to live in a Trekkie world where everybody seems to have all needs and wants met. In reality, redistribution is very much like throwing money away, considering the long-term impact of such. I think people are mostly either wealth generators or destroyers. Money in the hands of a benevolent generator has the possibility of benefiting many (even though in practice only a few wealth generators actually benefit the average person). In the hands of a destroyer it benefits only them, and only for a short time. Trickle down sucks, but it might be the most realistic option.

That said, while redistribution doesn't work, getting rid of tax shelters and deductions for the wealthy would.

Re: Money and wealth

#42

Post by rmah » Fri, Jan 10, 2014, 4:17 PM UTC

jerf wrote: post #31

This is also why wealth redistribution works far less well than people who imagine it as money redistribution think it will. Part of the wealth is tied up in the owner, and that can't be redistributed without loss, sometimes great loss. Let's take a concrete example. Suppose that class warfare rhetoric utterly wins, and as its first scalp The People decide that the filthy rich Bill Gates needs to have 100% of his wea…

Strawman. Safety net programs aren't about "wealth redistribution", they're income redistribution. Further, there are social factors and goals beyond aggregate economic growth to consider.

Re: Money and wealth

#43

Post by Dewie » Fri, Jan 10, 2014, 4:18 PM UTC

ionforce wrote: post #38

For the gamers in the house, this sounds quite similar to StarCraft and Magic: The Gathering. In both games, unspent minerals/gas/mana is seen as a bad thing. Either you have your sights set on something specific a little expensive (battlecruiser/expansion), you are building an army for an upcoming attack, or you are reinvesting it back into your economy. In none of those cases are you letting your money sitting arou…

I feel like real time strategy games makes me think a lot about investment and a sort of compounding interest (making workers, expanding), investing resources in tech vs. army vs. making all armies better in the long haul (upgrading army), attacking early and have a worse late-game v.s. playing defensively ...

Some RTS are, to a surprising degree, a lot about economy and balancing the short term v.s. the long term when it comes to your own resources.

Re: Money and wealth

#44

Post by _delirium » Fri, Jan 10, 2014, 4:20 PM UTC

jerf wrote: post #31

This is also why wealth redistribution works far less well than people who imagine it as money redistribution think it will. Part of the wealth is tied up in the owner, and that can't be redistributed without loss, sometimes great loss. Let's take a concrete example. Suppose that class warfare rhetoric utterly wins, and as its first scalp The People decide that the filthy rich Bill Gates needs to have 100% of his wea…

This just seems like a complaint about illiquidity of certain assets, which is a legitimate concern, but also a pretty commonly addressed one, because it already arises semi-frequently. If you were one of Sam Walton's heirs, for example, you can't just dump all your Wal-Mart stock on day 1. But if you want to turn that in-practice-fairly-illiquid holding into more liquid and diversified holdings, you are not SOL. It might take a few years, but it's perfectly possible to liquidate most such positions without destroying them, and it's done routinely. There are even financial folks who specialize in exactly that, who you can hire if you'd like.

Re: Money and wealth

#45

Post by RyanZAG » Fri, Jan 10, 2014, 4:21 PM UTC

I read through this, but I'm a bit lost. You realize you can use money to purchase income generating assets? In fact you realize that most people accumulate money for the purpose of purchasing these income generating assets?

If I have a lot of money I can easily change it into a lot of wealth and a lot of wealth can be liquidated into a lot of money. And no, nobody who is actually rich cares about their education or intelligence because neither of these are able to generate anywhere near the kinds of returns from simply buying up large amounts of income generating assets.

Re: Money and wealth

#46

Post by dkrich » Fri, Jan 10, 2014, 4:22 PM UTC

I like the article and agree with the main points, but I don't really understand the fixation on terminology. Who really cares about what one person defines as wealth vs having money?

Isn't the real point here that people who are capable of making a living will always have means to live and those who don't may get by from time to time when they come into money but don't have a lasting ability to generate it for themselves?

On a larger scale, I think this same idea could be used to describe the success and failure of most companies. Companies that can create products or services that sell will succeed in the long run whereas those that have large cash reserves but no ability to produce products or services that sell will eventually run out of cash and fail.

Re: Money and wealth

#47

Post by TDL » Fri, Jan 10, 2014, 4:23 PM UTC

tjr wrote: post #16

probablyfiction wrote: post #4

Robert Kiyosaki's claims are pretty hard to verify. Rich Dad, Poor Dad is not a good source for financial information. Edit: Forbes link ( http://www.forbes.com/sites/helaineolen/2012/10/10/rich-dad-... )

It's some fishy stuff. But reading that book was also the first time that I realized I could have income besides a paycheck from a job; I remember the book fondly, even if its specific advice (if you can call it "specific") is questionable.

If that's the only take away you had from Kiyosaki then I would say you are ahead of the game. You've found the gem in his philosophy (probably the only gem.)

Re: Money and wealth

#48

Post by steveinator » Fri, Jan 10, 2014, 4:24 PM UTC

aymeric wrote: post #17

probablyfiction wrote: post #4

Robert Kiyosaki's claims are pretty hard to verify. Rich Dad, Poor Dad is not a good source for financial information. Edit: Forbes link ( http://www.forbes.com/sites/helaineolen/2012/10/10/rich-dad-... )

It doesn't matter. The concepts he teaches is what matters.

Agreed. I think that there was a lot of snobbery the way he says 'look at how I got rich, you're doing it wrong'. But some of his concepts are immensely valuable. I like how he pushes the idea of strong education in accounting, law, and other business essentials, as well as his use of networking and assessing of market conditions.

Re: Money and wealth

#49

Post by Dewie » Fri, Jan 10, 2014, 4:26 PM UTC

jerf wrote: post #31

This is also why wealth redistribution works far less well than people who imagine it as money redistribution think it will. Part of the wealth is tied up in the owner, and that can't be redistributed without loss, sometimes great loss. Let's take a concrete example. Suppose that class warfare rhetoric utterly wins, and as its first scalp The People decide that the filthy rich Bill Gates needs to have 100% of his wea…

A similar story was illustrated in Carl Barks' Scrooge McDuck story.

A tornado lead to Scrooge losing all his money to everyone. This lead to everyone leaving their job and going on vacation. Soon, goods became scarce, so they had to turn to Scrooge who were selling produce from his farm at inflation-level prices. Soon everything returned to its usual equilibrium.

(Scrooge owns a lot of businesses, anyway, so that would be another avenue for him to recoup his losses.)

Re: Money and wealth

#50

Post by TDL » Fri, Jan 10, 2014, 4:28 PM UTC

Luc wrote: post #33

aymeric wrote: post #17

Earlier quoted context omitted.

It doesn't matter. The concepts he teaches is what matters.

Yes, it bloody well matters. What's the point in getting some high-level concepts correct if all the nitty-gritty detail is wishful thinking and fantasy? Instead, read Warren Buffett's letters to shareholders and take it from there.

As much as I have not been a fan of Buffett over the past dozen or so years, I can't vote this up enough. Even better, the shareholder letters are available for free on Berkshire's website (some pdf, some html.) A little searching and you can find his letters to his partners from his hedge fund days. Buffett & Munger are exceptionally good at what they do and they articulate their philosophy & the nuts and bolts of how they do it for free to anyone that is interested.