Money and wealth • Hacker News Board

Re: Money and wealth

#61

Post by JonnieCache » Fri, Jan 10, 2014, 4:34 PM UTC

jerf wrote: post #52

rmah wrote: post #42

Earlier quoted context omitted.

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.

Strawman; I was explicitly talking about wealth redistribution qua wealth redistribution. Politics ruins another mind.

It's called a strawman when you shoot down an idea that nobody else gives a shit about, however explicitly you do it and however many latin tags and semicolons you use.

Groups who capitalise phrases like The People traditionally want to redistribute control over the means of production, ie. they would have community ownership over microsoft itself. There aren't any socialist revolutionaries who want to break open the bank vaults and just start handing out cash, except in the popular imagination.

The other side of it, the one that's actually practiced in europe etc, is income redistribution, and that's different again.

Re: Money and wealth

#62

Post by pmorici » Fri, Jan 10, 2014, 4:35 PM UTC

"In practice, it seems people who know how to maintain wealth would never keep a large sum in cash around, but quickly turn it into net income generating assets"

Warren Buffet famously holds large sums of cash or cash equivalents from time to time. Dumping your cash into overpriced assets just to keep your cash balance low is no smarter than hording cash.

http://www.forbes.com/sites/sharding/2013/09/20/has-warren-b...

Re: Money and wealth

#63

Post by hooande » Fri, Jan 10, 2014, 4:35 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…

Following the logic of this post, you can't redistribute wealth, only money. ” The People” don't want to own companies, they want enough money to feed their families. The problem isn't that Bill Gates has a lot of money, it's that wealth is a system of exponential growth. It is somewhat unfair that his money allows him to make more money at such an outsized rate.

Taxes are a way to put wealth on an logarithmic scale instead of an exponential one. We don't want to forcibly take money from rich people, we want to make it harder for them to make more of it. The point of the post its that wealth is related to having something that can be traded for value. Higher taxes (potentially to support a Basic Income) would leave the rich with their ”wealth” while taking only money from them, hopefully leveling the playing field for everyone else.

Re: Money and wealth

#64

Post by jalons » Fri, Jan 10, 2014, 4:35 PM UTC

CJefferson wrote: post #37

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…

Bill Gates is a special case -- I would imagine the vast majority of stock (surely over 95%, maybe 99%) does not have value because of who owns it. Also, if the rich are sitting on wealth which loses values as soon as it is spent, perhaps quite a lot of the "wealth" was never really there in the first place? (although there we are perhaps getting into philosophy)

It's arbitrary who owns it, it just has to be owned. On a very superficial level, it's supply and demand. Increase supply without increasing demand causes price to fall.

Re: Money and wealth

#65

Post by jerf » Fri, Jan 10, 2014, 4:37 PM UTC

mullingitover wrote: post #53

drharris wrote: post #41

Earlier quoted context omitted.

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 l…

> 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. That's a testable hypothesis, and as it turns out it's already been refuted: research has shown that dollar-for-dollar, tax cuts are a net drag on the econom…

And I actually think that furthers the idea that "money == wealth" isn't a helpful way to look at the world. Why are food stamps so effective? Because when you're hungry, food stamps are astonishing wealth to the recipient, far more than the societal costs of providing it.

Unfortunately for people who read this as a strong endorsement for general redistribution, it is indeed the "biggest bang" and once you have filled someone's belly (and generally filled in the lower Maslow levels), you no longer have such simple options to take a bit of wealth from one and give a lot of wealth to another. At the margins that's not the choice we face; usually it looks more like my original post.

I am a libertarian, but I greatly value the social safety net. It is an incredible, incredible source of societal wealth. The problem is that there's no way to scale the safety net up beyond being a safety net, because again let me emphasize that would be awesome, but it just doesn't work.

Re: Money and wealth

#66

Post by crntaylor » Fri, Jan 10, 2014, 4:37 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…

Disclaimer - I've never played Starcraft or Magic: The Gathering.

But I expect that in both of them, just like in real life, there is some value to having unspent liquid assets, in that they give you optionality. Unspent liquid assets can be converted at a later time into marines/computing hardware/other 'real' assets, depending on what is most needed at the time. If you turn all of your liquid assets into illiquid assets as soon as you get them, you lose that optionality.

Re: Money and wealth

#67

Post by [deleted] » Fri, Jan 10, 2014, 4:39 PM UTC

CJefferson wrote: post #37

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…

Bill Gates is a special case -- I would imagine the vast majority of stock (surely over 95%, maybe 99%) does not have value because of who owns it. Also, if the rich are sitting on wealth which loses values as soon as it is spent, perhaps quite a lot of the "wealth" was never really there in the first place? (although there we are perhaps getting into philosophy)

[deleted]

Re: Money and wealth

#68

Post by pbhjpbhj » Fri, Jan 10, 2014, 4:40 PM UTC

jonnathanson wrote: post #26

Robin_Message wrote: post #11

Earlier quoted context omitted.

You are right; I've worked out the "accumulating savings" part reasonably well, but the "building wealth" is still eluding me. Stock market index funds seemed to be a good answer in the past. By owning them, you share in the economic growth and income of your country (or another country or set of countries) as a whole. Although, the spectre of Japanese-style stagflation for most of the West makes this less appealing…

I think a lot of people misunderstand what a pain in the ass buying and renting property can be. Unless one is wealthy enough to own multiple properties and have a full-time management company doing all of his work for him, he's going to be taking a fairly hands-on role. Most tennants are flaky. Our perceptions of such might be colored by the fact that -- I assume -- a lot of us here are white-collar professionals ma…

Based on your post it appears you're not profiting at all from your assets - presumably then you're currently selling up?

Is this more "first world problems" and in fact you're making a reasonable return given your investment of time and money?

I've several friends who're small time landlords - ie own a second residence they let out - they all make a tidy profit and none of them appear to have been exposed any more than a regular home-buyer to fluctuations in the housing market. It all comes across a bit like complaining that your Cristal is warm and your maid keeps coming in late.

Re: Money and wealth

#69

Post by imgabe » Fri, Jan 10, 2014, 4:41 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…

As far as I know there are no proposals to redistribute wealth by seizing assets from wealthy people. They mostly revolve around increasing taxation.

Right now, when Bill Gates wants to use some of his wealth that is tied up in Microsoft stock, he has to sell it. When he sells it, he pays a capital gains tax of 15%. If we increase that tax, Bill gets less money and more of it goes to the government to be redistributed according to the wishes of the people (in theory!). There's no question of what the government is going to do with a bunch of stock.

Re: Money and wealth

#70

Post by [deleted] » Fri, Jan 10, 2014, 4:42 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…

[deleted]