Money and wealth • Hacker News Board

Re: Money and wealth

#81

Post by cake » Fri, Jan 10, 2014, 4:55 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…

Man I'm in the same boat, I'm renting a house and it can be such a pain in the ass sometimes. It's a good anxiety enhancer for me ;-)

Loads of work to make the property a good rental and then it's also loads of work to get the good tenants (especally in the beginning).

Now that they are settled I have more leeway but I know that more work is coming next.

As you said I would also recommend rentals to people that can either dedicate big chunks of time to it or to get it managed by someone else (by the risk of losing quite a big deal).

I don't know if I would do this again, sometimes I think I should have put the money in stocks and be done with it.

Re: Money and wealth

#82

Post by _delirium » Fri, Jan 10, 2014, 4:55 PM UTC

jerf wrote: post #58

_delirium wrote: post #44

Earlier quoted context omitted.

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…

That's only the example, to make it easy to grasp. The same thing happens at scale in real life, too, it just isn't so obvious because it looks like merely the background state of the world, rather than something that is actively occurring. Again, people are going to have a hard time reading this as a morally neutral statement, but the fact that taxes exist depress the value of assets on the market. It's already pric…

> and yes, taxes can fund things of value that can bring wealth to the society at large, etc etc, but all of that adds to the truth, it does not somehow "undo" this fact.

Isn't the net effect what people are interested in? If you impose taxes and then do nothing useful with the money, sure, that's an easy negative. And if you tax only unproductive private-sector assets and use them for public goods, that's an easy positive. The real-world situation is that you typically tax assets or income that are at least partly productive, and use them to produce things that are at least partly valuable. You come out ahead if the things you do with the tax money are better than what would've happened absent taxation, for some value of better.

The contention of people who support high taxation (as most of us in Denmark do) is that the net value is positive, and we are therefore overall better off and more prosperous than we'd be if we did not have taxation, or had much lower taxation. Partly this is because of a view that certain systemic problems can be much more efficiently solved by the public sector: it's difficult to imagine the private sector producing Copenhagen's public transit system, or the Danish healthcare system, especially for the same money. And partly it's because the prosperity we enjoy seems to generally require a backdrop of "things working well" that the state partly provides: good transit, low crime, few homeless people, safe buildings, functioning court system, educated populace, etc.

Re: Money and wealth

#83

Post by downandout » Fri, Jan 10, 2014, 4:56 PM UTC

He claims that wealth does not come from owning "buy and pray" assets like stocks and homes, yet most individual net worth gains in this country over the last 50 years have been as a result of owning exactly those two things.

I get his point, but by defining wealth as ownership of "net income generating assets" I think he is ignoring history.

Re: Money and wealth

#84

Post by dclowd9901 » Fri, Jan 10, 2014, 4:57 PM UTC

One of those terrific articles that comes along, tells you something you already knew, but does it in a way that crystallizes it into an actionable direction. Bravo.

I've been struggling to figure out what to do with the money I've been accumulating in my Bay Area tech job. I thought to put it into a house, but after reading this article, I think I'd really like to give entrepreneurship a serious go (whereas in the past, I might've done it as a side gig). Few people can claim to have that level of influence from their writings.

Re: Money and wealth

#85

Post by dharmach » Fri, Jan 10, 2014, 4:57 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…

Wealth is also perception based and circumstances based. The value of a product or a stock can be increased with the help of smart marketing. Does it mean the wealth has increased? Many entertainment product would lose the value if suddenly, say a serious war is declared, or a better alternative product appears. Where the wealth disappeared?

Re: Money and wealth

#86

Post by 01Michael10 » Fri, Jan 10, 2014, 4:57 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…

I have always found it odd people who are so against wealth (or income) redistribution always talk about the taking of money from the rich to the poor. Where have you been the last 30 years (in the US)? The only redistribution has been from the working poor and middle class to the rich.

Really against wealth redistribution? Talk about a bottom up approach to tweaking our economy instead of trickle down...

Re: Money and wealth

#87

Post by ionforce » Fri, Jan 10, 2014, 4:58 PM UTC

crntaylor wrote: post #66

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 a…

You know, I hear what you're saying, but I don't think I've ever heard that.

Usually better players will give newer players a simple heuristic like "don't let your mineral count go over 1000", which seems generous even. Something more hard core would be like 800.

The point is, there aren't many scenarios where "saving" your money would be a good thing. Except for "expensive" purchases, which usually hover around 400 and no higher.

Units and buildings (things you spend money on) in StarCraft also cost time. So if you wait until the actual time you need things to request their construction, it's already too late. So there's some forecasting going on so that you can soak up the construction time.

Also, your economy is a forever investment. If you aren't attacking, you're building/expanding. So there's essentially never an ideal moment, there's always a fall through case. You're always spending your money on something.

The one possible exception to this would be the Zerg, who play in a more reactive style. Which means that their per unit construction time is on average less than the other races (as I'm saying this, I'm actually just guessing that, watch me be wrong). The point is, the Zerg are more reactive than they are forecasting, so maybe in this scenario, some amount of saving would be apropos. But still, you are spending on your economy until the last possible moment and then transitioning into an army. Zerg happen to specialize in "on the field" adaptation and parallel construction, making their throughput higher for shorter amounts of time.

But it could be argued that none of that money was "optional" or idle. I knew that I was saving for an army and as I was scouting I knew I was saving for a specific kind of army. Maybe burn 2/3 on unit construction and save that last 1/3 to use their on the field adapt ability (like baneling morph).

Re: Money and wealth

#88

Post by notdonspaulding » Fri, Jan 10, 2014, 4:58 PM UTC

imgabe wrote: post #69

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 redistribute…

I'm sorry, how is capital gains tax different from "seizing of assets from wealthy people" again? It seems like a distinction without a difference.

Re: Money and wealth

#89

Post by aj_ycombinator » Fri, Jan 10, 2014, 4:58 PM UTC

This describes money as a store of energy: http://morphius.blogspot.in/2013/02/money-is-energy.html

Re: Money and wealth

#90

Post by lmm » Fri, Jan 10, 2014, 5:00 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…

Liquidity is an irrelevant side issue. Gates would have exactly the same problem if he tried to sell all that microsoft stock to buy turnips; he could destroy billions of dollars of wealth just as easily as the people you so despise. (In fact, if you turn it around, Gates doesn't really have 100 billion dollars. He has something that looks like it's worth that much, but only for as long as he doesn't try and use it. If you destroyed 99% of his shares, you wouldn't be destroying any actual wealth - Gates' life wouldn't become any less comfortable, and microsoft would still exist and still be making the same products. So you're not damaging the societal wealth at all).

The interesting question is who will make better use of the dollars, or indeed microsoft shares. And the available evidence is that the poor make much more efficient use of their money than the rich (indeed on some level they have to, because someone 1000x as rich as me certainly isn't getting 1000x the value from their money). They spend money rather than hoarding it, improving the economy, and each marginal dollar improves their lives much more than it would for a rich person.