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Why Inequality Matters

gatesnotes.com

341–350 of 462 posts

Re: Why Inequality Matters

#341
Contrary to Piketty’s rentier hypothesis, I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since.

Bill, you didn't read far enough into the Forbes 400 article, which says:

"We didn’t include dispersed family fortunes. Those appeared on our America’s Richest Families list, which came out in July."

That money from 1780 is far from 'long gone.' In fact, most wealthy people started life rich and got richer, largely because they could afford to place bigger bets in life and take advantage of opportunities for labor-free capital gains that simply aren't available to people born without capital. Contrary to Gates' assertion, a 2012 study found that two thirds of the Forbes 400 were born wealthy (http://www.faireconomy.org/bornonthirdbase2012).

Re: Why Inequality Matters

#342
post #76

Earlier quoted context omitted.

I think some of Gates criticisms fall in the arm chair category of criticisms on this, honestly. (And to be fair, I know mine do.) I have no desire to silence any of them, and I am excited about seeing them debated. But, I am fairly skeptical about how good they are. I am genuinely interested in any discussions on this. Though, I will probably duck out of it soon, as it is beyond me. Please keep it going. Regarding t…

>I think some of Gates criticisms fall in the arm chair category of criticisms on this, honestly. (And to be fair, I know mine do.) I have no desire to silence any of them, and I am excited about seeing them debated. But, I am fairly skeptical about how good they are. Mine as well, and neither of us have time to compile the data that Piketty has done. Appreciate your thoughtful criticisms.

Even if I had the time, not sure I have the skill. I suppose the idea would be I could build the skill with enough time.

Regardless, is very fun to consider ideas on this. Thank you for the thread!

Re: Why Inequality Matters

#343

Earlier quoted context omitted.

> That sounds pretty middle class to me. Professional people - lawyers, bankers, management, etc. Professional people (as people who are predominantly workers, but usually not on living paycheck-to-paycheck and often with small capital holdings that may suffice for a comfortable retirement) are general middle class, yes. > The US doesn't really have an upper class at all The US actually does have an upper class, peop…

Yeah I sort of see what you're saying. But then do you have a different term for what I'm talking about? What would you call someone who comes from a well known family lineage, speaks with a refined accent, was privately educated, went to Harvard, listens to classical music, collects french poetry first editions, but earns a pittance as faculty in the classics department at a college somewhere and has no savings or i…

In the U.S.A. we use the following terms:

Blue collar: an individual whose earnings are derived primarily from physical labor, following someone else's instructions. Blue collar workers are often paid via hourly wages.

Brown collar: a subset of blue collar. The differentiating factor is that these people work outdoors. The brown is often explained by dirt on the collar, but in reality, most people who use this term use it because this type of worker is overwhelmingly likely to be a dark-skinned person.

Khaki collar: a subset of blue collar. Used for military jobs.

White collar: an individual whose earnings are derived primarily from labor requiring specialized knowledge or skills. White collar workers are often paid via weekly salary.

Tailored collar: a subset of white collar, except restricted to executive management, and possibly their immediate subordinates, depending on the size of the business.

Rich: an individual whose earnings are derived primarily from business ownership and investment returns. Rich people may also work in one of the aforementioned categories, but most prefer to enjoy leisure activities, volunteer for charitable causes, manage their own property portfolio, or pursue political goals.

Additionally, we have some terms for class-related nuances.

Ghetto/Barrio/Trailer Trash/Crab Bucket: this person grew up in the lower class, and exhibits many of the negative qualities of people raised in an impoverished, survival-oriented environment. These people are overwhelmingly ignorant of the social norms respected by higher classes.

Trust Fund Baby: this person grew up in the upper class, and exhibits many of the negative qualities of people raised in an affluent, self-realization-oriented environment. These people are overwhelmingly ignorant of the social norms respected by lower classes.

Welfare Queen/Welfare King: this person has no desire to earn their living, and survives primarily on government benefits. Ironically, these people often continue to receive benefits even as people who would rather work than be on the dole are cut off, because they are experts in gaming the bureaucracy.

Beltway Bandit: Welfare Royalty of the incorporated business variety. So named for the Beltway bypass highway around Washington, D.C.

Ivory Tower/Academian: this person was raised to value education above all else, and somehow managed to not learn anything of actual value. Usually white collar, but poor.

Hack: this person only does their job because it pays well. Often compensates for job dissatisfaction and high earned income via conspicuous consumption and being a dick to co-workers.

Wage Slave: contrasts with Hack, in that they are paid only enough to survive and continue working. These people would like to do something else, but cannot afford to support themselves at their preferred job. In the US, this is often someone who would have attended college, but could not afford it. May also be a person who graduated college, but cannot earn enough in their chosen field to pay off their student loans.

Brick/Backroom Boy: this person is absolutely competent and reliable in their job, and perform high-value work, so naturally other people stand on top of them and steal their credit.

Rainmaker: contrasts with Brick, in that they actually get some recognition for the value they produce. Often the top-producing salespeople at a company are recognized as Rainmakers.

Re: Why Inequality Matters

#345

Earlier quoted context omitted.

Why is investment "hoarding"? Money in the bank is moving around, even without the multiplier of partial reserve banking.

One might call passive investment "hoarding" because it does not really encourage economic activity. See, "investment" is such a loaded term. Somebody who uses their savings to open a restaurant is clearly making an "investment", and this form of investment is directly positive for the economy. When you put your money into e.g. an index fund, the situation is much less clear. You help drive up stock prices, but this…

I don't follow. If I buy stock during an IPO, the company gets the money to either reinvest or invest in something else.

If I buy stock post-IPO, that provides cash to someone else to either invest in additional stock or spend on consumables.

I don't agree that investing in any way relates to hoarding.

Re: Why Inequality Matters

#346

Earlier quoted context omitted.

Why is investment "hoarding"? Money in the bank is moving around, even without the multiplier of partial reserve banking.

Not all of it is hoarding, but some of it is. The effects on the economy between letting your money sit in government bonds vs. purchasing a consumable cannot be even close. The worst is investing in foreign companies - that wealth completely disappears from the domestic economy. Stock options and commodities and currency speculation create no wealth, only move funds from one person to another. Even typical investmen…

This doesn't make sense at all. If I buy a gov't bond, my money goes to the gov't to spend (they certainly aren't saving anything).

If I send my money to a foreign company, the economy is global. It may or may not benefit my country, but it sure isn't being hoarded.

Re: Why Inequality Matters

#347

Earlier quoted context omitted.

> I’m also a big believer in the estate tax As a third-generation American, I find the estate tax, even in its current form, extremely offensive, because it strives to reset every generation to zero instead of letting families establish themselves over time by building on the sacrifice and efforts of the parents. The current level of taxation, even though it's been recently, "graciously" increased, greatly extends th…

There is no such thing as a double tax as you put it. All money is double, triple, quadrupled so on and so forth taxed. The principle for fairness behind taxation is that whenever you get money (or wealth) there is a tax. Regardless of where is comes from. There are exceptions and loopholes to this principle. If I work very hard and earn $100,000 in a year I get taxed. If someone else dies and I inherit $100,000 (in…

Yet "more equitable" and "socialist" countries like Canada have no estate tax whatsoever.

Re: Why Inequality Matters

#348
post #184
post #137

Earlier quoted context omitted.

You can see this in action with Soros and the Koch brothers, both of whom have invested a lot of wealth to directly influence politics and social movements that further their political ideas. Even if you agree with one or the other's political goals, the fact that anyone can have that much sway over the governance of an ostensibly democratic society is a huge mess with serious risks to society and the common good.

Their political ideas aren't their own, and I highly doubt they would put so much of their resources into them if there wasn't a large base of support there already. Government spending in the US as a percentage of GDP has almost flatlined since the early 90s. There was a spike recently, but the previous growth wasn't really sustainable with the quasi-free-market economy everyone (at least in the US) seems to prefer.…

Many people have various political views. Allowing people with huge buckets of cash to use that cash to gain increased representation is fundamentally wrong. A representative government is supposed represent all of its constituents equally, but with the current pay-to-play/pay-to-propagandize/pay-to-astroturf regime it doesn't. We can't actually say with any degree of certainty that that the buckets of cash influencing politics are balancing out, since we haven't got a pristine state of thing to compare the current mess against, and there's plenty of evidence to suggest that huge buckets of cash have swayed things on many issues against the interests of the general public.

Re: Why Inequality Matters

#349
post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with differentiating between the "good investor" and the "lavish lifestyle guy" is that the good investor is actually the one that you (rather, Piketty) need to be most worried about. People worried about inequality aren't (just) worried about the morality of consumption -- a fat cat sitting atop a mountain of cash drinking champagne and eating caviar while the peasants starve. They're worried about maint…

Yeah but the smart investor should have an outsized say in how things are done because he's the one who wants society to be economically efficient.

It's the fat cat guys are the ones that are draggin us all down.

Re: Why Inequality Matters

#350
post #301

Earlier quoted context omitted.

You write as if no one has ever tried different ways of allocating capital. The 20th century is replete with examples of such "better" ways of allocating capital that failed spectacularly (often with considerable bloodshed).

No, it is full of examples of groups that established themselves as the new elites and continued maintaining the same type of semi-feudal systems they replaced. Many of them used rhetoric about redistribution to placate the masses, yes. But there was little different but names in the methods for allocating capital in Czarist Russia and the Soviet Union: The decisions were in both cases taken by a privileged elite ins…

Yet it is either astonishingly arrogant or astonishingly naïve to think that "if only we got a crack at it we'd do it right."

Any mechanism of government can and will be abused. Some such mechanisms like those of centrally planned economies are not only more likely to be abused, but more easy to abuse. Worse, they are so very often employed by the same people who think on the matter and decide we're just going to have to kill the people who don't agree with us.

The only thing that makes us better is if we take those lessons from history as a warning and prioritize liberty first. These mechanisms prioritize equal outcome, which is a fools errand. Doubly so in a leaky economy.

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