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Are super-rich people just better at making money?

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Re: Are super-rich people just better at making money?

#291

Post by greedo »

sgjohnson wrote: post #33
bmitc wrote: post #18

Earlier quoted context omitted.

What is "that" that you're referring to? Tax rates have absolutely fallen. If you're referring the article's claim that the rich pay much more taxes in terms of dollar amount, that doesn't necessarily mean anything because the rich are wealthier and more concentrated than every before. For example: > According to investment bank Credit Suisse, the fraction of global household wealth held by the richest 1 percent of t…

Looking at the total world population is completely meaningless. This is because fertility rate in virtually every developed country is below 2, however there are extremely poor countries where the population is exploding with fertility rates above 8. > To put it another way, as of 2010, 388 individuals possessed as much household wealth as the lower half of the world's population combined—about 3.5 billion people; t…

Bezos may not be able to sell his shares in significant amounts, but he can sure use them for collateral. This is a very basic strategy for the super rich...

Re: Are super-rich people just better at making money?

#292

Post by Jotra7 »

robertlagrant wrote: post #263
feet wrote: post #253

Earlier quoted context omitted.

You can pass it on, but you have to pay taxes on it

We have that today. For some people it's not worth working, and they might as well retire and stop contributing. As we raise the inheritance tax rate, that number will drastically increase, and we get to raid some one-off money in exchange for much less productive work.

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Re: Are super-rich people just better at making money?

#293

Post by matthewdgreen »

brianwawok wrote: post #245
vladvasiliu wrote: post #122

Earlier quoted context omitted.

How are stock-backed-loans paid back? If in cash, they have to get the cash from somewhere, right? Supposedly selling the stocks. That can be taxed then and there. If they transfer the stocks to the lender, that means the stocks in question are valued at $x, since that's the value of the loan. So tax that value.

After you die your estate sells stocks

Does the estate pay capital gains on those stocks, or can it take advantage of stepped-up cost basis rules to avoid those as well?

Re: Are super-rich people just better at making money?

#294

Post by tluyben2 »

bawolff wrote: post #224
bmitc wrote: post #131

Earlier quoted context omitted.

Why should corporations be allowed to purchase homes in the first place? Remove that or heavily tax it.

I don't think its that unreasonable that big apartment complexes are owned by corporations.

I have a friend who buys apartment complexes and houses on the company for his employees to live in; that seems not to be reasonable. In fact, it became more reasonable with wfh; now his colleagues living farther away, who he wants in the office 3 months a year, can live for cheap for both sides and without any long term contracts. Definitely cheaper and more convenient than hotels in his area.

Re: Are super-rich people just better at making money?

#295

Post by Jotra7 »

orcanwe wrote: post #262
pixelfarmer wrote: post #234

Earlier quoted context omitted.

Broken incentives? What about Boeing with their 737 MAX? That is a prime example of broken incentives costing human lives. What about stock trading causing famines? Our current way of doing "economy" is massively broken and affects everything.

Who said anything about people being infallible? Amusing to nitpick market failures when planned economies have all led to mass poverty and famine. And market economies have created, in the last 200 years, unparalleled prosperity.

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Re: Are super-rich people just better at making money?

#296

Post by ARK_12 »

gabesullice wrote: post #97

This is a dishonest piece. It ignores that it's based on a zero-sum game and the world isn't zero sum. The quoted economists know that very well. I like that the coin flip game illustrates the concept of compounding interest, but it doesn't model wealth creation at all. Most new ventures aren't I-win-you-lose, they're we-win-or-I-lose. Wealthy people really can take bigger bets more frequently like the article sugges…

Regardless of what complex strategy you apply in the real world, this still indicates that there's a bias at the core of a 50-50 fair bet in the long run, ability and IQ aside.

Besides the economy can very well have zero sum game elements to it

Re: Are super-rich people just better at making money?

#297

Post by 988747 »

greedo wrote: post #288
988747 wrote: post #140

Earlier quoted context omitted.

Poor people already pay next to nothing in taxes - the bottom 60% of society, making less than $50k only contributes 7% of total tax revenue from income taxes, while 0.3% of those making more than $1M per year contributes 27%. [1] I think the US has pretty good revenue structure in that regard. In my country 62% of federal budget comes from sales taxes (e.g. 23% VAT), which disproportionately affects poor people. [1]…

Your first sentence ignores what you say in the second. In the US, poor people pay a significant portion of their income in sales tax which is regressive.

Yes, I kind of missed that. On the other hand, sales tax in the US is very low compared to European VAT (0-7% vs 18-25% VAT), so it's much smaller issue.

Re: Are super-rich people just better at making money?

#298

Post by matthewdgreen »

imgabe wrote: post #180
spinchange wrote: post #129

Earlier quoted context omitted.

The Yard sale model in this post demonstrates that rich people are not necessarily better at allocating capital even if/as they accumulate and compound it faster. The military is NOT where most spending goes - most spending goes to the entitlement programs: social security and Medicare.

It does not demonstrate that at all. It assumes everyone, rich and poor, is exactly equal at allocating capital because they all have a flat 50% chance to make money on every investment. In reality some poor people are savvy investors and become rich and some rich people are foolish investors and become poor.

What it demonstrates is that people with equal investing skills will see radically unequal outcomes, based entirely on their pre-existing wealth. Presumably you could update this model to give some people “better investing skills” and others worse skills. (In practice you’d just bias the coin flip against the ‘worse’ investors.) I suspect that once inequality has crept into the game then even having “better investing skills” is outweighed by the advantage of being already-rich. But I haven’t run the simulation to see how much investing advantage gets wiped out by wealth inequality: seems like it would be a fun project to code up with my 15y/o.

Re: Are super-rich people just better at making money?

#299

Post by dhruval »

gjulianm wrote: post #43
dhruval wrote: post #11

This smells misleading / overly simplistic but I can’t quite quite put my finger on precisely why? Some thoughts - consensual trades are win win (you want a sandwich, I want $5 let’s trade! And we both win) - something about the model is overly simplistic, like it produces a statistical distribution that looks like extreme inequality from randomness, but lots of different sorts of distributions can emerge from aggreg…

Some counterpoint thoughts: > - consensual trades are win win (you want a sandwich, I want $5 let’s trade! And we both win) Not all trades are exactly "consensual". The sandwich seller can probably live without selling a sandwich, I can't live without food, so the seller has far more power to set the price. Existing power imbalances make trades less fair, specially with essential goods (and that includes jobs, which…

1. Sure, I think there are degrees of consent

- people enthusiastically lining up to get the latest sneaker / iPhone.

- mildly enthusiastic grocery shopping.

- overpriced medical drugs due to a monopoly.

- taxation.

- outright theft at gunpoint

2. Insightful, thanks. I think one variable the model doesn’t account for is time (which is not multiplicative and scarce).

Money and power can be multiplicative so maybe most of us are playing the non-multiplicative game of spending our time to make money, while the rich are leveraged time to play multiplicative games where they spend money to make more money and happened to win a bunch of times.

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